Five things to consider before expanding your business in China

EU exports to China are now worth over ?150 billion, but Germany accounts for over half that figure. We asked business leaders who have been there and done it for their advice on how UK businesses can expand to China.

At our recent 'Slow Boat to China – are British companies doing enough to capitalise on the opportunity?' event we assembled a panel of experts to discuss why UK companies are potentially overlooking the Chinese market, and how they go about expanding into it. Here, some of the panel offer their advice on what to consider before you start.

1. Don't do things the same way

"If we tried to do things in China the way we do here, we would've failed a long time ago. You can't do things the same way," says Mark Johnson of Sigma Precision Components.

"The first aspect for us was recognising that difference, and more importantly getting people to respect that difference, because we're lifting the standards in China higher than they are in our established businesses in the West."

2. Don't see China as just 'cheap and cheerful'

"Once the Chinese manufacturing capability gets it, they do it really well," argues Simon Bevan, head of Grant Thornton's China Britain Services Group. "It's a mistake to think that Chinese is essentially 'cheap and cheerful' and always will be. It's not."

3. Spend lots of time on preparing for a Chinese expansion

"It is a complicated marketplace and there are many issues that you need to think through, so spend a lot of time preparing before you jump in with two feet," Stephen Phillips, CEO of the China-Britain Business Counciladvises.

"It's a market that requires a long-term approach, and that means that you have to do plenty of preparation."

4. Start with the easier markets before tackling China

"Don't start with China, because it's too big a jump," warns Will Butler-Adams, Managing Director of Brompton Bicycle. "Start with the easy markets where culturally and historically we have good trading routes; I would suggest Japan and Hong Kong.

"Hong Kong clearly because of the British relationship with it, the ease of law and its proximity to China. But equally Japan, because it is a real trendsetter; a real insight into setting trends for the whole of Asia. If you get it right in Japan, it bodes well for the rest of Asia."

5. Focus on your business's core strength

"I think it's important for British companies to focus on what their core strength is, what is the core proposition of their brand and how can they create a meaningfully differentiated proposition," argues David Roth of The Store WPP.

"The onus is on British companies to go out with an open mind-set to understand the market well and to find a differentiated, meaningfully different proposition in the sector of the market where they can command a price premium.

"Going into the market with a 'me-too' product, which is going to be slightly more expensive than their competitors, is a recipe to lose, rather than make, a lot of money."


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