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Concerning Trading with China

As the second largest economy in the world, China has one of the planet's fastest growth rates. It is clearly a good choice for a market for the UK exporters to consider. The 1.3 billion population of China offers a potentially lucrative market for outsiders to try to get into.

As time goes on, it is becoming easier to break into the Chinese market. The Chinese government is offering tax incentives for foreign companies to begin doing business there. The many restrictions of the past are being relaxed somewhat.

The government of China is encouraging engineering and manufacturing businesses in the UK to consider partnering with Chinese manufacturers. Communications technology, high tech manufacturing and electrical equipment are much in demand now. Although there are still many state-supported companies in the country, the growth of private companies is also increasing.

The many regions in China have differing degrees of population and poverty as well as great opportunities. The coastal cities are growing rapidly with tremendous chances to get in on their growth.

A China-Britain business council, the CBBC, has taken over most of the UK Trade and Investment services as well as general inquiries for business in China. It is a not-for-profit organization which promotes businesses in the UK as they do business in China. For advice, you can contact the China-Britain Business Council by email at enquiries@cbbc.org. In China itself, email enquiries@cbbc.org.cn.

The Chinese approach to business is a bit different than in the UK. They value face-saving as a basic in business relationships. No attempts should ever be made to embarrass anyone in a business deal. As well, no attempt to make oneself appear superior in any way is acceptable to the Chinese.

Usually, a dinner party is a major part of initial dealings. It is an attempt to get to know the foreigner who wants to do business with Chinese counterparts. When you attend the dinner, bring small wrapped gifts and many business cards to hand out. When cards are handed to you, read them immediately rather than putting them in a coat pocket. Formality is important to the Chinese so using a title with a person's name is advantageous. Shaking hands politely is considered proper.

Being in a hurry is not common in China. However, when the time comes, deals can be accomplished quickly. It is a rather common occurrence in China to make addendums to contracts after the contract is drawn up.

If you bring literature to hand out, it needs to be printed in the local dialect. Except in Hong Kong, where Cantonese is the basic language, Mandarin is usually the accepted dialect. Having your own interpreter and/or translator is wise since he or she is not already biased in favour of your Chinese counterparts.

The best way to know what you are getting into is to visit China yourself. Business support organizations such as UK Trade and Investment organizes trips to China for prospective business owners to assess the Chinese market and meet prospective partners. If possible, it is good to take samples of your own products to show around while in China.

Among the ways to sell your service or product in China are using an agent or distributor, setting up a representative office in the country, going into a joint venture with an existing Chinese firm or creating a wholly-owned foreign company. The wholly-owned company is the most popular at the present time.

Going to China for business is most often done for financial gain. How to get paid is one of the challenges for this goal. Most trade in China is paid through letters of credit, which are promises from your customers' bank to pay you once the goods are received in China. Payment currency options are the RMB, the local Chinese money, or US dollars. The rates fluctuate for the dollar.

Costs for exporting to China include taxes and duties for importing into the country. Most goods imported into China are exempt from the Chinese VAT. In the UK, you must report all exports to HM Revenue and Customs (HMRC). Imports into China will involve paying a duty on the value of goods to be left in the country. This duty must be paid before the goods are released in China.

Other restrictions in dealing with China include limits on the amount of money you can remove from China, restrictions on the types of products you can bring into the country and whether you need a license to import goods into China.

Generally, it is good to have a plan in place to protect intellectual property rights. The Chinese have had some negative situations concerning this problem.

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