roundtable ... continued from previous page
China offers huge potential for SMEs, Wu believed. “My reading from my experience is that among some SMEs there are a large number who have good potential in China but haven’t yet done anything about it although they know they should. The big question for us is how can we help more of these Thames Valley businesses into the Chinese market, which is ripe and ready” he said.
British businesses have a great appeal in China, noted Stoter: “Saying you’re British is a good thing and still has a premium on it. Don’t underplay the nature or origin of your goods and services.”
John Freeme
Trade from China to the UK is benefiting the Thames Valley economy. The success of Chinese telecoms giant Huawei, with its UK base in Reading, is a good example. Huawei’s Eric Yu said: “Huawei uses carefully picked local suppliers for marketing and product delivery. We employ nearly 1,000 people in the UK and work with a number of Thames Valley companies.”
Darren Seward
One of these is Westcoast, whose head of mobile Darren Seward said: “We bring in Huawei tablets and mobiles from China and market them in the UK. The UK market is very brand driven and Huawei has done well here over the past 12 months. We see this as a massive opportunity for Westcoast. What is key, as Eric says, is bridging cultural differences between Huawei and UK businesses.”
eCommerce entry route
An increasingly popular route to reach Chinese consumers is through eCommerce. “China is the world’s largest eCommerce market,” Lethbridge pointed out. “This presents opportunities for selling direct to consumers as for some products eCommerce can get around some of the cross-border rules and regulations.”
Chris Lethbridge
A number of Crowe’s clients use eCommerce to transact with China. “The whole process is evolving rapidly and things are changing very quickly. While our clients who use eCommerce with customers in China haven’t faced any major issues to date, careful planning and early-stage advice is required,” said Stevens.
Robin Stevens 82
businessmag.co.uk
Lethbridge added: “Around 90% of Chinese eCommerce is on platforms operated by a few huge conglomerates, like Alibaba. We generally have good relationships with them and regularly let them know if UK companies find IP violations. Alibaba has a reporting system to flag incidents. However, companies should remember that in China trademarks are first to file, not the first to use.. For example, if you give someone your
business card, they could register your logo or product as their own, so make sure you register trademarks and patents before you start out in China.”
Getting paid
Doing your homework, finding the right partners and starting to trade with China can be challenging. The panelists also agreed that getting paid for your products and services can be frustrating. Vialou- Clark shared a practical example. “We (and our Chinese partner) are finding it difficult getting money out of China. Payment on our first transaction with a Chinese partner was due within 25 days and is now measured in months. We’ve been told not to worry, that the process is complicated, and that the issue is all about regional and central bureaucracy” he said.
China’s foreign exchange controls make this a common problem noted John Freeme at foreign exchange broker HiFX. “Getting money out isn’t always a swift or easy process. The first time you do it might take longer, for example, if local Chinese banks have never transacted overseas and don’t understand the mechanisms for sending money. Getting money in to China is easier than getting it out.”
Wu added: “I think taking money out of China is pretty straightforward if you understand the paper work requirement. Many payment delays can be due to misunderstandings in the process. For example, for service contract you need to file it with China’s foreign exchange bureau, while some Chinese companies are not experienced to deal with foreign currency procedures. Even some local branches of the foreign exchange bureau and banks can sometimes be confused.”
Persistence should pay off, advised McLean. “You have to be completely and utterly persistent. The rules are set in Beijing, but officials carrying them out in the regions who are handling the nitty gritty can be paranoid about making a mistake in the paperwork. You have to keep at it,” he suggested.
The panel discussed various options to speed up the process of getting paid. “Letters of credit can work to your advantage, although they are usually only used with tangible goods rather than services,” said Stoter.
“Our parent company is Huawei Group and Huawei UK signs contracts with Huawei Hong Kong, which then deals with the Group company in China. This means we have fewer delays moving money,” said Yu.
McLean said: “We also use Hong Kong as a conduit to China and that makes life significantly easier for us. You could use an intermediary, like a lawyer in China, so you
THE BUSINESS MAGAZINE – NOVEMBER/DECEMBER 2018
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