Tips To Note When Doing Business In China
My many trips around the world has exposed me to diverse business cultures and environments. From these exposures, I have made critical observations about trade activities in a number of countries.
Traders could make huge profits on deals if they are to avoid certain activities that have come to stay in trade transactions around the world, especially in China, which is one of Africa’s biggest trade partners.
I have noticed quite a number of activities traders do in China, which if avoided could bring huge financial gains to them and here they are;
Do not purchase from Agents
There is no need in dealing with an agent while the manufacturer of the product is a call or email away. Guangzhou is the main entry point for people coming to China to do business. Businessmen often place their order with wholesale shops in Guangzhou, these wholesale shops, who act as agents, in turn place orders with the manufacturer on behalf of the businessman. These agents make huge commissions on their dealings, averaging $30,000 on a 40-footer container purchased.
Getting contacts of manufacturers is not as hard as traders are made to believe. There are several online channels that provides most contact details of manufacturers in China and beyond, the commonly used one is “Alibaba”. You don’t only get to pocket the agent’s commission when you deal with the manufacturers but also get to enjoy free accommodation at highly-rated hotels. You get the chance to discuss customization option in detail and also the opportunity to tour the factory to assess their working environment, especially when you trade in food and drugs.
First time traders are usually scared of losing some money and going to purchase low quality products, this panics them to seek the help of middlemen who have stayed in China for a while and perhaps speak the language. Most of the time, these mediators don’t do you any good.
Trusting their service is equivalent to dealing with an agent or wholesale shop. They have commissions on every purchase that they make on your behalf. Dealing with these middlemen is like paying two people in addition to the actual price of the product. Agents take their commission, middlemen also take theirs. This is why the selling price of your stuffs are always higher than others in the same line of business. People who know about these make great savings and are able to sell their products at cheaper prices and faster.
Don’t employ an interpreter
Language has always been a problem in transactions when both sides cannot communicate using a common language. This usually tempts traders to hire the services of interpreters but seeking their service is almost like using a middleman because interpreters in China mostly introduce themselves as middlemen to the manufacturers since you cannot understand a thing of whatever they say. This allows them to get commissions on every purchase you make in addition to what you pay them for their services.
Manufacturers are interested in your business transactions with them and they will always provide everything that will facilitate a smooth transaction including an interpreter or translator at their own cost. Do not fear because dealing with the company’s interpreter is dealing directly with the company and there are no extra charges.
Discuss your specifications in detail.
What you order and pay for is exactly what they must produce. It is prudent not to just mention things you need but go into the actual details of the peculiar thing. Example; if you are purchasing shirts, mentioning just shirt without being specific means any shirt. Always give details of the percentage of materials to be used for it, be it cotton, silk, wool or polyester, the print quality and even packaging. If there are known standards for your item, tell them which standard you need. Do not just mention them but note them down and make sure they are stated in a contract.
Sign a sales and specification contract
Always make it a must to get a sales and specification contract on your business transactions. Some Chinese companies are noted for delivering services other than the discussed ones. It is always advisable to sign a specification contract when doing business in China so that there would be a basis to argue and push for the exact order when the manufacturing company does not deliver as agreed.
If the company fails to mention one in your meeting, ask for it and make sure you go through it thoroughly. Seek clarifications on clauses you are not too clear with. Also whatever additions you deem fit make sure they are included in the contract before you sign.
Do not place order prior to Chinese New Year
The China calendar is different from the rest of the world. Their New Year is in February and the companies break for about a month for the celebrations.
In order not to lose business, companies deliberately take orders even if it’s a day before the Chinese New Year. There is always massive delay in the processing of such orders. Some companies may try to meet deadlines because of some clauses mentioned in the contract but bear in mind that, there will be no shipping agent available to ship the goods during this period.
Be present during inspection and loading
Unless there is a mutual trust between you and the company, it is advisable always to be present during inspection and loading of your goods.
It will be huge loss, if goods shipped do not meet your specification that is why it is always advisable to be present during the process, so you can do all the necessary checks. And make sure the container is locked in your presence, it is helpful to take note of the lock seal. This makes it easy to track any goods in case of any unforeseen events.