Full-tilt transformation

Breakneck change has transformed the picture for British businesses entering the Chinese market.

Rapid urbanisation is famously redrawing the Chinese landscape, as 15 million people every year move from the land into cities. And the economic landscape is changing as fast as the environmental one, delegates at the HSBC China Forum in London heard.

Investors now head for China in search of the fast-growing consumer market and a share of vast infrastructure projects, rather than low-cost labour.


Efficiency and innovation

IWG benefits from the urgency of Chinese development, Dixon added: “What Chinese customers have in common is that they want to move quickly. They're efficient operators. Increasingly they want to outsource and have less on their balance sheets.”

This pace of change is particularly marked in the standard of innovation, Allen pointed out. With new copyright laws in place, product imitation is less of a challenge, but western businesses can no longer be complacent about superior quality.

“The biggest fear is not that someone will steal your IP  - it's that somebody is going to come up with a product that's simply better than yours,” he said. “It's only in the last two years that we've seen this absolute leap in Chinese technology.”

Electronic marketplace

Similarly, Chinese ecommerce has “leapfrogged”, with electronic wallets and use of platforms such as T-Mall now common.

This makes it easier for many businesses to take their products to market without the need for infrastructure and wholesalers, Allen said. Conversely, some retailers have found that only by establishing a store in a city can they start to trigger online orders there.

Recruiting from the highly-skilled local market is an attractive alternative to joint ventures. However, partnerships can still be useful if deep knowledge and negotiations with local authorities are required.

Allen pointed to one train supplier which has recently moved into subway systems. Their new clients are small municipalities rather than multinationals: “They've had to do a joint venture with a marketing company that understands how these municipalities work, and their business model has jumped into life again.”

Heritage counts

British exporters need a narrative to intrigue Chinese consumers, said Paul Hyde, CFO of whisky producer The Edrington Group.

“The Chinese consumer is very curious. They want to discover new products,” he said. “British brands are perceived as being good quality. Most companies that come out will, like Edrington, tell a story about their heritage.”

For Allen, British firms could learn from the boldness of their French and German counterparts, rather than merely “dipping a toe in the water” of the Chinese market.  

He sees China's future in the dynamism of under-30s, who have grown up seeing their country grow at breakneck speed: “Their whole culture is about growth, development, excitement.

“When you get that sort of entrepreneurialism in a framework of very clear planning, I see China becoming the dominant economic leader in the world faster than we expect.”

Useful links

You are leaving the HSBC Commercial Banking website.

Please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.

You are leaving the HSBC Commercial Banking website.

Please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.