International Trade

» qingpetras - Tips On International Trade with China

Relationship is essential to Success on starting an import export business with China. A former Executive Director of World Trade Center Association in Guangzhou China will tell you HOW...
It was at 76 floor in South Tower of World Trade Center(it was collapsed in 2001) where I first met my customer, who was from Long Island New York and he is a wholesaler on microscopes business for years.
I could never forget how he bargained with me at that short, limited moment. We negotiated Microscope which he intended to import from China. It was a very hard negotiation, I just could not sign the contract as the price was too low to be accepted. In addition, the payment term was not I expected which must be L/C, a term we say Letter of Credit issued by bank. Instead, he wanted me to accept D/P payment method. There was a big gap between two, if he agreed to change the payment term, probably I would make that deal. There was no conclusion at that time, so we change the name card, and we both agreed to think about it.
Not long after I back to China, my customer wrote me a letter that he changed his mind and agreed to open an L/C only for the first shipment. From this response I knew he was eager to make deal that not only for this one contract, he needed to test my company and the merchandise as well, and eager to put his food print to China for future's long term marketing.
In exchange, I responded him almost right away as I was also, wanted to get an opportunity for a future business run, even the deal won't be profitable.
I signed the contract, and he opened the L/C according with the Sales Confirmation. We shipped the goods accordance with the L/C, and our company received the first payment from this buyer very smoothly.
That's how I got started in import export business with this customer. It was lucky that after a short period of our contract, Chinese currency had been changed from 5.6 RMB Chinese Yuan per U.S.dollar to 6.8 RMB Yuan per U.S. dollar, which means we gained a little for exporting microscopes. And again after a certain time, I didn't remember what exactly the year was that Chinese yuan drooped again from 6.8 to 7.5 per U.S.dollar and then 8.3 per dollar and was hooked with the later one for years.
So our microscopes business was making a nice profits because of Chinese Yuan devaluation.(it has been raised from 8.3 Chinese yuan per U.S. Dollar to 7.993 from late 2005 until now) And this product kept steady for over 15 years until my former company had been capital reorganized in 2005.
Tips You Must Know On Starting An Import Export Business
1. For most Chinese suppliers, the payment term is a major concern to be considered instead of price, specially negotiating with a new importer or buyer on their first contract. I think this is reasonable fair to both side.
2. It will be easier to conclude a contract by using L/C payment term instead of D/P payment when Starting An Import Export Business with China, especially negotiating with your new exports or sellers. You may change the terms at a certain period later when your both side mutually feel need it and understand each other so well.
3. Do not concern yourself whether or not you appear polite or are sensitive to the foreign culture. Americans are generally considered the most polite and generous of visitors in foreign countries. Do not ask for references of other US customers of this supplier, they will likely not be helpful.
4. Do not expect your first contract be profitable. You plan to deal with a foreigner, a Chinese partner, facing a new but very different culture.
So don't expect you win all the things. You will pay your time at learning curve, and pay for lessons, mistakes when Starting An Import Export Business. NO PAIN NO GAIN! But you might gain your connection, your relationship, even more, your long term marketing - that's a big win! Don't forget this is your Foot Print in China, a 1.3 billion population country.

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-- posted by qingpetras