CHRIS LOWSLEY CHINA BUSINESS ADVISER UKTI SOUTHEAST Climbing the Wall! (Winning Business in China).

Agenda The market, trends and developments New 5 year plan Success factors and exporting considerations UKTI/CBBC support for China business Market visit this November Summary

Orientation Now 2 nd largest world economy 中 centre of the earth 22 Provinces (34 province-level administrative units) 200 million new consumers 500 million out of poverty in 20 years

Market growth UK exports £6billion = 1% of China imports £17billion investment in China 400 Chinese companies now established in the UK New self confidence Weak western demand vs high domestic growth 10m + pa – Expected urban shift

Shanghai 1990

Shanghai 2010

Future focus in China 10% GDP growth in 2010 (over 15% in areas) 8% forecast for 2011 Domestic engine of Growth in next 20 years: - Automobiles /transport - Services - Urban Housing and Infrastructure - Environment - Health and social support - Higher value added manufacturing

The 12 th 5 -Year Plan Highlights of plan : 1.Urban dwellers will reach 51% of population 2.Foreign investment focus on modern agriculture, High tech and Environmental industries 3.Nuclear power to be developed with safety as precondition. 4.Large scale hydro-electric plants to be built 5.A new airport in Beijing to be completed 6.Plus ………

Building 36 million low cost homes

45,000km of high speed rail track

83,000km of highway networks

10 Day traffic Jam – Aug 2010

New Media Growth (Under 30s) 900m mobile phones 550m netizens (300m using mobile access) 68m - G3 users e-shopping and e-banking growing at 30% pa 150m regular e-shoppers

Trends for China engagement Besides conventional exporting UK companies are expanding in:- Designing, licensing, creating products and ideas for production in China for global markets. Using the creative base in China to enhance products and services in the UK Establishing own China base to serve China and regional markets.

The winning recipe 1 A viable business first. 2 As a viable export business 3 As a business with growth potential in China 4 Has the drive to learn and capacity to succeed

Your Company Why are you looking at the China Market (your business reasons) Do you understand what your USPs are? Are you competitive in other world markets Have you evidence to show that a market exists in China for your Goods/service ( ie market research) Do you have a budget and resources committed. How do you propose to sell in China.

Your customers in China Do you understand the geographic size of the market and know where to start. Who are the customers you wish to target (consumers, local companies, Foreign companies in China, or official bodies) (many SMEs enter China selling to, and encouraged by, foreign firms operating there and this is a more risk free option. Do you know how to carry out due diligence on customers/suppliers/partners

Financial considerations Internationally experience in managing financial exposure. Are you prepared to accept lower margins (as China is one of the most competitive world markets) For internal sales in China payment will be made in RMB – How are to be paid? Do you in-house credit controllers. Do you understand INCO terms and the logistics cost structure to land products in China.

A China Market View Three distinct market segments:- 1.State controlled activities (business and Education) 2.Chinese companies / Consumer market 3.Foreign invested/owned businesses

Routes to Market Appoint an Agent or Distributor Establish a local presence - Representative office - Wholly owned enterprise (WFOE) - Licensee - JV - Sell direct (internet presence) - Other

UKTI – CBBC China Network We have 4 UKTI trade offices in China + 11 CBBC offices offering local support to British companies. Subsidised tailored market and company information, guidance and advice and help to exhibit or visit the market. 21

UKTI Impartial advice focus Strategic and export business advice Market information and research Identifying partners How to promote/exhibit company products Support to visit markets and potential customers Support in market 22

Chongqing – the heart of China

Chongqing - Autonomous municipality

Annual Business visit HK China Japan Date 20 th -30 November 2011 Hong Kong, Chongqing, Shanghai and Tokyo. Assistance and economic briefings in each city Tailored visits to local and foreign businesses (optional) Flexibility to vary to own agenda or include other cities in China or the region Up to £900 grant towards costs for eligible South East companies 100% report clarity of next steps into China – 60% plus report orders or inquiries as a direct result. Any interest let me know today!

Easy Access to UKTI SE support National website – Local website – Export Talk Forum – online advice Local customer services Chris Lowsley China Business Adviser UKTI SE Tel :

Summary for success Not a single market be selective Very competitive – expect lower margins Do your research carefully – network others Take time and effort to find the right partners Show commitment Use UKTI/CBBC impartial support services. Do you have a China strategy/What if Plan? China is bringing fundamental change to all our lives – be prepared!