Doing business with China

China is one of the largest economies in the world and it relies heavily on exporting goods. As a result, the country is highly dependent on global demand for its products. China is one of our largest trading partners. Dutch companies imported €61 billion worth of goods from China in 2022. This makes the Netherlands an important gateway for China to other European markets.

In this article, you will find out more about business opportunities in China and how to comply with specific rules when importing and exporting goods and services.

Latest news

Imports decrease, exports increase

In the first half of 2023, the Netherlands imported almost 70 billion euros worth of goods from China. This is almost 5 billion euros less than in the same period last year. Exports to China increased by 16% to 11.8 billion euros. The Netherlands imported fewer computers and phones. And exported mainly machinery and medicines (source: CBS, in Dutch).

Struggle over computer chips

As of September 2023, the Dutch government will limit exports of computer chip machines to China. The Chinese government’s response is to restrict the export of raw materials for chip production. This is about the 2 main raw materials germanium and gallium. Industry in the Netherlands imports these raw materials to produce chips, solar panels, and solar cells. Chinese companies must first get government permission to export these goods. (Source: NU.nl)

Trade with China

China’s economy is mainly focused on manufacturing and the primary sector, the economic sector that provides raw materials and food. Figures from Statistics Netherlands (CBS) show that Dutch companies imported €61 billion worth of goods from China in 2022.

Telecommunications devices, electrical appliances, office equipment, and automatic data processing machines were the main imports. In the same year, Dutch exports to China totalled more than €20 billion. These consisted primarily of prepared foodstuffs, specialised machinery, and electrical appliances. Check out the key figures (in Dutch) on trade between the Netherlands and China.

Promising sectors

With a population of more than 1.4 billion, China is the most populous country on earth. It is a massive country and there are stark differences between regions. So focus on the region in which your product or service is most likely to succeed.

There are many opportunities in the e-commerce, hydrogen, maritime, and agrifood sectors. The Netherlands is a front-runner in these sectors when it comes to knowledge, development, and innovation. If you have a new product or service to offer that China needs for the growth and development of the country but cannot provide itself, you can be very successful. The Chinese government is investing heavily in generating energy from hydrogen, for example, and making its ports more sustainable. Discover more business opportunities in China (in Dutch).

Finding partners

Finding the right suppliers or buyers takes time. Local trade fairs can serve as a valuable source of information on the Chinese market. Here you can meet new people and start building up a network. You could also consider partnering up with a Chinese business and attending the fair together. Taking part in a trade mission to China (in Dutch) may open doors for you that would otherwise remain closed. For a list of trade fairs and exhibitions, visit AUMA or TradeFairDates.

Chinese business partners

You find a Chinese supplier or buyer and would like to do business. First, check that you are dealing with a reliable party. Most countries have a commercial register where a company must be registered. This does not yet say anything about the reliability of a supplier. But it does tell you whether the company is registered according to the law and has a right to exist. In China, the National Enterprise Credit Information Publicity System manages the Business Register. In its register, you can find company information such as the company name, registration number and activities of the company. This website is only available in Chinese languages.

You can check a registered company in Hong Kong on the Hong Kong government website. This is the Companies Registry. And ask the local embassy network for support on this. Upon request, they will carry out a company check (in Dutch) for you. This way, you can be sure that the Chinese company exists.

Smartphones

China has the largest number of smartphone users in the world. Messaging apps like WeChatTencent QQ, and Sina Weibo are widely used in China. While WhatsApp is popular in Europe, it cannot be used in China. When communicating with Chinese business partners, it is best to use a Chinese app.

Do you have questions about doing business with China? Contact the KVK Advice Team.

Business culture

Doing business in China requires a lot of effort, but you will reap the benefits over time. To a Chinese company, who you know is more important than your company’s track record. And Chinese people will often prioritise trust over a signed contract.

Because of the language barrier, many Dutch entrepreneurs struggle to communicate with their Chinese counterparts, few of whom speak English. Bring your own interpreter to meetings. And if you plan to give a presentation or bring written materials, have them translated before you leave for China. For more do’s and don’ts, visit RVO’s China country page.

Payments

To make payments to other countries, your Chinese business partner will have to request a foreign exchange rate from SAFE, the State Administration of Foreign Exchange. As a result, payments from China always take longer to process, regardless of which form of payment you choose.

Advance payments are particularly common, often in combination with a Letter of Credit (L/C). Chinese businesses prefer not to deliver goods on credit. Always consult your bank on which form of payment is the best fit for the transaction in question. Also ask about common payment habits and behaviour in China.

Put contracts in writing

Even though Chinese people put more faith in trust than in signed contracts, you should always set out agreements in writing. Have contracts reviewed by a lawyer who is familiar with the Chinese legal system. You should also make clear agreements on who will arrange and pay for transportation. Agree on an Incoterm® and set it down in writing in the contract. To avoid having to draw up a contract from scratch, consider using one of these model contracts (in Dutch).

Exporting goods

You have received an order and are about to export your products to China. You will always need an invoice, transport document, and packing slip. But you may also need additional export documents. Use Access2Markets to find out which documents you need to import your products into China. RVO explains (in Dutch) how to look up export regulations, duty rates, and requirements for China in Access2Markets.

The Chinese importer usually pays the import duty in China. This duty increases the cost price for your Chinese customer. As an exporter, you arrange this for your Chinese customer only if you have made agreements about it.

Product requirements

Product requirements in China (in Dutch) are very strict. Imported products are always registered when they enter the country and have to meet Chinese standards. Products that do not comply with local requirements are not allowed to enter the country. The same goes for products that do not bear the CCC mark (China Compulsory Certification) and a commodity code. Product requirements vary between different product types. China does not recognise CE marking. You can find more information about product groups and the corresponding product requirements, documents and certificates, and import duties in China on Access2Markets.

Mandatory registration of foodstuffs

IIf you produce, process, or store food, you must be officially registered (in Dutch) to export food products to China. New labelling rules (in Dutch) for foodstuffs were also introduced. Your registration number now has to be printed on the inner and outer packaging of your product, for example.

Importing goods

Dutch companies import more from China than they export to it. Of everything we import from China, about two thirds leave the Netherlands in an unprocessed state.

Check which documents you need and whether there are any additional costs. This is how you tackle importing products from China.

Transportation

There are many experienced logistics service providers in the Netherlands who are familiar with customs procedures in China. You can also hire a freight forwarder to ensure that your goods are processed quickly and efficiently and avoid having to worry about customs formalities yourself. Goods are generally transported to and from China by sea or by rail. Smaller consignments are also sent by air freight. Make clear arrangements with your Chinese business partner prior to shipping. Agree on an Incoterm® and lay it down in writing in the contract.

Services

To provide services in China, you need an official invitation from your Chinese business partner and a so-called Z visa. You can apply for this work visa via the China Visa Application Service Centre. This organisation handles visa applications for the Chinese Embassy in The Hague.

If you bring tools to China for work and will be taking them back with you, you can use an ATA Carnet to bring them into the country. With this goods passport, you will not have to pay import duties, VAT, or a deposit for temporary imports into China and re-imports into the EU.

Use the Overseas Services tool (in Dutch), created by the Tax Administration, to check whether the services you performed in the Netherlands or China are subject to VAT.