E-commerce in China accounts for about a third of all retail sales in China, and therefore nearly half of all e-commerce globally, according to Shopify. With markets looking depressed in the UK and Europe could now be an opportune time for small businesses and freelancers to seriously start targeting China to ride its wave of growth and prosperity? The Freelance Informer asks an expert for some tried and tested tips.
Consumer consumption is roaring
Mainland China has been the only region globally to end the year on a positive note, growing by 45 per cent at current exchange rates to reach EUR44 billion. “Local consumption has roared ahead across all channels, categories, generations and price points,” according to Bain & Company.
While China seems to be making an economic comeback, Europe, on the other hand, has been lobbed with the brunt of a collapse in global tourism and at the time of writing London restaurants were placed into Tier 3 COVID restrictions, which is never good for the tourist retail shopper.
The share of purchases made locally reached 80-85 per cent this year and going forward Bain expects it to represent between 65-70 per cent as domestic purchases regain relevance especially in China and the broader Asian region.
That is why now more than ever getting into the local shopping experience in China could be seriously considered.
Experience-based goods could lead the recovery
Bain found that those companies that are offering experience-based goods or services (fine art, luxury cars, tea ceremonies linked to weddings, private jets and yachts, fine wines & spirits and gourmet food) could see recovery at a faster pace than say personal goods. That said, some experiences will lag in the recovery if they have a strong reliance on tourism.
So, how do you get your products or services into the local territory – and more importantly which territory or city – and what is the outlook for freelancers or SMEs doing business not only in China, but with Chinese clients in the UK and abroad?
The freelance opportunity
A reputable source and sounding board for anyone looking to do business with China is Ting Zhang, Co-Founder and CEO of China-focused business consultancy and freelance recruiter, Crayfish.io. Zhang knows the ins and outs of winning business in the lucrative Chinese market- she’s been doing it for 20 years – and by the same token, now creating successful avenues for China-based companies to launch in the UK.
Alongside her co-founder, Jiao Li, who spent six years at Unilever working as E-Commerce and Digital Manager, leading cross-functional teams in the UK and China, Crayfish is backed by investors including Dr Jonathan Milner, co-founder and currently Deputy Chairman of Abcam plc.
Knowing what to expect when working with Chinese companies will open your eyes to the challenges and possibilities. However, once you have proven yourself with a Chinese client or customer, the world is your oyster, according to Zhang, but be prepared to act fast, be accessible during China’s working hours, and learn how to use WeChat.
Crayfish is, for the most part, a Cambridge-based business consultancy specialising in China-related cross-border research and commerce, but in recent years as the company started to use more freelancers in a range of areas, their freelancers are now in a position to sell their services via Crayfish’s platform.
“There is an increasing number of opportunities coming up with freelancing as a lot of work has shifted remotely,” Zhang tells The Freelance Informer. “One thing freelancers will have to keep in mind, however, is that Chinese companies are very cost-conscious, except for some of the very large listed companies,” she says.
Having an edge and offering freebies
With this in mind, Zhang says freelancers must have an “edge” if they want to compete with agencies. If you can offer a client cost-savings, flexible solutions and at the same time provide multiple skills or knowledge not typically available in China, then that’s an edge. For example, a handle on the Chinese language and another language, with excellent technical know-how and writing skills in both languages.
If you are looking to win the business of a Chinese client, once they are confident your background and experience is proven, they may then ask you to initially offer some complimentary services, says Zhang. This can be a red flag for some freelancers or SMEs in the UK, so if you have already done your research on the target client and feel confident they are not taking advantage of ‘free business’ or anything related to IP, then perhaps it would be advantageous to look at the experience as a test for your true appetite to do business with China. It is also a good culture test for you to pass if you wish to gain the trust of a Chinese client.
For example, back at the onset of the pandemic in early 2020, Cambridge-based Crayfish.io offered free English-Chinese machine translations to all researchers, scientists, medical and life science companies, and NGOs working to stop the pandemic caused by Covid-19. It was able to provide this through a translation platform – developed by CloudTranslation, one of Crayfish’s strategic partners in China.
Once you have gained a client’s professional trust and confidence, you will be granted autonomy to take things to the next level and could be on a much more lucrative rate than in your home country, according to Zhang.
Software engineers, both foreign and local in Shanghai, for example, have higher salaries now than those in Cambridge, according to Zhang. Freelancers, including those that can offer simultaneous translations, can earn at the high range £1,000 per day in China, especially if they bring specialised sector knowledge.
Selling ‘asperational’ products to China
If, for example, you have a product that is of both high quality and unique, it could be ideal for the Chinese consumer. They are looking for foreign brands that represent both quality and status.
“Companies like Apple and Starbucks have prospered in part by selling aspirational products to Chinese consumers who want to show the world that they have made it. That task is tougher for products that nobody sees,” said a New York Times report that highlighted some of the products that have had lackluster success in China, including deodorant and Weetabix.
Zhang says that they are able to spot where a non-China client’s pain points are so that they can provide them with more effective solutions than the big freelancer platforms, especially when it comes to China-focused and social media marketing.
If you are already familiar with Shopify, then an international Shopify agent or consultancy could be a good place to start to do your research on setting up a website that is China-friendly, i.e. is not blocked by the Great Firewall of China, and is eligible to trade in China, plus is in simplified Chinese or Mandarin. From T-Malls to acquiring customers to payment platforms, London and New York International E-Commerce and Shopify agency, We Make Websites, offers some introductory tips to setting up an e-commerce shop in China.
Shopify has outlined some pros and cons of varying market strategies, which you can download here.
However, before you start looking at setting up a site, there are some essential tried and tested tips Zhang feels need addressing first. One is to protect your intellectual property (IP).
“China has been strengthening its laws for better enforcement of IP rights, and it is dealing with issues in a fair and transparent way,” said Zhang.
If you make a formal complaint to one of the Chinese authorities – the Industrial and Commerce Bureau for example – based on your evidence that someone has infringed your trademark, they can shut down the infringer’s business.
Be aware of cultural differences. “If you are going to do business in China, you need more than just enthusiasm. You need to understand how things work in China and to be prepared,” says Zhang.
Also make an effort to build your reputation within the government network. In an article, Zhang cited, “Confucius led the foundation for the Chinese way of thinking about 2500 years ago, and consequently, Chinese people do listen to the government.”
“When you do business in China, you need to respect this and foster a good relationship with the government,” she says.
When it comes to communicating, email is less popular, therefore WeChat is the first choice because it is instantaneous.
Here is some background on WeChat, what it is and how to use it.
Clients want answers so they can make decisions fast. If you are serious about working for a Chinese client expect to offer rapid responses, almost immediate, even if it is not in your time zone.
Translations or research requests, for example, could be expected to be filed within hours of a request. If you find this demanding, remember your clients are merely feeding the end culture’s expectations, as many expect rapid results, same-hour delivery and answers. You could be on the winning end of this if your product or personal brand fulfils this promise. Only if your brand is of exceptional quality or is a unique luxury will customers be willing to wait.
Zhang and others suggest working with a partner if possible. “Do some proper research and find one that best represents you in your sector. Sometimes size doesn’t matter. It is often best to work with a smaller, friendlier company whose team can give you their full attention”, she says.
“Understand that if you don’t get an answer, even after very frequent WeChat messages, that it just means ‘no’. Chinese people don’t want to make you lose face by saying “no” to you directly,” says Zhang.
When you are communicating translation is important so make sure to use the right characters (i.e. the Chinese simplified, rather than traditional characters). Have translations double-checked by industry experts if they are technical in nature.
Building your reputation
Expect to have frequent contact with potential customers or clients to build trust. When permissible, visiting multiple times and talking to important people – your potential customers, government officials and other stakeholders, e.g. industrial or academic experts, is paramount to building your reputation in the relevant ecosystem. When in-person is not permissible, then make the most out of virtual meetings on Teams, Zoom or another app.
Initial red tape
Compared to the UK, setting up a company in China is slower. Zhang says that China is a bureaucratic country and doing business there actually does take a lot of time. “If you are looking to set up a company, you need to allow three months at least; sometimes it will take longer,” she says.
Think about currency issues. Be prepared to go through the process of approval at China’s State Administration for Foreign Exchange, and then go through the bank remittance process – this can take as long as 90 days. Look for specialised international payment platforms and open banking for more advice. Ask for specific examples of their UK clients doing e-commerce in China to gauge how much you will be waiting fro payment and currency fluctuations and transaction fees.
Be flexible and open-minded. China is a dynamic place to do business and changes can occur quickly. One of the best ways is to work with a partner and align your interest with the country’s interest so that you are there with your Chinese partners in the long-term.
Export to China from the UK
UK companies can increase their sales, growth and stability by selling to China, according to website, great.gov.uk. The Department for Investment and Trade provides the following:
- an export guide to China
- practical export advice
- export opportunities
- events for exporters and international buyers
- export finance and related guidance
Export licensing and special rules
Information can be found on this link on products or services which require licences for supply outside of the UK.
If you are a freelancer or small business conducting business with China we would love to hear your experiences. Get in touch with us on email@example.com
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