ILO:

Discuss the relative advantages and disadvantages of the ways in which businesses might operate in the Chinese market (eg exporting, joint ventures, mergers or setting up production or sales outlets
Baby milk rationed in UK over China export fear
China's Parents Crave Illegally Imported Baby Formula
Considering the following information, what are the risks and rewards of operating in China?

How can your method of entry reduce the risk and improve the rewards?

Will this be the same for all industries/products? Why?

Exporting

Luxury cars drive UK exports to China

British exports to China are rising at a blistering pace and are poised to overtake those of France for the first time in the modern era, driven by sales of Range Rovers and other luxury cars to the country’s new rich.

After years of lagging behind in terms of exports to China, India, Brazil, Russia and other emerging markets, British-based groups have at last begun to catch up. Fresh data released by China’s authorities show that imports from Britain rose 14pc to $19.1bn (£11.6bn) last year, with more than 40pc of total sales coming from vehicles and transport goods.

French imports fell 3pc to $23bn. The two countries were neck and neck in the fourth quarter, a sign of chronic erosion of French competitiveness due to the wrong mix of products for the Chinese market and an over-valued exchange rate.

Jaguar Land Rover (JLR) said China had become its top market over the past 12 months, helped by a network of 130 dealers growing at a rate of two a month across the country. “What a year we have had,” said chief executive Ralf Speth. “It has been phenomenal for growth.”

JLR is building an assembly plant to be running later this year, in a joint venture with Chery Automobile, probably to make the Range Rover Evoque. “We are deeply impressed with the speed you can do something in China,” Mr Speth said.

The Society of Motor Manufacturers and Traders said total UK vehicle sales to China rose 17.8pc in the third quarter from a year earlier.

Britain’s car industry manufactured 1.5m vehicles last year and is expected to reach an all-time high of 2m by 2017, more than during the glory days of the 1960s and 1970s. The industry is now almost entirely foreign-owned but the concept of national ownership has lost much of its meaning in a world of globalized share holdings.

http://www.telegraph.co.uk/finance/newsbysector/industry/10567355/Luxury-cars-drive-UK-exports-to-China.html
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The UK getting Business in china - Video
British pig breeding companies to export semen to China
By Nick Garnett

Three British pig breeding companies are preparing to start exporting pig semen to China after a deal was struck between the two countries last month. Half the world's pigs are in China and the deal is worth up to £45m a year to British pig producers. The growing middle class in China are demanding better quality food and British pedigree pig producers are considered among the best in the world.

Last year live pig exports to China were allowed, mostly of boars for breeding, but the transport costs have proved prohibitive. The new deal, which was signed by Prime Minister David Cameron on a trip to China in December, will allow live and frozen semen to be exported which is then used to impregnate sows that are bred there.

Artificial insemination accounts for about 90% of pig pregnancies and it is hoped the British stocks being used will drive up the quality of pork in China.

Pig breeders in Britain are playing down suggestions that Chinese companies will clone their pigs and then cancel contracts with British firms in a few years. They say that if that were to happen the inbreeding would lead to poorer stock in the future and the Chinese realise the importance of maintaining quality for years to come.

http://www.bbc.co.uk/news/uk-england-25762080
Trade and Investment
  • UK exports to China in 2011 were £13.78 billion (including goods, services and other income e.g. remittances), up 17.6% on 2010. (Source: Office for National Statistics UK)
  • UK exported goods to China in 2011 were £8.77 billion. This is up by 21.4% from the previous year. (Source: HMRC)
  • UK exports of service in 2011 were £3.2 billion, up by 19.5% from the previous year. China is the 14th market for UK service exports, 4 places up from the previous year. UK exports of goods and services in 2011 were £12.5 billion, up by 21.3% from the previous year. (Source: Office for National Statistics UK)
  • Since January 2012, China has risen from 9th place to 7th place in the UK’s most important export markets by value (overtaking Italy and Spain). 
  • The value of UK goods exports to China from January to May of 2012 ranked 3rd among EU countries, after Germany and France.  This is one place up from the same period last year (as we have overtaken Italy).  (Source:  MOFCOM)
http://www.cbbc.org/guide/china_info_and_reports/uk_china_statistics

TWE: Protectionism

Censorship in China
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Duty calculator 


Joint Ventures

  • The UK has more joint programmes with Chinese higher education institutions, more than any other country (131 in June 2011). (Source: British Council)
  • Under Chinese trade laws, foreign carmakers looking to launch manufacturing operations in China must have a local partner. (BBC)

Starbucks:

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Direct Investment

  • At the end of 2011, UK was the largest EU investor to China, with a cumulated actual direct investment value of £11.70 billion. UK’s direct investment to China from January to May 2012 was £282 million, the second largest EU investor to China after Germany. (Source:  MOFCOM)
How IKEA adapted its strategies to expand and become profitable in China
http://businesstoday.intoday.in/story/how-ikea-adapted-its-strategies-to-expand-in-china/1/196322.html
IKEA with Chinese Characteristics

IKEA Biggest Foreign Landowner In China With 6.89 Million Square Feet

Ikea at last cracks China market, but success has meant adapting to local ways

Why IKEA Took China By Storm, While Home Depot Failed Miserably
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Why Localisation Is Important for Success in China – Yum! Brands and the Rapid Growth of KFC


Franchising:

China has the most franchises in the world but the scale of their operations  is relatively small. Each system in China has an average of 43 outlets, compared to more than 540 in the United States. Together, there are 2600 brands in some 200,000 retail markets. KFC was the most significant foreign entry in 1987 and is widespread [27]

Many franchises are in fact joint-ventures, as at their forming the franchise law was not explicit. For example, McDonald's is a joint venture. Pizza Hut, TGIF, Wal-mart, Starbucks followed a little later. But total franchising is only 3% of retail trade, which seeks foreign franchise growth.

The year 2005 saw the birth of an updated franchise law,[27] "Measures for the Administration of Commercial Franchise".[28] Previous legislation (1997) made no specific inclusion of foreign investors. Today the franchise law is much clearer by virtue of the 2007 law,[29] a revision of the 2005 law.

The laws are applicable if there are transactions involving a trademark combined with payments with many obligations on the franchisor. The law comprises 42 articles and eight chapters.

http://en.wikipedia.org/wiki/Franchising#China
Related articles:
Here's What You Need To Know To Start A Franchise In China
The Pros and Cons of Franchising in China
Doing Business In China. The  Opportunities And The Challenges.