5 Things You Need to Know, before You Say NO to China
Updated: Jul 9, 2019
A business move with undoubtable potential for success.
Have you ever noticed that an increasing number of Chinese visit Europe, especially gathering in the big department stores? If they came all the way here to experience your culture and products, why don't you send your culture and products to them in China, and actively take your part in this growing economy?At this point, some words must be appearing in your mind: immature copyright protection, lack of intercultural understanding and undecodable bureaucracy. Or you are just not interested. Fair enough. But if you are really not, what led you to this post? Long story short, the China today is no longer the China you knew from 10 years ago. Nowadays, foreign business operations in China are definitely not as difficult as you may think.
1. 6 options for you to enter the market
Foreign Invested Partnership Enterprise (FIPE): as a recent addition to eligible business types, FIPEs offer an easy setup process and no minimum capital requirements.
Equity Joint Venture (EJV): you may register your business in cooperation with a local equity partner.
Representative Office (RO): as the name suggests, the primary objective of a representative office is to serve as an outpost of a foreign company in China.
Whole Foreign Owned Enterprise (WFOE): WFOEs are the most common business model of foreign companies in China.
Fulfillment through Hong Kong
Cross-Border E-Commerce (CBEC): through online retail platforms, foreign companies can directly display and deliver their products to Chinese customers. Currently, this is the fastest and most secure way for small to medium scale companies to distribute their products.
2. The market potential for your business may well be growing. According to iResearch, China's import trade rebounded as its YoY growth rate reached 18.8% in 2017.
With the changing international economic situation and the deepening structural adjustment of China’s economy, China’s import trade will maintain relatively stable growth, creating a favorable market environment for cross-border e-commerce
Population of cross-border e-commerce consumers has increased more than 10-fold in the past four years. According to a joint report by Deloitte and Alibaba, 10.2% of online shoppers have purchased imported products through online import portals. The volume of the Chinese digital economy reached 31,300 billion RMB (around 4,000 billion EUR) in 2018, while the total volume of the online retail market had already exceeded 7,000 billion RMB in 2017.
3. Don't over-worry to lose control over your brand. Chinese consumers have an exceptional brand awareness. In order to avoid potential copyright infringements, register your brand and products with the government institutions in place.
Products: depending on the nature of your business, registering your product with the Chinese Patent Office can be an essential step when entering the market. The registration can be based on a product's shape, pattern and colour.
Trademarks: in order to protect your trademark, file a registration with the China Trademark Office. Your registered trademark should be in English, Mandarin, and pinyin.
Patents: file a registration with the State Intellectual Property Office (SIPO) to protect your patents. There are two forms of patent protection in China: invention patents (effective for 20 years) and utility models (effective for 10 years, intended for more minor innovations). Both are simultaneously applicable to a single product.
Copyrights: copyright registration is not required in China but filing a registration with the National Copyright Administration of China (NCAC) will provide you with additional protection.
4. Electronic transactions are China are more secure than you think.
In 2018, China's third-party mobile payment transaction volume reached 190.5 trillion RMB (roughly 25 trillion EUR) with a YoY growth of 58.4% (iResearch, 2018). Mobile payments have become a major habit for big parts of the population and third-party mobile payments have penetrated into almost all fields of consumer markets featuring various service models. At this stage, the fast development of mobile finance and the further penetration of new payment scenarios in traditional areas of off-line transactions may become the main market growth drivers.
5. Food And Beauty Products Show Particular Relevance in CBEC
According to iResearch (2018), imported food and beauty products are the items most frequently purchased by cross-border online shoppers in China. The proportions of shoppers who buy imported food, beauty products as well as clothing, shoes & hats and bags lay at 55.0%, 49.0%, and 48.3%, respectively. The categories of beauty and personal care as well as 3C products, home appliances and sports & outdoors products are expected to further increase their share in overall CBEC sales.
If your company distributes or produces authentic consumer products, it is time to consider mapping your business into China. For more advise, don't hesitate to contact us at firstname.lastname@example.org.