China owes much of its prosperity to an unrivalled production chain and the competitive prices of its products, which made it the world’s biggest exporter over the last decade.
But increasing standards of life, taxes and regulations introduced over the last few years now mean that the country is finding it harder to keep such levels of competitiveness in the export market, with effects being felt already and sales down 15 percent year on year and 9.7 percent towards Britain alone.
On the other hand, despite imports to China dropping 12.1 percent year on year, the country still holds huge and mostly untapped opportunities for British trade. British exports to China grew 7.6 percent in February 2015 over the previous year, and the government’s indicators suggest that there is room for even further expansion going forward.
If established British companies doing business with China are continuously honing their strategies to build upon such growth, many more want to move their first steps into this market and meet local demand for British products.
The good news is, thanks to the internet and e-commerce even small business owners can now find cost-effective ways to look East and start selling. But exporting to China can be a rather complex legal matter given that a free trade agreement is not in place.
First of all, you will need an Economic Operator Registration Identification number and register for the National Export System.
Depending on the product you intend to export, you may then need to obtain a licence. Few small businesses actually need a licence, as these are required only for weapons, agricultural products, chemicals, live animals and fish.
Thirdly, you will have to make an export declaration to customs via the National Export System. Such declaration is needed to prove to HMRC that you’re fulfilling all your VAT and licensing requirements.
VAT-wise, your exports will be zero-rated, and you will have to fill in a VAT return form at a later stage for this purpose. You will however have to pay custom clearance and will be charged VAT in China, so you should double-check whether your commercial partner in the country is taking care of this or you need to step in and manage the process.
Once you’re done with this lengthy process, you will be in the position to make the most of the advantages that come with exporting in the digital age. It is now easy to compare shipping costs online and sending any size of parcel to China is getting cheaper year after year given the high volume of goods being sent to and from the country.
An online presence with an effective sales platform as well as coordination with the British Chamber of Commerce in China will likely help you hit the spot with the country’s increasingly affluent customers. And given their increasing need for luxury fashion, quality food and drink, you will at last be in the position to enjoy all of the perks that come with exporting to China.