Recent years have witnessed China‘s rise as a major economic power on the world stage. China‘s economy has posted consecutive years of economic growth-often in excess of 8% per year-an unimaginable growth record for China‘s competitors in the West. China‘s continued rise has seen it become a hot destination in terms of doing business, whether with regard to imports or exports. However, for domestic companies look to import Chinese goods, what are some of the key factors to
take into account?
The first thing to bear in mind is that China’s export mechanisms are somewhat different to those in the West, so it is not simply a matter of just transposing basic practice from one to the other. Companies dealing with imports will also face issues such as import duties, various customs compliance regulations and the issue of international logistics.
Examine the nuances of the various companies you are dealing with, especially with regards to the exact nature of the business they are engaged in. For example, are they a third-party import supplier or an actual manufacturer? Each variant will have its own associated advantages and disadvantages. Manufacturers, for example, will generally respond more quickly to product requests and production arrangements, whereas import suppliers are likely to have more connections and channels, thereby offering you greater diversity of choice. Also, entities such as professional exporters in China can be very helpful in terms of dealing with such intricacies as customs compliance (which can be a minefield in a foreign market), import duties and logistics.
When discussing terms and researching such companies, it is important to remember certain cultural pointers that should be observed in order to avoid misunderstandings, smooth through any potential problems and, perhaps most importantly when forging any business relationship, establish goodwill.
In China, doing business is forged on relationships, or “guangxi”, so remember to forge good, close relationships with the key members of staff in the companies you deal with.
Remember also that China is very much a “face” culture, so be sure to keep your temper as even as possible when talking to Chinese manufacturers or suppliers-especially in the event of any problems. Losing your temper will result in “losing face”, and will adversely affect your overall relationship.
Be sure also to get a good estimate of the Landing Cost before placing your order, and take into account also that there may also be certain hidden import costs in the chain, so get advice before ordering. Pay close attention also to import duties and the terms of payment, as any misunderstandings can lead to delays on either side that can have knock-on effects not only on the business side, but also on future dealings and goodwill with the company involved. Try to get information in writing, if possible, as certain agreements may initially enthusiastic (and vague), as saying “yes” when asked to do something is seen as polite in Chinese culture. Do not be afraid to gently probe to ascertain whether or not something, a delivery date, for instance, is really possible, as any vagaries can cause real problems later down the chain.
Written by Alexander Grimes