ChinaClub2U Forums

By JEREMY HAFT
As the Chinese recover from the aftermath of the devastating earthquake, it’s worth remembering that they can’t rebuild Sichuan province alone. They need America’s help.
In the months to come, China’s central and provincial governments will spend billions to remake hospitals, communication and power networks, roads and infrastructure, dams and water-treatment facilities, factories, schools and houses.
But many of the goods and services needed to rebuild aren’t produced in China. That’s not because of any damage that the earthquake may have caused; Sichuan accounts for less than 4% of China’s GDP. Rather, there’s a fundamental deficiency in China’s industrial capability.
In most industries, China lags decades behind the U.S., with factories that don’t meet modern quality standards. That’s a problem if you want to make a Barbie doll, but it’s an even bigger problem if you want to make a safe nuclear power plant. Or rebuild a province.
U.S. exports to China will no doubt increase as a result of the earthquake, but China buying American is nothing new. Indeed, China is our third-largest export market behind Canada and Mexico. Few politicians talk about it, but 406 out of 435 Congressional districts have seen triple-digit export growth to China from 2000-2007. Those exports have created jobs and built value in local communities.
In fact, U.S. exports to China are growing five times faster than any other export market. This is less a function of the falling dollar and more of rising Chinese demand for U.S. products. Put simply, they need what we make – from chemicals and components to turbines and telecommunications, from drugs and medical devices to sewage and sanitation equipment. If a product requires modern technology and precise engineering, chances are, China needs it. Not to mention all the services and after-care required for set up and maintenance.
The broader lesson here applies to our ailing economy. If the International Monetary Fund is right and the U.S. economy is slipping into a recession that will ripple out into the global economy, then that ripple will stop at China’s shore. China’s demand will help absorb the shock of our solvency crisis.
To understand why, we need to compare balance sheets. China is essentially America’s economic alter ego. American households have a negative savings rate. Chinese households have a formidable 80% savings rate. Our treasury is trillions in debt. China’s treasury has trillions in retained earnings. We’re leveraged to the gills. China is swimming in black ink.
China’s behemoth currency reserves and strong demand were why China was able to weather another financial crisis – the currency crisis that hit Southeast Asia in the 1990s. China was one of the only regional economies not to collapse. Indeed, its savings rate and high demand helped rescue its neighbors.
More than a decade later, China has accumulated even greater savings. There’s enough money under China’s mattress to midwife the largest middle class on the planet. Which means China will keep buying more and more from America.
China couldn’t ask for a better time to buy American. The falling value of the dollar – coupled with the steep appreciation in China’s yuan – is nothing short of a gale force tailwind for U.S. exporters. The Sichuan earthquake only adds urgency to China’s already powerful demand.
So, in dealing with this catastrophe, America and China’s interests are aligned. By exporting American goods and services, we help China in a desperate time of need – while creating jobs and building up our national savings account in the process.
(Mr. Haft is the author of “All the Tea in China: How to Buy, Sell, and Make Money on the Mainland”)

By Vitaliy Srel
the subject I want to discuss with you - is it easy or hard thing to have a business with China?
Import-export and other trading operations is almost clear, than that great and very important process of finding information.
Please look on some main points that we found in our researches of China market.
If you are new in that business, you can meet both good and bad situations if you are not familiar with their national habits, their life style and their way of making business deals.
So, let’s turn to talk about pluses.
1. The goods and materials from China are more cheap than anywhere around the world.
2. The quality of “made in China” goods becomes more and more higher, moving on the next level.
3. Their service in working with client is also pretty good, because they have respect to every visitor.
4. Final price in your own country would be small and you would easily get a good profit.
But…let’s speak about minuses.
1. Only personal visit or visit of your trusted friend could give you exact understanding about product quality, the way of production and character of your possible future business-partner.
2. Too often you can get in trap, if you will look on some product through Internet browser, because picture is looking so nice but the real things may be far away from that.
3. Certificates… Headache for every businessmen, because usually they valid only on 60%.
4. Payment process contains a high risk.
5. Before sending your order, they can to put the worse quality products than you were looking for.
To my mind, the best way to trade with China - is to give the opportunity to professional agencies and experienced people that can help you.

Both time and result depends on their work, you just get final description of products and some important wishes on how to work with your new business partner.

Product check, factory visiting, certificates, payment-delivery process, all paper work. Huge work, but they will do it quick and with respect to your desires.

Money you’ll spend - too small in comparison with your possible future lost.

By David Foo
Tier 1 cities in China are mainly Beijing, Shanghai and Guangzhou where most of the major enterprise had sunken their teeth long ago. However China had more than hundreds of cities which was considered Tier 2 with population of more than 1 million each which represented untapped massive market potential. In this article, an overview of how we can tap into this massive scale of abundant resources are discussed.
China with her growing population can be categorized into three basic zone, newly developed area, developing and rural areas. Unlike other nations where the gigantic enterprise just wrap up and uproot themselves and move to lesser developing places to leverage on lower human and operating expenses. China had it unique advantages to progress inlands. In facts, million of rural workers dynamically relocate to urban cities to seek better employments vehemently as part of their birthright. Many had encountered differential degrading working conditions and wages as compared to their urban peers.
Chinese authority is facing a delicate situation of balancing aggressive growth which concentrated along the coastal area and inner rural developments, the social fabric and infrastructures represent a critical factor of which if uncontrolled will led to massive scale of instability which may weaken the Chinese superior competitive edges as a whole in her efforts to attract foreign investments.
Early signs were detected when the factories in golden triangle area discontinued production when their laborers who most if not entirely return to hometown for holidays and decided not to return to work as they found better jobs at home. Certain industries in the coastal areas also didn’t received warm welcome as before by the local administrative especially if they are involved in high energy consuming and environmental polluting activities. Many need to take turn to schedule for production shutdown due to rationing of energy resources.
In fact, the Chinese Government encourages many well established manufacturers and retailers to explore inlands as an effort to balance prosperities and growth between urban and rural areas. Big names operators like P&G and Danone had restructured their luxurious and imported products and services to cater for the less fortunate rural consumers with lower cost packaging and materials. For example, branded soft-drinks cost only 30% more as compared to local made equivalents.
The race to remain competitive also had significant impacts to big scale manufacturers where thousands of rural workers are given accommodations and meals to offset the higher standard of urban livings. Thousands of unskilled and semiskilled workers sleep, eat and work 7 days a week virtually at the same location to keep up with the production outputs. Better terms are negotiated between the management and workers to avoid losing the work forces back to their respective home towns where conditions are improving dramatically on a daily basis.
Cultural heritages had trained many supervisors to be aggressive where verbal and mental abuses, such as shouting and rude manners to achieve their production outputs with their operators. Physical and heated arguments are not uncommon scenes one can expect to find in thousand if not hundred of thousands of manufacturing facilities scatter all over in China.
With increasing pressure on infrastructures on public transports, private cars and living conditions, the lures of seeking an employment in urban area had started to lose ground. Matters are made worse as due to the communism system, the local district practice profits sharing among it registered residents where thousands of RMB are distributed as a results of rental and land incomes. Many were doing pretty well and travel overseas regularly whereas their rural counterparts can only hope they are never born. All Chinese residents are registered with their respective territory account and relocation had to be approved by the relevant authorities. The contrast of an urban and rural Chinese in terms of their respective employment, education and financial status had never been so obvious before.
Management of their fellow rural and urban citizen’s expectations become a top priorities as nobody likes to be left behind in the full steam of growth Chinese had experiencing for the past few decades. In the past, everyone was being assigned a job and accommodation by the state own enterprises and with more than 500 of them declaring bankruptcy last year alone, many had been “exiled” into the free enterprise market to take care of themselves.
So, how can an individual like you and me take advantages of this wind of change?
1) One can start sourcing higher margin products from the tier 2 manufactures where their overall operating cost are lower where the quality standards are preserved.
2) One can joint ventured with manufacturers which are operating from rural areas to leverage on the increasing bargaining powers.
3) One can negotiate with lower cost products if you can identify their lower cost of producing the goods based on the manufacturing location
4) One can repackage products with lower packaging and materials cost to cater for the massive rural markets where the volume can make up the shortfalls in lower price.
5) One can identify manufacturers with high potential to become as big scale as their urban counterparts to groom the relationship to grow with them.
6) One can invest on the local rural properties with potential of extremely handsome returns in long run.
Believed it or not, some Taiwanese manufacturers who had set foot in China more than a decade ago had reap in huge profits with the escalation price of lands. In other words, these entrepreneurs make the seemingly unrealistic explosive fortunes from the warehouses, lands, shop-houses and factories they acquired in the course of running their business.
In summary, the same opportunities had already presented itself on rural areas exactly like what had happened 20 to 25 years ago in urban areas. One can regards China as a mixture of countries in varying stage of economic progress where the same language and system is in placed. With improving transportation on land, sea and air, another wave of China made products which swipe across the globe like nobody business is highly possible in the next 5 to 10 years. Remember the remote controlled cars which could easily cost a fortune 10 years ago, now they are made so affordable and everyone can afford to buy one for their kids. China made automobiles, heavy machinery, consumer products and even aggressive Chinese businessman are everywhere. Like what someone told me, if you can’t beat them, join them.
Author is the founding member of the of the
http://www.chinawholesalesourcingguide.com/
http://www.singapuraproperty.com/