Import From China - Introduction Import from China Mini-Course - Part 1 Section 1 - INTRODUCTION

"If You Aren't Already Looking At China, Start Now"

You can't afford to ignore China these days. Maybe you grew up thinking it is a distant, closed-off land, but this is no longer the case. In the past few years Western national newspapers have started carrying a lot more news about China-- some have even got special daily "China Business sections -- and it's not just hype. China is the world's fourth largest country with one fifth of the world's population. The GDP of China is now over 10 times larger than what it was in 1980, when the previously closed country began opening its doors to international commerce. Chinese people and culture are spreading more than ever, and in turn Chinese people are eagerly looking abroad to Korea, Japan, Australia, Europe, and the USA - absorbing and learning from foreign culture and business know-how. China is now known as "the factory of the world and the chances are that, at this moment, you are reading this text on a computer with at least some of the components made in China, wearing clothes made in China, sitting on furniture made in China... and planning on making a profit from buying and re-selling even more goods made in China!

China has already taken a leading position in the economy of the world, and you need to be ready to take advantage of the opportunities this presents. Recent economic developments such as new Chinese stock markets, ever-increasing investment in the domestic market by western multinationals, and aggressive entrepreneurial expansion by Chinese exporters, mean that China's economy is still evolving and actually growing faster than ever. But the big difference for you and other business-people around the world is really going to be the improvement in communications that mean you have no excuse for not doing business with the Chinese!

"Start Communicating With China!"

Two big changes that will make communication with China easier: 1. The internet. China has rapidly implemented broadband internet access for all cities and towns, thanks to good cable networks and fast implementation of ADSL by Chinese telecoms. The power of the internet is breaking down barriers to communication. International phone calls are cheap or free, email is fast and efficient, and websites provide an unparalleled marketing platform. Small businesses or even individuals are empowered to compete in an international market, and the possibilities for business connections are seemingly endless. Chinese people have perhaps only just begun to wake up to the possibilities of the internet marketplace, but its certainly true that thanks to the www, China has never been more accessible.

2. Culture changes. Inevitably Chinese culture is becoming more outgoing and international thanks to influences of TV, movies, music, fashion, and the internet. But of course the real driving force is money, and if Chinese people are good at anything, it is spotting profit opportunities. Chinese businesses and individuals are less and less restricted by national regulations, meaning more travel, more trade, and more expansion into foreign markets. In fact, like it or not, Chinese businesses are already coming out of China and approaching you!

"Is The China Direction Right For Me?"

China itself is full of business opportunities for foreign firms and investors, but entering the Chinese market can be a thorny business. In this mini-course the opportunity I am talking about is not inside the China domestic market -- the opportunity starts at home, with you, on your computer. I want you to begin to be able to profit from China, without leaving home. (Of course if you want to come to China that can be a great idea and Ill talk about that later.) Travelling to China isnt difficult these days, and to make contacts in China you can start just with the telephone and your email. Speaking to Chinese businesses isnt like a conversation over the Iron Curtain you know! The first rule of making a profit on anything is buy low, sell high. I cant say it so elegantly, but what I hope you're going to take away from this mini-course is: Buy Chinese... Sell At Prices Lower Than Your Competitiors ... Take Your Nice Profit Margin. Rinse and Repeat !

Why import from China? Chinese factories make all imaginable types of products, usually muchcheaper than anywhere else. The world's large companies are still moving more and more of their manufacturing to China... it's about the bottom line. The low manufacturing costs mostly come from low human resources costs. Basically, the job market in China is highly competitive while living costs and expectations are relatively low: this means factories can employ hard-working people very cheaply. Most factories don't need to pay social security or insurance for their workers, and providing for their living costs isn't too expensive. Absence of bureaucratic red tape, a lower corporate tax burden, quite cheap energy costs, favourable interest rates, abundant cheap real estate, and low construction costs, are all other factors that lower the running costs for a Chinese factory. The low production costs leave a lot of room for middlemen in China, Hong Kong, or Taiwan trading the goods even before they reach export markets.

The closer you can get to buying from the source -- the manufacturer / factory in China -- the lower the price you will get. This used to be difficult but now thanks to the internet and more a more open attitude in China, it is possible in many cases for a normal foreign buyer to go to directly the source. Chinese suppliers are heavily geared towards exporting to western markets and are actively marketing their products to buyers like you. Expect Chinese efforts in international marketing to become much more vigorous and visible in the next couple of years. Since the suppliers in China are sending goods to your country, why not get them to send directly to your customers? Have you thought about the possibility of drop-shipping goods directly to international markets which are much less competitive than your market at home? If you already have a reliable supplier and have established a good relationship, you could profit from finding buyers for their products in markets abroad... bought through you of course. Chinese suppliers are not too picky (or loyal!) about who they supply to, andeven beginners with no registered company will be able to buy from China. Also, Chinese people have few cultural or religious prejudices - in other words, they are totally open- minded about which nationalities they are doing business with... as long as there is a good relationship sustained... and a reliable flow of cash!!

A key reason I hear from people why they haven't started buying from China is ... "I don't speak Chinese, I've never been there, and I don't know anything about China". Let's make this clear now: there's no need to worry.

Chinese companies geared for export are going to have English speaking staff, possibly also other languages, and they're ready to help you build a relationship. Even if you're not an experienced jet-setting business-person, people in China are definitely not going to scorn you for being a beginner to this country. As far as we Chinese are concerned, of course "foreigners" don't know much about China. ;) In fact if you visit we will never stop trying to teach you about our 5000 years of history and culture! So the people in China you need to talk to are going to be ready to help you start. Don't be nervous. You just need to jump in there and start grabbing the opportunities!

Are you still unsure whether a "China direction" is right for you? How about thinking of it from this point of view: in your own country are probably already buying from China, so why not go direct to the source yourself? If you are selling on EBay or other online auctions / ecommerce stores, it's a certainty that your "power seller" competitors are already buying some or all of their goods from China. Do your sales a favour and get the same or better low priced sources. The wholesale market in your country is probably very saturated with other people like you buying and reselling those same products. Compare that to China, where you could be the only person in your state or even country importing a particular product or from a certain Chinese manufacturer.
Wholesalers

from China will give you the opportunity to develop your business by finding new products at better prices in the future, especially as your relationships with Chinese suppliers improve. Can you say the same for your suppliers back home?

Importing

"The Wrong Approach... "

Importing from any country used to be much more difficult than it is now. Buying directly from China was pretty much impossible for normal business people (let alone consumers) up to about five years ago. Now there are more and more people profiting from Chinese sources in every sort of business, and they're not all huge bulk buyers like Wal-Mart. In fact, the great opportunities for you importing from China exist in covering the product areas that are NOT already owned by larger players. That's the BIG mistake a lot of people make: Don't think you can start importing from China and beat the prices of Wal-Mart, Radio Shack, or Amazon. They're already importing from China in huge quantities! They are buying in quantities which mean they have gone beyond simply getting good discounts: they are actually in full control of their suppliers and the prices. And that's not to mention their massive logistics systems, marketing power, and customer service strength. Of course you can't compete with them.

A lot of people think about importing a product, look at that product in the big stores and compare their first price quote from China... and the direct China price is already more expensive! I've seen many people give up at this stage. I'm going to talk more later in this mini-course about how to import products that will sell, and not fall at the first hurdle! Here is just one hint about a better way to approach the China import opportunity: Every day there are thousands of auctions listed on EBay for "MP3 Player"-- it's a hot category-- but my count today of the first 300 auctions showed only about 30 different models being sold. Wal-Mart in the USA sells 130 different MP3 Players. Dixons (the largest electronics chain store in the UK) sells 50 different MP3 Players.

Searching on www.made-in-china.com for Chinese MP3 Players will give you a choice from over 4000 MP3 Player products. A large proportion of these products are totally new designs and unavailable (so far) in Western markets.

Can you see what I'm getting at here...? There is no single, secret key to success in China importing, but there are certainly things to avoid. I will warn you about some common pitfalls later. I'm also going to talk in later parts of this mini-course about product research and how

to deal with suppliers successfully, but for now I hope you can hold on to the idea that importing from China doesn't mean simply copying the people who are already bringing you your made-in-china clothes, computers, and furniture. It means using the China source in a smart way.

"Can You Ignore The China Opportunity?"

Here's what I'd like you to take away and think about today: Importing from China is a MUST if you want to stay competitive in your current line of business, or develop your new money-making business. Even if you think your products are too specialist, or you already have good import sources elsewhere, you can't afford not to research the possibilities in China. Importing from China is NOT as difficult as you believe. China is a very open, modern country, and businesses there are waiting to talk business with you. HOWEVER importing (from anywhere) is a complex and often risky business if you don't know what you're doing. You need to spend a lot of time researching at home, so you know your own market-- before you even begin talking to people in China. AND China is very different in culture, language, mindset, business, history, and economy to what you know in your home country. So there is a lot to learn if you want long-term success. Research and learning about China will help you succeed. Even more useful is time spent researching specific companies and getting to know real people. Keep an open mind about different products-- maybe even product areas you don't know much about yet. There are a lot of untapped opportunities here in China.

Import from China Mini-Course-- Part 1: Your Internet Research Resources

 Internet discussions and advice: Experts' answers about general "Exporting and Importing-- with some topics about China specifically (From About.com) Click here to read some key points 2. Internet discussions and advice: answers to questions about "Importing from China (From Google Answers) Click here to read some key points
1.

3. "China, Inc-- a fascinating book about China's growing importance in business and the world as a whole. (By Ted Fishman) Click here to read some reviews

"Visiting China -- A Good Investment Of Time and Money"

In the first part of this mini-course I told you it's possible to get into importing from China without leaving home, thanks to the power of internet communications. But first I think it's important to talk about actually visiting Chinayourself, because this can really give you a head-start. I know a lot of you are interested in visiting China on business, or already planning to, because of the responses we got for our Chinavasion Trade Fairs Tour in April 2006.

The advantages of visiting China in person

Chinese business culture is very person-focused. The better you know people, the better you will be able to do business. In fact, without some form of "relationship" you won't be able to do business at all. You can establish this kind of relationship by phone and email (and money!) but of course face-to-face is the fastest way to let suppliers get to know and trust you. If you have visited China you will have much more credibility both with the Chinese suppliers you talk to, and with your domestic customers. It can also demonstrate that you're a serious importer, when it comes to talking to banks and customs brokers. Even after visiting one time you will have the advantage of a realistic perspective on your suppliers and contacts. You will know more clearly what you can and can't expect from them. Your expectations about China in general will be more realistic. For example, in China, if you don't like a dish in a restaurant, you can't simply send it back. The waiter and manager will probably argue with you and tell you it is fine!! It's the same in the shops -- you can't take back a piece of clothing after you bought it, just because you changed your mind. We have good customer service in China, but we also believe strongly in "customer beware"! Now think about when you're importing from your supplier and you're much further away when you receive the goods. Will you expect them instantly to

take back products you're dissatisfied with, and pay your refunds including your extra shipping costs? Maybe there will be no problem, with a good supplier, but at least with some background on China you will know what is normal and what is an 'unreasonable' request, in Chinese eyes. Many of the products you'll see in China may be great, high quality, successful sellers in the Chinese domestic market but possibly completely unknown in your country. You will get tons of new product ideas, even if you weren't originally looking for them If you visit China, you are guaranteed to have a great time, and discover all sorts of cultural and culinary delights! And your business holiday will be taxdeductible! Travelling to (and in) China is nowhere near as hard as it used to be. I haven't got the space to talk here about how best to visit China -- I think I will have to leave that to another article, but for the moment I'll pass on a few hints if you've no idea about this country:

Rose's top 8 tips for newcomer business visitors in China

1. Even if you have a good relationship on the phone / email with a company,
don't expect them to arrange transport for you or pick you up from the airport. Organise your trip so you are self-sufficient as far as possible. 2. Taxi drivers in China definitely don't speak English -- sorry. If you are travelling anywhere get Chinese people to write down the address in Chinese. Sometimes this won't help either so you need to have the phone number of the people you're visiting so you can call them from the taxi and get them to speak to the driver. 3. If you are doing visits to companies, allow a lot of time for travel. The big cities in China are really big, with pretty congested roads, and you could spend over two hours travelling between two places in the city. 4. If you have never visited China before, you are likely to be impressed by the food. But it's not suitable for everyone, and the Chinese mealtimes might be different to what you're used to. Also, if your stomach isn't used to some foods, eating out China could make you feel un-satisfied if not ill. So bring snack food. 5. If you are a man and you are invited to dinner with Chinese business people, expect to drink a LOT. If you don't drink you should consider meeting people at other times of day. 6. Carry RMB (Chinese Yuan) cash, as your credit card won't be very useful outside of your hotel. 7. Ask a Chinese person to invent a Chinese name for you and have it printed on the other side of your business card. If you can get Chinese business address, job title, etc this will also look nice.Take plenty of business cards --

you will need them, as it's polite to hand over your card to every new business contact you speak to. If you're visiting China, you should plan your trip to coincide with one of the major trade fairs. When you visit a trade fair, you will be able to meet so many potential suppliers all in one space, and they will be in "export mode" -- i.e. ready to speak to you in English, with marketing materials, and real product samples you can check out first hand.

"Attending Trade Fairs In China -- Crowded, Exhausting, Excellent"

If you've attended trade fairs in your own country, you'll know how much of a boost just those one or two days can give your business, in terms of making contacts, getting new product ideas, and even negotiating prices. But trade fairs, exhibitions, and shows are not only about getting to the good products before your competition. They are also great for learning about your industry, meeting like-minded people -- and competitors, and making contacts with official bodies such as Chambers of Commerce and government organisations. It's becoming increasingly likely that you will run into some Chinese suppliers exhibiting in your local or national trade fairs. Chinese companies are waking up to the value of taking their products and brands abroad to meet eager buyers, before their competitors back home. However, the majority of Chinese companies still have little or no representation abroad, and some of the greatest opportunities for normal importers like yourself will be finding suppliers in China that are not fully developed into big exporters. So you'll need to look within China to make contacts with them, and the trade fairs are an excellent starting point. China has hundreds of trade fairs every year. The main venues are Beijing, Shanghai, Guangzhou, Shenzhen, and Hong Kong. Most of the trade fairs that get held each year are not so big and very industry-specific, which is good if you are focussed on a narrow range of products. However, if you are looking at a wider range of products, and you want to maximise the use of your time in China, you should be looking at one of the main international trade fairs:

The Top Trade Fairs In China The Canton Fair

(officially called the CECF -- Chinese Export Commodities Fair)

 Where: Guangzhou When: April and October Products: Everything Website: http://www.cantonfair.org.cn/

Hong Kong Electronics Fair

Where: Hong Kong (Hong Kong island) When: April and October Products: Consumer Electronics Website: http://www.hkelectronicsfair.com/

China Hi-Tech Fair/ComNet

Where: Shenzhen When: October Products: Computers, Machinery, Consumer electronics, Toys, Tea (yeah, it's 'evolving'...) Website: http://www.chtf.com/english/

China International Consumer Goods Fair

Where: Ningbo When: June Products: Everything Website: http://en.cicgf.com/ http://www.cgfair.com/en

AsiaWorld Expo
(a venue rather than a single exhibition) Where: Hong Kong (Lantau Island next to airport) When: April, October ++ Products: Electronics, Fashion, Gifts, Home products Website: http://www.asiaworld-expo.com/

Shanghai International Clothing & Textile Expo

Where: Shanghai When: March Products: Garments and Textiles Website: http://www.fashionshanghai.com/

Most trade fair exhibitors will also arrange appointments during or after the fairs, for you to visit their offices and factories. This can be a great opportunity to build a face-to-face relationship, and of course it will let you see what kind of company you are dealing with.

"Can they really supply me?"

There are basically four categories of people who you will be able to make contact with in China if you are obviously a serious import buyer:

1. Factories.
Advantage: lowest prices; you can change the specifications of the product. Disadvantage: high minimum order quantities; possibly underdeveloped products v-a-v your market, e.g. no good retail packaging; underdeveloped communications and customer service.

2. Export Distributor / Wholesaler

Advantage: good connections with factories; lower MOQs; still good prices; good customer support and communications. Disadvantage: little control of product specifications; may not hold enough quantity / enough variety of stock for your requirements.

3. 3rd-level traders and agents.

Advantage: may be more specialised and experienced in particular products and particular international markets. Disadvantage: the prices now include two middlemen, as these traders will generally be ordering from the distributors. In many cases trading companies will charge excessive mark-ups because they know you are not able to contact factories or distributors directly.

4. Conmen and scammers, who are not actually selling anything...

Advantage: when they are amateurish it is kind of funny. Disadvantage: there are a million ways scammers will try to take your money, and some of them are quite professional. Basically, you should be looking to get in touch with (1) factories and (2) distributors. The choice between who you deal with will boil down to these questions:

What quantities are you buying?

Are you buying a product that has already been developed?

Do you have complex labelling and packaging requirements?

Are you prepared to spend a lot of time negotiating (factories) or would you prefer a lot of the details to be taken care of for you (wholesalers)?

Are you even able to communicate effectively with the factory?

Which particular supplier has the most experience dealing with your nationality / type of orders, and which do you feel most comfortable dealing with?

A general tip I would give is, don't think you're being too clever by doing detective work behind your supplier's back, to find out the true factory source of a product. By trying to find the original factory source, you could be wasting your time, because it's a strong possibility dealing directly with the factory will be so fraught with problems it's not worth the savings, and by cutting out your distributor you will lose a potentially beneficial relationship. It's like the Aesop's fable of the dog with the bone. Another thing to bear in mind: when you're talking to suppliers in China,don't take what you're told at face value. If someone says they are the sales office of a factory, they may just be agents or distributors. If someone tells you they are the exclusive provider and it is not possible to buy direct from the factory, that is quite likely not true. On the other hand, if someone gives you their business card and the company name, logo etc is totally different from the company they are purportedly representing, that doesn't necessarily mean much either. A factory will typically have more than one company name and what you should really be looking for are the trustworthy reliable contacts that will get you what you need in the long term. You will need to exercise your business judgment... and this is even more important if you are not in China...

 "China Sourcing -- How To Play It Safe" I've mentioned that seeing products "on the ground, first hand" at a trade show or at the factory lets you really make sure you know the goods you're talking about and that you can't necessarily trust what you see on your computer screen. In the next part of the mini-course I'm going to talk a bit about some questions you should be asking possible suppliers and how to judge the responses that you're getting. For now, let's cover some basic DOs and DON'Ts of dealing with your new Chinese suppliers:

Playing it safe when sourcing in China

DO

Deal with companies, not individuals.

Get full contact details and company information as early as possible. Ask plenty of questions and speak on the phone if you are unsure.

Ask if the company has any overseas representatives, offices, or agents that you can also speak to.

Research the company by looking at their website, comparing their listings and products on different trade directories, and by doing web searches for their company name.

Ask questions to other buyers in online trade forums to see if anyone has feedback on the company.

Get samples shipped to you by courier so you can track the delivery.

DON'T
...send money in any form other than Bank Transfer or PayPal, and get professional advice about using Letters of Credit for large orders.

...make any orders before you see samples. Don't deal with companies which you can't buy samples from. (However, lots of Chinese suppliers will be reluctant to sell you samples because their staff are too lazy or they have no mechanism for sending out small packets - keep trying a couple of times if they initially refuse.) ...make large orders before you have negotiated specifications of the products and packaging, and payment / delivery terms down to the clearest detail. ...deal with companies making fake branded goods, other counterfeits, pirated software / DVDs, or grey market goods. ...trust companies that start immediately pushing you with unreasonable or unfriendly demands -- that is not the natural Chinese way!

A negative tip!
If you've sent money to China for products and you think you've been cheated,there isn't much point complaining to local Chinese chambers of commerce, bureaux, or embassies. They may be concerned but they haven't got the resources to police the Wild East for you!

A positive tip!
If you are waiting for your products to arrive and you think the supplier has just vanished with your money, you probably haven't been cheated (yet). It is probably just the Chinese supplier being slow to respond, or disorganised. Be patient and try different ways of contacting them. If there is some disagreement over the goods, the prices, or the terms, state your position clearly but don't immediately come in with complaints and

threats, because this could cause you to lose communications completely. In a problem situation, remain positive and polite in all your communications as long as possible, even if you're losing hope of a good solution.

"China Sources -- Grab The Opportunities, But Don't Move Too Fast!"
Here's some thoughts I'd like you to hold from today's information : China is not particularly more risky as a place to do business than anywhere else. But the comparative lack of regulation in the Chinese market and the very fast recent growth of small businesses, coupled with the obvious profit opportunities that foreign buyers present, mean that you need to walk in with your eyes open. Trade fairs are excellent starting points, and you won't regret spending the time and money. Don't be afraid of visiting China -- but make sure you have a professional travel agent help organise your trip because you don't want to have to try to make too many changes once you've actually arrived in China. When you are in China, go slow and focus on building contacts, not trying to close deals. You can make your visit to China most effective by researching companies online first, contacting them well in advance, and arranging appointments to visit. If you just show up on their doorstep without speaking to them in advance, you may not get anywhere at all. Record the contact details of potential suppliers systematically, because you will find a lot of leads at tradefairs and it's worth contacting many if you are just starting out in China. Focus on building contacts and relationships before jumping into masses of details. Order samples and go slow in your negotiations. Don't be pushy with your supplier for fast reactions if you're a new client -- they may be a great supplier, but in their eyes you're not a good customer -- yet! Import from China Mini-Course-- Part 2: Your Internet Research Resources Learning where important logistics centers are located within China: Container ports map A comprehensive list of big and small trade fairs in China:http://www.eventseye.com/fairs/event_l41.html

"Speaking to the Chinese - no need to speak Chinese"

Importing from China isn't as hard as it used to be, and it certainly isn't as difficult as a lot of people believe. One of the reasons many business people source their products inside their own country or region is that they feel safe doing business with nationalities they know, especially where the language is the same. If everything is going OK, why waste time or take a risk trying to start afresh with an unfamiliar, foreign supplier? Well, we've already talked about the benefits of buying from China - the bottom line! But in many of the questions submitted by members of our China Import Newsletter, I've seen variations of these questions: How can I deal with Chinese people, if they don't speak English? Are Chinese companies familiar with a Western way of doing business? Can I trust a supplier in China? Can Chinese suppliers really deal with me successfully?

How do I know if Chinese factories and distributors are modern and professional enough to supply my needs? These are all good questions, and if you're asking these questions, it's a good thing. To be doubtful and careful is a wise approach whatever you are doing in the import / export business. I am going to try to give you answers to all of those questions in today's fourth section. If you're already asking the type of questions above, the chances are that you are on the right path to researching a solid, reliable set of suppliers for your import business. I've seen a lot of customers who are first-time importers, for example starting an EBay shop, come directly into our online sales at Chinavasion.com with a first purchase of several thousand US dollars, without asking us a single question before. Now that's fine of course, because naturally you can trust us here at Chinavasion and the information we give to new customers in our FAQs gives a clear idea of what you're getting. But I sometimes worry if the same people are doing the same thing - "jumping in quick and hoping for the best" with unreliable or disorganised companies in China. A lot of Chinese companies can be found through the internet, and they often advertise things they can't really deliver, or at least their service is not professionally set up to deal with export customers smoothly. I guess there are a lot of newcomers to the import business who start with their first orders to that kind of company, and maybe get very disappointed or even lose a lot of money. Are Chinese suppliers actually allowed to export to my country?

So the idea I want to give you today is that when you deal with any Chinese company, you need to establish a steady, communicative relationship. The Chinese style, in business and life generally, is to communicate a lot and build a relationship. If you are communicating clearly with your suppliers, and in a positive way, you will run into fewer problems throughout all your business deals. But China is such a different place, and the language difference causes a barrier sometimes - how can you get this positive communication going?

"In China, human networks are more important than computer networks."
When you communicate with Chinese people, you want to make sure that you make a good impression and build up the positive feeling in your business relationship. You can't understate the importance of this to Chinese people. Communications need to be polite and positive. Here are some of my tips on good business communication with Chinese people: Always say please and thank you. Say "I'm sorry to bother you" and "Is this an OK time to call?" In emails say "I appreciate your help, [name]". Make your communications personal and use the other person's name. If you are speaking on the phone, it's OK to make some small talk. You can also use your name e.g. "it's Peter here calling from Norway, remember I am the one who ordered the cellphones last month?" to help the other person get to know and remember you. That will work in your favour because you will receive more personal service. Don't tell people directly that they are wrong. Chinese people are always right. No, only kidding, but in Chinese culture if you say "you are wrong!" or even "that's not true" you are creating a conflict, notharmony. If you must disagree, use diplomatic words. If you create a confrontation situation, the cultural response for Chinese people is to shut up and cease communicating. It's perhaps not a good habit, but if you ask Chinese people a question to which they don't know the answer, they will usually avoid saying "I don't know". So you may get a general answer, or three answers, or no answer at all. After some time you will get a feeling for when people know what they are talking about and you will learn how to get information from other people without hurting the feelings of the one who doesn't know. When it comes to money, you need to negotiate, not demand. Always find more and more variables which can be used as discussion points and possible concessions. "Refusing to budge" or "stonewalling" means you will make the Chinese people think you are not interested in business and they will send you away empty handed. Never raise your voice on the phone, and in an email don't USE ANGRY CAPITALS! It just won't get you anywhere with us Chinese I'm afraid! Now please read the above points again because they are the most useful tips any newcomer to China could receive!

Emailing Chinese People

Don't be too concerned if your business contact has a non-business email address e.g. "...@163.com" or "...@yahoo.cn". A lot of people use these webmail services because they are faster and more reliable than trying to access company email. Often, if a Chinese person emails you an MS Word document with Chinese characters, you won't be able to open it. Ask them to re-send it in PDF or RTF (i.e. rich text format) and it should be OK. It's always helpful to copy text from previous emails and include full references e.g. to invoice numbers, customer numbers, dates, etc. Your supplier may have many foreign clients handled by only a few people, and the more you can help them identify you, the more efficiently they're going to be able to help you.

Web chatting... for business

Chinese people love instant messaging like Skype, MSN, and (the Chinese network) QQ. Don't be surprised if Chinese people ask you for your instant messaging address because a lot of people here use these systems for day-to-day business communications. By the way, no one in China uses AOL... and Skype is still not as popular as MSN. QQ is generally only used by Chinese people, but a lot of Chinese people think it's universal so might ask you for your number.

Telephoning China

The China country code is +86 (and Hong Kong is +852). In most countries this means you dial 0086 before the phone number. Area codes begin with (0) e.g. Shenzhen (where Chinavasion is) is 0755, but you leave out the zero when you dial from abroad. So, the Chinavasion phone number is +86 0755 26451869 but you would dial: 0086 755 26451869 China time is GMT +8 hours for the whole of China - no complicated time zones like you Americans and Aussies! Chinese people almost never have voicemail or answering machines. With many office phone networks, if a line is busy and you call it, you will still hear a ringing tone. So you will think no one is answering! Yes, it is a stupid system. Be patient and try again later!

English Language in China

So, how good are Chinese people at English? Well, Chinese kids now learn English for over 10 years in their schooling, but the standards of teaching for the current generation of business people were not so great. So some of us are pretty bad at speaking, but our writing may be OK. And for others... they are just terrible all-round! If you've found a good supplier, you don't want to give up just because your contact person's English isn't perfect. Here are some tips on how not to get frustrated: When you are speaking, remember to speak clearly and slowly. That can make a big difference. Give the other person time to write down information.

For Chinese people it's often difficult to use the right words to get a polite tone. For example on the phone someone may tell you "Wait!" ... which sounds rude, right? But they mean "Please hang on a moment" ... they're not trying to be rude! In Chinese languages, the word for "he" and "she" is the same. So if your Chinese contact refers to your female colleagues as "he" please don't be too surprised - they do know she's a woman! In Chinese there are no verb forms for tenses. That is, in English we say "I am going", "I went", "I will go" etc but in Chinese you just say "I today go", "I yesterday go", "I tomorrow go" etc. So if your Chinese contact is telling you something, and you are not sure if it already happened, or is going to happen in the future, please ask!! As with all communications, it can't hurt to ask questions, repeat your understanding to clarify agreements, and confirm things in writing.

"Making contact with Chinese suppliers - starting out on the right foot"
A lot of people who emailed me to ask questions about importing from China mentioned this problem: "I've contacted loads of Chinese suppliers... but they never get back to me. How do I get a response from them?" First of all, you need to make sure you've allowed enough time for them to get back to you. If you've emailed and a week has gone past, try faxing or phoning. Or try emailing

again, copying your original enquiry. However, I think the main reason people don't get the response they want is that they don't begin the communications in the right way. This is the wrong way to write to a Chinese supplier: yo i am intrested to import from yall -- plz gimme the full price list and btw do you have iPods??? and wot about free samplez?!? thanx bye OK, maybe a bit exaggerated example, but can you see how in their pile of daily emails, the Chinese supplier might not take this kind of email seriously? Let's look at some other failed first enquiries: To whom it may concern, Our company is one of the top businesses listed on the Brazilian stock exchange. With over $3bn in assets and 50 years' history importing from all over the world, our customers love us because... ... ... [... blah blah blah] [ ++ 5 pages of company information + brochure attachments] ... We look forward to your reply. Yours faithfully, Mr Boss Big Shot CEO, President, Demigod Egos-R-Us plc That email is going to get junked, not because it lacks credibility but because: Can you guess why this next person never got an answer? Hi! I've seen your company clothing and shoes catalogue and I think you people at ChinaTextile can help me. I need to find a supplier for car tyres and also for baby toys. I know both of these are made in China, and you guys are in China, so you must be able to help me right? It is boring It is too long for an average Chinese person to read It doesn't actually ask a question, so how can we reply?

In case you think that's exaggerated, I've answered emails we've received at Chinavasion Wholesale Electronics from people asking to supply them with steel nails, rice, insurance, knives, and sex toys. And how about this next one - have you ever perhaps sent an email a little like this? Dear Sir, I have seen your website with special gadgets and I need you to supply me with a product according to the following specifications. The product needs to be as follows: - GPS locator Lightweight but made of metal Have solar power Have a full colour screen which can be hit with a hammer and won't break Optionally have a full waterproof body Can be mounted on any normal sniper rifle

Please get back to me immediately with a proforma invoice quoting prices for 50,000 pcs, 100,000 pcs, and 1 million pcs and full information about how fast you can ship this to me CIF Antarctica. Best regards, Mr Leet Importer What are the problems here? The China supplier may not even bother replying to your emails if there isn't a straightforward quick answer they can give! Too demanding Not asking about an actual product Immediately demanding prices for a non-specific quote Asking about huge quantity orders right from the start

How to write a good first enquiry email.

OK, enough cricitism for today! Here is my positive advice about your first enquiry email: Write a descriptive subject line. Bad: "Enquiry" Good: "Price Enquiry - TTC-1459 Accumulator - James Brent, UK Electricals Inc" 2. Don't write "URGENT", "important", or "reply asap" in the subject line because everyone thinks their own emails are the most important and for the person receiving it, it's just annoying. 3. Write a full, mainly formal email beginning "Dear ..." (to a person's name if you know it) and an ending "Best regards" with a footer including your contact details. 4. Use a spell checker, and write with normal capitalisation. And do you think it looks nice to write a question like this??!!???? 5. Tell them where you found out about their company, and state their company name so your email doesn't look like a bulk mailing. 6. BRIEFLY introduce your company and what your position is. 7. Use the email to establish communication instead of demanding information. 8. If you ask about products, refer to actual products and not general categories, and I don't think you need to talk about price quotations in the first email. Even if you are just price comparing, start the enquiry email conversation with a different question. 9. Don't demand references such as company certificates from the beginning. 10. Don't ask them a huge list of complex questions about taxes, shipping, warranties, terms and conditions etc. That can wait for later. You can apply these same ideas to phone calls - introduce yourself, ask simple questions that can be answered, and focus on building a communication, not on demanding details. Here is the type of good email I think Chinese suppliers would happily reply to - you can change the details and use it as a template for your own sourcing enquiries: [subject:] Enquiry regarding earphones from Roger Peres, Mexico Sounds Ltd. Dear Ms Li, I found the details of your company "ChinaSonic" in the trade magazine "Earphone Sources".

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My company is Mexico Sounds Ltd, based in Mexico City, and my position is Purchasing Manager. I am interested in finding new high quality earphones and headphones, and I think your company looks like an excellent possible supplier. Please could you let me know if you can export earphone products to Mexico? If so, please can you send me a catalogue of your products or a price list? I have seen a picture of your bud-type earphones, model [E-40b] and products similar to these would be interesting to us. I will be very interested to speak with you more about buying from ChinaSonic. If you would like to telephone me at the number below, or email me, I will be glad to talk with you. I look forward to your reply. Best regards, Roger Peres Purchasing Manager, Mexico Sounds Ltd roger@mexicosounds.com http://www.mexicosounds.com +52 1234567890

Realistic expectations
You have to be realistic about how much information your supplier can give you and how excellent their customer service is going to be. Remember, you're not dealing with a retail shop - it's probably a factory or a wholesaler, so they probably haven't got the staff or the expertise to deal with "live" customer service. Don't expect toll-free helplines! Don't expect voicemail.

Don't expect the people to remember who you are if you just phone up and say "it's Bob here" or email without signing your name and company footer. Don't expect instant answers to your emails.

Don't expect the Chinese supplier to know much about the import taxes or licences for your country. After all, do you know the Chinese laws and tariffs for a Chinese person importing from your country? Didn't think so!

 Don't expect a distributor or wholesaler to know all the details about their products. They will be able to find out, but the "English speaking office assistant" on the phone very likely isn't a technician, so go easy on them. If the company has already sent you a product specification or price list, don't expect them to be able to provide lots more photos, manuals, or technical specifications. The quickest way for you would probably be to buy a sample. If you get a price list early on, these prices might change later (higher).

If you get prices quoted and you are a brand new customer, don't expect to be able to bargain these down right away. Especially if you are only buying a smaller quantity. If you're a new buyer you may sometimes feel that you're not getting full attention from your supplier. Don't worry, Chinese business people take some time to get to know people. Chinese customer service is not bad at all, but you can't expect to be in the VIP client circle straight away. As you become better known to your contact people and your relationship as a buyer has more time and trust, you will find that your customer service from the Chinese supplier improves. A long-term relationship with a supplier is a very valuable thing to have, because you will get better prices, and the new, best products, before everyone else. It's worth investing the time and patience.

"Starting Your China Communications"

Here are the questions I summarised at the beginning of this part of the mini-course, and my short answers for each one:

How can I deal with Chinese people, if they don't speak English?
Most export-oriented companies will have at least one person who can communicate in English. Speaking English is much harder for Chinese people because our education system stresses reading and writing. So if you have problems on the phone, talk slow and don't get upset. And then confirm everything by email later!

Are Chinese companies familiar with a Western way of doing business?

You should expect your Chinese supplier to deal with you in a prompt, professional, efficient way. In that sense, Chinese business functions the same way as it should everywhere. But if you expect Chinese companies to follow your systems, don't be too disappointed when they tell you "yes" and then completely ignore you!

Can I trust a supplier in China?

China is the same as every other country in the world - there are always a few people who are out to cheat you. But actually when it comes to business the Chinese people have an honest attitude. If you approach your deals in a careful, organised, honest way, you will have little to fear because the Chinese companies will be happy to establish a good long term relationship with a good customer.

Can Chinese suppliers really deal with me successfully?

There are all sorts of suppliers in China - big / small; factory / distributor; specialist / general.... When you are starting out with your China importing, you will find a lot of people who can't give you what you need. Don't give up - soon you will find some great business partners, whatever you're importing, and then you'll wonder why you waited so long to "get into China".

How do I know if Chinese factories and distributors are modern and professional enough to supply my needs?
Basically, you have to test each supplier with samples and small orders before you proceed with large quantities. Don't rely on sales pitches or brands - just rely on what you can see and how successfully your orders are getting fulfilled.

Are Chinese suppliers actually allowed to export to my country?

There are some complex regulations about export licences in China, but don't worry, these will be already be taken care of by the Chinese companies, otherwise they wouldn't be advertising to export in the first place (hopefully). What you should be thinking about is - "am I allowed to import this product in these quantities to this country?" and that information is for you to find out yourself!

"Chinese People Value Harmony"

 How can you sum up how to start your communications with a Chinese supplier? I think of it like this: "be cautious, but don't seem suspicious; make enquiries, not demands". If you follow this attitude I can promise you, you will be much more successful in the long term in your dealings with Chinese businesspeople, because you will create a harmonious business relationship. One of the things you will notice if you visit China or deal with Chinese people a lot is that we are very proud of our history and culture! The Chinese way of thinking about everything in life is really very different to the Western way. Like it or not, Chinese people tend to believe their way of communicating and doing business is the "normal, correct" way, and your way is the foreign way!! So please don't expect Chinese business contacts to change their style and adapt to your way of thinking - at least not too much too fast. Try to be understanding if you find you can't seem to communicate in the way you expected at first! Work with Chinese people in a patient, polite way, and the rewards will come back to you in the long term! Import from China Mini-Course-- Part 3: Your Internet Research Resources China Business Negotiating Tips How to make sure you are communicating right in Chinese business culture! China Business Etiquette Tips on how to fit into the Chinese business world. Import Incoterms A list of the key import abbreviations used for negotiating prices. You DO need to be familiar with these!

"Logical Logistics"

So, you've found a good supplier and you're going to import some products. How are you going to get them from the Chinese supplier's warehouse to your door? If you are importing from China, your goods will come to you either by air or sea. Air shipments could be express post, courier delivery, or air-freight-containers. By sea it could be "snail" post, or container shipping. Air shipping is fast but expensive, whereas sea shipping is always the cheaper, slower option. You will know for your business how important -- or unimportant - time is.

You may think your goods aren't time critical so they can go by sea, but what about price fluctuations and local fixed costs during the month-long voyage? Or you may be opting for fast air delivery when actually your profit margin could be better with a slightly longer delivery time by sea. Overall you should look at different options for each different importing project... and always view the shipping quotes you receive as very open to negotiation! One of the reasons shipping costs are always open to a bit of bargaining is because there are so many variables, premiums, and concessions that can be factored in. I can't give you a big tutorial about logistics here... in fact, some people I know studied logistics at university at Masters level for three years and they still can't explain things clearly to me! But I will give you some pointers so at least you can think about the basics. These are the delivery stages that you need to be aware of because each will involve some costs which will affect your goods' prices: Warehouse storage in China. Packing in China. Loading and inland freight in China. Terminal charges in the port or airport. Loading and freight by air or sea.

Unloading charges and documentation fees (not including anything to do with tax!!) Possible additional storage en route to you. Inland freight & delivery to goods' destination.

When you look at the delivery process you'll see it's not just one simple step. It involves a lot of different people working together as your goods change hands and get closer to their destination. Because of the complexity of delivery your costs will increase the more stages are your responsibility. So making sure your price quotes are right, e.g. in your Proforma Invoice from a supplier, is a crucial business judgment.

Shipping and Incoterms

When you get a price quote from a supplier, you'll need to find out just how much of the journey theyare paying for, and at what stage the shipping becomes your responsibility. EXW Ex-works. This means the price quote is just for the goods, at the point of origin such as the factory. No shipping costs are factored in at all.

 FOB [+ name of local port] Free on board. This means the price is for the goods delivered onto the container ship. CIF [+ name of destination country port] Cost, Insurance, and Freight. Here the seller of the goods pays for them to be shipped to your country. Your price is for the goods plus the international carriage. (Typically CIF is for non-container shipments, and CIP Carriage and Insurance Paid to... is the equivalent for containers.) DDU [+location] Delivered duty unpaid. The goods price covers their international delivery to a certain place, but does not include any unloading costs, clearance costs, or import taxes. (More about that later.) It is not necessarily the best option to try to get your supplier to take responsibility for the shipping all the way down the line. They will simply pass on these costs to you in the invoice total, and you could be getting a better deal by arranging all the steps yourself with a forwarder or shipping agent.

Shipping from China -- important considerations

While I've been reading about logistics and reviewing some of the many questions readers of this mini-course have submitted, I've recorded a few assorted "things to consider" that I feel may be important for new importers from China: I can never get over how many people contact me at Chinavasion and ask about "Next Day Delivery". Start with realistic expectations. Maybe some great shipping options are available, but remember in your dealings with Chinese business people that you shouldn't expect to get the VIP No.1 best option offered to you at the very beginning of your relationship. "EMS" means Express Mail Service, and it is a fast, trackable postal service for packets offered by many countries' Post Offices. China has EMS as well. Unfortunately the system here in China doesn't allow people to send many types of items, e.g. certain categories of electronics. So if you can use it for importing samples and small quantity orders, you are lucky. But if the supplier says it's not possible, that is probably true. 3. For different types of consignments and destinations, the major couriers often advertise quite different rates. And it is usually possible to find a way to pay less than the advertised rate. 4. In the same breath you are talking about shipping you should also be discussing insurance. A lot could be written about this, but all I can say here is -make sure you know who is responsible -- and who /what is covered -- if your goods get damaged or destroyed or stolen.

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Packaging for international shipping is an important consideration. The supplier may want to cut corners and save on costs, particularly if you are not on hand to inspect the packing, and the sellers responsibilities end, say, FOB. 6. If you are in the early stages of dealing with suppliers in China, you may be "shopping around" for good quotes, including shipping. Try to help the suppliers by asking for specific quantities and delivery options. If you are not specific, and just ask for general shipping tables or a large number of different option quotes, you will be perceived as time wasting and may not get an answer. RESOURCES: Fedex international freight calculator: http://www.fedex.com/ratefinder /home?cc=US&language=en&locId =freigh t

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b. UPS international freight calculator: http://wwwapps.ups.com/servlet /QCCServlet

c. A forwarding company's online freight calculator:

http://www.freight-calculator .com/wholeicr.asp If you are using a freight company to collect your goods from a factory or warehouse in China and deliver to you, you're going to need the exact dimensions and weights of the cartons containing the products if you want the freight company to quote a price for you. And I do mean "exact" because a slight variance of a couple of mm here and there could increase the cubic weight calculation significantly. Don't be too surprised if the measurements submitted to you by the supplier turn out to be wrong when the freight company collect the boxes, because they might not have measured carefully, might not know how to measure properly, or might have given you a completely guessed carton dimension before the goods were finished and packed. It's just another thing you have to double and triple check especially when dealing with a factory / freight company combination. In such a situation it obviously pays to have a trusted representative on the ground in China, if possible.

"Delivered Duty Unpaid"

If you buy goods from China to be sent to you, you are importing from China. You're importing even if you're ordering a single item from a Chinese EBay seller or getting a sample of any product from a Chinese company. Every country in the world has some rules about importing, and here are the key basic facts: There are certain types of goods which you are not allowed to import. In some situations you will have to pay tax on your imports. In some situations there will be no need to pay tax. "Hey! Why are you charging me tax, Rose?" A lot of our customers at Chinavasion are surprised that they have to pay taxes when they import electronics bought in our online wholesale shop. Some people ask why Chinavasion is adding tax to what they have already paid. But the tax is

actually from their own country, not from China. What I say when I speak to customers is: "Import tax isn't about who you are buying from. It usually doesn't matter where the goods are coming from. It just matters that you're trying to bring something into the country from the outside." That's why we ask all our customers to do their own research about their own country's systems and regulations before they place their first order. Import taxes in your country probably are not simple to understand. The rates vary for different items and conditions from 0% up to 50% or even more, depending on country, carriage method, quantity and more, so you NEED to find out this information before you send any supplier your money. Read our statement for Chinavasion customers about import taxes here Because import tax is about your country, not the country of the supplier, I am not speaking in this section about special provisions importing from China. I am just talking generally about import taxes, so the ideas I am giving here apply to all importing situations even if it's not China. Whether you have to pay import taxes, and how much, will depend on the following: The type / classification of the goods; The value and/or quantity of the goods; In some situations the way in which the goods are packed and delivered; And the mode of sending, i.e. who is sending the goods and who is receiving. E.g. a company receiving commercial merchandise from a company may have to pay tax, whereas an individual receiving a gift from another individual may not have to. Every country has different rules and systems. And to add to the difficulty, the rules are not always enforced in a consistent way. For example, in some countries you could import a package and pay no tax at all, and then the next week import exactly the same order, and suddenly have to pay a lot of tax. This may be because the customs office only performs random checks or hasn't got the resources to inspect everything closely.

Import Tax Vocabulary

Even if you're a native English speaker, the terminology of tax can be a bit confusing for a newcomer to importing. Here are the key words you will come across: Duty Tax charged on imported merchandise (and sometimes services). It means the same thing as "import tax", although when people talk about import taxes they may also be including sales tax. Excise An excise just means a tax on certain goods. Typically it refers to a special tax on a category or type of goods that is levied inside a country. Specific Tax / Specific Duty This means you pay a fixed amount of tax for a fixed item or group of items of imported goods, regardless of the value of the goods.

 "Get

Import Tax Information From The Horse's Mouth!"

Ad valorem Tax This means the tax you pay is calculated as a percentage of the total value of the goods. This is the usual way most import taxes are calculated. Tariff The word 'tariff' just means a charge. The word can be used to mean the same thing as 'duty' and also can be used to refer to a list of charges and how they are calculated, e.g. "The UK Tariff" is a large document explaining how to estimate import taxes for particular items coming into the UK. Sales Tax / VAT This is tax that you pay whenever purchasing a wide range of goods and services inside your own country. It is calculated as a percentage of the price of the goods or service. However, when importing you may have to pay this tax on the goods as if you were buying it domestically. If you are a business, you get this money back by charging the tax to your customers. Customs Broker A person or firm licensed by an importer's government and engaged in entering and clearing goods through customs. The responsibilities of a broker include preparing the entry form and filing it; advising the importer on duties to be paid; advancing duties and other costs; and arranging for delivery to the importer.

Before you start importing -- and I mean, before you even buy samples you should do some basic research about import rules in your own country. The responsibility is on you to find out this information, not on your Chinese supplier: even if they want to help you it's unlikely that they can give you authoritative facts about such a complex topic, especially when such rules in China are usually different anyway. However, if you have good communications with your supplier, it may be worth asking if they have ever had customers buying the same goods from them to import to the same country as you. It's possible they can give you some anecdotal information that will help your planning. But anecdotal information isnot hard fact so please start by finding out the official importing and tax information directly from the government agency source: Your Country Your Official Customs Website Australian Customs Service http://www.customs.gov.au/site/page.cfm Secretaria da Receita Federal http://www.receita.fazenda.gov.br/ Canada Border Services Agency (CBSA) http://www.cbsa-asfc.gc.ca/menu-e.html Site internet de la Douane http://www.douane.gouv.fr/ Zoll online http://www.zoll-d.de/ Central Board of Excise and Customs

Australia Brazil Canada France Germany India

Italy New Zealand Spain UK

http://www.cbec.gov.in/ Agenzia delle Dogane http://www.agenziadogane.it/index.htm + Sito istituzionale della Guardia di Finanza http://www.gdf.it/ New Zealand Customs Service http://www.customs.govt.nz/default.htm A.E.A.T. http://www.aeat.es/ HM Revenue and Customs

http://www.hmrc.gov.uk/ US Customs and Border Protection Importing Information : USA http://www.cbp.gov/xp/cgov/import/ Some general (and quite complex) legal / taxation rules are noted in this European website: Union (all) http://europa.eu.int/eur-lex/en/lif/ind/en_analytical_index_02.html Some of those websites are atrocious examples of web programming so good luck getting information for your country! ;) If your country is not listed here, please visit BuyUSA.gov by clicking this link and use the menu called "Find Export Information by Country"

Sources of import tax information:

Start with your country's official customs information website. Phone them with specific questions only after you already know the basics. Read websites and internet discussion boards which are focussed on importing and your particular products. Don't take other people's experiences with tax as solid facts, but use the ideas to prepare yourself for the type of issues that may come up, and to think up the right questions you need to ask your supplier and Customs office. If you are planning to import large quantities or high value products, you should definitely be considering paying for the services of a customs broker, even if it's just for advice.

"How Can I Pay Less Tax?!"

No one likes paying taxes, and if there is some way to reduce import taxes, you want to know about it, right? In fact, after "Can you send electronics to Brazil?", tax questions are the most frequently asked questions for me and the customer service team here at Chinavasion. First, I just want to point out that there is a difference between 'avoiding taxes' and 'evading taxes'. Tax evasion by definition is a crime and I don't think I'll cover advice for that in this mini course!! However there may be many ways you can find -- legitimately -to reduce or eliminate the taxes you pay on imported goods and improve the profit margins for your import business.

The majority of countries have some kind of threshold for goods value under which you won't pay any tax. If you are a small scale importer, e.g. for EBay items, this will be very important to discover. In most countries there are also certain types of goods which don't get taxed - they are exempt. You may be able to find two different allowable categories in which to declare a certain product -- one description would incur a tax, and the other might not. Of course, tax classifications are designed so as not to allow for this sort of thing, but there are an infinite number of different goods being imported so there are always huge grey areas. But I can't get into details here of all the tricks and loopholes which exist in every country. It will pay YOU to spend time researching YOUR country's systems so you know how to get through the taxminefield. Even if you don't find out any special tricks to reduce your taxes, you will at least know enough about how to avoid making mistakes and breaking the rules, which could land you with fines and unnecessary delays.

What is the value of these imported goods?

If you import goods worth $5,000 you are typically going to pay more tax than if this shipment was worth $2,500. Naturally. But maybe you are already thinking you could import that $5,000 order and simply declare it to be worth $2,500, and pay less tax. Clearly there is an advantage to declaring a lower value, and you may ask "Who decides the value anyway? -Can't I decide on my own how much these goods are worth?" Well, the declared value of imported goods is always supposed to match the "transaction value". What does this mean? THE VALUE MIGHT BE JUST A MATTER OF OPINION According to what I have read about practices in the USA (and as usual this is not formal advice!), a shipment of goods can be declared at the "wholesale price". This could be a lot lower than the actual price paid by the recipient for the goods. "Wholesale price" is defined in the US as "the reasonable cost of the manufacturer to produce it" which could be a lot lower than what was paid and mean a lot less tax! HOWEVER ! That US concept of declared goods values won't necessarily apply in any other country. IN FACT :The rules for arriving at the customs value in most countries are based on the "WTO Valuation Agreement" (previously known as the "GATT Agreement"). According to the WTO the declared value of the goods must be, pure and simple, exactly the same as the amount of money paid by the buyer for the goods. According to the World Trade Organization, it's not supposed to be a matter of opinion! Read the full WTO wording here: http://www.wto.org/english /docs_e/legal_e/20val_01_e .htm#ArticleI

The Power Of Understatement

A common tactic to reduce import taxes is under-declaring the value of goods on the shipping waybill and invoice. In other words, you paid the seller $100 for the items, but you tell Customs it's only worth $30, so you pay less tax or avoid it completely. As you've read above, you're not supposed to do this. I am also not advising you to do this. Having said that I would still point out that it is common practice, and it can also be difficult for customs offices to deal with. If the invoice that accompanies goods says a certain amount was paid for them, in many cases the customs office will have no choice but to accept that as the true value for taxation purposes. On the other hand, for many common consumer goods, the Customs officers are extremely experienced in assessing their true market value and will quite easily override your declaration with their own non-negotiable idea of the goods value and tax amount. You will be left crying over spilled milk. Even if your goods are accompanied by the correct invoice, the Customs office will -- in law -- usually have the last word. They decide on the value for tax purposes, not you. And if you are still willing to risk it, consider that with a courier, the amount the goods are insured for is equal to... yes, you got it, the declared value of the goods. So if your $500 item goes missing, and you only declared it for $50, you will only get $50 from your insurance as compensation! Another common thing to do for small orders such as EBay purchases is asking the sender to send the goods as from a private individual (not a company) and declare the goods as a "gift". Again, this is not recommended if you are in fact buying the goods commercially, as it is a misrepresentation in the eyes of most countries' Customs. Whatever approach you end up taking to import taxes and goods declaration, I want to leave you with a warning: Even if the shipping/ customs documentation is filled out by your supplier or by a shipping company or forwarder, YOU are the one who will be viewed as responsible for the goods, as the importer. Therefore if the Customs office considers -- in their own opinion regardless of your opinions -- that the goods declaration is false or misleading, they will tax you according to THEIR idea of the contents and they could end up hitting you with: Additional penalties; Confiscation of the goods; Criminal prosecution. Remember, if you are thinking of taking chances, that Customs officers are not famous for being flexible or having a sense of humour. So if you are not 100% sure about what you are doing with an import order, just pick up the phone to your Customs bureau in your country and get some specific, case-by-case advice from the only people qualified to give it!

"Start Small, Learn From Your Experiences, And Build Up Expertise"

Shipping and Taxes are complex issues and may be the crux of whether you succeed in your import business or ... fail to succeed. As you gain experience importing from China and elsewhere you will get valuable knowledge in all sorts of technical areas that will gradually mean you are rising to expert status. And you may not wish to share too many secrets! I am happy to share the knowledge I have, and am still learning from our export business here at Chinavasion. I can't teach you everything in one go, but here are my words of wisdom for you for this part of the mini-course: The only things that are certain in life are death and taxes. Oh, and in your importing life you can add "lost shipments" to that too! Remember your insurance! Shipping, insurance, and import taxes can totally wipe out the profits you thought you were going to make! Do as much research as you can, as early as you can! Don't blame your supplier for your import taxes. Just make sure your delivery, labelling, packing, and declaration instructions to them are defined clearly. Don't rely on anyone's advice about import taxes unless it comes from a professional customs broker. One of the best sources of information about import taxes is your own experience! Every time you import and do/do not get taxed, keep clear centralised records of what taxes had to be paid in relation to the type / value of the goods. Use these figures as a system of estimating future taxes on import shipments. Your Research Resources - click the links to read the extra information: SHIPPING DHL volumetric weight calculator: http://www.dhl.com/publish/g0 /en/tools/volume.high.html You can also read about courier shipping of electronics orders with Chinavasion here Shipping rates calculator software for EBay sellers and online shops EBay's official advice for international trading and deliveries

TAXES

Discuss your experiences of import taxes, and ask other importers questions in our Blog Import Tax Discussion. At the time of writing this, the thread has over 70 comments already and you are invited to contribute anything you have to say!! About the Harmonized Tariff System (HTS) FAQs FOR USA IMPORTERS FROM CHINA These notes will also be useful background knowledge for everyone and a lot of the information is true in other countries too. Why was I charged duty for a gift that was sent to me? What should I consider before importing something? Do I need a license to import something? Do I need a Customs broker to clear my goods through CBP? What are the requirements for country of origin marking on goods that are imported into the U.S.?

Note from Rose Li

Thank you so much for reading the mini-course this far! If this is the first time you are thinking about importing from China, I wish you good luck as you continue your learning and build your business! This section of the mini course was quite hard to write because so many people have been asking me for information about shipping and taxes, but it's all so detailed, and everyone needs different information depending on their country and the type of importing they're doing. So I'm sorry if I haven't answered your questions yet! There were several things I wanted to talk about in this section of the mini course but didn't because they are just too in-depth: 1.Using a Freight Forwarder. 2.Container shipping. 3.Getting insurance. 4.Using a Customs Broker. 5.Customs documents and paperwork. If you have questions about these above issues in relation to your own Chinavasion orders, please submit a support ticket here. We'll give you specific assistance for your orders or quotations.

"Importing

From China For Ecommerce Profits"

Importing from China and the Far East is of course not a new business idea. In fact, Westerners have been making fortunes trading with China for centuries, dating back to the ancient Silk Road and medieval spice trade. In the past twenty years, China has emerged as the world's dominant manufacturing base for an ever-increasing range of products, and this now includes high tech consumer electronics products such as mobile phones, computers, and TV / home entertainment systems. For international business people in a position to use their know-how and contacts to buy from China and sell in their home markets, the profit opportunities are massive. International consumers are hungry to snap up cheaper and ultra-cheap imported goods, and China's enormouslow-wage workforce, accompanied by more and more relaxed business regulations, mean that the cheapest mass produced goods come from China and "Made In China" will continue to be the most common label on most consumer goods for years to come. You don't have to be a big, established company, or an import expert to begin taking advantage of buying low in China and selling high at home. Where can you look at examples of the smaller businesses that are already taking advantage of the low cost of Chinese electronics and other products? Well, in case you hadn't noticed, most of your local mall / high street stores are stocked with goods from China - it's not just Wal-Mart doing it. And I expect if you're a reader in a

Western country you're already heavily into online shopping, and guess where most of those products come from... Here are the biggest hubs of small-business online sellers for you to research, because so many of them are already using the China-cheap-import model to make big bucks, and you can learn a lot by seeing how their businesses are operating: EBay Power Sellers. http://pages.ebay.com/services/buyandsell/welcome.html EBay Stores http://stores.ebay.com/ Yahoo Stores http://shopping.yahoo.com/ Amazon Auctions http://auctions.amazon.com/ Amazon zShops http://zshops.amazon.com/ ...and if you haven't already tried Froogle - you can search here inside the product catalogues of a gazillion other online shops, big and small, mainstream and niche: http://www.google.com/products If you take a look at these sellers' products many, many of them are sourcing from China, and a lot of them probably drop-ship products directly from China, meaning they don't even handle inventory. You'd better believe that you can follow the same model for great import profits!

What Is "Drop-Shipping" All About?

Drop-shipping (also spelled as one word "dropshipping") is a practice of selling someone a product that you don't actually have in your hand. Sound like a scam? Think again, it's the new face of marketing and distribution in today's information-driven market. Here is what you do if you are a drop-ship seller: 1. You research good products to sell. You do the research to locate a good supplier of these products and establish a buyer relationship. 2. Next you advertise their products to your market, e.g. to your shop's customers, to your online auction viewers, in a magazine, etc just as you would market your own product. 3. You receive and process orders for the products from the customers, and take their payment. 4. You use this payment to go to the supplier of the products and buy the goods you need from them. 5. The supplier sends the goods directly to the customer without you having to handle the products or any stock. 6. For an extra fee many drop-ship suppliers will also brand the packaging and invoices with your name/logo so it looks to the end

customer like the goods have been dispatched from the same exact company that they ordered from. Drop-shipping is a classic exploitation of ecommerce online, because customers don't expect to see the goods when they order. If you walk into a normal shop and the shopkeeper asks you to put down money for goods which aren't even there, and will be delivered to you later from another shop which quite possibly you could buy from directly, would you still make the purchase? I don't think so, but it's different in 'cyberspace'. Online, the source of the goods is not quite so clear, so buyers are happily going to send you money for products which in fact you need to source from somewhere else. The obvious advantage of drop-ship selling is that you can make profits selling any sorts of easily deliverable goods, without having to take the risk of investing in stock, and without the costs and hassles associated with packing and delivering goods. Your selling business could also be very scalable, going from a few orders to a few hundred without significantly increasing your workload or operating costs. Drop-shipping can also be a source of efficiency for distributors or wholesalers because drop-ship sellers do much of the marketing work for their products which the larger companies wouldn't spare the investment, time, or expertise to do in so many worldwide markets. Because the drop-ship seller frequently will handle much of the customer service and also consolidate several small orders into reasonable larger order quantities, the large distributors will see small drop-ship sellers as good business partners. However, there is more complexity to drop-shipping than meets the eye, and since it's so easy to start up a drop-shipping business you need to be aware of some of the risks and downsides before you plunge in.

Is Drop-Shipping For You?

Drop-ship selling can be a great way to make good profits from a small and fast start-up business idea. It can also potentially bring good value to your customers, because although you are marking up the cost of the goods for your 'middle-man' profit, you may be bringing your market products which they otherwise can't obtain or didn't know about. You could also be adding value to the buyer's experience by creating good product combinations, making ordering easier and more secure, improving product information and customer support, andassisting with import issues. BUT, drop-shipping is not a simple thing to succeed at. Many people are succeeding at it, but you need to have a reasonable business common sense and be aware of the potential difficulties you will face. Let's say you find a really good, desirable product and you have a good supplier for that product who will drop-ship to your customers. Let's also say you have the know-how to market this product to the right customers. You've got the makings of success already! But you are not home and dry. Actually now you need to think ahead about how your business is going to work...

"Drop-Shipping - The Perfect Zero-Risk Enterprise?"

I am not normally a negative person, but I feel it's important to give some warnings about drop-shipping as a business plan. It can be great and I don't want you to go away from this section totally discouraged, but on the other hand everyone needs to face up to reality in the cold light of day. Too often when I am reading "guaranteed success" type websites I read sales copy from people who are trying to sell you drop-shipping directories or related services, and they don't like to show you the other side of the coin! I'm afraid I am more mean and not afraid to shatter illusions! Here are the basic downsides of drop-shipping you need to consider: YOU ARE NOT IN CONTROL Since you are not the manufacturer or original supplier of the goods, you are at their mercy or the mercy of fate. What if their business starts being unreliable, untrustworthy, or even goes bust? What if their export regulations, or your import regulations change? Without a supply of goods your business will quickly be finished. MOST COMMON DIFFICULTY: NO STOCK! Even if your supplier is a good one, inevitably they will often go out of stock on certain goods, or change their product range. If you aren't completely up-to-date with what your supplier has available, you could find yourself with dissatisfied customers facing long delays because they have paid you for a product which is now on back-order or not even available any more. "OH NO - I DIDN'T WANT A FULL TIME BUSINESS" As a drop-shipper you may be tempted to move quickly into several product areas in a bid to get the easy profits you dreamed of. Perhaps you hit on something very successful. You could rapidly find your sales expanding beyond what you originally thought you would have to deal with in the "simple" drop-ship business model.

Can you keep everything under control?

Very quickly, if you are successful at drop-ship selling, you could find yourself overwhelmed with all the problems of running a business that you thought you were going to be able to avoid: taxes, customer service, pre-sales and after-sales product technical support, product returns support, legal issues, growing overheads if you need support staff or office space,

accounting and record-keeping, marketing budgets, time management problems and personal stress, etc etc.

COMPETITORS Drop-ship suppliers tend not to offer exclusive agreements to anyone in particular. That means that with the right base and know-how, any other drop-ship selling business can relatively swiftly copy your successful model and compete with you or take down your business completely. ONLINE FACTORS Since most drop-ship sellers will be running most of their marketing through internet channels, they will be exposed to all the risks associated with online business. These include people copying your web content without authorisation, ever-increasing advertising costs, ever-increasing competition especially from large companies, and unpredictable customer traffic if relying on search engines. If you are doing business online, you won't succeed if you're a total web beginner. FINANCIAL RISK A normal import business may have to import a large stock of goods and bear the cost of storage and insurance for this stock. And then the goods may not even sell, or the value of the goods may go down over time, making the whole stock-keeping situation very risky for the business. In drop-shipping you have basically avoided that problem. However you are still handling the payments. If your customers send you money and for whatever reason that money gets lost, e.g. because of your supplier or because a shipment gets lost, you will bear the responsibility and financial risk. Similarly if you wish to offer customer money-back guarantees, or even have customers that cheat you, you will have more financial risks, and one or two large refunds or frauds could swiftly erase your profits or even put you out of business! LOW CUSTOMER LOYALTY By definition as a drop-ship seller your prices are higher than your supplier's, and in many cases your customers, if they know where to go, could quite easily cut you out and buy as cheap as you do, directly from the source. Especially if your buyers are planning to order the same product again, and in higher quantities, there is a strong likelihood that with a bit of research they will be able to locate your supplier and cut you out of the loop! Even if you aren't worried about your customers bypassing you, you still need to consider the traditional business issue ofbuilding loyalty with your customers, so instead of finding you once and buying one product never to come again, they will remember you, your brand, and continue to buy from you in the future. As a dropshipper the brands and products aren't yours, you may not be an expert in the product area, and you have no physical / personal presence for your customers. So you will have to work extra hard to build your company's identity and repeat-customer business.

Drop-shipping from China

Not a lot of Chinese suppliers will really know what you are talking about if you ask about "drop-shipping". Mainly this is because small order quantities for international orders are quite a new thing in many product areas, so even the word 'dropshipping' may be unknown. Chinavasion is an online wholesale electronics shop, and because we have no minimum order quantity, we have a lot of orders every day for single items being drop-shipped to customers all over the world. However, the factories we source the products from would never be able to deliver single items, even if they could cope with the logistics complications involved with so many small packages.

It's the same with most factories - they won't do small orders. So if you are looking for China drop-ship suppliers, you may need to look at the middle ground of distributors and trading companies instead of trying to head straight for the factories. In principle, Chinese suppliers probably won't have any problems sending goods to your customers. If they can already send samples or packages to your address, then why not to someone else's? The key really is finding suppliers with a low enough minimum order quantity. Even if you find a supplier with a MOQ of 10 pieces you may be able to drop-ship 5 of those to your customers and the others to yourself as a sort of combination of dropshipping and holding inventory. Or some suppliers may let you pay in advance for say 100 pieces and then ship them in small batches to different locations later. The perfect situation is to find a Chinese supplier who can reliably and efficiently dropship single item packages anywhere in the world. If you approach Chinese suppliers and simply ask "do you drop-ship?" you may not get very clear answers because they may not understand the question. Here are my suggestions for the questions you can ask your possible Chinese suppliers: 1. time? 2. 3. 4. Do you have a minimum order quantity? Can I order one piece at a

Can you ship to [country]? Is it OK to ship directly to my customers? If you ship to my customers can you also provide me with invoices?

5. If you shipped directly to my customers could you guarantee that your packages and invoice would not identify your company? (This is one of the hardest things!)
6. Would you be able to label the packages and invoice with my own company name / logo? If so would you charge an extra fee for this? 7. If I order 20 pieces but ship to 20 different addresses, how can I do this? Do I have to make 20 separate orders? And if so do I still get the 20 piece quantity discount? You will also need to discuss shipping options: what method of shipping how to quote / pay how fast how to get tracking details how to deal with customs and taxes

 how to deal with delivery problems how to deal with returns Obviously some of these things you will work out as you go along, but it's a good idea to think about some of the issues that are likely to arise so you can prepare yourself. Note: If you feel like asking me the above questions about Chinavasion's wholesale shop and using us todrop-ship electronics products to your customers, you'll already find all the answers in our Knowledgebase, which is quicker than emailing me! ;)

Tips for Successful Drop-Shipping from China

It may seem obvious, but please check with your supplier whether then can dropship, before attempting to place a dropship order! Don't dive into dropshipping and sell something to a customer, and THEN start asking your supplier if / how they can dropship. Do your homework! Don't make promises about delivery time to your customers until you have tried the supplier and you know they can deliver in the way you want. Under no circumstances drop-ship items that you have never seen. Your first order should be to yourself to inspect the goods and assess the supplier's service. This will also let you get an idea of the import tax situation for this particular product. Follow my good communication tips for Chinese suppliers. Make requests not demands. I think I've said enough about the general issues of drop-shipping. I want to return now to the question of selecting the best products to sell, which is vital to drop-shippers and in fact in any importing business.

"Choosing Profitable Products"

Perhaps you already have an area of knowledge or expertise that leads you towards importing and selling a particular category of product. Or maybe youve been selling one type of product for a long time from local sources, and now youre looking for alternative sources of the same product from overseas. If you know exactly what products you need to source, your search is going to be narrower, and you can immediately focus on finding good suppliers for particular products and setting up initial deals. But for a lot of people, especially those new to importing for resale on EBay, Yahoo Stores, or other online shops, it is sometimes a bewildering task to figure out what the best products are that are going to make you themaximum profit with the minimum headache.

Whatever your overall plan, its essential to do in-depth market research before you commit to a project. Business students learn that each investment of money means money not available for something else. The same goes for your energy, and time. You need to plan wisely so you dont waste too much time, energy, and money on business projects that dont have a solid foundation and good prospects.

Finding Products To Sell

There are essentially two angles to take, if youre looking around for new ideas about what to import and sell: STRATEGY 1 Play It Safe Find out what products and categories are currently hot sellers, and jump on the bandwagon. Get better quality products, cheaper prices, or better market penetration to compete with all the other people selling similar things. STATEGY 2 Get Ahead Of The Pack Find new, cutting-edge, or unique products that are little-known but, according to your background knowledge and research, have great selling potential.

STRATEGY 1 Play It Safe

An example of this approach would be searching for good wholesale sources of Playstation or X-Box consoles. These are established hot-sellers, so you know there is a market for the products. Advantages: Relatively easy to find wholesale sources. Easy to market as people already know the product (and want the product) and there are already information resources available relating to technical details. Well-known or currently-hot-selling items may be selling at a premium, allowing you a greater profit margin. Disadvantages: Most of the hottest consumer items are also branded goods. If you can find a source, so can others. Lots and lots of more powerful sellers will already be selling your chosen products. If you "ride the wave" of the product popularity, there will come a stage when everything slows down, and if updates to the product are being released regularly, you could end up selling things that are out of date and depreciating fast.

Can you succeed if you are only following the herd?

Your competitors are selling the same products as you, and they are more experienced, have a bigger customer base, and better prices. Dont give up!

With the correct approach and effort dedicated in the right directions, you can succeed using other people's tried and tested formulas. Here's how you can persuade customers to shop with you instead: Move faster than your competitors to bring newly released products to market. Use quantity buying power to cut your buying costs and lower your prices. Reach more customers. Take advantage of your location to market products. E.g. you may be the only person who has a source for this product in Timbuktu. Or your location may be virtual: maybe you are a regular contributor to an online community, and you have great connections for marketing products. Have a better overall marketing strategy than your competitors. You can study marketing all your life, but even small changes can improve your sales. Some things to think about: Improved product information and personalised presales advice Improved (personalised) customer support and knowledgeable technical support Improved delivery of physical products (e.g. faster logistics, better packaging, free gifts, good tracking correspondence) Warranties and guarantees Quantity discounts and other special deals Bundling, Upselling, and Combining products (e.g. software + hardware) Promoting products to previous buyers Strategic advertising (e.g. skillful use of pay-per-click advertising online) Traditional (offline) marketing

STATEGY 2 Get Ahead Of The Pack

An example of this approach would be visiting trade fairs and even travelling overseas to discover products with obvious selling potential. Advantages: Less competition to worry about. Novelty value and "uniqueness" ...the demand that means customers will pay high prices. You will develop expertise about your products quickly as you research sources, and as the first person to offer products you may gain respect and expert status in the marketplace. Disadvantages: You have a lot more marketing "legwork" to do, educating customers about the benefits of your product. New products may have unforeseen / unpredictable drawbacks such as electronics developing faults. New products could go stale quickly, especially in the world of technology, where your product could be suddenly rendered obsolete by a new and better product. At the least, products that are innovative may fall in price very quickly.

WHICH STRATEGY DO YOU RECOMMEND ROSE?

A combination of the two strategies will often work best.

"What Are Niche Products Anyway?"

For example, you know iPods are hot sellers, but the market is too crowded to profit from selling actual Apple iPods. What can you do? You can seek out and market related or "alternative" products. "Related" products would be iPod accessories like cases, speakers, and spare parts. Alternative products would be other MP3 Players or MP4 Players for buyers who want a media player but not necessarily only an Apple iPod. You identified iPods as hot sellers, but you are not selling iPods Instead you are just profiting from the popularity of iPods. This sort of approach would let you play it safe while still being ahead of the pack.

Overall, people use the word "niche" to mean... Not a mainstream product (although it may be in a mainstream category). A product that may be difficult to buy in normal (/offline) shops. A product with a specialist application or special interest to a certain group of people, that make it a desirable purchase item for only that group. A product with a reliable and predictable selling power because of its specialist appeal / necessity to a certain group. It may seem surprising, but when people talk about finding "niche products" this could in fact be part of a "play it safe" / "follow the crowd" strategy. For example, you may target a well-known successful product category, but choose to focus on one particular narrow band of products... e.g. "sex toys" are known hot sellers, but you choose to specialise only in "Mongolian hand-crafted leather whips". You may even source these from the same supplier as your competitors, but you put all your energy (& investment) into marketing this niche, and get successful by knowing a particular group of customers and their specialist tastes. The other way to look at finding "niche products" is that you "get ahead of the pack" by identifying a particular specialised demand in the marketplace that is undersupplied, and then searching out a supply to match that demand. Ways to source products other people aren"t supplying: Supply foreign or very localised markets where the products are previously unknown or unobtainable; Do deep internet research to uncover suppliers whose products may be good, but marketing spread is poor; Visit trade shows to discover the newest products; Work with manufacturers to adapt designs or even develop totally new products.

Another Top Rose Tip: "Customer Group Niches"

Maybe it's not the product that's a 'niche', but the market area which you are selling to. You can think about a "customer group niche" that lets you profit more from nonniche products.

For example, lots of hobby / enthusiast markets will have a number of ultraspecialist products but there is also potential to sell more generic products to the same group at higher prices. E.g. people whose hobby is fishing will buy specialist products like fishing rods and lines, but they will also be interested in related but not particularly specialist items like bags, outdoor clothes, drinks flasks, camping chairs etc. If you can bring products to the right audience and save the customers the effort of searching in different places for what they need, they will be willing to pay the slightly higher prices that will improve your profits. It may be really convenient for them to shop for items together and not look around all sorts of different shops for their needs. In the world of ecommerce, finding a "customer group niche" may just be a matter of keyword optimisation. E.g. on EBay instead of listing your item as "fingerless gloves" you list them as "fishing gloves" and in separate auctions as "sailing gloves", "windsurfing gloves", and "gloves for quad-biking". Simply bycapturing people who are already shopping in a particular hobby / enthusiast mindset, you will be more successful converting customers at good prices.

What Makes A Good Product?

Which is better - importing digital cameras, or importing digital camera bags? Digital cameras are more profitable, of course. But cameras are expensive, possibly will lose value fast, and need insured shipping. Camera bags are cheap to buy in quantity, can"t really go wrong, and easy to ship cheaply. On the other hand, you'll have to sell a lot of camera bags to match the profit on a single camera sale. There"s no right answer, but if you think about a variety of product types in your area of interest, it will lead you towards the right considerations for picking products: Is the product legal to import and sell in your country? (and think about possible trademark issues if you are importing fake or "replica" or "lookalike" items from Asia) Is the product expensive to ship? heavy... or valuable? Is the product in a category that is likely to be hit by significant customs taxes when it reaches you, the importer? Is the product going to require technical knowledge from you, just to be able to market it and support your customers? How much actual profit do you make per sale? A 4% profit on a $500 item is better than a 200% profit on a $1 item. Can the financial base of your business handle the impact of negative events, such as refunding customers, non-delivered orders, or holding stock that is depreciating? Those are BIG questions about your whole business venture, but the type of products you"re dealing in will make a difference, particularly if they are high value.

More Negative Thinking From Rose: Products To Avoid

Things that are widely and cheaply available in massive chain stores. Things that have a short popularity lifespan. Things that are so cheap your profit is too low to be worth the effort. Things that depreciate or fluctuate in price (e.g. RAM and flash memory)

Things with a lot of options or variables that take too much time to process, pack, and deliver. Things that break when you post them or which have a high likelihood of breaking during the warranty period. Things where there is an enthusiast / hobby / fan culture associated with the products which you are totally unfamiliar with.

"Getting The Wrong End Of The (chop)Stick"

If you think my warnings about drop-shipping and choosing bad products are negative thinking, at least this is from experience and not prejudice. How about some of the common misconceptions foreign people have about Chinese people and business culture here? When I talk to people living in Hong Kong - which is in practice part of greater China now, they frequently tell me how dangerous, dirty, poor, restricted, and backward "The Mainland" is. Well, I live here, and I don't think I'm being blindly patriotic when I say China is none of these things. China is not dangerous: street crime is relatively low on a global scale and nobody has guns. In business, visiting China is not a difficult matter at all, and your personal safety is much less of an issue than it would be visiting the majority of European cities. Chinese businesses are not, on the whole, trying to cheat foreign clients: they are much more interested in long-term profit from solid ongoing buyer/supplier relations. China is often seen as dirty and poor by those who only see the country through foreign media. Even a short tour of Shanghai, Beijing, or Shenzhen will leave no one in any doubt that China is already - at least in the urban areas - a highly developed market economy that is booming like nowhere else in the world. Most businesspeople who visit China get a feeling that they are being 'left out' if they are not part of this economic revolution over here. Some people complain that China is the "Wild East" for its lack of regulation, but the mass of opportunities for smart entrepreneurs is irresistible. Finally, I don't think China is restricted and backward in the way it is often portrayed. Foreign media focus on political and human rights issues, but within China people don't

seem to have time to concentrate on negative thinking. Since almost all of the restrictions of a closed socialist economy have long since been brushed away, Chinese people are universally focused on making money and building private businesses. In this kind of climate you are not going to experience ideological resistance to your plans for importing business partnerships! From an ecommerce point of view, Chinese people are becoming more and more outward-looking, and importing from China is only going to get easier from here. It's already possible to build successful import projects without ever visiting China or meeting your suppliers face-to-face. Doing business online, in a remote fashion with people you've never met, is quite un-Chinese, so who says Chinese thinking is stuck in the mud?

Some more cross-cultural words of wisdom from Rose

Never get angry when dealing with Chinese people. Many times you will want to because, yes, we can be quite annoying - sometimes on purpose. ;) But if you lose your temper you will get nowhere. Never become rude in an email or abusive on the phone. That would be the end of your communications with that Chinese person, and in business you can't afford to go around insulting people, wherever you are. Chinese people don't always say what they're thinking.

In fact, we hardly ever say what we're thinking. Western people often stress out when dealing with Chinese because they think the Chinese people are lying to them or holding back the truth. But it's just a different cultural style of communication: not always getting all the information openly stated is just the normal style in China. A brash style of "let's lay it on the line... let's not beat about the bush... let's cut to the chase... let's get straight to the point" etc that we hear from American business visitors unfortunately does not go down well in a Chinese communication style, where we prefer things more understated. Basic information sometimes takes a while to come out in the open. When negotiating prices you must aim for a non-confrontational style.

If you accuse people of trying to rip you off, or demand better prices for yourself, you are setting up a conflict feeling in the communication. It won't get a successful result, even if you are half joking trying to barter in a strong way. The Chinese way is to suggest and offer concessions and variations and everything is presented as a possibility for consideration, not a set of demands. Make sure every deal you are discussing is a win-win situation. Don't enter negotiations in an arrogant-sounding way, or present yourself at the beginning of your relationship as bigger than you are. Boastfulness will just make your Chinese contacts suspicious of you. If you are polite, generous, helpful, and friendly when you deal with Chinese people, you will get much more than expected in return.

"China Fever - Don't Get Left Behind"

Here is my quick roundup of all my previous advicevin this mini-course:

Part One:
1.China is now open for business and you can't afford to get left behind. 2.There are now more and more English speakers in China, and the universal spread of the internet through China and Chinese businesses means it's not that difficult to start your importing business, even if you have no connections or previous knowledge of China. 3.Your competitors are already importing from China, and it is the only way to buy cheap enough to establish competitive prices and good profit margins. 4.Don't try to copy the product lines of the big chain stores. Search for Chinese sources of products which aren't easily obtainable in your country. Even in mainstream product categories there are hundreds more models available from China factories which will be unique products back home.

5.

You should research the possibilities for importing from China online. You should be planning a long-term China import strategy.

Part Two:
1.Visiting China will put you at a huge advantage when you start importing. 2.Search online for trade fairs in China which are relevant to your product area. You will find some shows! And attending the trade fairs is an excellent investment of time and money. 3.Deal with factories if you are ordering in large quantities, and deal with wholesalers / distributors if you need medium or small quantities. 4.Play it safe and don't blindly send money to people you don't know. But Chinese companies won't be trying to cheat you. You just need to set up each deal with clear expectations.

5.

Focus on building contacts in China for long-term business opportunities. Products and suppliers may appear out of nowhere if you have the right connections, and these are sources your competitors won't have access to.

Part Three:
1.
Don't expect - or demand - instant results when you start out importing from China. You need to build relationships with your future suppliers. 2.Work for harmonious communications, and have patience if your contact person's English isn't perfect.

3.Don't blast Chinese suppliers with long, detailed questions in your first emails to them. Make sure your emails are easy to answer and establish a friendly and professional feeling. Don't expect first-class customer service if you are a new customer... this will come when you prove over time to the Chinese side that the cooperation has value! 4.Do your research, go slow when building up lists of suppliers, and start with small orders to allow both sides to test each other out.

5.

Understand Chinese culture: communicate in a harmonious way.

Part Four:
Make sure you know about the different stages involved in shipping products from China as it could produce unexpected costs and delays. Understanding incoterms helps you clarify price quotes you get from suppliers. Also you need to think about goods packaging and insurance before you make big orders. Import tax is practically unavoidable and you need to do your research in your home country before importing from China. Get information about import tax and customs regulations directly from the government source. Under-declaring goods value for customs is a common way of avoiding tax but is actually not permitted. If you do so the risk and responsibility is with you, the importer. The best way to find out about import taxes is to keep track of the actual taxes on your import orders. (Don't forget to read my recommended internet research resources, linked at the bottom of this summary page, and the last page of each of the previous parts of the minicourse.)

Looking Ahead To The Future Of China Importing

These are my predictions about importing from China in the coming 10 years: 1. The power of the internet in letting small businesses access China suppliers has only just begun to be tapped. 2. The online business-to-business internet portals will grow and grow in importance. But Chinese companies will also learn how to market themselves directly online, without having to rely totally on big directories. 3. Import taxes are going to get higher, regulations and certification more complex, and quotas more restrictive. There is no need to go into the reasons this prediction is inevitably true! 4. The RMB (Chinese Yuan / CNY) is going to get a lot stronger and this will make Chinese products steadily more expensive than they are now. Strike while the iron is hot! 5. a) Chinese companies will soon start to use improved logistics systems to sell online directly from China to overseas end consumers. b) More and more well-established western businesses will start dealing effectively with China and improve their logistics too. c) Most of the juicy profitable product niches will soon be cornered by large business players and minor Ebay-type sellers will be mostly pushed out. Together those three factors (5a), (5b), and (5c) mean that importing

from China is getting easier, but much more competitive, so you need to start your import business now so you aren't lagging behind in experience, market share, and Chinese business networks.

A Final Word From Rose Li

Well done for reading all of my Import From China Mini-Course. I hope that, whatever your business and level of experience, you got something out of it! It can be bewildering to start dealing with Chinese people and try to build a profitable import business. But China is such a complex and rapidly changing country that no one can really call themselves an expert. Everyone, even in China, always has a lot to learn. I would encourage you to get into China importing as soon as you can and not get left too far behind! Now you've finished reading this mini-course I am sure you have more questions for me, which you can submit to me and my team here. I will do my best to cover the most important and frequently asked topics in the free Chinavasion Import From China Newsletter, which you are probably already subscribed to if you're reading this! Your Mini-Course Part 5 Research Resources A big list of product categories to give you ideas for what to sell if you have no ideas! Article with a real-life story of someone's business success targeting niche products. Article about the downside of using dropshippers if you're selling on eBay. More advice about how to avoid making mistakes in drop-shipping.