FOCUS (focus.cbbc.org) is the content platform of The China-Britain Business Council (CBBC). In this series of articles we will regularly share the top selections from FOCUS with our followers on WeChat.
Investing in cybersecurity is crucial for UK businesses in China – here’s why
For companies operating in China, not having a robust cybersecurity and data protection strategy during uncertain times is a big mistake – here's how to get started:
Kay Ng, cybersecurity and data regulations expert and founder of Cyber Analytics, offers a guide to protecting digital data and assets for British companies operating in China.
In an era of unprecedented economic volatility and geopolitical tensions, where data and cybersecurity have become the new battlegrounds, UK businesses operating in China face a unique challenge: driving business growth in a complex market while safeguarding their intellectual property and digital assets.
This guide aims to reaffirm cybersecurity and data protection strategies, with the aim of helping companies in China to preserve their competitive advantage during uncertain times.
Why prioritising cybersecurity in China is non-negotiable, even in a downturn
In a slower growth environment, intellectual property becomes even more valuable
Robust cybersecurity measures are critical to protect trade secrets and innovations that drive competitive advantage. It is important to know in what format your IP exists, who has access to it, and whether it can be shared with competitors without your knowledge.
The typical IP a company holds is already in the public domain. However, certain IP, like trade secrets, is reserved for only a subset of inner circle executives. A global Fortune 500 manufacturing company I consulted for defined the following as IP requiring the highest level of protection:
Manufacturing processes and 3D-drawing: These might include source code, bills of materials, etc., from R&D flow to manufacturing.
Customer lists: These might contain valuable information about target, existing and potential clients, their preferences and purchasing history.
Pricing strategies: This could include confidential information about pricing models, discounts, and other commercially sensitive data.
The Fortune 500 company’s assessment was that the above were easily subject to insider exfiltration of data and should warrant a security programme that targeted insider risks.
On the other hand, digital assets such as Internet domain names are easy targets for external attackers. Domain names could be stolen by local companies and competitors to impersonate you, thereby stealing your business.
Securing the company’s online presence and brand identity in the digital space typically forms another strand of a global company’s cybersecurity programme.
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The China-based lipstick brand fusing the physical and digital
From a stint at L'Oreal in China to launching the world's first ‘phygital’ cosmetic product, one French entrepreneur is doing things differently.
Tom Pattinson talks to Laurent Taisne, the Shanghai-based French cosmetics entrepreneur who is revolutionising the concept of lipstick with his physical-digital object, the YiZhiJi.
Taisne got his first taste of China in the 1990s when he visited as a backpacker, so when he was asked by L’Oréal to return to China to launch the French cosmetic company’s China research and development division 20 years ago, he leapt at the chance.
“At that time, we needed to address how we looked at the booming Chinese cosmetic market, and we discovered that Chinese women challenged the way we looked at the global cosmetics industry,” he says. Taisne explains that at that time, Korea and Japan were leading the industry but their routines often took over 40 minutes and might involve 10 to 15 products.
“The Chinese didn’t have time for this but they also didn’t want to make any compromise on the results,” he says. Because of this, Taisne and his team came up with unique products – including L’Oréal’s now global hit BB Cream – that derived from the demands of the hard working, time poor Chinese consumers with ever higher standards.
Taisne enjoyed his work creating new products and was increasingly tasked with working with OEM partners to aggregate the various products.
Many of these partners were seeking new technologies and an idea was born: he would combine his knowledge of product development with tech development.
Five years ago, he set up on what he calls his own adventure, launching the brand Totemist.
The first product that he has produced under the Totemist label is called the YiZhiJi – a luxury lipstick that carries personalised messages to the owner. It’s the first ‘phygital’ cosmetic product in the world, he says.
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How to appeal to China’s health conscious consumers
Whether it's health supplements, organic food or fitness gear, China's appetite for health-related products has skyrocketed – here's how to reach them
China’s consumer market is incredibly diverse, with various “consumer tribes” exhibiting distinct behaviours, preferences and spending patterns. Each of these tribes offers unique opportunities for businesses to tailor their products, services, and marketing strategies. In this article, WPIC introduces one of the most influential tribes: the health-conscious consumer.
The rise of the health-conscious consumer
The health-conscious consumer tribe in China has experienced significant growth over the past decade. This expansion has been driven by rising incomes, increased access to health information, the impact of the Covid-19 pandemic, and government initiatives like Healthy China 2030. As a result, consumers across different age groups, from young professionals to the elderly, are increasingly focused on maintaining a healthy lifestyle – and are willing to invest in products and services that promote health, from robust vitamin regimes to exercise classes.
Key drivers
Cultural shift: Rising incomes and the Covid-19 pandemic have contributed to a widespread cultural shift towards preventive healthcare, where maintaining health through diet, exercise, and lifestyle choices is prioritised. This trend has also been fuelled by the rising availability of health information online and through social media. In many ways, China’s health awareness boom aligns with that in Western markets.
Product categories: Nutraceuticals, supplements, organic food, and fitness-related products are popular among this group of health-conscious Chinese consumers. Traditional Chinese Medicine (TCM) products also play a significant role, combining modern wellness trends with more established cultural practices. Chinese consumers also demonstrate a distinct preference for “consumables” in promoting health, creating an especially large opportunity for nutraceuticals and supplements.
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What is China’s ‘six-year rule’ for foreigners?
How are expats in China taxed on their overseas income? A new rule comes into effect this year, so here's what you need to know:
Kristina Koehler-Coluccia, Head of Business Advisory at Woodburn Accountants & Advisors, offers a quick guide on the income tax implications of China’s “six-year rule” for foreigners working in China.
In 2019, China introduced a significant change to its individual income tax (IIT) system by implementing the “six-year rule” for foreigners. This rule, which starts applying in 2024, determines how foreign residents are taxed on their overseas income.
What is the six-year rule?
According to the revised IIT system, foreigners who reside in China for 183 days or more each calendar year are considered tax residents. If a foreign individual remains a tax resident for more than six years, they become liable for tax on their global income, including income from foreign sources. This is known as the “six-year rule.”
China’s tax rates are relatively high for high-income earners — 35% for annual taxable income between RMB 660,000 (approximately £70,250) and RMB 960,000 (approximately £102,183), and 45% for income exceeding RMB 960,000. Due to these rates, foreigners often seek to avoid IIT on their overseas income.
The year 2024 is crucial as it is the first time the six-year rule will be enforced. Foreigners should carefully review their tax residency status and consider strategies to reset their six-year period.
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China unveils new measures to stimulate the economy
What new measures has China brought in to try to boost the economy – and can they work?
On 24 September 2024, China unveiled its largest stimulus in years in an effort to revive its struggling economy amid a sharp property downturn and falling consumer confidence.
At a press conference in Beijing, People’s Bank of China (PBOC) governor Pan Gongsheng introduced a series of monetary reforms designed to boost investment and consumption.
Reserve requirement ratio (RRR) reduction
The PBOC will reduce the RRR – the amount of money banks must keep aside and cannot lend out – by 50 basis points, which will release approximately CNY 1 trillion (£107 billion) for new lending. This reduction may be followed by a further cut of 0.25 to 0.5 percentage points later in the year, depending on market liquidity.
Interest rate cuts
The seven-day reverse repo rate – the interest rate at which the PBOC lends money to commercial banks for short periods, using government bonds as collateral – will be lowered from 1.7% to 1.5%. Other key rates will also be cut to encourage borrowing.
Mortgage and property market support
Average interest rates for existing mortgages will be reduced by 50 basis points. Furthermore, the minimum down payment requirement for second homes will be cut from 25% to 15%.
A CNY 300 billion (£31.9 billion) fund, introduced in May and initially 60% funded by the central bank, will now be fully funded by the central bank to encourage local governments to purchase unsold homes and convert them into subsidised housing.
Capital market tools
A CNY 500 billion (£53.3 billion) swap programme will be introduced, allowing companies (funds, insurers, and brokers) to provide assets like shares or bonds as collateral to the central bank in exchange for credit or cash, enabling them to access liquidity more easily for stock purchases.
A separate CNY 300 billion facility will offer cheap PBOC loans to commercial banks to finance share purchases and buybacks.
Response
Global equities reacted positively to the news, reaching record highs, with Asian, European, luxury, car, and mining stocks benefiting the most.
According to analyses of the stimulus measures published by outlets including SCMP and Reuters, economists have largely welcomed the measures, although some have argued that they are insufficient to fully revive the economy.
Experts suggest that fiscal, rather than monetary, stimulus has historically been more effective and may still be necessary to meet the 5% growth target for 2024.
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The China-Britain Business Council (CBBC) is the UK’s national business network promoting trade and investment with China. We have been at the heart of the UK-China relationship for 70 years and are widely recognised as the independent voice of British businesses working with China. Our objective is to support the growth of British trade and investment with China and Chinese companies expanding and investing in the UK. Our diverse membership includes leading UK companies and universities, many of the UK’s most dynamic SMEs, and an ever-increasing number of Chinese companies exporting to and investing in the UK.
英中贸易协会（CBBC）是英国促进对华贸易和投资的国家级商业贸易网络。70年以来，我们一直处在行动的核心位置，积极参与两国在每个行业和地区的合作，被广泛认为是英国企业与中国合作的独立声音。我们的目标是支持英国对华贸易和投资的增长，以及中国企业在英国的扩张和投资。我们的会员包括众多英国领先的公司与知名大学、英国最具活力的中小企业，以及越来越多向英国出口和在英国投资的中国企业等。
