Trade with China
China is one of the UK’s largest trading partners. In the four quarters to the end of Q4 2020 :
Total trade in goods and services (exports plus imports) between the UK and China was
Total UK exports to China amounted to ￡22.9 bn, a y-o-y decrease of 37.7% (￡13.8bn)
Total exports between the UK and China accounted for 6.8% of total exports between the UK and all trading partners, making China the UK's third-largest single-country export market for goods, and its 16th-largest export market for services.
Of all UK exports to China，￡17.8bn (77.7%) were goods and ￡5.1bn (22.3%) were services.
Despite the pandemic, UK exports of goods to China* increased by 1.2% compared to the four quarters to the end of Q1 2020.
Total UK imports from China were ￡56bn (an increase of 13.1% or ￡6.5bn compared to the four quarters to the end of Q1 2020).
Total imports to the UK from China accounted for 9.6% of total imports between the UK and all trading partners, making China the UK's second-largest single-country origin of imported goods, and its 18th-largest origin of imported services.
*excluding crude oil and non-monetary gold
China represents the world’s fastest-growing major single market
The IMF has forecast that China's GDP will grow by 8.4% in 2021, ahead of previous predictions and demonstrating the impact of the country's rapid post-pandemic bounce back.
China’s consumer market is larger, more diverse and more sophisticated than ever
The country has made great strides in poverty reduction, with its GINI coefficient and per capita GDP both trending since 2000 towards levels seen in most advanced economies, leading to a burgeoning urban middle class. The pandemic has accelerated pre-existing trends towards e-commerce, with almost one in two online transactions worldwide happening in China, which has an e-payment penetration rate three times higher than the US. A domestic love affair with imported brands begun at the outset of China's reform and opening-up has yet to abate, however contemporary consumer trends demonstrate the increasing importance attached to quality, sustainability, innovation and exclusivity, while young people are growing interest in investment and financial products as an alternative to the traditional focus on real estate. *
*Data sources: World Bank; IMF; World Intellectual Property Organisation; McKinsey
A constantly-evolving and dynamic business environment
Boosted by more favourable government policies, China’s domestic business environment has significantly improved in recent years, alongside market access opportunities for foreign enterprises. While challenges remain, China leap-frogged some European countries to improve its ranking on the the World Bank ease of doing business index by 15 places in 2019. China is also an emerging innovation powerhouse, reaching an all-time high ranking of 14th on WIPO's Global Innovation Index in 2020, making it the top-ranked middle-income country in the world for innovation.
Doing business in China
The Chinese market is complex and it can be challenging. Make sure you factor in costs involved in getting products into and around the market, including:
- Marketing for a huge territory
You’re advised to seek advice and practical help from China business specialists before entering the market. DIT can help you find the right sources of information. A number of market entry options are available to UK businesses. Some of the most commonly used are:
Agents, distributors or other local partners
Having a local presence on the ground is essential to build sales in China due to:
- The sheer size of the market, whether at local or national level
- Language and cultural differences
- The importance of personal relationships in Chinese business culture
If you are seeking to access the China market at the national level, you should consider having more than one agent or distributor. However, some companies may wish to consider exploring local, provincial or regional partnerships.
Do your due diligence to ensure that you are working with credible partners. The right partnerships will ensure your brand values, corporate culture and product quality translate effectively into market success.
Direct investment is an increasingly viable option for developing your business in China. This could be via:
- A joint venture
- Setting up your own entity
These options give you the advantage of enhanced control over your business development activities in China, but all of them can carry financial, commercial and reputational risks.
You should expect activities involved in establishing a permanent presence, for example dealing with authorities and recruiting and training staff, to be more challenging and take longer. But over the longer term this approach can be the most effective for growth.
Digital commerce has emerged as the main way many Chinese consumers now participate in the market, and in many areas the economy is already almost entirely cashless.
Be aware of differences in user behaviour and plan for this, for example Chinese users generally trust paid search results more than organic results. Localise content beyond merely translating marketing materials into Chinese - the most effective localisation takes cultural and social habits, customs and trends into consideration.
Integration with Chinese e-commerce platforms and payment apps is the only way to sell products online.
DIT can suggest online marketplaces to help you get started. DIT’s E-Exporting Programme can also help.
The China Britain Business Council and the British Chamber of Commerce in China are useful sources of further information on routes to market in China.
Understanding the market and business culture is important. Government control still affects many areas of the economy. Consider getting specialist help in areas like market research, regulatory compliance and legal advice.
You should also consider legal advice around data protection and other laws. The legal process can be expensive, but alternative dispute resolution is becoming more common.
Guide on Trade Mark Registration
For foreign enterprises wanting to sell their goods or develop their business in China, applying for a local trade mark in advance is crucial. China applies a first-to-file principle for trade mark applications, granting a bundle of exclusive rights, including the right to exclusively use a trade mark with the products or services for which it is registered, to the first entity to file an application. Trade mark disputes can be complex, long-winded and costly to resolve, and often the outcome favours the local Chinese entity.
There are two ways for foreign applicants to apply for a trade mark in China:
I. National registration:
A foreign individual or a foreign company may authorise a local trade mark agency to apply to the Trade Mark Office (TMO) of the China Intellectual Property Administration (CNIPA).
II. International registration:
A foreign applicant may file an international application via the World Intellectual Property Organization (WIPO) under the Madrid Protocol, which enables the owners of trade mark applications and registrations to extend their rights to dozens of other members, including China.
I. Trade mark registration with the CNIPA TMO
When applying for a trade mark in China, an applicant needs to go through the following steps:
Trade mark research: Check that no similar or identical trade marks exist or have already been registered with the TMO.
Trade mark application: Submit an application form and other required documents to the TMO. For foreign applicants who have not established any habitual residence or business office in China, this can only be done through an authorised Chinese individual, or through an authorised trade mark agency. The routes to file applications are:
Submit paper applications through service windows at the TMO’s office in Beijing or through the trade mark corporation centre outside of Beijing;
Formal examination: The TMO will formally examine documents submitted by applicants. Once these documents fulfil the requirements of the formal examination, the application is accepted, and applicants will receive a notification of acceptance. The date of notification will be recorded as the initial application date.
Substantive examination: The TMO thoroughly reviews the trade mark to check whether an application fulfils statutory requirements.
Bad-faith filing examination: according to the revised examination procedure, the examiners shall make preliminary judgments on applications filed in bad faith. Based on the standards defined for a bad-faith trade mark, applications that are decided as having been filed in bad faith will be rejected. Before formal rejection, the applicants in question will receive administrative notices that provide an opportunity to challenge this decision.
TM Gazette: If the trade mark passes the TMO’s substantive examination, then it will be published in the TM Gazette on the TMO’s website for three months.
Approval for registration: If there is no opposition during this period, the TMO will approve the trade mark’s registration. This approval will be published as a notification in the TM Gazette. Once an applicant’s trade marks are registered, the starting time of the validity of the trade mark registration will be tracked back to the date of filing.
II. Trade mark registration through the Madrid System
Stage 1: Application through your national or regional IP office (office of origin)
Before filing an international application, an applicant needs to have already registered or have filed an application in their home IP office. The registration or application is known as the basic mark.
An applicant then needs to submit an international application through this same IP office, which will certify it and forward it to WIPO.
Stage 2: Formal examination by WIPO
WIPO only conducts a formal examination of the international application. Once approved, an applicant’s trademark is recorded in the International Register and published in the WIPO Gazette of international trade marks.
WIPO will then send the applicant a certificate of their international registration and notify the IP offices in all the territories where they wish to have their trade mark protected.
It is important to note that the scope of protection of an international registration is not known at this stage. It is only determined after substantive examination and by the IP offices decisions in the territories in which an applicant seeks protection, as outlined in Stage 3.
Stage 3: Substantive examination by national or regional IP offices (office of the designated contracting party)
The IP offices of the territories where an applicant wants to protect their trade mark will make a decision within the applicable time limit (12 to 18 months) in accordance with the relevant national or regional legislation.
WIPO will record the decisions of the IP offices in the International Register and then notify the applicant.
If an IP office refuses to protect an applicant’s trade mark, either totally or partially, this decision will not affect the decisions of other IP offices. An applicant can contest a refusal decision directly with the relevant IP office in accordance with its legislation.
If an IP office accepts the protection of an applicant’s trade mark, it will issue a statement of grant of protection.