How-to articles

First study the domestic market and try to determine the demand for the kind of products that people want to buy which can be sourced from China. For the time being, it is better to avoid to buy products from China made for children. Apart from that niche, try to explore other areas that you can buy good products from China. There are a lot of inexpensive items from China that are trendy and made especially for youngsters to buy. These are easy to transport from China and have a market already in the west. You can try importing fast moving items that are not too difficult to buy and sell and are quite inexpensive as well.

Try to gather as much information as possible about the short listed companies from China that you would like to buy your products from. There are a number of well established suppliers who already supplying a lot of goods from China to a good number of companies in the west. Try to locate them and build a business relationship with them before you buy. Most of these companies from China are already familiar with western tastes and modes of doing business. Buy your goods from established suppliers from China because that would be the best option especially for people with no prior experience of importing from China.

Try to have a local representative in China who can represent your company and take care of the remote dealings. The representative from China can either be a company or an individual who acts on your behalf and has your best interests in mind. Working remotely has its own complications which can be minimized to a large extent by having a dependable representative from China who can correspond with you on a constant basis when you buy.

At your end, you need to find retail outlets through which you can sell the products that you buy from China. Establishing a good business relationship at this end with many retail outlet owners would help you in recovering your investments quickly when they buy from you. You can also arrange for retailers to buy the goods that you get from China on a regular basis. This would help solve the problem of hunting for buyers for your goods every time a shipment arrives from China.

Once you import a couple of shipments from China, you would be able to understand the economics of the business and aim for higher profits. You would know where to buy to minimize your costs and how best to negotiate with your suppliers so that you can maximize your profits when you buy your products from China.

The most common method of payment used to pay sellers in China is a letter of credit or LC for short. A LC or L/C as it is sometimes denoted, is a financial instrument that is used to protect the interests of both the buyer from a foreign country and the seller in China. A bank usually issues an LC on behalf of the buyer. The LC is a kind of proof that the buyer has the money to make the payment to the seller in China once the goods reaches him.

There are normally four parties involved in the payment transaction. The buyer, the buyer’s bank, the seller in China and the seller’s bank in China constitute the four parties involved in the payment transaction. The buyer’s bank is also called the issuing bank since it issues the LC, and the sellers bank in China is know as the advising bank. Once a contract is finalized and the goods are ready for dispatch from China, the issuing bank sends the LC to the seller in China. The seller in China consigns the goods for shipment from China to a carrier. The seller in China then obtains a bill of lading from the carrier as proof. The seller in China then provides the bill of lading to his bank in China and gets his payment. The seller’s bank in China then gets a payment from the issuing bank by producing the bill of lading. The issuing bank then issues the bill of lading to the buyer and gets the payment from him. Finally, the buyer provides the bill of lading to the shipping carrier to take possession of goods.

Although an LC is a safe method of payment, it cannot totally protect a buyer. The buyer needs to check at each point that the buyer complies with the terms before going ahead with the contract. The buyer can use the services of auditing firms to check the seller’s reputation and quality assurance agencies to inspect the goods at every point in order to protect his payment.

The buyer can start small by placing a sample order for goods from China. Since the investment would be low, he can test the proceedings with a small payment. If things proceed well, the buyer can then confidently place a larger order to procure goods from China. Building trust slowly through bigger and bigger orders could ensure safety for the buyer’s payment. The buyer can also use an escrow service to monitor the transaction and to protect the interests of both the buyer and the seller.

The term Made in China has gotten a lot of connotations over a period of time. For some people, the term Made in China brings incredibly inexpensive products to mind. For others, the term Made in China reminds them about some bad experiences with low quality products. For still others, Made in China is just a tag that they see in most of the products that they purchase even in their own country. So the term Made in China can mean different things to different people. There is no standard perception to the term however and each person’s perspective on Chinese products is different from others.

Coming to the question of ethics about buying products made in China, one has to understand a few things at the outset. China is one of the most favored destinations for outsourcing manufacturing processes for companies around the world. You would probably see the Made in China tag on many of the branded products of western companies. For instance, many of Apple’s computers are made in China. Many of the world’s designer clothing are made in China. Also, many of the branded electronic products of major companies around the world are made in China.

While China manufactures these products, it does not have the legal rights to sell them. China is just the manufacturing facility and not the distributor for these products. So while are products are made in China, they can be legally marketed and distributed only by the parent company that outsourced the manufacturing to China. So buying these particular products made in China is definitely unethical if at all these are available in the market. However, other products made in China are freely available for you to purchase legally. Buying these Made in China products is not unethical. You only need to avoid buying products made in China when it is an outsourcing order placed only for manufacturing.

The perception that Made in China products are of an inferior quality is totally wrong. Products of an inferior quality are indeed made in China but they are manufactured for a market that expects those products for dirt cheap prices. It is the price that dictates the quality rather than the technological expertise of Chinese manufacturers. So if some products made in China are of low quality, just remember that they are made for a special low price market. There are a number of world class products made in China as well. So buying Made in China products is definitely not unethical when you know these facts.

If you are intent on maintaining ethical business practices in China for your business operations, you need to follow these guidelines carefully.

- Have a thorough knowledge of your products / services and the specific market that you are catering to in China.
- Make it known to the company that you are doing business with in China and the government officials in China that you come in contact with, that you would always run an ethical business come what may. After all, it is your right to run an ethical business in China. And it will stay an ethical business.
- As an ethical business, you would never have anything to do with “under the table” dealings in China. As an ethical business, you would always comply with regulations in China. As an ethical business, you would never violate the law in China.
-You probably need to educate your partners in China on the fact that through an ethical business everyone in China benefits. If it is not an ethical business, there might be short-term gains. But it is only an ethical business that wins in the long run. So it really makes sense to run an ethical business for the benefit of everyone in China.
- To let everyone in China know that yours is an ethical business, have your ethical standards clearly mentioned in writing. Also have it written in Chinese so that people in China would know that yours in an ethical business.
- Learn everything that you can about the people that you deal with in China, especially when they do not have an ethical business. If you find that they do not have an ethical business in China, then avoid a business partnership with them.- If someone in China approaches you for a bribe, politely show the ethical business standards that you have put down in writing.
- Be very open and strict about your ethical standards when you employ local workers from China for your company. Let them know that it is an ethical business. Require them to sign a contract after they understand your terms.
- Make sure that any business service provider helps you in negotiating business deals with others also makes known to others business partners in China that yours is an ethical business.

If you maintain these high ethical standards right from the very beginning, then it would be much easier to stay an ethical business in China without much of a problem.

The Incoterms commonly used in China are as follows:

EXW or Ex Works

EXW is one of the incoterms used in China, which refers to the passing of title and risk to the buyer once the goods cross the seller’s door. The buyer has to also take care of transportation and insurance costs.

FCA or Free Carrier is one of the incoterms used in China, which refers to the passing of title and risk to the buyer once the goods are delivered by the seller to the carrier and they are cleared for export. The seller needs to load the goods to the vehicle of the buyer. The buyer needs to bear insurance costs and receive the goods.

FAS or Free Alongside Ship is one of the incoterms used in China which refers to the passing of title and risk pass to the buyer once the goods are delivered by the seller alongside the ship. The buyer has to bear transportation and insurance costs. The seller has to look after export clearance.

FOB or Free On Board is one of the incoterms used in China, which refers to the passing of title and risk pass to the buyer once the seller on board the ship delivers the goods. This is predominantly used for transportation by sea and inland waterways.

CFR or Cost and Freight is one of the incoterms used in China, which refers to the passing of title, risk and insurance cost to the buyer when the goods are delivered on board the ship by seller. The seller also pays the cost of transportation to the destination port. This is predominantly used for transportation by sea and inland waterways.

CIF or Cost, Insurance and Freight is one of the incoterms used in China, which refers to the passing of title and risk to the buyer when the goods are delivered on board the ship by seller. The seller also pays for the cost of transportation and insurance at destination port. This is predominantly used for transportation by sea and inland waterways.

CPT or Carriage Paid To is one of the incoterms used in China, which refers to the passing of title, risk and insurance to the buyer when the goods are delivered to the carrier or else the seller pays transportation and insurance cost to destination. This is used for any mode of transportation.

CIP or Carriage and Insurance Paid To is one of the incoterms used in China, which refers to the passing of title and risk to the buyer when the goods are delivered to carrier by the seller. The seller also pays for the cost of transportation and insurance to the destination. This is used for any mode of transportation.

The other incoterms used in China are DAF (Delivered to Frontier), DES (Delivered Ex Ship), DEQ (Delivered Ex Quay i.e. Duty Paid), DDU (Delivered Duty Unpaid) and DDP (Delivered Duty Paid).

There are different modes of payment that people use when doing business with China. It is more of a matter of convenience between the buyer and seller and the kind of agreement that they enter into. For businesses that have a long relationship, having a 30 day credit period is not uncommon. This means that the buyer can send the payment 30 days after he has received the goods from China. This however means that the seller’s business in China would sometimes need to wait for almost 120 days before getting its money back. From the time the seller’s business in China invests money and starts manufacturing till the date the goods are ready, it might sometimes take up to 2 months. It might take another month for the goods to reach the buyer. And then the buyer takes another month to make the payment to the seller’s business in China. So a total of 120 days might lapse before the seller’s business in China gets the payment. Unless the buyer and seller have a long standing relationship, this may not be a probable method of payment.

Normally, a one-time payment is avoided when doing business with China. Many businesses use the “30-40-30” payment principle. In this method, the buyer pays 30% of the amount to the seller’s business in China upfront. The seller’s business in China immediately starts production of goods for the buyer. When the products are ready for shipping from China, the buyer pays a 40% payment to the seller’s business in China after confirming the quality of the goods. Then the seller’s business sends the goods from China. The buyer then inspects the goods at the destination and then pays the remaining 30% to the seller’s business in China. This form of payment is effective in protecting the interests of the buyer’s and the seller’s business.

The phased approach towards payment in any business can be the safest method. Since the entire amount is not paid in one go, the transaction can be regulated and controlled more carefully if things do not go as planned. In case the shipment does not arrive or the quality of the products is not satisfactory, then the buyer would have the option to hold the payment in order to remedy the situation. The “30-40-30” method is therefore a very safe mode of payment that protects the interests of the business of both the buyer and the seller.

In order to make your visit to factories in China that make your products efficient and fruitful, you need to have a thorough knowledge of the exact processes that the factory in China is using to make your products when you visit them. The reason the visit is important is that many factories outsource some of the manufacturing processes to other smaller factories nearby. Unless you are familiar with all the processes your factory does to produce your products when you visit them, you may not be able to discern whether or not they are outsourcing part of the processes to other smaller factories in China.

The reason why outsourcing may not be good for you is that you cannot ensure the quality standards of the smaller factory. Moreover, your contract would only specify the quality standards of operations in the factory you are directly dealing with. When they outsource part of the work to other smaller factories in China, the quality standards of those factories cannot be controlled through your contract. Therefore, the quality of your products cannot be guaranteed. So outsourcing of processes by the factory that you are in direct contact with should be totally avoided or minimized at best in order to maintain quality as much as possible.

Unless you personally visit the factory and look for signs of outsourcing, you may not be able discover whether or not your factory is outsourcing some of its production processes to other smaller factories in China. There are a number of reasons why they might outsource their work.

- They might be able to save money since the smaller factory might accept lower prices
- They might temporarily face a shortage in production capacity due to various reasons
- If the other factories in China are run by a friend or relative, they might want to do them a favor by giving them business
- They might want to cover up violations on labor rights
- They may not have certain equipment for spray painting or injection molding and hence would need to outsource those production processes

While outsourcing in itself is not a problem, the real issue crops up when the quality standards of the smaller factory is much lower than the main factory where your products are manufactured. As more player come into the production process, maintaining quality standards might become a difficult task. When you visit the factories in China, you need to tactfully find out whether other smaller factories in China are involved in manufacturing your products and need to know how to eliminate the practice or at least ensure that quality standards are maintained as per your specifications.

One of the best ways to find reliable trading/sourcing companies in China is to visit trade fairs, which are held all around the year. Millions people visit these fairs annually. You would be able to come across a large number of reputed trading/sourcing companies in these trade fairs. Thousands of manufacturers and traders participate in these events. A large number of trading/sourcing companies in China also are present. Attending a number of these events during your visit to China would help to get in touch with a number of good trading/sourcing companies in the country.

The department / chamber of commerce in most countries would have a directory of reliable trading/sourcing companies in China listed in their database. For instance, the Department of Commerce in the US publishes a guide every year known as the “Contact China” guide. This publication is extremely valuable for companies hoping to have business ties with China since the guide contains a list of trading/sourcing companies in China. This is an invaluable resource for anyone considering buying products from China, or setting up operations there. The website of the US Department of Commerce also has a number of resources to help you get started.

You can also employ business service providers to help you locate good trading/sourcing companies for you in China. Most of these companies would have a huge number of business contacts throughout China. You can effectively use their client base in China in order to spot reliable trading/sourcing companies to source products from. These business service providers would also help your company to draft sound legal contracts with these trading/sourcing companies, which is very important for your business interests. Basing your business on a strong legal footing is extremely important for doing business with your trading/sourcing companies in China.

The web is another powerful medium through which you can find good trading/sourcing companies in China. Of course, the normal precautions you need to take while gleaning through information online still applies here. Regardless, the immensity of the web makes it a limitless source for finding good trading/sourcing companies that you can source from in China. You however need to carefully go through the websites of these trading/sourcing companies in China in order to check their credentials. A number of genuine trading/sourcing companies in China have a comprehensive amount of information on their websites, which would help you assess their credibility quite easily.

China is extremely different in a lot of ways than other countries in the world. The language, the customs, the tradition and the eastern way of doing things is a lot different from what most westerners are used to. The socio-political climate of China is also very different which makes it difficult to easily source in China. In case this is not your first time doing business in China, then you might try to source yourself in China. But on the other hand, if this is your first venture in China, then using a trading/sourcing company would be essential.

It is always wise to use a trading/sourcing company when starting new in China. If you try to source in China by yourself, you might face a lot of difficulty. A trading/sourcing company would help you avoid most of these problems. Since China is not very transparent, the trading/sourcing company would help to get things done quickly in tricky situations. The trading/sourcing company would also help you source from reputed firms in China. To source a good trading/sourcing company, you might need to search around in China. But once you locate a good trading/sourcing company in China, they would help you to source your products from reputed firms in China.

It is never advisable to source by yourself in China because you may not know the various intricacies of doing business there. But a good trading/sourcing company would know much of the situation there and help you source products from reputed firms. A reputed trading/sourcing company would have a lot of business connections in China. You can effectively use their contacts to source your products. In fact most new companies find it difficult to find good contacts to source from in China. A trading/sourcing company would be the best solution for their problem.

Locating good companies in China to source from is just the beginning. You then need to draft an effective legal contract with them that is profitable for you. Here again, a reputed trading/sourcing company would help you with all the legalities involved. Since the trading/sourcing company would know much of the technicalities of such a business partnership, they would help you source from the best companies in China. The trading/sourcing company would also go a long way in helping you avoid many of the loopholes that you might otherwise encounter if you try to source products by yourself in China.

One of the strongest business aspects that make China a competitive business destination is its low cost of products coupled with China’s technical expertise in the manufacturing industry. Virtually any product can be manufactured in China as per your specification, and almost always at a much cheaper cost than what would be possible in the west. Chinese manufacturers have the advantage of low labor costs. This makes it easier for Chinese manufacturers to price their products at a very low price. So products made by Chinese manufacturers have very competitive prices and are in high demand throughout the world.

Chinese manufacturers are also highly skilled in technology, which again makes them highly competitive. While other developing countries are trying hard to gain market share, Chinese manufacturers are able to dominate the industry by their competitive prices. The technology used by Chinese manufacturers also helps them to minimize on production costs, which makes their prices even more competitive. Countries from around the world are attracted to product made by Chinese manufacturers for their high quality and competitive prices.

What sometimes what makes importing from Chinese manufacturers not very competitive is the cost of importing the products. The huge amount of expense in shipping and storing the products made by Chinese manufacturers makes it lose its competitive edge in the market. When all the overheads are piled up on the price of these products made by Chinese manufacturers, the prices are no longer competitive. This is one of the reasons certain kinds of products are not imported from Chinese manufacturers even though the prices might still be very competitive in the Chinese market. It is only when these products made by Chinese manufacturers land on western shores that the prices lose their competitive edge.

This is not to mean that products from Chinese manufacturers are not sold in foreign markets. Our own experience tells otherwise. We see so many products Chinese manufacturers being sold in our own countries and the prices are still competitive. It is just that certain products made by Chinese manufacturers become very expensive for importing and hence lose their competitive edge in pricing. There are, however, a number of other products made by Chinese manufacturers that are still very competitive in price. Such products from Chinese manufacturers are still being imported in large numbers and sold at competitive prices in supermarkets and chain retail stores in various countries around the world.

The first and foremost thing to understand about China is that things over there are worlds apart from what people are normally used to in the west. We cannot expect the same amount of transparency and support from authorities in China that one is used to in their own country. This makes self sourcing at little bit difficult for new entrepreneurs. If you have been running a business in China for a considerable period of time, then you might already know many places for sourcing your products. But if you are new to China, then sourcing by yourself would be a difficult option.

One of the things that new businesses start ups are encouraged to do is to always get advice from reputed and established business service providers in China. They are warned not to venture out on their own for sourcing products or business partners in China. An established business service provider can help in sourcing good companies for you based on their years of experience in business in China. When you start a new business in China, you may not have the required experience or the contact necessary to do the sourcing all by yourself.

Starting a business in China requires a lot of legal paper work that is best left to the experts. Especially when you are sourcing products through other Chinese businesses, you need to know the exact strategies involved in structuring your business correctly. The sourcing needs to be done right so that you do not run into problems in the future. If you make a mistake in sourcing, then it would take a lot of time and effort to set right the problem in China. Therefore, hire the services of a business service provider in China to do the sourcing for you.

When you do your sourcing through a business service provider, you might be able to establish contacts with so many reputed companies in China that you might not be able to do if you are sourcing on your own. A foreign company in China should always do their sourcing through reputed service providers so as to establish a strong and stable business presence. All the possible loop holes of sourcing by oneself can also be avoided when sourcing through a reputed business service provider in China. This kind of sourcing would help you concentrate better on growing your business in China rather than rectifying the mistakes you had done.

You have to be careful about any kind of Chinese scam when planning to start a business in China. What do we mean by a Chinese scam? Well, there are a number of dubious business offers that we find being pushed on the Internet. While not all of them originate from China, a lot of them however do. So we would refer to any kind of too-good-to-be true offer that originates from China, obviously, as a Chinese scam. Sometimes an offer might seem to look like a Chinese scam but in reality could be an extremely profitable deal. Just because is sounds too good, we need not label it as a Chinese scam.

Here are some of the ways in which you can detect a Chinese scam. First visit the website mentioned in the offer to study a little more about the business. Since English is not their first language, most of them struggle to write grammatically correct sentences. You can identify a Chinese scam when they have not taken the time or the effort to coin a domain name that is grammatically right. A Chinese scam would most often have an incorrectly spelt name or one that do not make proper sense. When you see such a site advertising a very attractive offer, it is most probably a Chinese scam. Do yourself a favor and just close the browser. This is one of the most straightforward ways to detect a Chinese scam.

Next, can need to check the “Whois” details of the website. Every domain name has a corresponding “Whois” page which shows you who registered the domain, when it was registered, when it will expire and so on. You can use this information to detect a Chinese scam. The “Whois” page almost always would contain the contact details of the registrant of the website. If you suspect the website is a Chinese scam, you can go ahead and verify using the contact information listed. If it is a Chinese scam, then the company would not exist in the address mentioned on the “Whois” page. You can also check the date of registration of the domain name and the number of years the website claims that the company has been in operation to determine whether it is a Chinese scam. That is another powerful way to detect a Chinese scam.

Once you are on the site, check the quality of the site itself to see whether it is a Chinese scam. A professional company would at least have a reasonably good and professional looking website. A Chinese scam on the other hand would focus more on extracting your money right away. If the sites talks only about how you can pay and not much about the product or service itself, then you might be looking at a Chinese scam. A Chinese scam website is only after your money. Moreover the Chinese scam is not very intent on being discreet. It aims its schemes on the gullible and innocent. If you are shrewd enough, you can protect yourself from a Chinese scam.

If also need to be aware of the fact that a website which collects credit card information always uses SSL for transactions. You can tell by looking at the URL which always starts with ‘https://’ instead of the standard ‘http://’. If it does not use SSL while collecting credit card information, then it is definitely a Chinese scam.

It is not always easy for western importers to locate the best factory in China to source their supplies from. It takes a lot of time and effort to familiarize yourself with the factory in China and the way that things are done in the market there. Nevertheless, if you spend enough time in the factory in China, then you will slowly come to know the names of some of the reputed companies that have a good quality factory in China that makes a lot of high quality products which you can source from.

The reason why you might need to search far and wide for a factory in China is that there is very little done in the form of formal registration of businesses and the kind of regulations that we are used to in the west. So what happens is that some companies that are very small and do not have proper registration also are very good sources of high quality products. They may not have a very good corporate image, but the quality of their goods might be very good, which is exactly what we are looking for. Unless we search well enough for a factory in China, we might totally miss such opportunities. The more time we spend to search for a factory in China and the harder we look, the more chances we have of locating a good factory in China from which we can source good quality products.

We can also go through trade journals and attend trade shows to get a taste of the kind of products that are available in the market. Sometimes it might be a little difficult to determine the exact factory in China that manufactured these products that you see in the trade shows if the company that showcases the products is different from the factory in China that manufactured the products. So you might have to dig a little deeper to actually determine the name of the factory in China which actually made the products.

A number of websites also feature a long list of companies that manufacture a wide array of high quality products made by a factory in China. Browsing through many of the sites that specifically deal with the subject of sourcing from the Chinese market can help you locate a good factory in China that manufactures the exact product that you are planning to source from China. You local representative might also be help you locate good factory in China that manufacture high quality products available at an affordable price.

There are a number of ways to find the best factories in China for premiums and gifts products. The first and foremost step is to determine the variety and range of products that you want to deal in. Some people do not have a clear picture of what they want. So this is the first step. Once you know exactly what want, then it is a matter of making a systematic search for finding the sources from which you can procure the products.

There are a number of ways in which you can locate the best factories that manufacture premiums and gifts products. It depends on the approach you would like to take. If you have the time, budget and the inclination, you can personally visit China for a first hand look at the opportunities that is available to you. You can attend various trade shows that take place on a regular basis in different parts of China. These events are wonderful opportunities for you to catch a glimpse of the kinds of products that you are interested in. You would also come to know of the companies that manufacture the products. You can also find out whether you can procure the items directly from the factory or you need to go through a distributor to buy the items.

On the other hand, if you are planning to outsource the manufacture of your premiums and gifts products to factories in China, you can use the same strategy outlined above to locate good factories in China. You can look for products similar to the ones you would like to manufacture and find the factories that manufactured those products. Then you can get in touch with those factories directly and try to work out a deal. You can also hire the services of agents who would be able to forge a contract between your company and the manufacturing unit that you would like to outsource your work to. Being in person would immensely help you in quickly establishing your business in China.

You can also locate good factories in China by browsing through the numerous online directories on the web. A number of directories are devoted to business listings where you can find factories in China that make premiums and gifts products. You can also browse through trade journals to locate many of them. The U.S. Department of Commerce also has many resources that would help you locate the kind of services that you are looking for in China.