There are a lot of problems and issues involved in importing from China which is why a lot of foreign investors are hesitant by the idea of it. However, this does not mean it is impossible to succeed as an OEM manufacturing business to be doing business in China. If the issues are addressed, you can always find a way to counter these importing problems.
Common Problems Encountered when Importing from China
Inconsistent quality problems and intellectual property issues kill many business ventures on to China. Inconsistent quality comes with the China territory: Beware of first production runs on products where product quality seems A-OK and subsequent runs are not of equal or improved quality.
Intellectual property (IP) issues are at stake and the inability to prosecute appropriately when these types of violations occur makes it more complex and scarier for companies.
Price is always a primary concern, but it shouldn’t be the primary driver to achieve your desired outcome. Ultimately you must know who you are dealing with. You must find out the country’s regulatory environment well, in advance of a sales transaction.
Hiring a third party to oversee product quality is ideal and consult with your banker and transportation experts to fully cover payment and delivery concerns. Consider using a third-party quality control officer to monitor quality from a factory and incorporate an inspection certificate as part of your payment condition.
The Classic China Scam: Done Often Because It Works
Aside from the common problems mentioned above, there is also another prevalent issue known as the “Classic China Scam”. This is another reason why investors have learned their lesson not to invest in China or do importing with this country in any sense.
The scam goes as follows: a project leader wants to build a business relationship with you. Typically, you meet the project leader in a high-end hotel where you will review the contract and the site plans.
Afterward, you will be asked to prepare an exorbitant gift for whomever. The most important part is they will ask you to provide your banking information to wire the first 20% of the project expenses due prior to starting the work. After the money is received, they disappear.
American and European service companies should always do basic due diligence on potential partners before entering China in order to avoid any potential risks. The classic China scam has been done repeatedly because many trusting people will follow a Chinese project leader without doing any due diligence.
How to Combat Importing Problems in China
If you run a business heavily reliant on manufacturing either your own products, or sourcing from abroad you should be interested in the trade fairs that run across China. At these events, thousands of suppliers set up stalls advertising their wares and hoping to network with potential customers.
You can get an exclusive inside look into upcoming products and could seize the opportunity of being a first mover with a new product. This is also the perfect place where to look for potential partners which are reputable and can be trusted for a long-term business run.
There are many different trade fairs in China, with the largest being the Canton Fair which attracts over 200,000 buyers each year with over 50,000 different booths being set up. If you are on a strict time schedule, it is unlikely you will get to see everything, especially if you only get a day pass.
If you are interested in reading a bit about the background and finding out about other popular trade fairs, consider reading our entry into our Trade Wiki found here.
Factors to Consider
However, these fairs do not come cheap. Once you factor in air fares, hotels, food and all other associated costs, traveling out to visit one of the fairs becomes quite expensive. Determining whether this trip is worth the money all depends on the context. There is no doubt you will benefit from the experience, but in monetary terms, you may not see a reasonable return on your investment.
Setting up a stall costs the vendors a considerable amount of money. They themselves approach trade fairs in a similar way to attendees, to make profits. After investing considerable sums to set up a booth, the often want to reclaim this cost. Therefore, if you want to visit a trade fair and your aim is to reduce your current costs and are already manufacturing in China you may not benefit. Quoted prices are generally slightly inflated by vendors looking to recoup their initial outlay.
However, if you are more interested in discovering a new and upcoming product to bring to market, you will benefit greatly. Many vendors use these fairs to showcase their products, hoping to attract bulk orders for new and innovative products. Furthermore, trade fairs can be ideal to launch exclusive new products granting an ideal opportunity to be taken advantage of.
To really get the most out of any trade fair it is highly recommended to do plenty of planning. Certain trade fairs are more suited to a select audience more so than others. For example, the popular Yiwu Commodities Fair seeks to attract small buyers, whereas others may only cater to select industries or other sectors. Most trade fairs will have a map with vendor’s locations on to utilize, which would be ideal to obtain and use. You should also plan other factors like issues with visas (check out our entry in the Trade Wiki here).
Getting Genuine Apple products from China
Apple products are popular choice to import from China since a lot of people know Apple goods are made in China even though it is actually an American company. It is indeed true Apple goods are easily accessible in China. However, there are only a small number of Apple stores in there. There are, however, a large number of authorized merchants. I live in Shenzhen and have an iPad. If your question is “Can you buy genuine Apple goods from China via the internet at a severely discounted price?” The answer, is unfortunately, “No.”
While everyone knows Apple goods are made in China, most fail to understand is that due to the Chinese tax system, the price of goods at a wholesaler are 99% of the times higher than back in the States. Apple is very well known for the superb monitoring of their sub manufacturers. They detail where everything goes — all the way down to the last bolt.
Despite otherwise, the Apple authorized manufacturers are unable to provide genuine products. Such products are genuinely fake and nothing else. Shenzhen is filled with runners who travel back and forth from Hong Kong buying Apple products.
All these problems when importing from China are all in place. It would be up to you to adjust how to fight them and make your business succeed despite these roadblocks. With genuine Apple products out of the question when importing from China, simply focus on other products you may find in trade fairs. Make the most of the opportunity in trade fairs and find partners and clients which can be trusted with your business moving forward.