China is a major economic and trading power. To have a successful and long-lasting trading relationship with China, here are ten simple-to-follow rules.
1. Keep up-to-date with China’s import regulations
As in many countries, the rules governing imports to China are complex - and often change. The Ministry of Commerce (MOFCOM), the government department in charge of foreign trade in China, periodically publishes and revises the lists of restricted or banned goods.
Tariffs apply to most goods imported into China, based on their value inclusive of packaging, freight, insurance and any other charges incurred before the goods are delivered. But, as an indication of China’s gradual acceptance of international trade, the average tariff fell from over 15% in 2000 to 9.8% in 2015. A tariff schedule, updated annually, can be obtained from China Customs Press, Jia 1, East Fourth Ring South, Chaoyong District, Beijing 100023; telephone: 86 10 6519 5616.
2. Make most of China’s Free Trade Zones
In 2013 the Chinese Government, in recognition of changes to global trading patterns, set up the first Free Trade Zone (FTZ) in mainland China, in Shanghai.
The Shanghai FTZ, focuses mainly on financial services, trade, shipping and logistics and, in 2015, three more FTZs were established in China:
Tianjin: focused mainly on maritime and air logistics; financial services; high end manufacturing; shipping services; ship registration; maritime law.
Fujian: focused mainly on manufacturing and service trade; shipping and machinery maintenance; shipping services.
Guangdong: focused mainly on manufacturing; leasing; commercial and financial services; pharmaceutical and chemical products research and development.
Foreign companies may find that their products and services can be exported to these FTZs with lower or no duty payable.
Seven new Free Trade Zones have been approved in 2016, opening up trade even more.
3. Think Chinese
Whether you’re selling in your own country or abroad, potential customers generally feel more comfortable and confident about entering into a sales contract with you if you appear to understand - and even behave like them. So it’s a wise move to take time to learn about the way that your prospective Chinese customer operates and, importantly, to appreciate Chinese business culture too.
In Chinese business, formality and respect for hierarchy are essential. A key element of Chinese culture is the concept of ‘face’: a combination of actions and perceptions that can either help or hinder business relationships. For instance, foreign businesses can gain ‘face’ if their Chief Executive attends meetings and demonstrates a knowledge of and sensitivity to Chinese culture, while ‘face’ can be lost if foreign business representatives behave inappropriately, in Chinese terms, at the meeting.
There is much to learn about Chinese business culture, but it will be well worth the effort.