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Before leaping into the Chinese market, companies should be ready to face an array of planning and operational business challenges. ACBC Victoria is running a series of briefings in 2017 to assist small to medium enterprises understand the complexities of doing business with China.
The first event of the series was held on 15 March at International Chamber House, and welcomed Mr Peter Stephens, finance executive with over 20 years of China experience, to discuss the key considerations for SMEs thinking about entering the China market.
The information presented by Peter and included in the China Checklist document attempts to provide a high-level summary of the main issues that Australian businesses should take account of if they wish to set up business operations in, sell into or source product from China.
Topics covered by Peter included considering why do you want to go to China, pre-planning and due diligence, what to look out for, how to set up a presence in China, other considerations, as well as where businesses can go to for help.
China is Australia’s largest trading partner, representing a market of 1.4 billion people with a growing middle class wanting to spend more on higher quality products. Yet success is by no means guaranteed. When contemplating an entry into the China market it is important to ask whether your product or service will be successful there and why, how will you compete, do you have the time, money and resources, and what is the business case?
The importance of pre-planning and due diligence was repeatedly stressed by Peter. Research and due diligence should be conducted on the opportunity, market, partners, suppliers, etc. It is also important to have a plan, a budget and a realistic timeframe.
Regarding things to look out for, Peter underlined the role of relationships and trust, and emphasised that having a good partner and advisor in China who is strategically aligned with your objectives is crucial. Understanding the political trends and priorities of the government, as well as Chinese laws and regulations is also vital.
Peter touched on cultural and language considerations before discussing a number of other factors including entry point, the opportunities presented by e-commerce, risk assessment (financial, regulatory, exchange rates and currency control), tax, intellectual property and the China Australia Free Trade Agreement.
The presentation was followed by an engaging Q&A session and networking opportunities.
The key takeaways from the session were that China is a huge market, but not to be overawed; you may need to adapt your product for local consumers; strong political and professional relationships are critical; and if you have a unique product, be ready for the competitive response.
We kindly thank Peter for his time and expertise and we extend our thanks to all those who attended.
Keep an eye on the ACBC website for upcoming events in the SME briefing series.