The Challenges of Brexit.. Could China Be the Solution?

As a British ex-pat living in China as the ‘Brexit’ saga unfolds, it is clear to me that this is understandably an issue dividing, not just the nation, but also the wider international community. The effects and ramifications of Britain operating outside the EU are yet to be fully understood. In this article, I would like to present a more positive angle on how the UK can move forward outside of Europe; through business expansion in China.

UK-Chinese Business Relations

The importance of strong UK – Chinese business relations outside of the European market has now become a greater priority in a far more favorable cross-border era for business than a decade ago. The importance of positive UK – Chinese relations should not be understated, for Brexit to be a successful UK business needs to expand and tap into the lucrative market offered by such growing economies. There are of course many challenges but the opportunities presented by business expansion into China are vital to seize at this crossroads for the nation.

UK Business needs to adapt to China – The Key is Digital

UK business needs to adapt and tailor its strategy for the Chinese market. In China, the uptake of digital technology and the growth of the internet and online business has been unprecedented. Therefore any business activities in China need to be digitally focused, the UK has a strong propensity towards digital marketing but this is a different proposition.

The difference is that the whole online ecosystem developed under a completely different set of conditions with state censorship and regulation essentially shutting out the foreign competition; this resulted in Chinese domestic platforms dominating that uniquely cater to this market. No Facebook, Twitter or Youtube. Instead, British businesses need to understand WeChat, Weibo, QQ, and Youku.

As a nation developing a closed ‘intranet’ in this unique way, it is vital to utilize Chinese online platforms and Chinese specific business methodology to grow.  In a nation where digital business dominates the answer (especially when it comes to market entry) is to grow and increase your presence and e-reputation online.

The infrastructure for business growth in China is better than ever

The reality is that, despite these differences, successfully expanding British business into China is now more cost-effective and achievable than ever before. There is a far greater focus on cross-border e-commerce and the introduction of beneficial state policies regarding the importing of foreign products and services. This has all been facilitated by the rise of the Chinese middle-class consumer and increasing disposable incomes. With over 350 million ‘middle class’ Chinese citizens now desiring the best in quality products and services the opportunity is there for the taking.

The emphasis needs to be on quality and Chinese-specific strategy

China has the digital and technological infrastructure but in some ways lacks quality goods and content, this is changing with domestic competition fiercer but the UK can capitalize on its association with quality. Outside of the EU, it will need to negotiate intelligently and bring to the table the best products, services, and content it has to offer. This then needs to be marketed and adapted for the Chinese market in the right, intelligent way. Chinese-specific strategy is invaluable.

China is truly open for business with the UK poised to capitalize on this in a number of ways:

1)      China’s consumers desire quality, International Products

China is renowned for counterfeit and fake products which actually works to the advantage of UK business. In a market where domestic goods are typical of poorer quality, being a ‘foreign brand’ has become a byword for authenticity and quality in the eyes of the average Chinese consumer.

There is now a strong backlash against fakery from the growing middle class who are prepared to pay a premium for genuine goods. This helps explain the success of Alibaba’s Tmall Global platform which is perceived as the most trustworthy online store in the Middle Kingdom.

UK brands need to use the issue of counterfeit goods to their advantage, it is inevitable that large brands will be faked but this doesn’t outweigh the growing market for the real deal, the costs of fakery for brands are far less than the benefits reaped by the premium price consumers are prepared to pay for the genuine article.

2)      Chinese Students and UK Universities  

This is the largest market, with education as a priority for Chinese families. Currently, the largest number of foreign students in the UK are Chinese and with growing levels of wealth this number is set to increase. In 2015 there were 90,000 Chinese students in UK establishments. The country is renowned in China for quality education and with a growing emphasis on learning English from a young age studying with native English speakers is highly valued.

To help calm nerves and inform Chinese students of UK university’s dedication and commitment to them and their futures, many universities posted heartwarming messages on their official WeChat accounts expressing their real concerns for Brexit as well as their deepening obligation to accommodating both EU and Chinese students in spite of the result. These messages were met with positive feedback from their Chinese followers and were quickly ranked at the top of WeChat’s most read pages in the higher education sector.

This focus on education is for furthering their own children’s futures. The prestigious view of the University/College sector is likely to be unchanged regardless of EU status from a Chinese perspective, being a member of the EU is typically not the reason for UK study, the quality of education is.

3)      Chinese tourists and investment.

A local friend from Shanghai put it like this. With the decreasing value of the pound; ‘China has never been so rich and London more affordable’. This is likely to spur an increasing number of visitors and an investment rush with the valuation of the RMB higher.

The number of Chinese tourists to the UK increased by 40% in the first 9 months of last year to over 200 000 visitors. China Eastern, the largest domestic carrier has just opened direct flights from Beijing and Shanghai to London Heathrow; with a rising middle class and higher disposable incomes, the UK is a more realistic opportunity for tourists. It is now the third most visited destination in Europe after France and Italy.

When it comes to overseas investment the UK is highly valued, one example we are seeing is the growth of ‘memorial investing’ where the mega-rich are looking to back prestigious or promising projects and have their name associated with the success and growth of that business. This is a growing trend whereby the rich invest in large architectural projects and start-ups overseas and domestically to be remembered after death.

4)      Property Investment

The Chinese were granted the most tier-one investor visas by the UK, which fast tracks the immigration process for those who want to invest more than £1m (€1.2m, $1.66m) in the country, the scheme was launched in 2008 and has been growing ever since.

Additionally, China’s economy has seen a slight slowdown in manufacturing activity, which has pushed the country’s wealthy towards London property as a key investment opportunity.

Chinese buyers prize London for its heritage, schools, and universities, growing levels of new-build homes, and the fact residents are not taxed on their global wealth, unlike the United States.

Interestingly many parents sending their children to the UK for education also look to purchase property, either for their Children or to establish themselves in highly regarded cities such as London. There is a strong potential for the development of the property as an addition to education.

5)      Cross border e-commerce opportunities 

Cross border e-commerce platforms are growing in China. This trend has largely been pioneered by ‘Alibaba’, the e-retail giant holding a record breaking IPO on the New York stock exchange. Alibaba’s flagship platform Tmall launched a new division of the site, ‘Tmall Global’, that is solely focused on selling international products and brands.

The Tmall platform hosts official ‘stores’ set up by companies to sell their goods to the 300 million consumers who shop on Tmall. The platform is renowned for only offering quality, authentic products and is the number one place to be selling as a British business. Sellers can tap into the active consumer base as well as the extensive delivery and storage network. Alibaba is a highly innovative e-commerce corporation that realizes the demand for quality, foreign products, and brands.

There are also opportunities to sell on other established sites such as JD.cn which are more associated with technology and electrical appliances. They too host customizable ‘stores’ where international brands can sell to the Chinese audience.

E-commerce is part of the DNA of modern China with large social networks such as WeChat (boasting over 700 million users) even launching micro-stores. British businesses can successfully tap into these huge, active audiences for sales and promotions by offering the right products for this market and tailoring their strategy.

In response to Brexit, the Chinese are signaling they are open for business and welcome UK Investment.

To conclude there are clearly strong business opportunities for the UK in China with the foreign minister of the CCP and his delegation meeting with Theresa May to discuss mutual interests. Despite the challenges and obstacles for Brexit to be a success the UK clearly needs to forge strong business partnerships with countries outside of the EU block, China has made it clear they are willing to collaborate to further the growth of both countries’ economies and mutual interests.

It is important to use the specialist local knowledge, skill set, and market connections you need to succeed. We are a digital-focused marketing agency based in Shanghai, China. We specialize in helping international businesses grow in the different, yet lucrative Chinese market.

How we can help you: 

• –          Digital strategy and consulting
• –          Management  of all Chinese communications
• –          Lead Generation, Customer Services
• –          Sales and Lead Conversation
• –          The creation of quality Mandarin Language Content
• –          SEO/SEA services on Chinese search engines
• –          Social network marketing on WeChat, Weibo, and Youku.
• –          E-reputation development on forums

We want to forge long-term partnerships in China, we are a 100% digital agency that focuses solely on the Chinese market.

If you are a British business with a project in mind for China don’t hesitate to contact us for a quote, advice, or more information on our case studies.