By Neil Kuschel, Sales Director, DHL Express UK & Ireland
Recent Office for National Statistics trade figures show that the UK trade deficit has narrowed to its lowest level since April 2003.
While this is good news for the country’s economy, it is worth noting that the reduction was largely driven by a decrease in the volume of imports, rather than a significant boost in exports.
UK businesses should set their sights on new faster growing international trade partners if we are to boost exports and shrink the deficit in the long term. Businesses looking to expand should consider booming international economies such as Brazil, now the second fastest growing economy in the world, Indonesia, whose GDP figures increased 6.5% in the previous year, and China, where fashion retailers like Hermes and Louis Vuitton are outperforming financial analysts’ expectations.
China is one of the largest countries in the world and offers enormous possibilities for UK businesses looking for a new trading partner, so we’ve highlighted some need-to-know facts to help businesses navigate their way through trading in this prosperous marketplace.
With a population in excess of 1.3 billion people, China is home to the world’s single largest consumer market–a market that represents approximately 20% of the planet’s population. This year the nation is celebrating being in the Lunar year of the Dragon — considered to be the luckiest as the creature is associated with might, intelligence and success. Start trading with China this year and perhaps some of the Dragon’s prowess will rub off on your business — making for a profitable 2012.
China is the second largest economy and trading nation in the world. Current statistics coming from the China indicate a slowing of inbound trade — with imports falling by 15.3% in January. The slump has put pressure on China to re-evaluate its trading strategy, with the Ministry stating in December that the nation aims to boost imports from the west in order tohelp support their economies and to balance out China's trade surplus.
Furthermore, in early 2009 the UK and China took steps to strengthen business ties, building on the rapid growth in bilateral trade which saw UK exports to China rise by almost a third. Since then, George Osborne has announced his intention to make the UK a leading offshore trading centre for the renminbi, highlighting the opportunity for Britain to prosper from China’s growing role in international currency markets.
China posted GDP growth of 8.9% in the last quarter of 2011, and while the rise of the country is easy to acknowledge, businesses constantly need to catch up with the speed and depth of change and development in China’s large and complex market space. Due to a lack of development in offsite retail infrastructure, the country is more susceptible to e-tail monopoly, which is great news for budding e-comm operations.
For smaller companies, deciding to trade in China can seem overwhelming, especially as the import/export regulations are myriad. For companies without experience in trading with China, there is confusion around the protocols and SMEs may be put off by the complexities of getting started.
Gaining insight into where you are trading and its economic conditions is a good place to start - for example, sales in the Chinese luxury retail market grew by 27% in mainland China in 2010, making it the world’s third largest luxury market and amounting to nearly 40% of the US luxury market according to recent research.
This shows that the market presents major opportunities for a luxury goods retailer looking to expand - however, your research could also show that the luxury marketplace is overly crowded and your product may not differentiate itself - so this part of the planning process is really crucial.
More practical issues also need to be explored such as route to market, logistics, regulation and local resellers, if going through a channel, in your chosen market.
Every country has different customs regulations, with some more complex than others. China offers fantastic potential for UK companies in terms of trading, but its complex customs legislation mean that navigating the world of exporting can be challenging. For example, with the exception of personal effects, all shipments must be sent to a company rather than a residence, and the most heavily restricted items are communications equipment, mobile phones, accessories and components. If you intend to trade any of these goods, you should liaise with an experienced third party logistics provider.
DHL Express offers help and advice to businesses planning on expanding internationally with export services, including country specific ‘how to guides’ such as this, which provide information on customs rules and regulations that govern overseas markets. DHL has been operating in China since 1986 in a 50/50 joint-venture agreement with Sinotrans (China National Foreign Trade Transportation (Group) Corporation) — a large Chinese transport corporation with interests and activities stretching across all transport modes, including sea, air and ground. It has the most extensive network of all the export providers.
A further source of information is the UK Trade & Investment (UKTI) offers a range of services for UK exporters, including a flexible business tool called the Overseas Market Introduction Service (OMIS). The British Chambers of Commerce (BCC) also offers export-training services.
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