Getting your product into market
To be successful in China you need to understand distribution options.
Navigating your way through Chinese Customs and other border agencies is not an area to do it yourself. It is recommended to use customs agents registered with Chinese Customs.
Tax
China has one of the most complex taxation systems in the world. Tax may feature strongly in decisions on how to set up and operate in China. However, tax rates and regulations can change quickly, so ensure that you get professional and up-to-date advice.
Logistics
Getting your good from A to B in China will cost you more than in developed markets.
Air New Zealand has direct flights from Auckland to Shanghai and Beijing.
COSCO has a weekly direct service to China. The Auckland-Shanghai service takes 17 days. Other shipping lines provide transit services to China.
Setting up an office
Setting up a representative office is the easiest way to establish an ‘on the ground’ presence in China. However, rep offices have tight operating rules so carefully consider what business you want to transact through this structure. They cannot issue invoices or receive any revenues and cannot hire staff directly.
Establishing wholly foreign-owed enterprises is the most popular option for foreign companies setting up a permanent presence in China. They give you control and flexibility and can issue invoices and receive payments.
Opportunities
- The New Zealand China Free Trade Agreement will over time eliminate tariffs on 96 percent of New Zealand exports to China.
- A growing middle class, that is well educated and familiar with non-Chinese cultures, is aware of latest global trends and has high purchasing power.
- Rising disposable incomes means Chinese urban consumers can afford better quality products and there is a growing appreciation of Western food.
- Demand for healthcare and related products will continue to rise.
- Most interest from Chinese looking to study abroad is around undergraduate, postgraduate and vocational study. New Zealand providers, especially tertiary institutions, are increasingly being asked to deliver programmes in China.
- For New Zealand companies looking to manufacture in China, the move should be based on taking a strategic international position, not on cutting costs.
Challenges
- Companies must take time to research and understand the Chinese market before making any commitments.
- Companies entering China need to ensure that management is 100 percent behind the approach. They then need to resource the move with both the right people and sufficient funds.
- There is no ‘China market’. China consists of many different markets broken down by region, city and niche.
- Costs and management issues around contract manufacturing in China are often not appreciated.
Cultural and business tips
- New Zealand Trade and Enterprise recommends travelling to China on a business visa. In most cases exporters will require a letter of invitation from a Chinese company.
- Business cards are an absolute must in China.
- Building up a good relationship is important for conducting business in China.
