China is Australia’s largest trading partner, and buys almost a third of Australia’s annual exports.
With advances in technology and the ease of use of platforms such as Alibaba exporting to China has never been easier or timelier.
It is important however, for those considering exporting to China to think prudently when it comes to business planning, as many get caught out when it comes to the financial and cultural factors. Provided below are the three crucial considerations a small business needs to consider when doing business in China.
1. Build your networks with key partners
With a population of 1.4 billion China is a huge market. It is difficult as a small business to know where to begin, who to speak to, and how to launch your product as effectively and efficiently as possible. So it’s vitally important to build up your networks.
Networks can encompass everything from friends, peers and other companies operating in similar markets, business professionals, advisers and mentors, government contacts and market partners.
Arguably, your market player is the most important contact you’ll have if you are to successfully export to China. In such a large market, you need partners who know how to fast track your progress and know how to provide your product to your target market.
2. Understand your financial requirements
Many small businesses don’t understand the amount of money required to finance large scale export operations. Your export strategy should include the capital you will require for growth overseas, what costs and expenses you estimate you will encounter, expenses required for suppliers, time delays on payment terms, and how you will source the finance to support your plans.
To avoid a funding shortfall, it’s important to understand your financing options. If it’s a cash flow issue, you should consider protecting your business with strong contracts and favourable payment terms.
For businesses that require quick access to cash, a small business export loan can provide companies between $20,000 to $350,000 to support their export operations.
3. Recognise cultural differences
There are significant cultural differences between Australian and China. Small business owners should develop a basic understanding of the business etiquette in China if they are to establish successful export operations.
For example, building strong relationships and trust before closing a deal is very important in China – and often this happens over a series of dinners with senior business executives. You should think about the costs required in entertaining your prospective business partners.
Another tip is that business cards are crucial in China – and it pays to have your card translated in Chinese. In Australia, business cards are sometimes overlooked and are often seen as an accessory. In China they are more important and play a large role in creating good first impressions.
For further information on exporting to China visit: https://www.efic.gov.au/education-and-tools/ebooks-and-reports/exporting-to-china/