China is overrated?It tastes of fine wines and luxury handbags, wearing a Rolex, and owns a Ferrari. They celebrated the Chinese super-consumers, and the very rich in the high-end business around the world. But there are a large enough to justify investing in the market? And how long can the country's economy continues to maintain its amazing growth?
Overheating of the economy?
It 'difficult to sustain over the same period compared with growth of over 8%. The pace of China's economy shows no slowdown.
But the Chinese government still does not curb the inflation concerns of its stated objectives. Rising prices have also given rise to some cases of social unrest.
Some fear a "hard landing" for China, but the consensus is that the country will continue to advance linked bonds in the United States to become the world's largest economy.
Thank you to the liberalization of the Chinese currency, there is now an added advantage in trade with China: the ability to buy and sell directly in the renminbi (RMB).
Otherwise it is attractive to Chinese customers. "If you are already exporting to China, is pulling out of the conversion cycle, which would be a fairly strong bargaining position," said Ian Tandy, head of HSBC Trade and Supply Chain Management in Great Britain.
Working within the Chinese economy brings headaches, however, that based in Hertfordshire can testify Electronics SE. "For us, the biggest problem is the pressure of price inflation, and how it will affect us and the competition," said CEO, James Ishmaev-Young. Take comfort in the fact that most of his rivals of manufacturing in China.
But the seemingly unstoppable growth can only be good news for British exporters, according to HSBC chief economist Dennis Turner. "China needs to maintain growth levels to stop the massive rise in unemployment," he said. "They now realize they can not sell a lot more for the United States, Europe closed, so are they going to continue that growth?
"The answer is to unleash the potential of the internal market and that is where the opportunity for Western companies is selling .. the Chinese"
What is the potential market size?
How many of these middle class consumers depends on your definition. Studies suggest that about one quarter of China's population that currently can not be considered middle class with disposable income and aspirations to participate.
The proportion increased to half the population in 2020. Although this is well below the level of the middle class in other booming economies like Brazil, is still impressive in terms of numbers: 700 million dollars.
However, it is important to distinguish between, and the improvement of living standards - but the effort is typically inflationary pressures - and very rich.
It is about half a million Chinese millionaires. Relatively young compared to their Western counterparts, they react to the news of the conspicuous consumption of wealth. The experience of other economies suggests is due less to their taste impressive brands. However, by 2015 China is expected to bring third luxury product in the world.
What about the lack of knowledge?
Language.Bureaucracy.Corruption.The stiff competition from home grown products. There is no doubt reap the benefits of the China market requires persistence. "To do business in China can be daunting, no doubt," admits Chris Lewis HSBC - and as Head of Trade and Supply Chain in the region, he is passionate.
It does not help that the country is actually a series of several separate markets, each with its own culture, customs and regulations. In addition, established four urban areas in Beijing, Shanghai, Guangzhou and Shenzhen, has a plethora of other emerging faster than the urban plan.
Help is at hand from UKTI, which provides a range of guidance and counseling for companies in China. But with the networks of other professionals in the area can be just as useful.
HSBC support from cultural competency for detailed introductions, according to Regional Commercial Director Mark Vines:. "Say you want to buy refrigerators from China, for example - we probably have a number of customers that produces cooling, we can have four or five manufacturers, and you can select the one you love."
Visit soon and visit often - is the advice of David Brown of PinheirosPost Press Ltd. "Most of our competitors to visit China once or twice a year, because they feel they have to do, but decided to go every six weeks, what kind of confusion. our customers who wondered why we were there again. But for us, began to be curious to see us. We have developed strong relationships accordingly. "
With a relationship of trust comes from. Fired Up Huddersfield Corporation has forged strong links that send local students on exchange to China to give music lessons. "We now have good relations with the Communist Party in our local area in China - we are invited to the official home and we get along very well," said Gareth Ackroyd company.
Where to start in China?
Chinese city will host a round constant Expo, which provide a real networking opportunity. "If you were sitting in the United Kingdom, where the export potential of the product, I would have arrived in Hong Kong or China and start making connections," said Chris Lewis, director of trade and supply in China at HSBC. "There are an increasing number of fairs that serve just that."
Service office space is plentiful in China, offering a quick way to establish a presence without the commitment of a lease. Some, like the serial entrepreneur Sir Eric Peacock, have gone a step further, making use of the premises and staff provided by operators as global quick start.
"This means that I have an opportunity to close facilities and employment situation with 90 days notice," said Sir Eric, who has used such facilities in Europe and the United States and China. "And when the business opportunity is beginning to mature, and want to have contracts with your own people, you are not locked into a long-term contract outsourcing."
Abacus Lighting has taken China specialist for over 15 years - The chief executive Andrew Morris-Richardson is also president of Shanghai Abacus. It is clear that the risks are worth browsing - and the possibilities are open to all.
"There needs to be a BP, ICI, and can not do this," he says. "The right partner, the right relationship and understanding of markets is more than able to take this step forward."
