How businesses are preparing for post-Brexit trade with China

Not a day goes by without Brexit in the news. But for all its media coverage, the plan doesn’t seem any clearer now than it was after the initial vote. It is worrying, but not wholly surprising then, that more than two thirds of UK businesses are lacking any contingency plan for a possible no-deal Brexit.

While a no-deal Brexit would not be ideal, it would have the effect of allowing the UK to be free to forge deals with the rest of the world. It would not affect trade with countries outside the European Union, which is precisely what the UK seems to be planning for with its Prime Minister having recently visited China for talks.

The UK seems to want a trade deal with China, but does China share the excitement? After all, in 2016, the UK imported £42.3bn worth of goods from China, but exported only £16.8bn to China in return. But then again, that’s not entirely proof that China wouldn’t increase its British exports demand if a trade deal was in place — the country is already hoping to widen its trade with The Belt and Road Initiative.

The initiative would see Asia fostering far stronger trade routes with the rest of the world. The “belt” side of it roughly equates to the land connections it will build through railroads, and the “road” refers to a sea-route of trade. Essentially, China is building a new Silk Road,  and 71 countries are already part of the project, including Russia and New Zealand. But, according to Business Insider UK, there seems to be a clash of confidence in the Belt and Road by British officials; where Prime Minster Theresa May has not pledged support to the project that she feels isn’t a guaranteed success, Chancellor Phillip Hammond expressed his support of it.

Naturally, a trade deal between the UK and China could change this view. In fact, we have already enjoyed success in China before Brexit has even resolved. At the start of 2018, during talks between the UK and China, the 20-year ban on British beef was lifted. The deal is purported to be worth £9bn to the UK. Originally, the worldwide ban of British beef exports was put in place by the EU in 1996, in fear of “mad cow disease”. It wasn’t until 2006 that the EU lifted the ban, but other countries chose to retain their ban on the product, including China.

What other UK goods does China want? What markets and UK businesses could, potentially, fare well with Chinese consumers? According the Telegraph, top British exports the Chinese enjoy are:

  • British cars
  • Scotch whisky
  • Scottish salmon
  • Burberry, and other designer labels

It’s not only big brands that can make a profit in the Chinese market. The Creative Industries reported on the success of hairbrush and haircare brand Tangle Teezer over in China. Tangle Teezer’s International Managing Director, Gemma Clarke, confirmed in the article that China became its second biggest sales market in only 3 years trading there.

Tangle Teezer soared in popularity over in China after a popular model there purchased one and shared it with her followers on social media. China loves its online shopping, so influencers should not be overlooked when planning to cater to the Chinese market.

As with any market, the right product and the right approach will see success in any market. At the very least, firms need to plan for the eventual shake-up to the UK’s ties with the European market once Brexit comes into play, and time is running out to start building the foundations. This small window of golden opportunity has been highlighted by Rebecca De Cicco in regards to the UK’s construction industry in particular. The director of Digital Node outlined how 70% of buildings over 200 metres tall completed in 2017 were built in China, and so the country is increasingly interested in building information management software and crowd simulation. The use of British construction software has already proved its value to the Chinese construction sector in Beijing’s new airport, the Beijing Daxing International. Projected to see 45 million passengers a year, the airport’s construction has benefited from crowd simulation software provided by UK building design software experts, Oasys. The software alerted the construction company and designers to any potential bottlenecks, congestion problems, or other inefficiencies.

There’s some brilliant advice out there for companies looking to approach the Chinese market, such as from Business Magazine. As with any overseas market, the magazine advises companies to consider the culture of the country they are trading with; in this case, explore China’s culture. The general consensus is to be aware that what works in the UK may not work in China’s business ground, and as relationships can take a long time to build, jeopardising them with an ill-placed comment or miscommunication can slow that pace even further.

Time’s flown by, and businesses need to be ready for 29th March 2019. Whether or not we retain trade deals with the EU, and to what to degree, the wider world is coming to the UK. Will it be a great opportunity for businesses, as some predict?


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