Exploring China's export potential
With expanding domestic purchasing power, lowering of legal and logistical barriers and enhanced capabilities of e-commerce, China should be a primary candidate for companies looking for new markets beyond Europe and its political uncertainties.
A ‘staged’ approach to this market not only minimises upfront costs of entry, but facilitates adoption of strategies to suit the level of market penetration and success.
The Chinese government has integrated the customs and inspectorate functions to form a customs administrator, and has introduced new regulations for e-commerce, which further accommodates this approach.
Companies often ask whether a physical presence should be established, but this is likely to be some way down the path of assessing the opportunity and deriving an appropriate sales strategy.
E-commerce is very popular with Chinese consumers and the market is mature. It is possible for UK companies to rely on their UK web site to attract orders from Chinese consumers, though this will result in potential checks of packages entering the country, with the customs declaration being made by the end consumer or an agent of the consumer.
A physical presence is likely to be some way down the path of assessing the opportunity
A more focused approach is providing availability to the product through registered Chinese e-commerce platforms, if the product is one of the ‘qualifying’ categories (of which there are over 1,000). The platforms are linked to Chinese customs authorities, which enables acceleration of product delivery and possible reduction or elimination of import duties and consumption tax. The UK company would link with a logistics and payment processing agent. The e-commerce platforms also have responsibilities for consumer protection and IP protection.
There are certainly legitimate reasons for establishing a physical presence in China, in which case it is imperative to select the most appropriate form. However, in appropriate circumstances, it is possible to ‘test’ the market without such initial upfront investment.
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