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How to evaluate the risks and best practice for importing goods from China. An insiders practical guide to the opportunities and pitfalls. Sources for goods in China First establish who the supplier is! It seems obvious but there are many routes to buying products in China through agents, trading companies, wholesalers and factories or any number of "back door" sources. Agents operate on a commission basis whilst trading companies include costs in the quoted price, most wholesalers and factories do not have export approvals so have to operate through a registered agent or trading company to export to you at all. In my experience almost every sales person that I have met in China who is not the owner of the business has shown interest in either setting up on his own by "stealing" his employer's customers and product designs or simply doing his own deals on the side through friends, contacts or family. On the internet there are many scams and dubious "traders". But accepting that you are lucky or diligent enough to find a legitimate agent/trading company, you will find that Chinese business ethics are very different. Most Chinese friends and contacts, that I have spoken to on the subject, believe that "cheating" is the name of the game for people in business. Negotiating the price is an art form poorly practiced in the West in my view. Certainly in street purchases in China you may well think that you have done well to reduce the price first quoted by 20% or more (often the normal negotiating "add-on" is 50% in street markets) this figure can be very much higher for foreigners. Whilst the situation may be quite a bit different for more formal purchasing the principals are much the same. But then there are all the "extras" like packing materials, printing and minor changes, inland costs etc which can be used to hike the price back up, or a possibly a worse scenario is the practice of cutting corners on materials and quality to regain the lost margin. Having a good feel for the all inclusive price from a number of suppliers in China for the specific product you want gives you the purchasing power to negotiate and buy the right product from your selected supplier at a reasonable price hopefully without any "extras". Payment terms are more often than not 30% down payment with the residue on completion of manufacture. But beware the requests for payment in full with a money order, these payments are to individuals and generally are not traceable once made. No terms, no security and probably no goods and only bitter experience to be gained! Are the prices quoted ex-works, FOB, CIF, delivered warehouse - what has been agreed and who pays and at what stage? Who raises the shipping documents, packing list and commercial invoice and will these documents enable you to clear the goods at the port of destination, assuming the goods exist in the first place never mind whether they are of merchantable quality when they arrive? Developing long term relationships with a few suppliers who you know well pays dividends. Getting to this point with a new supplier needs extreme caution no matter what their pedigree until a personal relationship has developed but even then be careful. The supplier's staff may also be offering your products to your customers or competitors at lower prices if they can find out who they are.
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China, China Business, China Trade,
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