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How to Pay China Factories By PayPal: 5 Things You Must Know

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Sending money through telegraphic transfer (T/T), or paying by letter of credit (L/C), is slow and relatively complicated.

The wrong beneficiary name, or even address, can delay the payment for weeks, and there is no effective way to request a refund in case you get scammed by a supplier.

So, why aren’t more importers using payment services such as PayPal, that can send money instantly to suppliers – while also offering the chance of getting the money back if the products are not matching the specifications?

Keep reading, and learn why many suppliers refuse to accept PayPal payments, and what you can do to change their mind.

1. Most suppliers only accept PayPal payments when ordering product samples

PayPal is available to both businesses and individuals in both Mainland China and Hong Kong. Opening an account only takes minutes, and is as easy as anywhere else on the planet.

Yet, many Chinese suppliers, both factories and trading companies, don’t accept payments via PayPal.

Why is that?

First, it’s a matter of old habits.

Most suppliers are accustomed to the established payment methods, such as telegraphic transfer and letter of credit – while they are quick to dismiss newer payment methods.

The suppliers that do accept PayPal payments tend to restrict it to sample invoice payments only. As such, most suppliers don’t accept PayPal payments for larger orders. Continue Reading →

Import duties from China: How much should I pay?

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Not sure how to calculate import duties on your incoming shipment from China? Read this article, to learn how you can make an accurate customs duty estimation, find the right customs value for your country and HS code for your product.

You will also learn how, and when, to declare import duties to your local customs authorities – and why it’s a really bad idea to undervalue your goods for the sake of paying a lower duty rate.

How do I calculate the import duties?

Two factors that decide the amount of import duty you must pay are the following

a. Import duty rate (%)
b. Customs value

The import duty rate depends on the product and its assigned HS code. The customs value, on the other hand, depends on the target market.

Below follows an overview:

Country / Market Customs Value Comment
United States FOB Only the product cost is included
European Union CIF Includes product and freight cost
United Kingdom (EU) CIF Includes product and freight cost
Canada FOB Only the product cost is included
Australia FOB Only the product cost is included
New Zealand FOB Only the product cost is included
Singapore CIF Includes product and freight cost
Hong Kong S.A.R (PRC) None No import duties

In many markets, the customs value also includes the cost of samples, tooling and any services provided by the foreign supplier.

However, the customs value never include services generated domestically, such as forwarding from the port of loading to your address.

Note: Read this article about Incoterms to learn more about FOB (Free on Board) and CIF (Cost Freight Insurance)

Continue Reading →

What’s the Difference Between OEM and ODM Products?

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On Alibaba.com and other directories, suppliers claim to offer ‘OEM service’ and ‘ODM products’. In this article, we explain what OEM and ODM really means, and the difference between them.

Keep reading, and learn how product development and IP protection procedures differ, based on whether you go OEM, or select an ODM product.

The Definition of Original Equipment Manufacturing (OEM)

An OEM product is made according to the buyer’s product specification. For example, any product with a customized design, material, dimensions, functions or even colors can be classified as OEM.

To some, OEM means a product that is designed entirely based on the buyer specification, while others classify even the slightest modification of an existing ODM product design, as OEM.

That said, most would agree that the primary definition of an OEM product, is a product for which tooling (i.e., injection molds) must be produced before production can start. Continue Reading →

How to Get a Prototype or Sample Made in China: By Kevin Lee

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Importers order product samples to both test their new design, and the suppliers production capabilities. It’s also a way for the supplier to learn how to make the product, and create molds and other necessary tools.

The prototyping and sample order process can take months, and sometimes suppliers just give up – even without telling the customer. In this article, Kevin Lee of Asianconn, shares his best advise to Startups and SMEs looking to get their prototype or product sample manufactured in China.

Kevin, please tell us a bit about your background, and current business

In early 2000, China became what many call “World Factory”. She had reliable and cheap labor pool, friendly business ecosystem and low production cost. However, that “potential” came with certain issues that make the business full of risks.

Compared to big companies, many middle and small business didn’t have the ability to implement international purchasing strategy. On the other hand, excellent local suppliers totally didn’t know how to deal with customers abroad.

In 2009, I finished my work in Hong Kong and built this business with my friend Vincent to connect reliable Chinese suppliers to Western purchasers and help them hold the entire trade process to avoid various kinds of risks.
Continue Reading →

5 Best Practices for Efficient Communication with Chinese Suppliers

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Why does everything have to be so hard when dealing with Chinese suppliers? You send emails, and barely even get a reply.

You put together the best mood board ever, communicating the ‘feeling’ you want for your spring collection – and your supplier don’t even bother to comment on it.

The communication between overseas buyers, especially those in the West, and Chinese suppliers, is at best dysfunctional. Most often, it’s a complete disaster, that results in severe quality issues and huge losses for both sides.

In this article, I share my 5 best tips for effectively communicating with your supplier, so that you can avoid misunderstandings and delays.

1. Be overly clear and concise in your communication

In manufacturing, one must think, and communicate, as an engineer. However, Alibaba.com and Globalsources.com have essentially opened up contract manufacturing to every Entrepreneur on the planet.

As a result, many business owners without manufacturing or product development background venture into a field they have no experience in.

I see this all the time, with vague and open ended product specifications. Or worse, ‘inspirational documents’ that will ‘communicate a vision’ to the supplier.

Manufacturers don’t want or need your ‘vision’ or ‘inspiration’. They assemble your product for a quick profit and that’s it.

They want spec sheets, design drawings, label files and bill of materials. That’s the universal language of manufacturing.

In addition, most Chinese engineers and sales reps are far from fluent English speakers.

Thus, keep your communication as clear and concise as possible. Use bullet points and short, standardized documents. Continue Reading →

Supplier Visits in China: A How to Guide for Startups

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About to visit a new supplier in China? In this article, Renaud Anjoran of Sofeast Ltd and CMC Consultants in Shenzhen, explains what every importer must know about factory visits.

Keep reading, and learn the following:

a. The top reasons why supplier visits are important

b. The ‘right time’ to visit your supplier

c. How to plan your trip to China

d. What to look for in the factory, and what questions to ask Continue Reading →

Chinese New Year 2017: How Importers Can Avoid Delays

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The Chinese New Year of 2017 starts on January 28th, and lasts until February 2nd. While this is a major event that is still largely unknown outside of Asia, importers are, sometimes painfully, aware of this season.

They certainly have good reasons. The Chinese New Year shuts down every single production facility in the entire country, for varying time frames. In a worst case, and rather likely, scenario – the Chinese New Year can result in severe delays.

This time is especially risky for products that are due for shipment in the spring and summer season. Think swimwear and outdoor furniture.

If you fail to implement the proper preparations, the Chinese New Year may result in heavy losses for your import business. How to do that, is exactly what I’ll explain in this article.

1. No New Orders Accepted. Mass Production and Sample Development is Halted One to Two Weeks Before the Chinese New Years Eve.

While the Chinese New Year Eve is set on January 28th, 2017, all suppliers start to wind down operations one to two weeks in advance.

As such, the CNY puts a halt to mass production far earlier than many buyers anticipate. This is not always in your suppliers direct control.

One component and materials subcontractor closing doors a few days earlier can essentially result in an unexpected, and early, shutdown of the supply chain.

This partly explains why different companies close their doors on different dates. Get a confirmation on their schedule well in advance to prevent delayed orders.

However, administrative functions tend to be operational a week or two longer, than the production lines. As such, you can, at least, save some of the runways on sample development and contract negotiations, that may take place at this time.

Chinese New Year 2017

2. Production is Halted for At Least Two Weeks After the Chinese New Year Eve

While the official holiday is only lasting for roughly 5 working days, plus two weekends, most workers remain in their home provinces for an extra week or two.

This explains why most suppliers are not back in business until two, sometimes even three, weeks after the Chinese New Years Eve.

Continue Reading →

China Export Licenses and Permits: A Complete Guide

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Today, most suppliers in China hold export licenses. But, it was not always that way, and there are still factories that lack them.

In this article, we explain what Importers must know about Export licenses in China – and how you can buy from a suppliers without one.

What is an Export license?

An Export license, or Export permit, is a document issued to companies by China’s Ministry of Foreign Trade and Economic Cooperation.

The Export license is required for shipping goods out of China. Without such a license, the cargo will not be cleared through the Chinese customs.

As such, most export oriented suppliers, both manufacturers and trading companies, hold Export licenses.

Shall the Supplier or the Buyer apply for the Export license?

The Export licenses are only issued to Chinese companies, that wish to export goods from China to overseas markets.

Hence, overseas buyers don’t need to obtain license or permit in China. Continue Reading →

Canton Fair Autumn 2017 in Guangzhou: A Complete Guide

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The Canton Fair, held annually, is China’s largest Trade Show. Hosted in Guangdong province’s capital city, Guangzhou (formerly known as Canton), it’s a major even for buyers of all sizes. In this guide, we help you decide when to attend, and explain what you can do to get the most out of your time at Canton Fair Autumn 2017.

Products and Trade Show Phases

The Canton Fair is held twice per year and is divided into three different phases. Each phase last for 4 to 5 days, and covers set industries. Below follows and overview of the Canton Fair Autumn 2017 phases, and the respective products of each phase:

Continue Reading →

Trade Shows in Hong Kong 2017: A Complete Guide

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T-shirts and Plastic flowers may not longer be labeled as ‘Made in Hong Kong’, but the Chinese territory is still home to perhaps the best – and biggest – Trade shows in the world.

In this article, we explain what you must know about upcoming Hong Kong Trade Shows during the Spring and Fall 2017.

You will also learn everything you must know about getting to Hong Kong, including visa requirements and transportation.

Global Sources Exhibitions

Global Sources provides a diverse range of services for importers. It is, however, primarily known for its supplier directory (www.globalsources.com) and magazines. Global Sources also host some of Hong Kong’s biggest trade shows: Continue Reading →