Go East, young man
Updated: 2011-08-19 11:01
By David Bartram (China Daily European Weekly)
But even with these challenge Johnson-Hill sees opportunities in China that simply are available back home in Europe.
"Today when I open a newspaper I see the markets in turmoil and riots in London, and yet I have just had my biggest month of sales. Retail in China is booming, and I don't even feel what's going on in the West. The challenges really seem quite small compared to what's going on around the rest of the world."
Perhaps the single greatest concern for European business taking the plunge is the issue of intellectual property rights (IPR). Last year the UK-China Business Climate Survey found that IPR was one of the top three concerns for UK businesses operating in China, alongside the environment and bureaucracy.
But there are some encouraging signs that the situation is improving. Ralph Rogers, soon to be director of The British Centre in Beijing, leads the China-Britain Business Council (CBBC) that provides assistance to British companies large and small in China.
"A common question we receive on a daily basis from people is about how to protect your intellectual property rights. In fact China has some of the best IPR regulation in the world, and now it is starting to be enforced more often," Rogers says. "Last year there were 43,000 civil IPR cases in the Chinese courts, and only 1,500 were from foreign companies. It is actually Chinese companies who are driving forward the intellectual property agenda."
By offering practical solutions to problems such as IPR, Rogers and the CBBC hope to encourage UK businesses to China. While previously many would have been intimidated by the prospect, rapid growth, previous success stories and increasing support from multiple avenues are making it viable for SMEs not only to manufacture in China, but also to sell to the Chinese market.
"A number of companies will outsource their manufacturing to China for obvious reasons," Rogers says. "What we are seeing more of now is the local manufacturing partner turning around and saying: You do realize we can sell this in China as well as make it? A lot of companies will start off buying from China and end up selling there.
"China is moving away from a country focused on manufacturing for export to one more focused on domestic consumption. As Chinese consumers increase in number and affluence, there are more and more opportunities to sell to them, especially the hi-tech products and services that the UK and other European countries excel in."
The market is a tantalizingly alluring one. The Chinese middle classes now number somewhere in the region of 300 million. There are over a million millionaires, and a population the size of the US will move into urban regions over the next 15 years. The race to grab a share of that market is already well underway. The CBBC, which operates 11 offices across China, is keen to reinforce the message that even small companies can be a part of China's growth.
"Doing business in China is no different to doing business anywhere else in the world when you come down to the essentials of it. Obviously there are unique challenges but the essentials are the same," Rogers says.
"China is moving up the value chain. They want to design and innovate and the UK excels in design. We can collaborate with the Chinese across the creative sector. Whether you are interior designer, an architect or a designer of electronics, there are opportunities for small businesses in China.
"If you go to China and visit Shanghai, Beijing, Guangzhou, Shenzhen or any of the many regional cities that are developing at the rate of knots, you can almost feel the opportunities in the air. You can see the new metro systems and five star shopping malls selling European goods. You can see Chinese citizens using their new smartphones - many of which use microchips designed by British companies. There are huge possibilities."
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