{"id":6967,"date":"2021-01-25T10:09:55","date_gmt":"2021-01-25T10:09:55","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=6967"},"modified":"2025-04-23T09:56:30","modified_gmt":"2025-04-23T09:56:30","slug":"chinese-business-culture-and-market-entry","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/chinese-business-culture-and-market-entry\/","title":{"rendered":"What UK tech companies need to know about China market entry"},"content":{"rendered":"<h2 class=\"polaris__heading -content-subtitle\">For tech companies to make the most of opportunities in China, they need to understand and address the risks \u2013 here&#8217;s how<\/h2>\n<div class=\"polaris__post-meta\">\n<div class=\"polaris__post-meta--meta\">\n<p>China presents real opportunities for UK tech companies. Scale counts \u2013 this is a country with over 100 cities of more than a million people \u2013 and China-UK trade surpassed \u00a370 billion in value in the 2018\/2019 financial year. The Chinese government is working to drive future growth through technology investments and innovation, and Chinese markets hold UK tech companies in high esteem. China wants to take advantage of the UK\u2019s capabilities in AI, big data, fintech, ed-tech and e-commerce. It\u2019s looking to create strong synergies for closer UK-China collaboration in these areas where UK tech companies are already experiencing success.<\/p>\n<div style=\"clear:both; margin-top:2em; margin-bottom:2em;\"><a href=\"https:\/\/focus.cbbc.org\/top-10-most-common-mistakes-foreign-businesses-make-in-china\/\" target=\"_self\" rel=\"dofollow\" class=\"u0fb747234ca69fe1fb7767fe1e25aaeb\"><style> .u0fb747234ca69fe1fb7767fe1e25aaeb { padding:0px; margin: 0; padding-top:1em!important; padding-bottom:1em!important; width:100%; display: block; font-weight:bold; background-color:#eaeaea; border:0!important; border-left:4px solid #E74C3C!important; box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -moz-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -o-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -webkit-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); text-decoration:none; } .u0fb747234ca69fe1fb7767fe1e25aaeb:active, .u0fb747234ca69fe1fb7767fe1e25aaeb:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; text-decoration:none; } .u0fb747234ca69fe1fb7767fe1e25aaeb { transition: background-color 250ms; webkit-transition: background-color 250ms; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; } .u0fb747234ca69fe1fb7767fe1e25aaeb .ctaText { font-weight:bold; color:#E74C3C; text-decoration:none; font-size: 16px; } .u0fb747234ca69fe1fb7767fe1e25aaeb .postTitle { color:#000000; text-decoration: underline!important; font-size: 16px; } .u0fb747234ca69fe1fb7767fe1e25aaeb:hover .postTitle { text-decoration: underline!important; } <\/style><div style=\"padding-left:1em; padding-right:1em;\"><span class=\"ctaText\">Read Also<\/span>&nbsp; <span class=\"postTitle\">Top 10 most common mistakes foreign businesses make in China<\/span><\/div><\/a><\/div>\n<p>Yet moving into China also has its challenges, not least <a href=\"https:\/\/focus.cbbc.org\/how-to-build-credibility-online\/\" target=\"_blank\" rel=\"noopener noreferrer\">building a brand<\/a> in a market that covers such a huge and diverse territory. There can be regulatory barriers which can inhibit foreign market access, and restrictions around foreign investment in some sectors. These aren\u2019t necessarily higher or more onerous than those in other territories \u2013 including the US \u2013 but they need to be considered.<\/p>\n<p>It can take up to six months or more to clear the hurdles involved in setting up a Wholly-Foreign Owned Enterprise (WFOE), a Chinese limited liability company 100% owned by the parent foreign company. And while it doesn\u2019t take as long to set up a Representative Office \u2013 effectively a local extension of a foreign business \u2013 these cannot engage in direct profit-making activities.<\/p>\n<p>There are various other regulations and licenses tech companies need to be aware of, such as licenses for hosting on Chinese servers, hardware manufacturing regulations, national product standards and rules on cross-border tech licensing agreements. China\u2019s <a href=\"https:\/\/focus.cbbc.org\/new-cross-border-laws-extended\/\" target=\"_blank\" rel=\"noopener noreferrer\">e-commerce Law<\/a> has also introduced a series of regulations around the setup and operation of online stores. These cover everything from responsibilities for the prevention of IP infringement, to measures that protect consumer privacy and rights.<\/p>\n<p>These issues can be challenging to navigate without local Chinese expertise. Even where you base your organisation has an impact, as specific\u00a0<a class=\"polaris__link -is-external\" href=\"http:\/\/www.cbbc.org\/resources\/in-the-zone-2019\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">special zones<\/a>\u00a0offer distinct rules and benefits for foreign businesses, based on the industries and sectors they\u2019re designed to support; a provision that\u2019s far from specific to China, but that can have a real impact on UK tech firms doing business in the country.<\/p>\n<p>Local expertise can also help you understand available business incentives across the country and to navigate compliance mechanisms. Luckily, other companies have blazed a trail and expert advice is available. You can find initial guidance on many of these issues and negotiating China\u2019s regulatory frameworks at the UK Government\u00a0<a class=\"polaris__link -is-external\" href=\"http:\/\/pubads.g.doubleclick.net\/gampad\/clk?id=5586342404&amp;iu=\/359\/impcount.co.uk\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Digital and Tech China<\/a><em>\u00a0<\/em>website, along with links to further resources. The\u00a0<a class=\"polaris__link -is-external\" href=\"http:\/\/pubads.g.doubleclick.net\/gampad\/clk?id=5586060901&amp;iu=\/359\/impcount.co.uk\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">China-Britain Business Council<\/a>\u00a0can also help with webinars, reports and a range of useful services, many of them free. Finally,\u00a0<a class=\"polaris__link -is-external\" href=\"http:\/\/pubads.g.doubleclick.net\/gampad\/clk?id=5586322691&amp;iu=\/359\/impcount.co.uk\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">techUK<\/a>\u00a0is another key organisation. Not only does it specifically support the growth of the UK tech sector both at home and overseas, but it offers various resources to help technology companies navigate these business pitfalls.<\/p>\n<div style=\"clear:both; margin-top:2em; margin-bottom:2em;\"><a href=\"https:\/\/focus.cbbc.org\/creative-ip\/\" target=\"_self\" rel=\"dofollow\" class=\"u763a8a5e0780ba8801a3a09ef629e431\"><style> .u763a8a5e0780ba8801a3a09ef629e431 { padding:0px; margin: 0; padding-top:1em!important; padding-bottom:1em!important; width:100%; display: block; font-weight:bold; background-color:#eaeaea; border:0!important; border-left:4px solid #E74C3C!important; box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -moz-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -o-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -webkit-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); text-decoration:none; } .u763a8a5e0780ba8801a3a09ef629e431:active, .u763a8a5e0780ba8801a3a09ef629e431:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; text-decoration:none; } .u763a8a5e0780ba8801a3a09ef629e431 { transition: background-color 250ms; webkit-transition: background-color 250ms; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; } .u763a8a5e0780ba8801a3a09ef629e431 .ctaText { font-weight:bold; color:#E74C3C; text-decoration:none; font-size: 16px; } .u763a8a5e0780ba8801a3a09ef629e431 .postTitle { color:#000000; text-decoration: underline!important; font-size: 16px; } .u763a8a5e0780ba8801a3a09ef629e431:hover .postTitle { text-decoration: underline!important; } <\/style><div style=\"padding-left:1em; padding-right:1em;\"><span class=\"ctaText\">Read Also<\/span>&nbsp; <span class=\"postTitle\">How to keep your intellectual property protected in China<\/span><\/div><\/a><\/div>\n<h5 class=\"polaris__heading\">IP and joint ventures<\/h5>\n<p>There\u2019s no shortage of demand in China for innovation and original ideas, but it remains important to take steps to put IP protection measures in place. While the government has addressed the issues with new regulations, areas of inconsistency remain, and it\u2019s only sensible to take steps to protect your IP before launching technology products, including software and 3D product designs. Bad faith trade mark claims \u2013 or trade mark squatting \u2013\u00a0 are another thing to watch out for, where a Chinese entity registers your product\u2019s name or logo, then expects you to pay before they\u2019ll transfer the rights.<\/p>\n<div class=\"polaris__simple-grid--main\">\n<p>What\u2019s more, companies entering into joint ventures with a Chinese partner are required to share technology and IP with the other company and commit to joint development in Chinese research centres. This itself can complicate your IP rights.<\/p>\n<blockquote><p>The UK government\u2019s Intellectual Property Office has an online IP Health Check tool you can use to identify your IP assets, while the IP attach\u00e9 team based in China can offer advice on registering and defending your IP<\/p><\/blockquote>\n<p>Expert help is available. The UK government\u2019s Intellectual Property Office has an online IP Health Check tool you can use to identify your IP assets, while the IP attach\u00e9 team based in China can offer advice on registering and defending your IP. You can also find legal services that specialise in Chinese IP issues, to help ensure you take the right steps.<\/p>\n<h5 class=\"polaris__heading\">Intelligence and security<\/h5>\n<p>Firms operating in China must also comply with the full range of applicable Chinese laws, including the <a href=\"https:\/\/focus.cbbc.org\/new-cyber-security-law\/\" target=\"_blank\" rel=\"noopener noreferrer\">Cyber Security Law<\/a>, which protects China\u2019s critical network infrastructure and governs the collection, usage and transfer of data. The National Intelligence Law, which requires companies to cooperate with state intelligence agencies, also has obvious implications for data privacy and security.<\/p>\n<p>Beyond this, Chinese partners can end up with unrestricted access to any systems or data produced through the partnership, and pass that on to government agencies. In one case, the developer of a medical information platform found out too late that it had no control over the use of patient data, and that a Chinese partner and six government bodies had unrestricted access. This wasn\u2019t good for its reputation or its international sales.<\/p>\n<p>The most sensible approach to dealing with these laws is to carefully assess how they might apply to your business and the potential impact on the business and its customers. You can find further explanations of these laws, along with guidance at the\u00a0<a class=\"polaris__link -is-external\" href=\"http:\/\/pubads.g.doubleclick.net\/gampad\/clk?id=5586342404&amp;iu=\/359\/impcount.co.uk\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">UK Government website<\/a>\u00a0dedicated to doing business with China.<\/p>\n<div style=\"clear:both; margin-top:2em; margin-bottom:2em;\"><a href=\"https:\/\/focus.cbbc.org\/what-is-corporate-intelligence\/\" target=\"_self\" rel=\"dofollow\" class=\"u3b1dbf82d99b50dc12debaadd7c882d3\"><style> .u3b1dbf82d99b50dc12debaadd7c882d3 { padding:0px; margin: 0; padding-top:1em!important; padding-bottom:1em!important; width:100%; display: block; font-weight:bold; background-color:#eaeaea; border:0!important; border-left:4px solid #E74C3C!important; box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -moz-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -o-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); -webkit-box-shadow: 0 1px 2px rgba(0, 0, 0, 0.17); text-decoration:none; } .u3b1dbf82d99b50dc12debaadd7c882d3:active, .u3b1dbf82d99b50dc12debaadd7c882d3:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; text-decoration:none; } .u3b1dbf82d99b50dc12debaadd7c882d3 { transition: background-color 250ms; webkit-transition: background-color 250ms; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; } .u3b1dbf82d99b50dc12debaadd7c882d3 .ctaText { font-weight:bold; color:#E74C3C; text-decoration:none; font-size: 16px; } .u3b1dbf82d99b50dc12debaadd7c882d3 .postTitle { color:#000000; text-decoration: underline!important; font-size: 16px; } .u3b1dbf82d99b50dc12debaadd7c882d3:hover .postTitle { text-decoration: underline!important; } <\/style><div style=\"padding-left:1em; padding-right:1em;\"><span class=\"ctaText\">Read Also<\/span>&nbsp; <span class=\"postTitle\">What is corporate intelligence and who needs it?<\/span><\/div><\/a><\/div>\n<h5 class=\"polaris__heading\">Dual-use tech<\/h5>\n<p>UK regulations also govern what businesses can do in China. Companies have to perform due diligence to ensure they don\u2019t breach the Human Rights Act, and must be wary of manufacturing or inadvertently selling dual-use technologies, which have potential military or intelligence applications. China\u2019s Military Civil Fusion policy encourages sharing of science and technology resources between the civil and military sectors, meaning that a product developed with a Chinese partner could potentially be repurposed for military use. This can even happen without the foreign partner\u2019s consent.<\/p>\n<p>Taking a hypothetical example, a UK-registered company could end up with a \u00a3400,000 fine on an \u00a3800,000 commercial deal if, for example, it sold cameras without a necessary license that could then be incorporated into weapons programmes. Again, getting advice early can help you spot potential challenges and work out ways to counter or avoid them. The UK Government has a page on\u00a0<a class=\"polaris__link -is-external\" href=\"https:\/\/www.gov.uk\/guidance\/uk-strategic-export-control-lists-the-consolidated-list-of-strategic-military-and-dual-use-items\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Strategic Export Controls<\/a>\u00a0where companies can find useful resources and guidance.<\/p>\n<blockquote><p>Chinese partners can end up with unrestricted access to any systems or data produced through the partnership, and pass that on to government agencies<\/p><\/blockquote>\n<h5 class=\"polaris__heading\">Meet the challenge<\/h5>\n<p>China is a very different market, with its own systems, its own dominant online services and its own unique business culture. UK tech businesses have their hands full working with Baidu rather than Google or Weibo and with WeChat rather than Facebook and Twitter. Yet, they also need to work around local customs in a territory where personal relationships are key.<\/p>\n<\/div>\n<div class=\"polaris__simple-grid--main\">\n<p>So how can UK companies meet the challenge? Partly, it\u2019s a question of preparation, deciding on the right business structure to support your Chinese ambitions and researching the regulatory hurdles. Perform due diligence on your proposed activities and ensure that you\u2019re staying within the bounds of both UK and Chinese law.<\/p>\n<p>Just as importantly, companies need to make connections, developing the personal contacts essential for your Chinese business to thrive. For instance, the Norwich company Developing Experts sells online teaching resources into Chinese schools. When Chinese regulations changed that could have affected the business, a contact within the government provided warnings and advice that helped the company comply and continue sales.<\/p>\n<p>Making these connections may require some grounding in Chinese business etiquette. The China Britain Business Council has some excellent resources that newcomers should refer to. Try to avoid hostile negotiation strategies; in China the worst thing you can do is cause potential Chinese partners to lose face. Similarly, working with a Chinese interpreter will not only help you in meetings and social encounters, but make it easier to avoid basic errors in your marketing or social messaging.<\/p>\n<p>The complexity of navigating both the cultural differences and the local regulations means that working with a local partner becomes the logical next step. In fact, Everledger, the developer of an AI-enhanced blockchain platform with a growing presence in the Chinese jewellery market, says that it\u2019s critical, enabling companies to cope with market conditions and consumer preferences in a country where both can change so quickly.<\/p>\n<p>Even so, UK companies need to take any time necessary to review their potential partners. Are there any records or corporate filings on potential partners? Can a Chinese-speaking colleague do some internet research on Baidu? It\u2019s better to find out about court cases or corruption allegations before entering any partnership, as the association could affect your business for the worse. Similarly, it\u2019s helpful to know about any commercial or political ties that might not be immediately obvious. There are government resources to <a class=\"polaris__link -is-external\" href=\"http:\/\/pubads.g.doubleclick.net\/gampad\/clk?id=5586342404&amp;iu=\/359\/impcount.co.uk\" target=\"_blank\" rel=\"noopener noreferrer\">help you with your due diligence<\/a>, providing advice on the important questions to ask and how to answer the questions you\u2019re likely to face.<\/p>\n<p>None of this should put you off doing business in China, but to make the most of the opportunities, you also need to be prepared to meet the challenges head-on and do the research needed to help you make the right decisions.<\/p>\n<p><em><strong>This article was published in partnership with\u00a0<a class=\"polaris__link -is-external\" href=\"http:\/\/pubads.g.doubleclick.net\/gampad\/clk?id=5586062080&amp;iu=\/359\/impcount.co.uk\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">china.theweek.co.uk,<\/a>\u00a0<a class=\"polaris__link -is-external\" href=\"http:\/\/pubads.g.doubleclick.net\/gampad\/clk?id=5594787804&amp;iu=\/359\/impcount.co.uk\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">techUK<\/a>\u00a0and\u00a0<a class=\"polaris__link -is-external\" href=\"http:\/\/pubads.g.doubleclick.net\/gampad\/clk?id=5596158662&amp;iu=\/359\/impcount.co.uk\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">CBBC.org<\/a>.\u00a0 Visit the\u00a0<a href=\"https:\/\/digitalandtechchina.campaign.gov.uk\/\">digital and tech China hub<\/a>\u00a0to learn more.\u00a0<\/strong><\/em><\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>For tech companies to make the most of opportunities in China, they need to understand and address the risks \u2013 here&#8217;s how China presents real opportunities for UK tech companies. Scale counts \u2013 this is a country with over 100 cities of more than a million people \u2013 and China-UK trade surpassed \u00a370 billion in value in the 2018\/2019 financial year. The Chinese government is working to drive future growth&hellip;<\/p>\n","protected":false},"author":38,"featured_media":6968,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[124],"tags":[2081,2427,2075,302],"class_list":["post-6967","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology","tag-business-culture","tag-paywall","tag-set-up","tag-wfoe"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What UK tech companies need to know about China market entry - Focus - China Britain Business Council<\/title>\n<meta name=\"description\" content=\"As a UK tech business you may be asking, &#039;how can I get into the China market&#039;? 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