Multimodal discusses how exporters can succeed in China

Birmingham, UK, 30th April 2014 – The UK government wants to help manufacturers double their exports by 2020, and sees China as a key target market. In an informative seminar yesterday to close day one of the Multimodal exhibition, three speakers who have lived and worked in the country for a combined 55 years told attendees “why you should care about China.”

Mark Millar, managing partner of Hong Kong-based M Power Associates, said seven million young, well-educated Chinese will graduate this year. They are IT literate, well connected and largely responsible for an e-commerce market that is expanding faster than anywhere in the world.

“Some have never been to a department store. They order online and products are delivered out to rural areas. It’s a fantastic opportunity but comes with challenges,” Millar said.

Damian Beswick, responsible for lead development of e-commerce products at Allport Cargo Services, pointed out that China overtook the US last year to become the world’s biggest online market, worth $287 billion.

But he warned: “It’s a huge step for an international retailer to set up there as it’s getting so expensive. Western companies expect the ‘factory of the world’ to be cheap. But office rents are the same in Shanghai as in London, and website development managers attract the same kind of salaries. The cost of hiring a DC manager has gone through the roof – it’s 10 times the level of 10 years ago.”

A practical understanding of fulfillment – sheds, people, pick-and-pack – is important, but so too is awareness of China’s social media. When it comes to digital marketing, “there’s no silver bullet,” Beswick said. “No one may have heard of you, or cares who you are.”

Retailers trying to penetrate China without a base of stores must make sure their brand is seen and recognised in what is a saturated e-commerce market, he added.

Stewart Ferguson, head of research and consultancy for the China-Britain Business Council (CBBC), said expanding UK exporters must be cautious about the country’s fragmented geography. “If you move from the east to the south you will find all the logistics companies brand new to you, and their range of services less than you may be used to.”

Different companies will generally handle local and provincial road distribution, rail, water, domestic air transport and international traffic. For national distribution across China, an exporter must be prepared to work with 100-plus companies, Ferguson said.

“What you see on the coast is not what happens inland,” Beswick agreed. “Distribution is all about having the right connections with courier companies, and there is little infiltration by multinationals especially in tier 3 and 4 cities.”

Understanding the Chinese Customs regime is key to success for would-be UK exporters to this potentially vast market. Each district or city will have its own independent authority, and its own ideas. Ferguson told the seminar it was typical to hear that “We’re in Wuhan, we don’t care what Shanghai said.”

Any inconsistency in the paperwork could see an import approval sent to the bottom of the pile or suddenly become much more expensive. Do as much as possible before the goods leave the UK, he recommended, especially if it’s a new destination. “Once it’s at the port, they won’t change their mind.”

The first day’s seminar programme at Multimodal was organised in conjunction with the Chartered Institute of Logistics and Transport.

Source: meantimecomms.com