How to start exporting to China

  • 21 Apr 2021

By David Lloyd, General Manager UK, Netherlands & Nordics, at Alibaba Group

The Covid-19 pandemic has created a tough economic climate for UK SMEs. However, there are hopeful signs of a recovery. Recent findings from payments software provider Sage have revealed that untapped SME trade has the potential to generate £290 billon for the UK economy. To realise this, small businesses must look beyond the borders of the UK – and even Europe – to fuel their post Covid-19 growth.

 

In October 2020, we conducted research among small British businesses, aiming to shine a light on attitudes towards exporting. Our findings revealed that only one in five small firms were considering exporting within the following year. More than a quarter of respondents were telling themselves they were ‘too small to export’, while a fifth thought that there was ‘no demand for their products outside Europe’.

This is disheartening, given the opportunity for British businesses abroad and especially in China. It is the world’s largest ecommerce market but, despite that, we found that only 7 per cent of small British businesses with plans to export say they will look to China as their next international market, compared to 23 per cent who would consider Africa, 37 per cent North America and 52 per cent who have their sights set on Europe.

For small and growing businesses, whose leaders are already navigating the challenges of prolonged lockdowns and the often-reduced income that comes with it, setting time aside to consider an export strategy can feel like an overwhelming task. From resource to regulatory concerns, to worries about cost and fulfilment, our research reveals a range of perceived barriers which are holding many small companies back from exploring international markets.

 

So, how can a small British business start its export journey to China?

Understand China’s growth

There is an incredible opportunity for international brands of all sizes to tap into the growing Chinese economy, which is being fuelled by strong consumer demand that has already exceeded pre-pandemic levels. Last year, our 11.11 Global Shopping Festival saw more than 1,300 British brands taking part, selling $494 million dollars worth of goods to Chinese consumers in just 11 days. Yet the scale, cultural difference and the sheer distance from home means that exporting to China can feel like a daunting opportunity and one that is only there for the largest companies. This needs to change.

Analysis of the UK’s trade data for the first eight months of 2020, conducted by the China Britain Business Council, shows that British goods exported to China rose by 10.7 per cent compared with the same period in 2019, with exports to China up by £837 million year to date.

Capitalise on ‘brand Britain’

Demand for products from international brands – particularly from the UK, which was again one of the top ten markets for brands selling into China during this 2020’s 11.11 Global Shopping Festival – remains strong. From luxury goods to health, beauty and nutrition, Chinese consumers continue to hold ‘brand Britain’ in extremely high regard for its quality and heritage. This reputation creates a unique opportunity for British brands to capitalise on.

 

Market to Chinese consumers

The pandemic has had a lasting impact on the relationship between consumers and brands in China, accelerating existing trends in digital tools and technologies to engage consumers, who continue to look for unique experiences and new trends while shopping online. In China, livestreaming is the go-to option for consumers when seeking out new products and deciding on what to buy, and the primary medium for key opinion leaders to engage with their audience. China has the largest livestreaming market in the world.

During a livestream, fans can access a three-dimensional, interactive and social shopping experience. This delivers on the consumer’s demand for more than just a transactional shopping moment. Chinese consumers think of shopping as a pastime which means their needs are different – they want an interactive, engaging shopping experience.

Do your due diligence

Spend time researching the market prior to the launch and find great partners to work with. China is a unique market but one that can deliver significant growth, providing businesses do their due diligence. It operates at a rapid pace and the sooner you can understand what the key trends are in your product category, the quicker you will be able to adapt and grow your business in the market.

 

To develop a deeper understanding, businesses should consider potential partners carefully. A great partner can help make all the right connections, from helping to find the right distributors for a product, or helping refine a business’ go-to-market strategy, all while being knowledgeable on the latest product trends.

No business needs to feel as though it is too small to export, as technology is now levelling the playing field and giving businesses of all sizes equal opportunities. The UK has a fantastic retail and consumer market, but there is a whole world out there waiting for British small businesses to tap into – and now is the time to seize this opportunity.

 

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