Investing and Exporting to China

If you are still locked into the idea that Chinese and Australian trade still revolves around the exchange of export merchandise with mineral resources, then ChinaDirect Investment has astounding news for you! You no longer have to limit yourself into believing that those are all your options when it comes to trade and investment in China.

On 17 November 2014, Trade and Investment Minister Andrew Robb and China's Commerce Minister Gao Hucheng, signed a Declaration of Intent ushering in the beginnings of the landmark Australia China Free Trade Agreement (ChAFTA). No less than Australian Prime Minister Tony Abbott and Chinese President Xi Jinping, were present during the signing at the Parliament House in Canberra. The China-Australia Free Trade Agreement (ChAFTA) itself was signed on 17 June 2015, and has been in full implementation since 20 December 2015.

ChAFTA only means even better trade between Australia and China! What is now our biggest trading partner can become even bigger! Australian businesses will now have even greater access to the markets of its largest trading partner, which happens to also be the world's second largest economy!

We at ChinaDirect Investments are excited to introduce you to the vast potential of this new agreement! It doesn't matter if you're a small, medium or large business! The pie is so big, there's enough for everyone who's willing to take advantage of the opportunity.

China-Australia Free Trade Agreement

Here's a short list of some of the key industries that AUSTRADE believes will benefit from ChAFTA:
  • Agriculture
  • Manufacturing Exports
  • Services
  • Investment
  • Resources
  • Energy

In our list, we have determined more specific areas that show excellent potential for trade and investment in China:

  • * Food and beverage to China
  • * Wine to China
  • * Consumer products to China (personal care, fashion)
  • * Agribusiness to China
  • Aged care to China
  • Automotive to China
  • Biotechnology to China
  • Environment and water management to China
  • Financial services to China
  • Infrastructure and construction to China
  • Mining to China
  • Sustainable Urban Development to China

* These are industries where ChinaDirect Investment has the most involvement.

China's Economic Reforms

Since 2013, the leadership in China set out new policies that seek to enhance its potential for attracting investments from overseas. Under the new leadership, government agencies are encouraged to refrain from intervening in the market and to focus on management of the overall economy, enforcing market regulations, delivering basic government services and enforcing measures to protect the environment. There is also a serious drive to reduce if not end corruption. These are all part of a comprehensive drive to woo Australian and other businesses worldwide into investing in China.

There are also steps taken to remove anti-market practices through the removal of subsidies, equal access to land and energy, simplifying licensing, relaxing restrictions on private investment, removing barriers to the movement of goods and equal treatment to both foreign and local enterprises.

One excellent example of the new business climate that China wants to create, is the Shanghai Pilot Free Trade Zone or the SHFTZ. This is a pioneer zone that demonstrates China's efforts to open its markets and industries to foreign companies.

Businesses that set up in the SHFTZ enjoy simplified business registration, greater transparency, less controls over the import or export of products, tax incentives and more.

Starting a Business in China

Do Your Homework
Just as you would do for any business, determining your market and doing research are essential to start.

Here are some tips to keep in mind:
  • Seek advice from a local representative who has a firm grasp of the local market and economic conditions. Obtain assistance from someone who has expert knowledge of the market, a wide network of contacts, the capacity to lower startup costs and provide accurate translation.
  • Know existing laws that cover taxes, accounting, the industry you are involved in, investment and employment.
  • Get familiar with the provisions of the ChAFTA.
  • Start a website that describes your product with its unique selling points and a FOB price.
  • Talk to other Australian business owners who have had experience doing business in China.
  • See which government agencies in Australia offer assistance for exporting or investing in China.
  • Find legal assistance for possible intellectual property theft.
  • Obtain the services of a legal firm that can review all contracts and make a firm background check of your Chinese partners.

If all this sounds overwhelming, you may want to consider an assistance firm that can cover all of these steps for you.

ChinaDirect Investment has all the experience, network connections and expertise that can take care of all your needs, when it comes to investing or exporting to China.

The Chinese Business Culture

Perhaps one of the most interesting but often overlooked aspects of doing business in China, is culture. It may sound trivial or like a nonessential, but potentially profitable business relationships with qualified Chinese business partners, can be gained or lost by simple acts of respect towards cultural preferences.

The Chinese put a premium on relationships. Respect is accorded to seniority. "Saving face" is important, therefore patience is a virtue. Emotionally charged and public confrontation should be avoided to maintain good working relationships.

Simple acts like how you receive a business card and where you put it, are part of showing respect to your Chinese counterpart. For instance, besides receiving a business card with two hands, taking time to examine it, and putting it in an appropriate place are just as noticeable to the Chinese. Quickly shoving a business card into your back pocket means you didn't take time to read it, and is construed as you, symbolically sitting on their business.

There is also an order in which people are introduced in a meeting. The more senior and high ranking members are supposed to be introduced first before the others, in descending order.

Promptness is important to the Chinese. Being there on time means you will be around during introductions, and learning a few greetings in Chinese won't hurt either. If you have to introduce them to your colleagues, remember that Chinese last names go before their first names. Therefore, a Mr. Chen means the person's last name is Chen.

There are also rules for dining, toasting and gift-giving. When dining, it is a sign of respect to start eating only when your host has begun. Dinners and lunches are important in building relationships. This is also one of the less frequent opportunities for you to meet senior members of the Chinese company.

Gift-giving also has its traditions. The Chinese usually offer small inexpensive gifts that mean good luck. When choosing a gift, make sure that it is not something that is known to bring bad luck, or portend disharmony in relationship. Some of the more common ones are sharp objects, anything that comes in four's, shoes and handkerchiefs.

If all this sounds overwhelming to you, don't worry. There is always help available. ChinaDirect Investment is here to help you navigate through the labyrinth of doing business in another culture, that has now happily become more accommodating and open to foreign businesses.

On behalf of my staff and crew, I, Lindy Chen, welcome you to an adventure that can bring you that business you have always dreamed of doing, in one of the fastest growing economies of the world, and in case you didn't know yet, its second largest. Welcome to China! Welcome to ChinaDirect Investment, a subsidiary of ChinaDirect Sourcing Services, proudly Australia's most reliable!