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14 January 2013
Finding the best route to China
There are numerous opportunities for UK
manufacturers in China, says Mark Morley of
GXS
Smaller companies may lack the capital to follow Jaguar
Land Rover and set up factories in China, but what they
lack in resources they can make up for with agility. Agility is
vital in a global market: an SME with a flexible supply chain
is perfectly placed to respond to customer needs.
Chinese businesses thrive on guanxi, a phrase loosely
meaning close working relationships. Face to face meetings
are preferred in China, especially early in a business relationship. However, this is obviously an expensive
option for SMEs in Europe. Conferences like the recent AIAG Auto Parts Purchasing Leadership & Suppliers
Forum are a great way to make the long trip worthwhile by meeting multiple contacts.
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The best step to a good ongoing relationship is to have a native representative in the country, sidestepping
language and cultural barriers. Patience is a virtue in China where they take time deliberating decisions and
look for long-term relationships.
Planning ahead is essential to capitalise on the market in China. Alongside this, rising wages and costs in the
country mean a quick profit is no longer a likely option. Gaining a thorough understanding of Chinese law is
also vital.
China has developed some incredibly strong supply chains, especially in the technology and automotive
sectors of manufacturing. Many western automotive companies have established joint venture operations in
China allowing Chinese workers to become more familiar with western working practices and quality
standards. On the flip side, UK suppliers are starting to see new business from Chinese companies who are
now beginning to globalise their own operations.
One example is SAIC, a leading Chinese car manufacturer which acquired the MG Rover brand in 2005. It
refurbished the old Rover plant at Longbridge and is now producing cars using parts supplied by many firms
in the West Midlands. UK brands are highly respected among Chinese consumers and Chinese manufacturers
regard UK suppliers as providers of high quality, reliable parts – something the Chinese automotive suppliers
are still trying to get to grips with. UK suppliers are now starting to explore business opportunities with
Chinese companies based in both China and the UK.
China's burgeoning consumer base and sheer size means there is an enormous demand, and even a small
business can find endless opportunities once it strikes out into the market
Author
Mark Morley, EMEA industry marketing director, GXS
Supporting Information
Websites
http://www.gxs.co.uk/
Companies
GXS
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