Open for business – trading with China in 2021

As the world’s second-largest economy with one-fifth of the world’s consumers, producers, innovators, depositors and data users, China continues to appeal to European businesses seeking to diversify their markets and capture new growth.

For instance, China’s global share of computers and electronics manufacturing doubled to 44 per cent within a decade, making its technology sector a key draw for international businesses.

And despite the global pandemic that triggered lockdowns across the world, China was the only major economy that grew last year – expanding by 2.3 per cent.

Overcoming key challenges

While there is hope that borders will begin to open with the international rollout of vaccines this year, there are a number of unique challenges businesses will continue to face when entering and doing business in China.

First, many international businesses venturing into China may assume China is a homogenous market. With 27 provinces and four municipal cities – all with their individual nuances – China is a competitive and fast-moving multi-region market that requires a tailored, local approach when it comes to business.

When it comes to compliance and meeting regulations, there are specific legal requirements that international businesses need to observe in China. For example, cross-border connectivity and business operations using the Internet must abide by a range of regulations. China’s Internet Security Law also requires specific information to be kept in data centres located within the country.

Are you “China ready”?

According to PwC, China is expected to become the world’s largest economy by 2050 and will account for 20 per cent of the world’s GDP in that period. However, when it comes to entering China, European businesses should take a long-term perspective and begin by understanding that it will take time to build a successful business in a complex market. This includes:

1. Understanding local policies and regulations: Government is central to most aspects of Chinese business, and it’s important that you understand the relevant central, provincial and local laws, otherwise you risk stunting your business growth in the region. The only way to do all of this is to spend time on the ground – which may be challenging at the moment given China’s border closures. However, ignoring these laws could risk business growth.
2. Finding a reliable partner: Current rules on foreign investment require international businesses to find a local partner in most sectors, and the benefits of doing so go beyond meeting legal requirements. Forming a partnership with a local company provides access to market intelligence, a wider customer base, local suppliers and other established relationships. And it could also offer a workaround in terms of keeping an ear to the ground during current lockdown periods.
3. Building local stakeholder relationships: Building and maintaining trust is at the core of all Chinese business dealings and vital to maintaining a successful long-term relationship. Businesses well-positioned for success in China usually have a good relationship with their stakeholders – the local government, employees, customers and Chinese society. 
4. Finding the right location: As aforementioned, it’s important to understand expectations and nuances of each of the different regions in China and do proper due diligence and research about a particular city or market before doing business there.
5. Becoming agile: International businesses must be prepared to innovate at a faster pace in China than in other parts of the world. Almost all major industries are dominated by domestic companies that compete on price and can roll out their technologies and service coverage quickly on a large scale.
   
6. Investing in local teams: Culture and company management play an important role in business operations. Companies expanding to China must have the right mix of local and expatriate staff, so that they can tap local market knowledge and know-how, while leveraging best practices from overseas.
   

This is where working closely with a trusted partner that has invested both in key international connectivity and domestic infrastructure, as well as long-standing, trusted relationships with domestic government and partners, is essential.

More than 30 years of experience in China

At Telstra, we understand the importance of building a local presence and engaging with China’s local governments and business communities. Doing so has enabled us to offer local service, support and counsel to customers around the world. Our investment in this market underlines our commitment to support our customers, to do business in bigger and better ways. 

Telstra’s presence in China goes back over three decades, with over USD2 billion invested in five technology businesses. Since we established a foothold in China in 1989, our operations there have grown to include Telstra PBS – our joint venture founded on the strength of our Chinese partner relationships. Telstra’s offerings in China now include building and operating seven data centres, IPVPN networks and backhaul that extend to 50 points of presence in 39 mainland cities.

As a business that serves customers across Europe, our local presence in China enables us to stay much closer to regional opportunities to extend your company’s presence in a market we understand.

To find out how Telstra can support your business in China, please visit our website