European SMEs in China can get help
Center offers support, advice to close the knowledge gap
On a cold December morning in 1995, I arrived in Beijing for the first time. China was growing and becoming a world economic leader, but not too many people knew this or even could predict this. We came to China to pick up our daughter whom we adopted. There and then I fell in love with China and I promised myself that one day I would move to China to live. From 2003 on I started to visit China from a business perspective. During these years and up to 2008, I was involved in bringing wind energy technology into China. With a new business set up here my wife and adopted daughter moved to China in 2008.
In October of this year, I accepted a new challenge to join the EU SME Centre as the director to lead the team to explore new paths for helping European small and medium-sized enterprises with their China businesses. I’m very excited about this new role because it combines my passion for China and my longtime experience in running and supporting SMEs in China.
The EU SME Centre is a European Union initiative with funding from the European Commission to support EU SMEs on their journey to the Chinese market. It is implemented by a consortium of six partners — the China-Britain Business Council, the Benelux Chamber of Commerce, the China-Italy Chamber of Commerce, the French Chamber of Commerce in China, the Association of European Chambers of Commerce and Industry (Eurochambres), and the European Union Chamber of Commerce in China.
Our team of experts provides advice and support in four areas: business development, law, standards and conformity, and human resources. Collaborating with external experts worldwide, the center converts valuable knowledge and experience into practical business tools and services easily accessible online. From first-line advice to in-depth technical solutions, we offer services through “Knowledge Centre”, “Advice Centre”, “Training Centre”, “SME Advocacy Platform” and “Hot-Desks”.
With the help of our team, our partners in Europe and China and many experts around the world, we are working very hard to bridge the knowledge gap of the SMEs toward China, provide a comprehensive range of hands-on support services and get them ready to do business in China.
All of our services, including training, publications, advice and advocacy, are aiming for one ultimate purpose — to help European SMEs obtain an unbiased and objective view of the Chinese market. We help them from the very beginning, providing them with all the essential information needed to evaluate if they are ready to enter the Chinese market. It is very crucial to support SMEs in their early stage of internalization because the risk for them is too high. Many of them have small teams with very limited resources, so exploring a new market outside of Europe is a big challenge. This is one of the reasons that only about 20 percent of 20 million SMEs export to countries outside of the EU single market and about 10 percent export to China, according to information from the European Commission.
If some of them make decisions to come as the next step, we provide them with training and advice on what they should do and should not do. For example, we explain to them the common ways of exporting and selling products, services and technologies to China, rules and regulations related to setting up a business in the country, and what to look out for when looking for Chinese business partners.
During the last decade of working in China, I have witnessed many foreign business owners achieve remarkable success, but many failed as well. A lot of those mistakes could be avoided if they were better informed and prepared.
This year we have seen the Chinese government make quite a few significant steps to continue its reform and opening-up and to improve its business environment for foreign companies.
One of the most recent examples was the first China International Import Expo, held in Shanghai in November, which attracted thousands of foreign businesses from all over the world, including many small-business owners who are still curious about China. We were asked by our European partners to support their delegations with training workshops and we could tell that the companies were all very eager to learn more about China’s market landscape.
In addition, we are happy to see less restriction for foreign businesses to access the Chinese market, following a shortened negative list released by the National Development and Reform Commission and the Ministry of Commerce in June. We trust that with this change, those newly opened sectors in China such as automotive, professional service and agriculture could also benefit from the know-how of European SMEs, as many of them are pioneers in their areas and the driving force of innovation in Europe.
We also hear good news in favor of SMEs in general operating in China. For example, the preferential tax treatment for small low-profit enterprises was also expanded. Small businesses with annual taxable income of less than 1 million yuan ($144,000; 127,000 euros; £112,000), instead of 500,000 yuan previously, can benefit from a preferential corporate income tax rate, following the announcement of the Ministry of Finance and the State Administration of Taxation in July.
Cross-border e-commerce is another area we observe very closely. When the State Council recently announced the extension of the current policy for cross-border e-commerce retail imports after Jan 1, the reaction we received from our partners and European SMEs was quite positive.
Despite those improvements, EU SMEs that take an initial step in the Chinese market should remain prudent, gather all the available information out there, and seek professional help along the way. As a Chinese saying goes, opportunities are there for those who are prepared.
Sadly enough, from our experience, we learned that many times European SMEs run into many habit and culture differences. When doing business in China, SMEs need to learn to have patience, prepare well for the market, protect intellectual property rights and take time to invest in relationships.
China is truly one of the most beautiful countries in the world. It is a country with citizens who are hard-working, dedicated and proud. We, together with millions of European SMEs, share the same vision to contribute our efforts to create a prosperous society, not only for businesses, but also for families, communities and our environment. And we do believe that with joint efforts from governments, companies and individuals, we can make it happen.