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“China myth-busting” and UK Creativity Plus

“China myth-busting” and UK Creativity Plus

Going global is a series of Entrepreneurial Spark – Power Hour webcasts looking at the challenges of taking your business global and how the 2020 Design Intelligence Awards can help you get started.

The context of the 2020 DIA for UK entrepreneurs, innovators and designers is how UK start-up and scale-up firms are capitalising on sustained growth in China. UK scale-up firm Open Bionics are leading the charge winning £115,000 with Hero Arm in 2019.  Jeff Cao, respected China expert and John Mathers Chair of DIA UK judges debunk the myths of doing business in China.

Tackling this week’s theme “myth-busting” doing business in China, two experts tackled the teams’ tough questions. Jeff Cao has previously led the Mayor of London’s Asia Pacific investment team and sat on the Board of China Britain Business Council and John Mathers is former CEO of the UK Design Council and Chair of UK DIA judges. Between them they know pretty much what there is to know that can help SME’s and if they don’t they know someone who can. So let’s get started.

Jeff and John were posed six questions around the theme of “China myth-busting”

  1. There are obvious cultural differences between Britain and China, but how do they translate in the context of innovation?
  2. There is a shift in mindset in China towards being more collaborative, so how true is the common perception that IP will be stolen if you have products made in China?
  3. How have the effects of COVID-19 changed the way China trades with the world?
  4. What are the benefits of working with China and are they open to being a market place?
  5. One of the aspects I fear, and I am not alone, is the language barrier, so how do we truly overcome this to trade with/in China?
  6. How do the DIA Awards help someone gain access to everything China has to offer?

First, businesses need to believe in the new world where it’s much easier to work with China than people think. Many of the perceptions are simply not reality.

Part of the problem facing new entrepreneurs is that business anecdotes have perpetuated a picture of a complex and difficult experience. People that have over-invested and couldn’t overcome challenges in the past think that this is reality today. In fact, it couldn’t be more different than just 5 years ago and China is very aware of the hurdles in doing business and has moved rapidly to break down barriers.

In terms of context there are some simple truths everyone needs to buy into:

The long game. When China decides to do something they play the long game. If they can’t fix it today they will keep working at the problem until it’s sorted. And they have long term ambitions that don’t change under new leadership and governance, so are consistent and work tirelessly to improve, to meet their goals.

Shift from Made IN China to Made BY China. Made In China 2025 is an ambitious long-term plan in advanced manufacturing where China set a self-imposed target of self-reliance  that by the year of 2025 there will be 70% domestic content in Made in China goods and services.  That leaves space for UK plc to supply designs, innovation and other potential areas to collaborate with China.  The Covid-19 induced acceleration of investments into the “New Infrastructure” – 5G, IoT, autonomous vehicles etc etc – has opened up new opportunities for global providers selling into China.  As China collaborates further it also  domestic content requirement evolves. And indeed “made in” is gradually becoming “made by”.

Q. There are obvious cultural differences between Britain and China, but how do they translate in the context of Innovation?

A. Jeff Cao: “The reality is that when it comes to doing business there aren’t much cultural differences. Many things work quite the same way. Commercial goals, transactions, legal, logistics, finance – it’s all the same.”

A. John Mathers: “One thing that is different is the speed of innovation and in terms of being a long-game player that doesn’t mean things move slowly. In fact the opposite is true and China wants a tech revolution overnight. So be ready to move fast. The Chinese are impatient for progress.”

Business view: “China business partners want solutions to be solved immediately and bring in people overnight to sort things out as they want the processes to be as smooth and as fast as possible. And when it comes to source of supply they are the first to recommend how to get things made cheaper to improve value for the customer.”

Q. There is a shift in mindset in China towards being more collaborative, so how true is the common perception that IP will be stolen if you have products made in China?

A. Jeff Cao: “The first and most important piece of evidence to counter the argument China just wants to steal outside IP is from the World Intellectual Property Organisation. In 2017 out of the top 5 countries for patent applications, China was number one in 9 of the 10 emerging technologies such as AI, blockchains, cybersecurity and regenerative medicine, except for quantum computing for which US came on top. In short China applied for more patents than any other country, so has a huge stake in protecting its own IP. By following this commitment they couldn’t legitimately steal IP from other countries, because they understand how that collaboration is key to growth.”

A. John Mathers: “China’s legal framework for IP protection is the one of the best in the world and one that firms can access and apply to their partnerships. IP is also the first thing creative and tech firms are used to sorting out early and if you engage good IP lawyers there’s nothing to worry about.”

Business view: “A Chinese firm found us on You-tube and wanted to sell our products in China with a 5 year licence agreement. We’re now on our second agreement selling video animations in primary education and its going incredibly well. But, perhaps we need to be more professional with IP than I’d imagined.”

Q.How have the effects of COVID-19 changed the way China trades with the world?

A. Jeff Cao: “China has nearly emerged on the other side.  China’s macro-economic management capability has long been highly regarded by the World Bank.  China is expected to lead other countries on economic recovery.  Out of the pandemic, we, China included, have learnt that we are all in it together. China will also rely on other economies to shore up demands”

A. John Mathers: “China has bounced back fast to near pre-Covid consumption and production levels. China is also as committed to investing in next generation technology infrastructure to become the number one world leader and this creates a significant business opportunity to invest in tech and creative industries post Covid.”

Business view:I’ve never been to China but they’ve been to us. They found us through content we put into the digital and social channels where they would look so it’s important to know your customer. As a result China has transformed our business.”

Q. What are the benefits of working with China and are they open to being a market place?

A. Jeff Cao:Beginning with investment, in China there is a negative list. For overseas investors investing into those businesses listed they will face different degrees of restrictions, ranging from minority shareholding through to off limit.  The length of negative list is ever shrinking in recent years; this year it’s coming down to 33 from 40 last year.  So overseas investors can enjoy increasing level of freedom to invest. Then there’s the sheer scale and size of the market – a population bigger than America’s and Europe’s combined and a ballooning middle class – these all mean business opportunities for British brands.”

A. John Mathers: “If you want to work in China don’t get stopped. There is always a way round a problem and the Chinese will throw people the problem fast to fix it – usually overnight! So, if you want to do China, determination is a key quality, because the Chinese are very determined.”

Business view: “Don’t assume a niche market is exclusive or peculiar to the west. Take pets for instance. When Covid hit many people were away from home and needed their pets looked after. This is a booming business and one where China looks to partners with experience of a sophisticated industry.”

Q. One of the aspects I fear, and I am not alone, is the language barrier. How do we truly overcome this to trade with/in China?

A. Jeff Cao:It’s claimed that Chinese is the most difficult language on earth to learn, but you must remember that in the EU which is our largest trading partner there are 24 official languages and in China only 1.  In addition, many Chinese millennials speak good English so probably you don’t have to speak Chinese to be able to do business in China!”

A. John Mathers: “Over 150,000 students attend UK Universities annually and are schooled in English and they look to UK education because many of the practitioners have been in business and this doesn’t happen in China. And a UK education will guarantee people a good job.”

Business view:In my experience dealing with Chinese customers and partners is a very personal experience being invited into people’s homes to meet families, doing seminars on the run and ending up in a karaoke bar – they love the Beatles. It’s really not alien at all – all very cosy.”

Q. How do the DIA Awards help someone gain access to everything China has to offer?

A. Jeff Cao: “The originality is still a scarce commodity in China. The UK must play to its strengths of inventiveness and entrepreneurship. It’s about Creativity Plus!  The DIA is one of the most prestigious awards in China and a good platform to showcase British originality.  Winning DIA Awards is a good way to get your brand known in the country.”

A. John Mathers: “The brand of Britain is highly regarded in China. In China you learn from your elders and shouldn’t question what they say. In the UK it’s normal to challenge the brief and question everything. UK design innovation practitioners are a precious commodity. The Design Intelligence Awards helps UK business owners understand this market and effectively dip a toe in to get a good foothold.”

4 China Must do’s

  1. Get your business known through social media and DIT services
  2. Play on your Britishness
  3. Never give up
  4. It’s about Creativity Plus!

Entering DIA is simple. It’s quick, easy and free to apply. Deadline: July 6th

Enter at: https://en.di-award.org/.

Details at: https://medium.com/@johnmathers2

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Contact: john@britishdesignfund.co.uk a