Several Important Issues in Entering China Market (2)

Posted on Wed, 05 Mar 2008 10:27:31 Author : From :

4. Understand fully the regulations and restrictions of import and export commodities.

The Chinese government organizations such as Ministry of Foreign Trade and Economic Co-operation (MOFTEC) may provide this information. Please make sure you read through and fully understand them. MOFTEC has got a web site, which is www.moftec.gov.cn

5. Understand trade practices prevailing in China, such as payment terms and settlement of currency.

(1) Payment terms
Most trading firms or mills can only accept payment in US Dollars and they would always ask for L/C at sight terms when you try to buy goods from Chinese supplier. Some firms now can try to accept L/C at 60 or 90 days, which gives the client, here certain length of finance credits.

(2) Shipment arrangement
Most client here would like to use sea shipment as it is more cost effective, only those items which need quick response to the marketing changes, such as fashion items, clients require shipment by air but usually shipment by air from China is very expensive. If it is sea shipment, the usual length from any Chinese port to any European Main Port is 4-6 weeks. So when you buy goods from China, you should also take time into consideration and make sure you can get your goods on time.

(3) Price terms
For visible trading business, there are certain price terms (ex-works, FOB, CNF, CIF etc.) that are used for doing business with another country. For doing business with China, most Chinese firms tend to offer you price on CNF or CIF terms which means that the price they offer should include freight and/or insurance charges. Occasionally, if the buyer can make shipping arrangement, he could ask China to quote on FOB Terms.

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(4) Quality issues
Quality control is a very tough task when you think of doing business with China. In order to achieve consistency in quality, most firms would like to pay frequent visits to the mill or employ quality control people locally if the quality requirement of the goods they need is of quite high standard.

6. Understand the importance of relationships in formulating effective business with china.

Building up close and cooperative relationship with your Chinese partner in both business and non-business environment is crucial to the success of your business. You might have already heard a lot about this from media and newspaper. Here let me say, in certain sense it is true. Chinese people usually look for long-term, trustful relationship rather than short-term profit gearing.