Cross‑border restructuring offers a way to de‑risk supply chains, sidestep punitive tariffs, and build operational resilience without abandoning China entirely. It is not just moving factories from China to Vietnam or Indonesia. It requires a strategic overhaul of tax structures, legal entities, workforce plans, intellectual property arrangements, supplier networks, and leadership models. When done well, it shifts China’s role from a one‑dimensional manufacturing base to a high‑value node in a broader regional strategy.

Why companies are choosing restructuring

Over recent years, geopolitical tensions, especially US–China trade and export controls, have disrupted once‑stable global supply chains. Rising costs and regulatory complexity in China have meant many multinationals are reassessing their entire China footprint. Yet for most, exiting China is simply impractical: the supply‑chain ecosystem is highly specialised; infrastructure is world‑class; R&D capability remains strong; and the domestic market continues to grow.

Instead, cross‑border restructuring provides a more balanced path. Companies can reduce geopolitical exposure while retaining China’s strengths by shifting certain parts of production, typically low‑value or labour‑intensive activities, to ASEAN or South Asia, while keeping R&D, quality control or domestic sales operations in China.

What to keep in China and why

The first step is understanding which parts of the operation truly belong in China. For some businesses, China is an export hub. For others, it’s a domestic market centre, an innovation base or a quality control node. That functional mapping is essential. Labour‑intensive assembly might be moved offshore, but high‑value engineering, regulatory liaison or customer service may remain.

Downsizing China operations isn’t simple. Legal obligations under labour laws mean consultations, severance and possibly union involvement. Equipment sales or asset transfer may require local approvals, particularly in sensitive sectors. And shifting assets can trigger tax liabilities, companies must weigh exit costs against long‑term benefits carefully.

Sensitive relationships can suffer if the process isn’t handled transparently. Government incentives or supplier ties may be put at risk if local stakeholders feel blindsided. Clear communication and compliance are crucial to preserving goodwill.

Choosing a new host location with purpose

The decision of where to locate new operations goes far beyond low labour cost. Strategic choice today must consider trade agreements, regulatory alignment, infrastructure, talent pools, and industry‑specific incentives.

For example, moving final assembly to Vietnam or Malaysia can help firms meet rules‑of‑origin requirements for free trade agreements, qualifying goods for tariff‑free export to the EU or US. But achieving this advantage depends on genuine manufacturing value‑add, not merely repackaging.

Market access also matters: Indonesia may suit consumer‑goods businesses seeking scale, while Singapore could be preferable for regulated sectors needing compliance clarity. Infrastructure readiness varies, from ports to digital readiness, and needs to match sectoral demands.

Many emerging markets now offer sector‑targeted incentives, India’s PLI (Production‑Linked Incentive) for electronics, or Thailand’s R&D grants for biotech. It’s vital to assess these offers relative to specific company needs.

Structuring the new entity and planning the timeline

How new operations are structured affects control, regulatory exposure, and cost. Options include a wholly foreign‑owned enterprise (WFOE), joint venture, contract manufacturing agreement or strategic alliance – all with different implications for tariff control, governance and local compliance.

To qualify for tariff benefits under agreements like RCEP or CPTPP, companies need to ensure local transformation thresholds are met, not just shipment points moved. That shapes decisions around what functions to relocate and what suppliers to localise.

A phased rollout is often wiser than a big‑bang relocation. Pilot operations allow evaluation of delivery performance, compliance fit, quality standards and cost savings before full-scale implementation. Project timelines must reflect construction, licensing, recruitment, training and partner onboarding timeframes.

Tax, transfer pricing and fiscal design

Restructuring often reshapes where value is created, and that impacts tax. Multinationals must ensure operations reflect substance: functions, risks and assets must align with where profits are allocated to avoid transfer pricing disputes across jurisdictions.

China is increasingly vigilant about outbound restructuring, especially where high‑value functions or IP are shifted. Early engagement with local tax bureaus and careful planning of asset transfers, or equity restructuring, is key to managing capital gains exposure and compliance risk.

Transfer pricing models must be updated to reflect new functional roles. Suppose China becomes a limited‑risk distributor rather than the main manufacturer. Then profit allocation and intercompany pricing must align with legal reality, not just historic structure.

People, leadership and morale

The human side of restructuring is often underestimated. Talent is hard to replace, and morale can suffer if staff in China feel abandoned or insecure. Leadership continuity, internal communications, retention plans, or even relocation programmes, must be carefully managed.

Mobilising key personnel from China to the new site raises immigration, tax and cultural adaptation issues. Host countries may limit work permits or raise residency hurdles. Companies need clear plans and legal advice on visas, taxation and support for expat staff.

At the same time, building a skilled local workforce requires labour‑market mapping, training initiatives, localisation planning and collaboration with vocational schools or employment agencies.

Protecting intellectual property and data

Moving operations can expose IP and data to new risks. Protection regimes vary by jurisdiction, patent law enforcement, judicial capacity and digital data governance differ greatly. IP risk assessments should be specific to each location and business model.

Companies must decide whether to hold IP in China, in a regional headquarters, or a neutral jurisdiction, understanding the impacts on tax, licensing arrangements and exit liabilities. Licensing terms between entities need to be clear, reflecting royalty terms, legal risks, and control frameworks.

If operations shift to territories with weaker IP regimes, greater vigilance, not just contracts, is required. Partner vetting, in‑house retention of core know‑how and regional IP strategies help limit leakage.

Managing supplier and customer relationships through transition

Supply change disruption is a real danger. Long‑standing supplier ties and delivery expectations can be upended if operations move too quickly. Identifying sole‑source vulnerabilities or critical clients is essential before the transition begins.

Maintaining customer service levels during the shift requires interim logistics planning, buffer stock, possible dual sourcing and renegotiation of contracts to reflect new transit routes or import/export jurisdictions.

Proactive, transparent communication builds trust. Customers and suppliers benefit from clear timelines and commitment to quality. In some cases, joint planning with anchor suppliers or logistics partners can smooth the transition; others may mean onboarding new local sourcing partners in the host country.

When is restructuring the right move?

Cross‑border restructuring may sound complex, but it offers more than risk mitigation. For many companies, it is a strategic move designed to future‑proof operations in a world where agility and resilience matter as much as efficiency.

Businesses must assess their own vulnerabilities: Are specific tariff risks or export controls exposing particular product lines? Is there over‑reliance on a single site or region? Which functions are portable? Which need to stay in China? Will a partnership model or contract manufacturing serve just as well as full investment offshore?

Cost savings alone are rarely enough. Firms must weigh infrastructure limitations, legal unknowns, language or cultural barriers, and balance must favour long‑term operational stability over sheer low cost.

Finally, internal alignment is critical. Leadership must treat restructuring as organisational change, not just logistics: reshaping workflows, managing talent, and preserving morale during the shift, all while sustaining governance, communication and the integrity of service delivery.

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From 1 July 2025, Shanghai raised its monthly minimum wage from RMB 2,690 (£288) to RMB 2,740 (£294), a relatively conservative increase of less than 2%. The city’s hourly minimum wage also climbed from RMB 24 (£2.57) to RMB 25 (£2.68). While Shanghai retains the highest minimum wage in the country, the small increment marks its lowest annual increase in over a decade — signalling a broader strategic shift in China’s approach to wage setting.

The restrained increase comes at a time when many Chinese cities are weighing the need to support workers against mounting pressure on businesses. For low-income workers in the city, the additional RMB 50 (£5.36) a month may be welcome but is unlikely to keep pace with rising costs for essentials like rent, transport and food. Meanwhile, employers — particularly in the private sector and among SMEs — have been wary of sharper increases that could hit hiring and operating margins.

Shanghai’s move follows a pattern seen in other economically advanced parts of China, such as Beijing, Shenzhen and Guangdong, where minimum wage growth has slowed in recent years. Beijing now has the country’s highest hourly minimum wage at RMB 26.4 (£2.83), while Shenzhen and Guangdong follow closely behind Shanghai with monthly minimum wages of RMB 2,520 (£270) and RMB 2,500 (£267) respectively. Coastal cities continue to lead the pack, but the difference with other regions is narrowing as inland provinces roll out more substantial hikes.

China allows each of its 31 provincial-level regions to set their own wage levels, leading to wide disparities. While most now have minimum monthly wages above RMB 2,000 (£214), some less developed provinces such as Hunan and Liaoning still sit closer to RMB 1,700 (£182). Regional authorities are required by law to review wages at least every two to three years, but increases are not guaranteed. Shanghai skipped adjustments altogether in both 2022 and 2024, reflecting the uncertain post-Covid economic environment and the government’s cautious fiscal outlook.

The wider context for these adjustments is China’s drive towards “common prosperity”, a national policy ambition aimed at reducing inequality and spreading the benefits of growth more evenly. While minimum wage rises are just one part of this broader agenda, they remain a critical lever for supporting working-class incomes and boosting domestic consumption.

Still, policymakers are walking a tightrope. Labour-intensive industries such as manufacturing, retail and logistics remain sensitive to wage increases, particularly in regions where businesses already face thin margins. Some firms may respond by relocating operations to lower-cost inland areas, or by investing in automation. Others may reduce hiring or move workers to informal, lower-paid roles not protected by minimum wage regulations.

There is also a generational and demographic dimension. Migrant workers and young people are disproportionately represented in low-wage and part-time employment, and thus stand to benefit from wage increases, but they are also most at risk if businesses trim staff to offset higher costs.

Shanghai’s modest wage rise this year suggests a preference for gradualism. The increase was likely designed to signal continued government support for workers, without destabilising local businesses or contributing to inflation. Analysts expect other cities to follow similar trajectories: small, measured increases tied closely to local economic indicators such as productivity growth, employment rates and cost-of-living data.

With China’s economy facing slower growth, soft domestic demand and ongoing global trade pressures, wage-setting will remain a key balancing act for local and national authorities. The 2025 update may be modest on paper, but it offers insight into how China is managing its transition from high-growth industrial powerhouse to a more service-led, consumption-driven economy.

For now, Shanghai leads the country in both pay and prudence. The rest of China is watching closely.

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If Part 1 of this series focused on what brands must do to prepare before signing with a Chinese distributor, Part 2 explores the more difficult scenario: what happens if that relationship breaks down?

As Zarina Kanji, Managing Director UK & Europe at WPIC, puts it: “The best thing is to avoid getting stuck in the first place.” But if things do go wrong, whether the distributor isn’t delivering, the market strategy has changed, or the working relationship has simply soured, brands must move swiftly, strategically and with clarity.

“Trust is absolutely fundamental in Asia,” says Kanji. “It’s a region where relationships matter. The number of UK brands and beauty partners is small, people talk. If you can keep things professional and polite, you’ll stand a better chance of exiting on good terms.”

That’s not always easy, but it’s critical. “If you’re planning to stay in the Chinese market, you’ll need to line up a new partner and manage the transition carefully,” she explains. “Platforms like Alibaba or an agency like WPIC can sometimes support the handover. The new partner might help with transferring stock, keeping the store live and downtime minimal. But this is only possible if the breakup isn’t acrimonious.”

If tempers flare or the relationship turns hostile, things can spiral quickly: stores shut down, sales data is lost, and customer reviews disappear. “In the worst-case scenario,” she adds, “it’s a reminder of why doing due diligence upfront— and retaining ownership of your store — is so important.”

A phased approach—not a scorched earth

Kristina Koehler-Coluccia, Head of Business Advisory at Woodburn Accountants & Advisors, has seen this scenario play out many times, including with long-established brands.

“I’ve worked with companies that started with wholesale, then expanded into e-commerce and even hired staff. When the time was right, they decided to set up their own company in China. But instead of cutting ties with their distributor, they took a phased approach.” In this case, the company drew up a list of everything the distributor controlled — logistics, warehousing, customs clearance — and identified what to take back in-house and what to leave in place.

“Just because the distributor’s no longer right for the e-commerce or brand management side, doesn’t mean they’re not good at operations,” says Koehler-Coluccia. “So rather than burn the bridge, keep them doing what they’re good at. It also avoids triggering hostility.”

This type of staged transition can be particularly valuable for brands that rely on physical stock management. “Distributors don’t always just run the store,” she says. “They may also hold your inventory, fulfil orders, or handle customer service. You need to think about the whole supply chain, not just the front end.”

If it turns ugly, get legal, get local

But what if the distributor won’t cooperate? What if they refuse to transfer ownership of assets – or worse, continue using your brand? “If it turns ugly, you need a Chinese lawyer,” says Koehler-Coluccia. “Don’t try to manage this through a UK firm. Chinese law, Chinese platforms – this is where you need expertise on the ground.”

The first step is to review your contract. Hopefully, it includes clear terms on asset ownership and an exit clause (as advised in Part 1). If the distributor has no licensing rights and doesn’t own the trademark, you have leverage. “If they’re still using your brand post-termination, you can stop shipping,” she says. “That gets their attention. Meanwhile, your legal team can engage directly with the platform—whether that’s Tmall, JD, or another.”

She also recommends reaching out to the platform itself. “Tmall and JD don’t want this conflict either,” she explains. “They earn off your sales. They want to keep your brand active. You can get a client manager, and in some cases, they’ll help you change usernames and passwords. But you need a lawyer to do this—it’s not a simple customer service job.”

Keep your company structure in mind

For brands with serious long-term ambitions in China, one option is to incorporate locally. “Platforms will only let you own your store directly if you have a Chinese entity,” explains Koehler-Coluccia. “So many companies we work with start by using a distributor, but then form their own local company to take over.” That local entity can then contract directly with the platform, manage invoicing, repatriate profits, and even hire staff. “You can still outsource warehousing and logistics, even keep the same partner in a reduced role,” she adds. “But you control the brand and the data.”

For brands exiting completely, the priorities are slightly different. “If you’re done with the market,” says Kanji, “then the key is to get everything closed as quickly and cleanly as possible. Connect with the platforms and ask to close the stores, retrieve any stock, reclaim your platform deposit and close contracts—especially if you’ve got months left and nothing’s happening.”

Think strategically, not emotionally

In Kanji’s experience, British brands often get caught up in the heat of a bad situation. “But think long term,” she advises. “If you might want to come back to China, then it’s worth leaving on good terms.”

She recommends again using the CBBC, DBT, or approaching platforms directly for guidance. “There are people who’ve done this before and can help. Don’t go it alone.” And ultimately, as Koehler-Coluccia points out, this is about thinking operationally. “Too many brands only think about the e-commerce channel. But if you’ve been doing wholesale too, that’s a whole different relationship. Do a SWOT analysis. What are your distributor’s strengths? Where are the weaknesses? How much can you do yourself—and how much do you need help with?” She concludes with a reminder: “If your distributor has done a good job with logistics, why change it? The goal is to regain control, not destroy what’s working.”

Part 1 Recap: What to do before engaging a Chinese distributor
Read the first feature in this two-part series for a full breakdown of how to choose the right distributor, avoid common mistakes, and ensure you retain control of your brand in China.

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It’s no secret that the Chinese market offers immense opportunities for international brands. But engaging a distributor without thorough preparation can leave businesses exposed, misrepresented, or worse, locked out of their own success. Two experts, Zarina Kanji, Managing Director UK & Europe at WPIC, and Kristina Koehler-Coluccia, Head of Business Advisory at Woodburn Accountants & Advisors, offer a clear-eyed look at the key steps British companies must take before signing anything.

The first lesson: do your homework. “Due diligence is everything,” says Kanji. “Ask for case studies from the distributor of companies they have worked with before and speak to them about their experience with that distributor. Ask partners within the network for their insights. It’s a relatively small community, so introductions are possible. Speak to other brands about their experience—but be discerning. Some may have had a bad story, but that might be down to getting the price wrong, or targeting the wrong market.”

She recommends using networks like the China-Britain Business Council (CBBC) and the Department for Business and Trade (DBT) to get introductions and independent perspectives. But due diligence isn’t just about reputation, it’s also about understanding what’s actually being offered.

“Governance is important,” she says. “You need to know the breadth of services on offer. Is it an end-to-end service? Are they only running social campaigns, or are they also providing logistics, data reporting, and customer service? Some brands charge less, but do a lot less. You have to understand what’s required of you as the brand.”

For example, larger partners like WPIC may put 10 to 15 people on a single brand account. But smaller partners often require brands to provide considerable input, time and resources of their own. If your internal team can’t handle the load, the relationship may suffer.

Know your value…and your size

A common mistake, Kanji warns, is choosing a distributor that’s either too big or too small. “If your brand is under £10 million in annual turnover, don’t go for a giant partner like Baozun. You’ll be competing with Nike or Lululemon and you simply won’t get the attention.”

Instead, she advises finding partners at a comparable size. “You want someone who sees value in your business and is incentivised to make it grow, not just to hit quotas.”

Own your store. Protect your IP.

Perhaps the most critical red flag is giving away too much control, too early. “Make sure you own your store in China,” says Kanji. “The worst-case scenario is handing ownership of your Tmall or JD store to the distributor. Once they have that, they have the upper hand. That’s where the most costly and complex challenges come from.”

Koehler-Coluccia agrees emphatically. “There must be a clause in the distribution agreement that clearly states: all collateral belongs to the brand,” she says. “That includes the Tmall and JD stores, the inventory, all the digital assets. And if the contract ends, there must be a clean transfer of those assets back to the brand.”

In practice, she adds, this means spelling everything out in the contract—including an itemised list of what the distributor is setting up, and who owns what. Too often, British companies rely on UK lawyers for contracts that will be enforced in China. “Don’t do that,” she says. “Hire a Chinese law firm. You’re playing by Chinese rules—use someone who knows the game.”

Plan your exit before you start

One of Koehler-Coluccia’s most repeated mantras is simple: have an exit strategy. “There needs to be a section in the contract that says: if this doesn’t work, here’s how we unwind it. That includes transferring stores, assets, remaining stock. Don’t wait until things go wrong to figure that out.” It’s also worth accounting for the possibility that the distributor might lose money on the venture. “If they spend on marketing or logistics and don’t see ROI, what happens? That needs to be agreed up front—whether that’s clawback clauses or refund triggers.”

Understand the costs…and how to get paid

The Chinese e-commerce ecosystem is expensive and complex. Brands must factor in multiple layers of fees: platform deposits (for Tmall, JD, etc.), annual platform charges, partner fees, and campaign costs. All of these need to be fully itemised from the beginning.

“Get a full breakdown,” says Kanji. “You need to know what the fees are, what frequency they’re paid, and what happens if something goes wrong. Budgeting without this knowledge is asking for trouble.”

Remittance is another challenge. How will profits be repatriated? What’s the process for converting RMB back into pounds? These issues need to be clarified up front, with support from tax and legal advisors familiar with Chinese rules.

Stay involved from day one

For companies that assume the distributor will handle everything, both experts sound a stark warning. “Too many brands just want to delegate,” says Koehler-Coluccia. “They don’t have the internal capacity, so they assume they can just hand it off and watch the money roll in. That’s a fantasy.” Instead, she stresses the need for active involvement: “Set KPIs. Have monthly meetings. Monitor performance. If targets aren’t being hit, have that conversation early.”

It’s not uncommon, she says, for companies to ignore the setup process, then try to take control later, only to find the distributor has more leverage than expected.

“They’ll say: we put in the capital, the resources, the attention. And now you want to terminate us? If you’re not willing to pay attention from day one, what do you expect?”

Choose partners with platform access and influence

Relationships still matter in China, particularly when it comes to access and visibility. “Ask how long they’ve been in business, and how well integrated they are with platforms like Alibaba, Douyin, Xiaohongshu (RED),” says Kanji. “At WPIC, we have longstanding partnerships, so we get early access to marketing campaigns or new tools. That gives our clients first-mover advantage. Some agencies don’t have those connections., they can’t pull favours, they can’t get you in early.” That kind of platform integration can be the difference between a flagship campaign and being lost in the crowd.

Eyes wide open

Ultimately, both Kanji and Koehler-Coluccia stress the same thing: be realistic. China is not a plug-and-play market. It takes time, investment, clarity, and ongoing engagement. British brands that treat their Chinese distributor as a plug-in growth engine are almost always disappointed. But with the right preparation, the right legal safeguards, and a partner aligned to your scale and ambition, the rewards can be substantial. As Koehler-Coluccia puts it, “You can’t just hand it off and hope. This is your brand. Protect it.”

Read Part 2 here: What to do if your relationship with a Chinese distributor goes wrong

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In 2022, China’s population fell for the first time in six decades, dropping from 1.4126 billion to 1.4118 billion, a decline of 850,000. This trend has accelerated, with losses of 2.08 million in 2023 and 1.39 million in 2024, according to China’s National Bureau of Statistics. The United Nations projects a further decline of 204 million by 2054, and by 2100, China could lose over half its current population, falling by 786 million. This shift, driven by low birth rates and an ageing population, is reshaping labour markets, consumer demand, and business prospects. For UK firms, understanding these changes is key to thriving in China’s evolving market.

The decline stems from the One-Child Policy (1979–2015), which limited most families to one child, reducing the number of women of childbearing age and skewing gender ratios. Coupled with high living costs, shifting attitudes towards marriage, and the economic impact of COVID-19, China’s birth rate in 2024 was just 6.77 live births per 1,000 people, slightly up from 6.39 in 2023. Meanwhile, the population over 60 reached 310.3 million in 2024, up from 297 million, while the working-age population (16–59 years) dropped from 61.3% to 60.9%, totalling 858 million. By 2050, those over 65 are expected to double, straining social systems.

To counter this, China has rolled out policies to boost births and manage an ageing society. Since 2016, couples can have two children, expanded to three in 2021. Subsidies, like Shenzhen’s RMB 19,000 (£2,050) for families with one to three children, aim to encourage childbirth, alongside tax deductions and childcare support. However, these measures have yet to reverse the decline. Starting January 2025, China will raise retirement ages, men from 60 to 63, women from 50 to 55 (blue-collar) or 55 to 58 (white-collar) over 15 years, to address a shrinking workforce. The government is also investing in the “silver economy,” with policies like rent exemptions and tax breaks for eldercare providers, as outlined in the 2022 National Development and Reform Commission measures and the 2024 State Council’s Opinions on Developing a Silver Economy. A private pension scheme, launched in 2022 and expanded nationwide in 2024, offers tax incentives to ease pressure on public pensions. Additionally, China is pushing automation and “New Quality Productive Forces” (NQPFs), focusing on AI, robotics, and biotechnology to offset labour shortages.

This demographic shift challenges China’s economic model, once fuelled by a large, young workforce. With 734.4 million workers in 2024, labour shortages are not immediate, but industries like manufacturing and construction may face higher wages and shortages as younger workers shun manual labour. A smaller population could shrink consumer markets, with older citizens spending less. Yet, rising per capita income – RMB 41,314 (£3,550) in 2024 – and policies like the Special Action Plan to Boost Consumption and the dual circulation strategy are strengthening domestic demand. British brands like Burberry succeeded by tailoring products to local tastes, highlighting the need for adaptability.

Despite challenges, China’s ageing population creates opportunities for British businesses. The eldercare market, projected to reach £2.6 trillion by 2030, demands healthcare services, pharmaceuticals, and medical devices. Healthcare Opportunities in China, allow UK firms like AstraZeneca to grow in China through local partnerships to meet these needs. Education is another growth area, with smaller families spending more on premium services and a shortage of skilled workers in technology, healthcare, and engineering. UK institutions are also helping to uskilling China’s workforce by expanding vocational training. China’s push for automation aligns with UK strengths in AI and robotics, as seen at the 2024 China International Import Expo, where British tech firms showcased innovative solutions.

To succeed, British businesses should invest in automation, partnering with Chinese firms to develop AI and robotics. Offering vocational training, diversifying products for an ageing, affluent market, and building local partnerships are critical. Flexible work arrangements can also attract talent in a competitive market. While China’s population decline poses risks like labour shortages and reduced consumer demand, it also opens doors in healthcare, education and technology. By staying agile and leveraging UK expertise, British firms can seize these opportunities in China’s changing landscape.

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Understanding China’s IP Framework

China’s IP system has undergone transformative reforms since joining the World Trade Organisation (WTO) in 2001, aligning more closely with international standards such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Key milestones include the establishment of the first Trademark Law in 1982, the Patent Law in 1984, and the Copyright Law in 1990, all of which have been amended multiple times to enhance protection and enforcement. The China National Intellectual Property Administration (CNIPA) oversees patents, trademarks, and geographical indications, while the National Copyright Administration of China (NCAC) manages copyright matters.

In 2021, China introduced the “Outline for Building a Strong Intellectual Property Nation 2021-2035,” a 15-year plan aimed at strengthening IP protection, improving market value, and boosting brand competitiveness. By 2026, the outline targets a 13% contribution from patent-intensive industries to GDP and an increase in high-value patents per 10,000 people to 12. Recent data highlights China’s progress: in 2022, the country recorded 4.21 million valid patents (up 17.1% year-on-year) and 42.67 million valid trademarks (up 14.6%), underscoring its commitment to fostering innovation.

Despite these advancements, foreign businesses must remain vigilant. China’s first-to-file system for trademarks and patents means that the first entity to register IP rights typically secures them, even if they are not the original creator. This system, combined with historical issues like bad-faith registrations, necessitates proactive strategies to protect IP effectively.

Key Steps to Protect Your IP in China

1. Register Your IP Early

China operates a first-to-file system, making early registration critical to securing IP rights. Trademarks, patents, and copyrights must be registered with the CNIPA or NCAC, as IP protection in other countries does not automatically extend to China. For trademarks, consider registering in both English and Chinese (including transliterations) to prevent bad-faith registrations, where third parties register similar marks to extort foreign companies. The CBBC advises seeking professional assistance due to the complexities of the Chinese IP system, particularly for trademarks, which require a comprehensive understanding of local regulations.

Patents in China include invention patents (20 years), utility models (10 years), and design patents (15 years). Design patents, crucial for creative industries, protect the aesthetic aspects of products but must be registered before public disclosure to maintain eligibility. Copyrights are automatically protected under the Berne Convention, but voluntary registration with the NCAC provides presumptive evidence of ownership, simplifying enforcement. For creative sectors like architecture, design, and media, registering copyrights and design patents is strongly recommended to safeguard against infringement.

2. Use Contracts and Agreements

Contracts are a vital tool for protecting IP internally and externally. Non-Disclosure, Non-Use, Non-Circumvention (NNN) agreements, tailored to Chinese law, are more effective than standard Non-Disclosure Agreements (NDAs) in preventing suppliers, partners or employees from misusing IP. These agreements should be bilingual (Chinese and English) and governed by Chinese law to ensure enforceability. Including IP protection clauses in contracts with employees, clients, and partners further strengthens safeguards.

For creative businesses, contracts can delineate ownership and usage rights for collaborative projects. Clear agreements are key in industries like film and design, where IP disputes can arise from ambiguous partnerships.

3. Leverage Trade Secrets Protection

Trade secrets, encompassing confidential business information like manufacturing processes or client lists, are protected under China’s Anti-Unfair Competition Law, amended in 2019 to enhance safeguards. To qualify as a trade secret, information must be non-public, commercially valuable, and subject to confidentiality measures. Businesses should implement internal controls, such as limiting employee access to sensitive data, providing IP training, and incorporating security into facility design. Monitoring for potential leaks at trade shows or online platforms is also essential.

4. Monitor and Enforce IP Rights

Proactive monitoring is crucial to detect and address IP infringements promptly. Businesses should regularly check trademark and patent databases, industry publications, and e-commerce platforms for unauthorised use. The CBBC’s partnerships with platforms like Alibaba and Tencent facilitate dialogue and enforcement, helping British companies tackle online infringement.

Enforcement options in China include administrative action, civil litigation, criminal enforcement, and customs seizures. Administrative actions, handled by local authorities, are effective for straightforward trademark or counterfeiting cases. Civil litigation, increasingly successful for foreign firms, offers the potential for damages and public deterrence. Specialised IP courts in cities like Beijing, Shanghai, and Guangzhou, established since 2014, have improved judicial expertise and consistency.

5. Utilise Technological Tools

China’s adoption of technology to enhance IP protection is noteworthy. In 2024, the Copyright AI Intelligent Review Tool was introduced to streamline the assessment of copyright infringement cases, particularly for images. By automating analysis, the tool reduces human error and accelerates rulings, empowering creators to combat infringement effectively. Businesses should stay informed about such innovations, as they may expand to cover broader IP categories in the future.

6. Collaborate with Strategic Partners

The CBBC’s network of strategic partners, including the Alibaba Anti-Counterfeiting Alliance (AACA) and the Quality Brands Protection Committee (QBPC), provides valuable support for UK businesses. These partnerships facilitate collaboration with Chinese authorities and platforms, enhancing IP protection and enforcement. Engaging with CBBC’s IP team can also provide access to tailored advice and professional networks.

Addressing Challenges

Despite progress, challenges remain. Bad-faith trademark registrations continue to hinder foreign companies, requiring costly legal action to cancel or invalidate. The perception that “you cannot do anything if someone copies you” in China is outdated but persists among some businesses, underscoring the need for education. Additionally, cultural differences and varying levels of public awareness about IP rights can complicate enforcement.

Businesses, particularly in creative sectors, may hesitate to enter China due to infringement fears. However, by leveraging China’s robust IP system and taking proactive steps, these risks can be mitigated. Success stories, such as eOne’s recognition of Peppa Pig as a well-known trademark, demonstrate that persistence and strategic litigation can yield positive outcomes.

Looking Ahead

China’s IP environment is poised for further improvement, driven by domestic innovation and international pressure. The 2024 Patent Law amendments, introducing patent term extensions for pharmaceuticals and reinforcing good-faith principles, reflect China’s commitment to a stronger IP regime. By 2025, over 2,000 IP support agencies nationwide are expected to assist businesses, processing 71,000 applications annually.

For British businesses, protecting IP in China requires a proactive, multi-faceted approach: early registration, robust contracts, vigilant monitoring, and strategic partnerships. By staying informed and leveraging resources like the CBBC, companies can navigate China’s IP landscape with confidence, fostering innovation and growth in one of the world’s most dynamic markets.

The post How to Protect Intellectual Property in China appeared first on Focus - China Britain Business Council.

Current Regular Commercial Flights

Direct flights between the UK and China are primarily operated by Chinese carriers due to their ability to use Russian airspace, which shortens flight times and reduces costs compared to European airlines. Key airlines include:

• Air China: Operates daily direct flights from London Heathrow (LHR) to Beijing Capital International Airport (PEK). Flight time averages 10 hours 59 minutes.
• China Southern: Runs daily direct flights from LHR to Guangzhou Baiyun International Airport (CAN) with an average duration of 14 hours 25 minutes, and four weekly flights to Beijing.
• China Eastern: Offers daily direct flights from LHR to Shanghai Pudong International Airport (PVG), with an average flight time of 11 hours 23 minutes.
• British Airways: Continues daily LHR–PVG flights but suspended its Beijing route in October 2024 due to longer flight times (avoiding Russian airspace adds up to 2.5 hours) and low demand.
• Hainan Airlines: Provides occasional direct flights from London to smaller hubs like Chongqing or Xi’an, though schedules vary.

Indirect flights are available through hubs like Dubai (Emirates), Doha (Qatar Airways), or Helsinki (Finnair), often at lower costs but with longer total travel times (15–20 hours). Popular routes include Manchester (MAN) to Shanghai via Abu Dhabi with Etihad or LHR to Beijing via Paris with Air France.

Flight Frequency

• Daily: Air China (LHR–PEK), China Southern (LHR–CAN), China Eastern (LHR–PVG), and British Airways (LHR–PVG).
• 4–5 times weekly: China Southern (LHR–Beijing), Hainan Airlines (LHR–Chongqing/Xi’an).
• Indirect flights: Multiple daily options via Middle Eastern or European hubs, with Emirates and Qatar Airways offering the most frequent connections.

Sunday has the highest number of direct flights from London (averaging six), while Monday sees the fewest (around four).

Costs and Deals

Flight prices fluctuate based on season, booking time and demand.

• Cheapest months: October and November, with return economy flights starting at £324 (e.g., LHR–PEK with China Southern). Booking two months in advance on Tuesdays or Wednesdays often yields the lowest fares.
• Most expensive months: April and January (around Chinese New Year), with return flights exceeding £458.
• Average costs: Economy return tickets range from £324 (Beijing) to £460 (Shanghai or Guangzhou). Indirect flights can start at £237 (Saudi via Jeddah), though direct flights with Chinese carriers are often better value for time saved.

Deals:

• Skyscanner and KAYAK offer real-time comparisons, with deals like £254 return from LHR to Beijing on Air China.
• StudentUniverse provides student discounts, with return fares to Shanghai or Beijing from £300.
• Booking.com and Expedia.co.uk highlight flexible tickets with no change fees, ideal for uncertain travel plans.

Reliability and Delays

Chinese carriers (Air China, China Southern, China Eastern) are generally reliable due to shorter routes over Russia, reducing weather-related disruptions and fuel costs. Data from OAG indicates these airlines have fewer delays compared to European carriers like Lufthansa or Air France, which face longer routes and higher operational costs. Air China’s LHR–PEK route is among the least delayed, with an on-time performance of around 80%. Indirect flights via busy hubs like Dubai or Doha are more prone to delays, especially during peak seasons.

Best Value and Chinese Cities Served

For best value, direct flights with Chinese carriers to major hubs offer the optimal balance of cost, time, and reliability:

• Beijing (PEK): Air China’s daily LHR–PEK flights (£324–£400 return) are ideal for access to the capital.
• Shanghai (PVG): China Eastern and British Airways’ daily flights (£400–£460 return) serve China’s economic powerhouse.
• Guangzhou (CAN): China Southern’s daily LHR–CAN route (£350–£450 return) connects to southern China’s trade hub.

For secondary cities, indirect flights or domestic connections from Beijing, Shanghai, or Guangzhou are cost-effective.

Tips for Travellers

• Book early: Secure flights 2–3 months ahead for the best deals.
• Check visas: UK passport holders need a visa, obtainable via Chinese visa application centres.
• Avoid peak seasons: Steer clear of Chinese New Year (January–February) and summer (June–August) for lower costs and fewer crowds.
• Consider indirect routes: For budget travellers, transiting via Seoul or Hong Kong can save up to 30% compared to direct flights.

Despite post-Covid and Ukraine-related challenges, direct flights with Air China, China Southern, and China Eastern from London to Beijing, Shanghai, and Guangzhou offer the best value and reliability in 2025. With return fares starting at £324 and daily frequencies, these routes cater to diverse travel needs. For the budget-conscious, indirect flights via Middle Eastern hubs provide cheaper alternatives, though at the cost of longer travel times. Always compare deals on platforms like Skyscanner and book early to maximise savings.

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In its eleventh edition, the CBBC Trade Tracker, released in June 2025, paints an optimistic picture of UK-China trade relations, underscoring the resilience and dynamic nature of this vital economic partnership. In 2024, a year marked by global economic turbulence and shifting geopolitical currents, UK goods exports to China rose by 1% to £21.1 billion, reversing a 1.6% decline from 2023. This modest but significant growth signals a renewed momentum in bilateral trade, driven by diverse regional contributions from across the UK’s regions and a deepening of commercial ties with the world’s second-largest economy. With China, including Hong Kong, standing as the UK’s third-largest trading partner and fifth-largest export market, the report highlights the critical role this relationship plays in bolstering British prosperity.

The CBBC’s report, drawing on HM Revenue and Customs (HMRC) data, offers a granular view of how UK regions and devolved administrations have navigated the complexities of the Chinese market in 2024. Among the standout performers, the East Midlands, which solidified its position as the UK’s largest exporter to China with £3.5 billion in goods, a 2.8% increase from the previous year. The region’s dominance is largely attributed to its robust trade in power-generating machinery and equipment, which rose by 1.3% to £2.6 billion, accounting for the lion’s share of its exports. Notably, the East Midlands remains the only UK region to run a trade surplus with China, with exports to Hong Kong comprising an impressive 84% of its total trade with the country. This underscores the region’s strategic importance as a hub for high-value manufacturing and its ability to capitalise on demand in both Mainland China and Hong Kong.

Hot on the heels of the East Midlands, the West Midlands emerged as the UK’s second-largest exporter to China, with goods exports edging up by 0.5% to £3.21 billion. The region’s trade is anchored by road vehicles, including premium cars and automotive components, which, despite a marginal 1.6% dip to £2.15 billion, remain the cornerstone of its exports. A notable bright spot was the 36.8% surge in power generating equipment exports to £287 million, reflecting growing Chinese demand for advanced energy technologies. The West Midlands’ contribution to UK-China trade accounted for 1.65% of its regional GDP, the second-highest share among UK regions, highlighting its pivotal role in sustaining national economic growth.

London, with £3 billion in exports, maintained its position as a key player in UK-China trade, despite a 4.8% decline from 2023, a marked improvement from the 25.5% drop the previous year. The capital’s trade profile is distinctive, with miscellaneous manufactured articles, such as luxury cosmetics and designer goods, leading the way, though these fell by 13% due to subdued consumer sentiment in China. London’s unique position is further evidenced by China ranking as its third-largest export market, the only UK region where this is the case, and its prominence in apparel and optical goods exports. The presence of major energy firms headquartered in the capital also drives significant petroleum exports, though these are more reflective of corporate activity than physical trade.

The North West of England also shone brightly, with exports to China climbing by 7.6% to £2.15 billion, marking the third-fastest growth rate among UK regions. This growth was underpinned by steady demand for road vehicles, including electric vehicles and components, as well as strong performance in agri-food exports such as cereals and animal feed. The region’s success in these categories aligns with China’s increasing focus on food security, positioning the North West as a critical supplier in this strategic sector. Meanwhile, the South West of England celebrated its fourth consecutive year of export growth, with a 3.5% increase to £1.7 billion, overtaking the South East to become the UK’s fifth-largest exporter to China. The region’s strength lies in ‘other transport equipment,’ including aircraft parts and luxury yachts, as well as scientific instruments like avionics and radar systems, which saw robust demand.

Regional Stars: North East and Scotland Surge Ahead

Among the most striking stories of 2024 is the remarkable export growth from England’s North East, which soared by an impressive 45.9% to £620.6 million, the fastest growth rate of any UK region. This surge was driven by power-generating machinery and equipment, likely including turbines and wind energy technologies, alongside significant gains in non-ferrous metals (up 174%) and medicinal and pharmaceutical products (up 138%). Despite being the UK’s second-smallest exporter to China, the North East’s leadership in niche categories like timber and organic chemicals underscores its outsized impact on UK-China trade.

Scotland, too, delivered a standout performance, with goods exports surging by 32.6% to £1.47 billion, the second-highest growth rate among UK regions. A key driver was the meteoric rise of petroleum exports, which leapt from negligible levels to £407.5 million, making Scotland the only UK region with oil as its leading export to China. Equally impressive was the 128.9% increase in seafood exports, reaching £75.3 million, a trend likely fuelled by China’s booming cold chain logistics sector. While beverage exports, primarily whisky, dipped by 32.7% amid China’s reduced luxury spending, Scotland’s dominance in leather goods and beverages highlights its diverse export portfolio.

Diverse Strengths Across the UK

The East of England also contributed to the positive narrative, with exports to China rising by 3.5% to £1.39 billion, reversing a three-year decline. Seven out of its eight top export categories recorded growth, with medicinal and pharmaceutical products remaining the region’s flagship export at £367.5 million, despite a slight 2.9% dip. The East’s position as the UK’s largest exporter of pharmaceuticals, meat and crude rubber underscores its critical role in meeting China’s demand for high-quality goods.

While not all regions saw growth, the overall picture is one of resilience and opportunity. Seven of the UK’s twelve regions recorded export increases in 2024, up from just four in 2023, reflecting a broadening of engagement with the Chinese market. Even regions like Wales and Northern Ireland, which saw declines of 15.2% and 14.7% respectively, showed pockets of strength, Wales in transport equipment and Northern Ireland in pharmaceuticals. The South East, despite a 12.4% drop to £1.47 billion, retained its leadership in pulp and waste paper and inorganic chemicals, while Yorkshire and the Humber’s modest 4.7% decline was offset by gains in dairy and egg exports.

The CBBC’s Trade Tracker highlights the complementary nature of British heritage goods and specialised industrial products, finding a ready market in China’s sophisticated economy. As Peter Burnett, CEO of CBBC, notes in the foreword, the improved engagement by the Labour government in 2024, marked by high-level ministerial visits, has fostered a more constructive dialogue and boosted business sentiment. Despite global challenges, including US tariffs and China’s domestic economic pressures, the UK’s ability to grow civilian goods trade unimpeded offers a pathway for further expansion.

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China’s semiconductor sector has emerged as a cornerstone of its technological ambition, propelled by significant government investment and a strategic push for self-sufficiency. In 2024, the industry was valued at £134.2 billion, with projections indicating a compound annual growth rate (CAGR) of 7.8% from 2025 to 2034, potentially reaching £283.7 billion by 2034. This growth reflects China’s determination to reduce reliance on foreign chips, which accounted for 83% of its £185.5 billion chip consumption in 2020, and to establish itself as a global leader in semiconductor innovation. The sector’s rapid development, driven by advancements in artificial intelligence (AI), 5G, and electric vehicles (EVs), positions China at the forefront of the global tech race, though geopolitical tensions and technological gaps present significant challenges.

China’s semiconductor industry began in earnest during the 1980s, with early efforts like Project 908 and Project 909 aimed at building domestic capabilities. These initiatives, including partnerships with foreign firms like NEC, faced setbacks due to outdated technologies and global market downturns. A pivotal shift occurred in 2014 with the National Integrated Circuit (IC) Industry Investment Fund, or “Big Fund,” which injected £17.6 billion initially, followed by £23.3 billion in 2019 and £36.8 billion in 2023. The “Made in China 2025” strategy set ambitious targets of 40% self-sufficiency by 2020 and 70% by 2025, though the actual figure reached only 30% by 2025, underscoring the complexity of achieving technological autonomy. Despite this, China’s 53.7% share of global chip consumption in 2020 highlights its position as the world’s largest semiconductor market.

Key players dominate China’s semiconductor landscape. Semiconductor Manufacturing International Corporation (SMIC), the country’s largest foundry, reported £9.77 billion in revenue in Q1 2024, a 19.7% year-on-year increase, making it the world’s second-largest pure-play foundry behind Taiwan’s TSMC. SMIC’s production of 7-nanometer chips, such as the Kirin 9000S for Huawei’s Mate 60 Pro, demonstrates its ability to innovate despite U.S. export controls. “SMIC is at most only a few years behind Intel and Samsung,” noted industry analyst Dylan Patel, highlighting its progress in advanced node manufacturing. Hua Hong Semiconductor, the second-largest Chinese chipmaker, holds a 2.6% global market share, focusing on mature node chips. HiSilicon, a Huawei subsidiary, designs advanced chips like the Kirin series, while Yangtze Memory Technologies Corporation (YMTC) has achieved a 5% global market share in NAND flash memory, with plans to surpass 10% by 2027. Other notable firms include Hygon Information Technology, producing x86-based CPUs, and Loongson Technology, developing MIPS-compatible microprocessors for domestic applications.

Opportunities for partnerships are abundant, particularly in mature node manufacturing and emerging technologies. China’s dominance in EVs, with 35 million vehicles projected for 2025, drives demand for power management and sensor chips, creating openings for collaboration with foreign firms. For instance, joint ventures like Vanguard International Semiconductor’s partnership with NXP to form VisionPower Semiconductor Manufacturing Company in Singapore highlight the potential for cross-border cooperation. The rise of 5G, with China projected to have 430 million users by 2025, further fuels demand for advanced chips, offering opportunities for firms specialising in AI and IoT applications. China’s focus on RISC-V architecture, supported by companies like Alibaba’s T-Head, presents a pathway for partnerships in open-source chip design, reducing reliance on Western intellectual property like Arm.

However, the sector faces significant risks. U.S.-led export controls, tightened in October 2023, restrict access to advanced lithography equipment, particularly extreme ultraviolet (EUV) machines critical for sub-5nm chips. ASML, a Dutch firm with a monopoly on EUV technology, remains a chokepoint, as noted by the Federal Reserve: “A single Dutch company, ASML, has 100% market share for the most advanced lithography machines.” China’s Shanghai Micro Electronics Equipment (SMEE) has developed a 28nm lithography machine, but closing the gap to 5nm or below remains a challenge. Geopolitical tensions, including U.S. tariffs and sanctions on firms like Huawei, exacerbate supply chain vulnerabilities. “U.S. trade restrictions on China can hamper its global position as a manufacturing hub,” warned Fortune Business Insights. Overcapacity in legacy chips, driven by aggressive subsidies, risks price wars that could destabilise global markets. Additionally, a talent shortage and high capital costs (SMIC’s 2023 budget rose 18% to £5.82 billion) pose internal challenges.

Growth projections remain optimistic despite these hurdles. The global semiconductor market is expected to grow at a 15% CAGR from 2025 to 2030, reaching £777.7 billion by 2030, with China’s share projected to increase significantly. The memory segment, led by firms like YMTC, is anticipated to surge by 24% in 2025, driven by high-bandwidth memory (HBM) for AI applications. China’s focus on mature nodes (28nm and above), which account for 40% of the global market by 2030, aligns with its strengths in automotive and industrial applications. “Chinese foundry players are performing well in 2024, with a high utilisation rate of around 87% expected in 2025, thanks to the ‘Design by China + Manufacturing in China’ policy,” stated a Wikipedia analysis. Investments in 110 new fab projects since 2014, totalling £151.9 billion, underscore China’s commitment to expanding capacity, with 40 fabs operational and 38 under construction.

The integration of AI and 5G technologies is a key driver of growth. China’s leadership in 5G, with over one million base stations and 80% year-on-year growth in 5G smartphone shipments in 2021, creates a robust domestic market for semiconductors. The automotive sector, particularly EVs and autonomous driving, demands sophisticated chips for battery management and sensors, further boosting demand. “The semiconductor supply chain, spanning design, manufacturing, testing, and advanced packaging, will create a new wave of growth opportunities,” said Galen Zeng, Senior Research Manager at IDC Asia/Pacific. However, the industry’s reliance on government subsidies, estimated at £116.3 billion over the past decade, raises concerns about sustainability and market distortions, as noted by the Semiconductor Industry Association.

China’s semiconductor sector stands at a crossroads, balancing remarkable progress with formidable challenges. Breakthroughs like SMIC’s 7nm chips and YMTC’s 200+ layer NAND flash demonstrate innovation, yet the lack of EUV technology and geopolitical headwinds limit cutting-edge advancements. “It is entirely possible that five or ten years from now there is a far more developed indigenous ecosystem for Chinese chip equipment suppliers,” suggested Feldgoise in a CKGSB Knowledge article, pointing to long-term potential. As China continues to invest heavily and foster partnerships, its semiconductor industry is poised to reshape global supply chains, offering both opportunities and risks for international stakeholders.

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China’s biotechnology sector has emerged as a formidable force, shaking off a four-year slump to become one of Asia’s hottest markets. The Hang Seng Biotech Index has surged by approximately 60% in 2025, a rally that has outstripped the 17% gain in China’s tech stocks, driven by the release of DeepSeek’s breakthrough artificial-intelligence model in January. This phenomenon, dubbed the “DeepSeek moment” for biotech, reflects China’s growing prowess in innovation, positioning the country as a global contender in drug development and biotechnology. The sector’s rise is underpinned by significant financial investments, strategic partnerships with global pharmaceutical giants, and a robust pipeline of innovative drugs, particularly in oncology.

The term “DeepSeek moment” draws from the success of DeepSeek’s R1 artificial-intelligence model, which propelled the Chinese AI startup to global prominence earlier this year. In biotech, this analogy captures the sector’s rapid ascent and its potential to disrupt global markets. “China biotech is no longer just an emerging story — unlike 10 years ago — it is now a disruptive force reshaping global drug innovation,” Yiqi Liu, senior investment analyst at Exome Asset Management LLC in New York told Bloomberg. This sentiment is echoed in the flurry of high-value licensing deals and initial public offerings (IPOs) that have invigorated investor confidence.

A notable example is the performance of companies like Akeso, a Chinese drug developer that has seen its shares climb 6.5 times their IPO price from five years ago, despite a temporary 11.8% drop following a second marketing IP for its lung cancer drug ivonescimab in April 2025. Ivonescimab, a bispecific antibody, has outperformed Merck’s blockbuster drug Keytruda in phase three trials, marking a significant milestone. “The development of the new antibody drug was hailed by the mainland media last month as the biotech industry’s ‘DeepSeek moment’,” reported the South China Morning Post, highlighting the drug’s potential to challenge global oncology standards. Akeso’s partnership with Summit Therapeutics in the US to advance ivonescimab’s clinical trials across 108 locations in 12 nations underscores China’s ambition to compete on the global stage.

The financial momentum is equally striking. In May 2025, eight licensing deals were reached in China’s biopharma sector, with five cross-border out-licensing agreements generating over £1 billion upfront and a potential £6.5 billion including milestones, according to posts on X. This represents a significant increase from April 2025, which saw six deals with £141 million upfront and £2.35 billion in total potential value. These figures reflect a growing appetite among global pharmaceutical companies for Chinese-developed drugs. For instance, Bristol-Myers Squibb agreed to pay Germany’s BioNTech SE up to £8.45 billion to license a cancer drug originally developed by China’s Biotheus Inc, which BioNTech had acquired for £590 million in 2023. Such deals highlight the economic allure of China’s biotech innovations.

Investor enthusiasm is further evidenced by the performance of recent IPOs. Shares of Duality Biotherapeutics Inc, a company focused on cancer treatments, more than doubled on their first day of trading in Hong Kong on 15 April 2025. Similarly, companies like 3SBio and RemeGen Co. have seen stratospheric gains, with 3SBio surging 283% and RemeGen climbing over 270% after announcing potential licensing deals with multinational firms. “Chinese biotech companies are having ‘their own DeepSeek moment’,” said Dong Chen, chief Asia strategist at Pictet Wealth Management in Hong Kong, pointing to the sector’s ability to attract significant capital and deliver promising pipelines.

The role of venture capital is pivotal in this transformation. Hong Kong-based ORI Capital is planning a £260 million fund to invest in Chinese healthcare startups, capitalising on the sector’s momentum. “Hong Kong-based venture capital firm ORI Capital plans to launch a new fund to invest in Chinese healthcare start-ups, as the domestic biotechnology industry experiences its own ‘DeepSeek moment’,” noted Simone Song, the firm’s founder, in an interview with the South China Morning Post. The fund aims to leverage artificial intelligence to enhance drug development, reflecting the integration of cutting-edge technologies in biotech innovation.

China’s biotech sector is not without challenges. The development of drugs like ivonescimab remains uncertain, with many candidates still in preclinical or early clinical stages, requiring years and hundreds of millions of dollars to reach market approval. Approximately 90% of compounds entering human trials fail, a reality that tempers optimism. Moreover, geopolitical tensions and US concerns about China’s biotech dominance add complexity. A US congressional report warned that “China is quickly ascending to biotechnology dominance,” urging Congress to invest £11 billion over five years to bolster US biotech, including £890 million through the Defence Department for applications like shelf-stable blood and advanced explosives. The report highlighted fears that China’s advances could have national security implications, potentially complicating cross-border collaborations.

Despite these hurdles, China’s biotech sector is capitalising on its domestic strengths. Companies like Innovent Biologics are accelerating clinical development, producing six to eight assets annually and maintaining a robust pipeline of clinical-stage drugs. “We are developing at a very fast speed and to demonstrate a clinical concept and derisking it,” a representative from Innovent told Bloomberg, emphasising the “China speed” in research and clinical trials. This efficiency, combined with substantial financial reserves (Akeso, for example, held 7.34 billion RMB in cash at the end of 2024) enables sustained innovation.

The global implications of China’s biotech rise are profound. The sector’s ability to produce cost-effective, innovative drugs is attracting Big Pharma, as seen in Merck & Co’s £82 million upfront deal with Hansoh Pharma to develop an obesity drug, with potential milestones up to £1.4 billion. Such partnerships signal a shift in the global pharmaceutical landscape, with China transitioning from a manufacturing hub to a centre of innovation. “The surge in China-listed biotech firms is further evidence that the mainland is becoming a centre for global innovation,” noted a Bloomberg report, underscoring the sector’s competitive edge.

The integration of artificial intelligence is another driver of this transformation. AI is being used to streamline drug discovery and optimise clinical trials, reducing costs and timelines. This technological synergy is particularly appealing to investors, as evidenced by ORI Capital’s AI-focused fund. The combination of biotech and AI is not only enhancing China’s domestic capabilities but also positioning its companies to compete with Western giants like Merck and Bristol-Myers Squibb.

The competitive landscape is also shaped by China’s regulatory environment, which has become more conducive to innovation. The approval of ivonescimab by China’s National Medical Products Administration (NMPA) in April 2025 for two indications demonstrates regulatory agility, contrasting with the longer timelines in markets like the US, where the drug remains in clinical trials. This regulatory efficiency, coupled with China’s large patient population for clinical studies, provides a strategic advantage.

As China’s biotech sector continues to mature, its global influence is undeniable. The success of companies like Akeso, Innovent, and Duality Biotherapeutics reflects a broader trend of Chinese firms moving beyond generic drug production to pioneering novel therapies. The financial backing from venture capital, coupled with strategic partnerships with global players, ensures that this momentum is likely to persist. However, the sector must navigate the complexities of global regulatory frameworks and geopolitical scrutiny to sustain its trajectory.

The “DeepSeek moment” for China’s biotech sector is more than a fleeting rally; it signals a structural shift in global innovation. With a combination of financial strength, technological integration, and strategic partnerships, China is redefining its role in the biotechnology landscape, challenging Western dominance and setting the stage for a new era of drug development.

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