We have about 1,000 members, which range from very small companies to large corporates like M&S and HSBC. A
lot of them have offices in China already and have been doing business here for years, while others are just starting.
The leading sectors we see coming through are education, creative industries and financial and professional services. There are also a lot of business-to-business companies; for example, there are a lot of UK companies that produce niche engineering products that do quite well in China.
We help companies find business partners and distributors and help get them access to potential customers and the Chinese government. Government in China is a daily fact of life; it’s not an absolute rule but you have to interface with the government at some point to do business effectively.
We have offices in 11 cities here, so a lot of the work we do is outside the better known first tier cities like Beijing and Shanghai. That is where we are seeing a lot more UK companies showing an interest.
Retailers here tell us thinking very locally is essential when rolling out a presence because consumers in one region behave differently to those from another because it’s a huge country. It’s true when they say it shouldn’t be thought of as one country but many. There are big differences in terms of climate, cuisine, and incomes in the east can be double or triple what they are in some of the poorer inland areas.
Companies should look at several regions when they are first exploring the market and settle on one. It’s difficult to find good distributors that can cover the whole country. Working with one distributor, say in east China, and making that work might often be a better way than covering everywhere at once.
Some sectors are more challenging than others because they are quite restricted. In insurance, for example, you can’t have 100% ownership in China, so that generally means you have to go through a long process of identifying a partner. It can be very governmentally controlled, so you can end up sitting there for some years hoping for the best.
Retail is certainly very competitive. The local competition may be very intense and they have certain advantages over a retailer like Tesco in that they have very good government connections and good access to particular sites, and probably don’t have to do the same due diligence as a public company might have to for certain projects.
But Tesco is still expanding here and doing quite well. B&Q, however, went through a major retrenchment a couple of years ago.
It basically over-expanded and was hit by a housing downturn in some parts of the country that led to a lack of demand for home furnishings.