Climbing the Wall!
(Winning Business in China)
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CHRIS LOWSLEY
CHINA BUSINESS ADVISER
UKTI SOUTHEAST
Agenda
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The market, trends and developments
New 5 year plan
Success factors and exporting considerations
UKTI/CBBC support for China business
Market visit this November
Summary
Orientation
• Now 2nd largest world economy
• 中 centre of the earth
• 22 Provinces (34 province-level administrative units)
• 200 million new consumers
• 500 million out of poverty in 20 years
Market growth
• UK exports £6billion = 1% of China imports
• £17billion investment in China
• 400 Chinese companies now established in the UK
• New self confidence
• Weak western demand vs high domestic growth
• 10m + pa – Expected urban shift
Shanghai 1990
Shanghai 2010
Future focus in China
• 10% GDP growth in 2010 (over 15% in areas)
• 8% forecast for 2011
• Domestic engine of Growth in next 20 years:
- Automobiles /transport
- Services
- Urban Housing and Infrastructure
- Environment
- Health and social support
- Higher value added manufacturing
The 12th 5 -Year Plan 2011-2015
Highlights of plan :
1. Urban dwellers will reach 51% of population
2. Foreign investment focus on modern agriculture,
High tech and Environmental industries
3. Nuclear power to be developed with safety as
precondition.
4. Large scale hydro-electric plants to be built
5. A new airport in Beijing to be completed
6. Plus ………
Building 36 million low cost homes
45,000km of high speed rail track
83,000km of highway networks
10 Day traffic Jam – Aug 2010
New Media Growth (Under 30s)
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900m mobile phones
550m netizens (300m using mobile access)
68m - G3 users
e-shopping and e-banking growing at 30% pa
150m regular e-shoppers
Trends for China engagement
Besides conventional exporting UK companies are
expanding in:-
• Designing, licensing, creating products and ideas for
production in China for global markets.
• Using the creative base in China to enhance products
and services in the UK
• Establishing own China base to serve China and
regional markets.
The winning recipe
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A viable business first.
As a viable export business
As a business with growth potential in China
Has the drive to learn and capacity to succeed
Your Company
• Why are you looking at the China Market
(your business reasons)
• Do you understand what your USPs are?
• Are you competitive in other world markets
• Have you evidence to show that a market exists in China
for your Goods/service ( ie market research)
• Do you have a budget and resources committed.
• How do you propose to sell in China.
Your customers in China
• Do you understand the geographic size of the market
and know where to start.
• Who are the customers you wish to target (consumers,
local companies, Foreign companies in China , or official
bodies)
• (many SMEs enter China selling to, and encouraged by,
foreign firms operating there and this is a more risk free
option.
• Do you know how to carry out due diligence on
customers/suppliers/partners
Financial considerations
• Internationally experience in managing financial
exposure.
• Are you prepared to accept lower margins (as China is
one of the most competitive world markets)
• For internal sales in China payment will be made in RMB
– How are to be paid?
• Do you in-house credit controllers.
• Do you understand INCO terms and the logistics cost
structure to land products in China.
A China Market View
Three distinct market segments:1.
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State controlled activities (business and Education)
Chinese companies / Consumer market
Foreign invested/owned businesses
Routes to Market
• Appoint an Agent or Distributor
• Establish a local presence
- Representative office
- Wholly owned enterprise (WFOE)
- Licensee
- JV
- Sell direct (internet presence)
- Other
UKTI – CBBC China Network
• We have 4 UKTI trade offices in China
+ 11 CBBC offices offering local support to British
companies.
• Subsidised tailored market and company information,
guidance and advice and help to exhibit or visit the
market.
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UKTI Impartial advice focus
• Strategic and export business advice
• Market information and research
• Identifying partners
• How to promote/exhibit company products
• Support to visit markets and potential customers
• Support in market
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Chongqing – the heart of China
Chongqing - Autonomous municipality
Annual Business visit HK China Japan
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Date 20th -30 November 2011
Hong Kong, Chongqing, Shanghai and Tokyo.
Assistance and economic briefings in each city
Tailored visits to local and foreign businesses (optional)
Flexibility to vary to own agenda or include other cities in
China or the region
• Up to £900 grant towards costs for eligible South
East companies
• 100% report clarity of next steps into China – 60% plus
report orders or inquiries as a direct result.
• Any interest let me know today!
Easy Access to UKTI SE support
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National website – www.ukti.gov.uk
Local website
– www.uktisoutheast.com
Export Talk Forum – online advice
Local customer services - 08452 789 600
Chris Lowsley
China Business Adviser
UKTI SE
Tel : 07768067746
Email: chris.lowsley@uktisoutheast.com
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Summary for success
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Not a single market be selective
Very competitive – expect lower margins
Do your research carefully – network others
Take time and effort to find the right partners
Show commitment
Use UKTI/CBBC impartial support services.
Do you have a China strategy/What if Plan?
China is bringing fundamental change to all our lives –
be prepared!