Why should Spanish Companies go International towards China

Introduction 

After an almost 3- year pandemic. China has finally opened its door in 2023. What should we expect as foreign companies who want to get a share from the 1.4 billion population giant market?

It’s no secret that China is one of the most important markets in the world and it is an economic magic. The Chinese market imports a wide variety of commodities, including medical equipment, food, and chemicals. As evidenced in the abolishment of its zero-covid policy in Jan 2023. Exporting to China is therefore a gateway to exciting commercial opportunities.

The Chinese economy has become more open and compliant with international trade practices over the last 15 years. A vast and rapidly developing market offers unprecedented opportunities for those seeking to access it. Learning how to export to China should be one of your top priorities if you’re an exporter.

Inversión Extranjera Directa en China

What are the restrictions of Covid as of now (Feb,2023), Can we go to China for business purpose?

China removed quarantine requirements for inbound travelers on 8^th Jan 2023, effectively reopening its borders three years after the COVID pandemic led to strict travel restrictions.

According to the Reuters news agency, the Chinese Ministry of Transport expects over two billion trips to and from China to take place in the first 2 months of 2023 — an increase of nearly 100 percent — partly due to the start of the Chinese New Year.

However, at present, we have only limited types of visa that permits us to go to mainland China as listed:

• applicants who have obtained an “Invitation Letter” or “Verification Confirmation of Invitation” issued by a provincial foreign affairs office or department of commerce (M or F visa)
• applicants who have obtained a “Notification Letter of Foreigners Work Permit” (Z visa)
• applicants intending to visit a family member with a Z, M, or F visa
• applicants intending to visit a family member who is a Chinese citizen or who holds a Chinese permanent residence permit
• applicants (including dependents) who qualify for a high-level talent (R) visa
• applicants who qualify for a transport crew (C) visa

Can we do business travels to China or no? What are those M, F, Z or R visas stand for? 

The short answer is YES! M, F, Z and R visas are different types of visas aiming at business and family purposes! Which means you can not travel for visting but yes you can travel for doing business!

Why China?

As the old Chinese saying “ 得人心者得天下” which means “Those who can capture people´s heart will have the whole world under their control”. We could fairly say that China is a market that has 1.4 billion population and once Our product got their trust, we successfully captured their heart! 

Despite the concerns of some investors in regard to increasing investment or growing their operations, the country remains one of the best places to invest in for several reasons, including:

The market will be more open to FDIs (Foreign Direct Investments)

In a bid to encourage more foreign investors to enter the local market, China has expanded its list of allowed industries from 480 to 519. This is the government’s response to stabilize foreign investments amidst the circumstances that make investors think twice about doing business in the country. The new list will take effect on the 1st of January 2023.

According to the NDRC, they are aiming to stabilize foreign investments, optimize investment structure, and boost expectations and confidence of investors.

Less competition due to the restrictions of the past two years

While economies worldwide stopped during the height of the pandemic, China kept its engines running while mixing in its virus containment strategies. While other countries are starting slowly to reignite their economies, China in general, never stopped its production. Which gave it an advantage over other markets that maintains its attractiveness to investors. As the government implements new policies to further open the economy, China is still expected to maintain an advantage over other countries who wish to compete.

The world’s largest consumer market

China is still one of the largest economies worldwide and is home to the world’s largest consumer market. Taking into account the size of the population ad the spending power, its existing regulations and policies on foreign investments are still more attractive compared to alternative emerging markets. With the COVID restrictions now being lifted, China’s industrial production and consumer market are poised to rally.

Improvements in foreign investment services

The Chinese government is organizing and implementing a series of industrial activities that will help bolster the attractiveness of the local market to multinational companies. It aims to create more investment and cooperation activities that will streamline the process of approving, signing, and implementing foreign-funded projects.

Rebound of local equities

China’s GDP growth is expected to increase from 3% to more than 4.5% over the course of this year, as economic prospects and policies improve. Valuation levels are expected to improve as optimizations on COVID-containment policies are made. Additionally, China’s fiscal and monetary policies are expected to control inflation levels in the first 6 months of 2023, making the economy more viable compared to Western and European counterparts that are already experiencing higher inflation levels.

What products do the Chinese Customers want?

For investors looking to enter the Chinese market, here are some of the key areas that they can participate in:

Clothing

Fashion is one of the biggest product categories for Chinese consumers looking to buy imported products, according to Amee Chande, managing director of global strategy and operations for Alibaba Group. Chinese consumers, especially young people, like the styles they can get from U.S. brands, along with the quality of garments.

Shoes

For similar reasons, shoes are also popular import products in China. Stadium Goods is one business that has realized success by selling shoes there. The company has found that some of its collectable sneakers that can’t be found in Chinese stores are especially popular.

Jewelry

Jewelry is another popular category due to the quality and style of import goods. Jewelry.com is a large U.S. brand that has been able to increase its profits dramatically by selling on Tmall in China.

Makeup

According to Chande, beauty is another one of the most popular category for Chinese shoppers, especially those using Tmall. And makeup is a major product within that niche.

Skincare

Skincare products like moisturizer and sunscreen are also popular with Chinese consumers. Especially if you offer products made with natural ingredients, you could have a good chance of appealing to health conscious Chinese consumers.

Beauty Accessories

Also in the beauty niche, accessories like makeup brushes are popular in China. Real Techniques is one U.S. brand that has found a lot of success by selling its products on Tmall in China.

Vitamins

Chinese consumers are also becoming increasingly health conscious, according to Chande. So health products like vitamins and supplements are getting more and more popular on platforms like Tmall.

Seafood

There’s also a growing demand for U.S. seafood in China, both because of the increasing health concerns over local Chinese seafood and because the U.S. has access to some types of seafood that can’t be found in China.

Packaged Healthy Foods

But you can also appeal to Chinese consumers with healthy foods that are a bit easier to ship. Think packaged food items that include healthy ingredients like dried fruit and whole grains.

Trendy Snacks

Chinese consumers, especially young people, are also interested in food trends. (Think foods like kale chips and superfoods.) Sometimes Chinese consumers can’t get these trendy food items from local Chinese sellers.

Wine

In addition, wineries and small wine brands can appeal to Chinese consumers as import brands. Especially for brands that operate in desirable regions like Napa Valley, selling in China can lead to plenty of growth opportunities.

Baby Food

“Mom and baby” is another one of the most popular product categories among Chinese shoppers, according to Chande. And baby food is a huge product within that niche. Gerber, for example, has found a lot of success by expanding its offerings into the Chinese market and introducing healthy food for the growing number of babies in China.

Breastfeeding Products

Moms also want to make sure they have the best possible products when it comes to taking care of their new babies. So, companies that provide breastfeeding accessories and similar products can appeal to new parents looking to get the very best products for their growing families.

Gadgets

And also, technology is a huge market in China. Consumers can obviously get tons of different gadgets from all kinds of sources. But if your company has a unique offering that isn’t everywhere in China already, it could certainly appeal to that customer base.

Conclusion

Despite the pandemic and other complex global circumstances, China remains one of the world’s leading economies. Foreign investors can still benefit from the country’s huge export economy, affordable labor, and growing interest in high-tech manufacturing and development. 

It remains challenging for foreign investors to establish legal entities and hire local employees in China, despite the positive outlook for the Chinese economy in the new year. For this, RRYP Consultancy/Law Firm helps you with all those difficulties and doubts. Get in touch with us right away!