"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 China yourself, 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 tax-deductible!

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/

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/

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?"

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