Finding the best route to China

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. 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