Doing business in China-ask us anything

Here’s the fourth of our articles. E-commerce in China was up 78 percent last year (and 60% of online purchases were actually done on phones). Don’t underestimate the power of a smart phone! The consumer is king in China, and whoever owns the strategy to the end consumer holds the power. Do kiwi businesses fully understand the power of social media in China?

@Jessica_Guthrie this is really interesting to me, being a bit of a social media nerd and having worked in China for a little bit in 2011. I found it really interesting the level of engagement on Chinese social media platforms like Weibo (which many people in NZ have never heard of) compared to the uptake in NZ of its ‘Western counterpart’ Twitter. Also interested to note the differences in search engine popularity - while Google is generally acknowledged as the go-to search engine in NZ, in China it’s market share is really low with many Chinese users preferring to uses sites like Baidu. This might be something to keep in mind when establishing an online presence - if you’re putting effort into optimising your website it could be more worthwhile to consider what requirements Baidu has in terms of searchability rather than Google!

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@Yvonne - Exactly right! In China, the internet is censored (Western platforms like YouTube, Facebook and Twitter are blocked and Google is intermittent), as a result China has developed its own unique internet ecosystem which is thriving. State-approved social media platforms like WeChat and Weibo, are more popular than ever, and peer-to peer reviews are front of mind for Chinese consumers when making purchases online. Foreign companies need to deepen their understanding of these platforms, and weave them into their marketing strategies -  because failing to understand what consumers are saying about a company/brand online has now become a business risk. And forget Google as a search engine – think Baidu which dominates the search engine space (and is a whole different kettle of fish when it comes to website optimization). Don’t forget to register a .cn domain extension!

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I have read that China does restrict and has more control over the chinese surfing habits.
I have been told also that Google is or has changed its searching optimization for smart phones rather than desktop machines.
What about the dark web. I know they get a bad name because of some of the products they sell and the lack of transparency. But the customer base is substantial. They also work with bitcoin. Similar technologies could be used as a way to tap into a very lucritive market and I believe it could be done legitamately and legally.

Given the communist government’s tight restrictions around internet usage in China, circumventing the ‘Great Firewall of China’ via the dark web does not sound like a legal practice. Foreign companies operating in China should observe Chinese law and refrain from undermining cyber-security regulations. China welcomes and encourages foreign business expansion, but they must abide by the rules – and in fact can be very successful in doing so.

Here’s the fifth of our articles. The Chinese Free Trade Agreement doesn’t address non-tariff issues at the border – kiwi  companies need to be prepared for a layer of bureaucracy when trying to get goods into China, particularly when it comes to food exports.  The end-to-end process from New Zealand through to China involves around 20 documents. Avoid death by a thousand paper cuts by being diligent with documentation, and avoiding paper work discrepancies which could counter the benefits of the FTA if not handled correctly. Navigating Chinese regulations is not an area for doing it yourself!

Yes it would pose a great challenge to create a way to tap into the markets via the dark web, in a way that is both legal and in the best interests of our community. Can I assume then, Jessica you or BNZ won’t be taking up the challenge. No one mentioned anything about circumventing the Great Firewall of China.

Hi, what’s the best strategy for building advocacy in order to reach a target decision maker (at firm and person level), as a new entrant to the local Chinese market? How do you strike the right balance between building trust through transparency and protecting your IP?

@Greenmich1 It’s always very difficult to get directly to the right decision maker via a cold connection. Best way is to find who they are connected to in the hope that along the line there is someone you can access who has your trust. If you can build trust through that level it will reach its way up to the right person and then more likely they will listen to what you have to say. It will take alot of networking amongst established contacts here and in China and you will be surprised who will help. If then you have a ‘great’ problem of discussing business terms then make sure you get the right advice from ‘real’ experts on IP protection - don’t take shortcuts. It’s a big call to give a little to get a lot back but if you are ahead of the game then you have nothing to fear.

Thats an interesting idea. I wonder how “trust” will sit with the community board in terms of their priorities for our community. In my journey I have found that when it comes to  “trust” there is a lot different at the core at what appears to be on the surface. Yes seeing who one is linked to can help to show that. You may have to get a ways down the chain before it becomes apparent. Sometimes before you can trust you have to get to the truth. Sometimes trusting first will get you to the truth. Funny how those two words are similar in spelling. Problem is there are a lot of “experts” out there. Thats why as individuals and communities we need standards to measure against. That for me is what I have found useful. Lets share with others what and who we deem trustworthy and expert by having standards of behaviour that are in alignment with wellbeing. That will help our community grow into its true greatness and the untrustworthy and non-experts, will eventually fall away.

Want some tips on protecting your intellectual property in China? Read the key take away points from the recent ‘Doing Business in China’ seminar with AJ Park supported by BNZ and The Icehouse here

Tony Dench welcoming.jpg

SINGLES DAY 11/11: This is phenominal if you haven’t already read the stats! Each year it just gets bigger and bigger. So for NZ businesses how do we capitalise on the opportunity? Must be more we can do so keen to hear your thoughts? I have copied a great summary from our friends at China Skinny (the most widely read English publication in the world on China marketing…and lead by a kiwi).

Few things symbolise modern China more than Single’s Day. The most obvious parallel is the remarkable scale of the day - 278 million products worth $9.3 billion sold in 24 hours last year, and it is on track to be even bigger this year. It also represents how the Internet is addressing some of China’s big challenges such as limited retail infrastructure in the hinterland. In addition, this year’s integration with 180,000 brick & mortar stores in 330 cities illustrates how the lines between online and offline are increasingly blurring in China.

Yet Single’s Day’s most interesting representation of contemporary China is that a celebration based purely on consumerism has become one of the biggest days of the Chinese calendar; with the build-up, buzz and now the Chinese New Year-style-celebrity gala, rivalling all other Chinese celebrations for scale, with the exception of Chinese New Year.

Like the Lunar New Year, which is celebrated in cities in every corner of the world, Alibaba is hoping Single’s Day will become the next festival that China exports globally. The company has aspirations to become a truly global company, which is one of the focuses of Single’s Day '15. Not only is it bringing countless products from around the world to Chinese consumers, it is hoping the massive Single’s Day discounts from 200,000 mainly-Chinese manufacturers on AliExpress will capture the imaginations of Americans, Russians, Brazilians and many other countries as it has with Chinese consumers. Single’s Day is Alibaba’s Trojan Horse; which it hopes will establish the company for consumers globally.

Things are on track for an even bigger Single’s Day this year. $100 million was spent a minute in the first half an hour, with 2012’s $3.1 billion total blitzed in 31 minutes. Within 90 minutes, $5 billion dollars had been spent, 72% on mobile. By 1:15am, consumers from 200 countries and regions had bought something. Chinese couldn’t get enough international products, with Japan, USA, Korea, Australia and Germany the top-5 origins in the first hour.

Many of the 30,000 international brands from 25 countries who are participating in Single’s Day '15 look to be selling well. Some foreign retailers sell two-three months worth of products in the single day. It’s no surprise that foreign products are the focus of this year’s Single’s Day - 40% of all products sold online in China are foreign, versus just 10% of China’s overall retail sales.
China Skinny was fortunate to be hosted by Alibaba at the Gala in Beijing, and it did not disappoint. The Gala was full of interactive mobile shaking, prizes, Chinese, Korean and Taiwanese celebs, a prefilmed advert with Kevin Spacey addressing the Chinese as the President of the USA (the crowd went wild) and a special appearance with Jack Ma and James Bond (aka Daniel Craig) who thrilled the audience.

For those looking for the biggest thing on Single’s Day this year - it may be the late Michael Jackson’s Neverland, which is currently on a one-day auction with a starting price of ¥500 million ($79 million).

With all the hype, Single’s Day - like any other day in China - is incredibly competitive, which is something that China Skinny can help with. We hope you enjoy this week’s Skinny.

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Want to know more about the rules around exporting food to China? (customs/CIQ /labelling/traceability/e-commerce & marketing etc).  Come along to the NZ/China Food Safety and the Internet conference being held in Auckland and Christchurch next week to get the right advice – supported by BNZ/ICBC and Crowe Horwath Food safety seminar.jpg

Plenty of advice for business wanting to successfully engage with China at the recent breakfast in Asia breakfast panel in Auckland this month, including how to take advantage of the cultural insights we have at our doorstep, leveraging the rise of digitisation & e-commerce, harnessing opportunities for our services sector, navigating regulatory minefields and other practical tips. View the link to the video discussion here

Hi Paul, I am thoroughly interested in learning about Guanxi - the cultural aspect to building a relationship first to enable business relations, or not, pending on ‘the cut of your gib’ as we would say here in New Zealand. I understand that like dialects, there are variations per province, so I would appreciate learning as much history and current factual information please.

Secondly, manufacturing of clothes and some sports gear - can BNZ link me to existing known entities?

Hi  – thanks for your comments. You are right that ‘Guanxi’ – (personal relationship building), is a very important part of doing business in China. Your long term presence is vital, and trust is not automatic. Guanxi isn’t a concept that can be immediately taught, and developing your cultural know-how is a learned skill that will help you to appreciate the way things are done.

Some key things to keep in mind are:

•    Take your time developing relationships – Be prepared for negotiation, and don’t try to rush the deal. Really understand what the other party is looking for, look at the full picture and be prepared for further negotiation on points you felt were already finalised. This is part of the long term relationship building process.
•    Etiquette for business meetings – Read up on business card and seating arrangement protocol for business meetings. Present your business cards with two hands (and never put received business cards in your pocket). It is preferable to have your own business card translated into Mandarin on the reverse side if possible. Seating arrangement is also very important, and is usually dictated by the most senior person presence.
•    Respect – It is important that you do not make people ‘lose face’ in front of their group. Always respect seniority.
•    Dining and entertainment – Business banquets are a common part of building a Guanxi relationship. Be open to new cuisine and master the art of chopsticks. Seating arrangement is also important at business dinners. At a round table, the seat directly facing the door is usually reserved for the most important or highest level attendee.
•    China general knowledge  - Relationships can be aided by  some general knowledge of China and its culture – particularly relevant to the province you are doing business in.

NZTE has some really good tips on relationship building in China here.

Regarding finding a manufacturer in China for clothes and sports-gear - this will require a lot of research and will largely depend on the particular items that you want manufactured (to ensure they have the right processing equipment) and your minimum quantity order. We can link you to organisations or consultants that can help you find the right manufacturing entity.   Engaging NZTE is a good place to start, and also talking to kiwis that have ‘been there, done that’ before and are willing to help. Some clients that we work with have found their suppliers by actually going to the markets (shoe markets/garment markets etc) and chatting with people to see what they can offer, or seeking referrals from other NZ based designers to find the right channels. Once you’ve defined your needs accurately, you can compile a shortlist of candidates and then it would be recommended to have someone on the ground in China to vet them as a next step.

If you are exporting wine or honey from New Zealand to China - take note! There are new rules coming on board next year. Read the Herald article here

If you’re interested in developing new food and beverage product lines and exporting to new markets – including China, come to our 4th Get to Market Series Food & Beverage Commercialisation and Export event on 7 December at BNZ Highbrook Partner Centre, Auckland.

Join the BNZ led business mission to China

Every year, BNZ takes businesses on a journey of discovery to the China market. This year’s business mission is in collaboration with Auckland Council, ATEED and New Zealand Trade & Enterprise and will be based around the high profile Tripartite economic summit in Guangzhou. The BNZ mission will also extend to Shenzhen, Shanghai, Hangzhou and Hong Kong, and will have an exciting program packed with opportunities to help you generate business and learn about the market.

Dates: 7-14 November 2017

Key benefits

• Attend the Tripartite Economic Summit in Guangzhou. Engage with high-level government officials, and business delegations from Guangzhou, Los Angeles and Auckland sister cities;

• Experience first-hand the scale and magnitude of business opportunities with visits to NZ companies with a base in China;

• Attend NZ trade promotion events, and engage in high-quality business matching;

• Understand consumer behaviour and how to build Chinese e-commerce into your marketing plan with a visit to ecommerce giants;

• Understand cross-border trade and import logistics;

• Gain knowledge of imported food offerings via visits to supermarkets. Understand what a typical “middle class Chinese consumer” looks like and their buying behaviour;

• Attend ‘New Zealand Week’ activities - NZ’s food & beverage festival in Shanghai, understand supply into food services channels, and take advantage of external brand opportunities and networking.

For further information on the itinerary and costs, please contact Asia Business Manager Jessica Guthrie at

Is there an ETA on when BNZ might start offering RMB denominated accounts? a lot of our transactions in terms of buying and selling are done in RMB so avoid the double handling of currency it would be a great option going forward.

Edit: I have to note that my personal banking is with BNZ but the business baking is with a competitor but if you offered RMB account then it would be a great incentive for us to move over as our current bank doesn’t offer such a facility.

Keep in mind these are the views of fellow BNZ Community users, and not BNZ.