Monday 8 February 2016 marks the start of the Chinese Year of the Monkey, which will be celebrated in China by setting off fireworks, spending time with loved ones and eating dumplings (sometimes all at once!).
The start of a new year is also a great time for individuals and businesses to take calculated risks, learn new things and start a new project and the Year of the Monkey looks positive for Swindon and Wiltshire companies looking to take advantage of the opportunities available in one the world’s fastest growing economies.
Over the past few years, the UKTI SW and China-Britain Business Council (CBBC) have seen an record rise in interest from South West based businesses wanting to export their goods, services, technology or brand name to China, resulting in the CBBC growing from strength to strength in the region and the advisory team doubling in size.
China is now better understood. The numerous cultural links, trade missions and abundant stories in the press have also helped demystify China and educate us about the country and how it works. The recent state visit also confirmed UK-China relations as being in excellent shape.
Antoaneta Becker, China Business Adviser for UKTI SW and the China-Britain Business Council (CBBC) has some practical tips and advice for SMEs that are considering entering the China market in the Year of the Monkey and beyond:
- Look Beyond Beijing: China’s first tier cities are Beijing (North), Shanghai (East), Guangzhou and Shenzhen (both South). They are often seen as the natural place to start when breaking into China. However they are highly saturated and competitive markets for goods and services and by no means your only option.
China has over 300 cities and over 100 of these cities have over one million residents. (In comparison, the UK has just 2 cities with over one million residents). When getting started in China, think about targeting a second or third tier city.
This strategy, also gives you a good opportunity to ‘test’ or ‘pilot’ the market, build your confidence and adjust your strategy before expanding into tier one cities.
If companies are looking to target first tier cities, it’s useful to know that Bristol, the South West’s largest city, has a friendship and cooperation agreement with Guangzhou, which means there are a number of established links to build on. Both cities share some similarities that may make Guangzhou an attractive proposition for local businesses. For instance, both are port cities and therefore have a global outlook, both are well regarded for their creative sectors and both excel in high-tech manufacturing.
- Be Proud of Your Provenance. Chinese consumers regard foreign goods and services to be of higher quality than domestic equivalents. This is due to many factors, including the proliferation of fake goods in China, scandals such as the 2008 infant formula incident and because of China’s traditional role as a manufacturer and not as innovator and designer (although this is changing quickly).
Purchasing foreign brands and services has cachet and makes a statement about the person. The UK has a great reputation in China and many well regarded British brands have roots in the South West including Clarks, Mulberry, Superdry and Lush. Chinese consumers have confidence in the quality of British products and enjoy buying into brands with provenance. There has never been a better time to launch a British brand in China.
- Covet Chinese Ambassadors: Getting your product or service ‘right’ for the market sounds like it could involve heavy market research costs but does it really need to? In the UK we have a Chinese foreign student population of around 100,000 and our local South West universities have a high number of Chinese students. Seeking their opinions on how your brand, product or service will resonate in China is a way to help you modify, shape and adjust your strategy before taking the leap into China. Foreign students are also ‘taste makers’ or ‘early adopters’ in their home market.
Many Chinese students have ‘unofficial’ part-time jobs buying goods for friends or contacts made on social media because these products are either not available in China or they are more expensive due to heavy import taxes on certain goods. It’s worth remembering the buying power this cohort have and think about ways to work with them.
In addition, the South West is a popular destination with Chinese tourists. Bath, Stonehenge and Clarks Village are three of the most popular ‘stops’ on Chinese package tours. What opportunities in these popular tourist destinations are there to ‘test’ and garner feedback?
One of the most popular holiday activities for Chinese tourists is shopping (for themselves and their friends). If you want to build your brand with Chinese consumers then are you currently stocked in the right places in the UK where they can find you?
- Set Up Shop Online: The costs of entry into China for small and medium-sized enterprises are high. However, there are ways of breaking into the market without physically ‘setting up shop’. E-commerce is very popular in China and a great place to start. Most sites require sellers to register their business in China, but some – like Tmall Global – specifically cater for foreign companies who do not wish to register in China.
E-commerce and social media go hand in hand in China and are far more integrated than they are in the UK. China has its own domestic social media platforms, which means there is no point marketing on Facebook, Twitter or YouTube in China as they are all blocked. China’s social media platforms are often hybrids of a few platforms. For instance, WeChat, one of the most popular apps in China, is more than just a social network. It combines instant messaging, video calling, a twitter like service, a newsfeed, a feature for chatting with strangers close by, online payments, taxi ordering and a browser. Online influencers can have as much cachet as mainstream celebrities and all apps are geared towards mobile. The foundation of any marketing strategy in China needs to be driven by social media.
UKTI’s E-Exporting Programme aims to help UK companies get their brands to millions of global consumers and grow their business through online exports. UKTI’s Digital Trade Advisers can advise on your eCommerce strategy; call the International Trade Centre South West for more information on 01275 370 944 or access their website via: www.gov.uk/guidance/e-exporting
- Golden Time to Strike: The rate of change and development in China is fast. There is never going to be another time like this, which is why both the British and Chinese governments have described bilateral ties as entering a ‘golden period’. If you don’t start looking into the potential of the China market now, it’s only going to get harder later. In a few years time, China will be further along on its path to market maturity and the opportunities that exist now may well be gone.