Accommodation
China is still a developing country in many ways, and those traveling there cannot make the same assumptions as they would in nations with higher levels of income. This is especially true with hotels. Maintenance can be spotty, and sometimes basic amenities like hot water will not work. In other cases, windows that do not shut properly or noisy karaoke rooms may be a real nuisance.

To avoid problems, try to choose newer hotels, since they are much more likely to be in good condition. Inspect rooms before checking in to make sure they are up to standard. If visiting a factory or other company, they will likely help find accommodations, but they may simply book the nicest and most expensive place without negotiating the price. Make sure the hotel is near transportation and any needed services.

Be wary of offers for special massages since they are often fronts for prostitution, which is illegal in China and can get a foreigner into lots of trouble.

Transportation
When booking domestic airline reservations, it is better to use a Chinese website that offers service in English, since they will show more flights than an outside site such as Expedia. Sites to include http://www.elong.net can be used to find both airline tickets and hotels. Remember that airline ticket prices are usually set and waiting for the price to come down will not work.

Trains are a good option if they are available. If not, buses can be used with many point-to-point routes between cities and other places.

If using taxis, make sure the driver turns on the meter, and that it is working before getting started. A taxi called by the hotel will likely cost much more than one flagged down on the street. Since the taxi driver will probably not understand English, having a phone number of someone at the destination can be useful.

Whenever using any form of transportation, having someone write down the destination in Chinese is always a very wise move that can potentially save a lot of trouble.

Keep in mind that tipping is not a custom and not expected. In addition, a service charge is already included in the bill in most upper-end establishments.

Another traveling tip is to only use official money changers and beware of fake exchange bills at airports.

Tips for doing business in China

Communication
The first major obstacle to doing proper business in China is the language barrier. Remember that reading, speaking and understanding English are all different skills. Just because someone can read most English and make themselves understood in the written word does not mean they will be ok in conversation. In general, the English proficiency is not very high in China. Be sure to speak slowly and clearly and pause between sentences. They are making the attempt to understand a foreign language, so be understanding.

Chinese generally do not like to say “no” directly and will often just nod and say “yes” (sometimes simply because they do not understand what has been said). Look for indirect hints that something is not acceptable.

If using the services of an interpreter, make sure that interpreter is familiar with the business terms that will be used.

In addition, be careful with written communication. Write in a way that is easy to understand while being detailed and accurate since Chinese put great emphasis on these details. Remember that credibility can be shaken if mistakes are made, not to mention the other potential problems that may occur.

Saving face
Maintaining personal honor is very important in China and other Asian societies so doing and saying things that will make the other side lose face must be avoided. Be careful of saying critical things too directly and in front of others.

While it is necessary to be firm at the appropriate times, it is often not wise to push for an instant decision. Be prepared to walk away.

Connections and delegating
Personal connections and relationships (quanxi) mean more in China than in Western countries, and the importance of building and having them cannot be overestimated. Work to cultivate these connections. At the same time, be wary of delegating too much to a partner in China. There are many stories of businesses losing to partners they put excessive trust in. Still, having a local representative is very important for many forms of business.

Verifying
Do not rely too much on documentation offered by a potential supplier as proof of their legitimacy. Look for outside verification. If visiting their facilities, look at size, level of activity, movement of materials, etc. In addition, try to visit more than once.

Talk to as many people as possible, including their competitors.

Entertainment
Chinese business contacts generally feel it is their responsibility to keep clients entertained during their entire visits and will plan dinners and events. They will often try to feed their guests until they cannot eat anymore and keep their glasses full of drink at all times. It can be hard to break away, but this is often were deals are made.

This is also part of building relationships. Chinese will usually expect initial contacts to be more small talk about weather and the like that gradually builds up to more serious business negotiations.

With its increasing dealings with the outside world, doing business in China is not as different as it used to be. Chinese businessmen are becoming more familiar with Western business practices. However, there still are differences to keep in mind.

Factory direct or wholesale
While it is possible to order goods factory direct from Chinese factories, it is often best for those starting a business to go through a wholesaler, unless a unique product needs to be manufactured. Chinese factories frequently have very close working relationships with wholesalers so the price difference may be minimal. China wholesalers will offer more products, secure payment methods, lower order quantities and are generally easier to do business with than going directly to a factory. However, there are exceptions such as when ordering larger quantities.

Finding the right supplier
Regardless of whether going China wholesale or factory direct, it is important to choose suppliers very carefully. The most thorough way to confirm this is to go to China or have an agent there to check out things first hand. However, this is costly and time consuming.

Fortunately, like so many other things, the internet has changed the game. It is possible to order everything online without any business trips. However, steps need to be taken to ensure the reliability of the supplier.

There are many websites offering ways to find good suppliers. For example, http://www.made-in-china.com/ has a system for audited suppliers. These suppliers will go through a verification process that makes them much more secure than a free supplier that has not. In addition, it is possible to check reviews and other references to further ensure the source can be trusted and is legally registered.

For the most secure suppliers, those buying China wholesale also can use sites to include SaleHoo that only represent verified suppliers and break relationships with any wholesalers that do not provide a satisfactory level of service.

When purchasing from a Chinese supplier, it is best to use a payment service such as MoneyGram or PayPal that has a policy on refunds. A bank transfer does not leave any room for recourse if there is a problem with the shipment.

Types of China wholesale electronics products
With China such a manufacturing hub, just about anything, from shoes to phones and cameras can be found. As China has advanced in manufacturing prowess, Chinese wholesale electronics (the best area for these is Guangdong Province) have become particularly attractive.

Anyone buying China wholesale electronics first needs to very carefully consider the types of products they would like to sell. It is usually best to avoid products to include children’s toys that are more regulated. Carefully look at regulations and import duties before deciding on any product.

Branded and non-branded wholesale products
Keep in mind that it is generally impossible to legally purchases branded products directly from Chinese producers and sell them. Agreements with between the owners and suppliers of these products will forbid it. Therefore, branded products that can be purchased from a wholesaler are likely to be counterfeit.

With this in mind, it is necessary to buy non-branded products. While these products will be cheaper, they will generally be of lower quality. For consumers more interested in price, such products can sometimes be the best sellers. In addition, keep in mind that non-branded products can often be branded with one’s own name for large enough orders.

Advantages of China wholesale
Besides the obvious cost advantages, it is important to keep in mind that many products that can be found from Chinese wholesale are often not on sale yet in the US and other markets. It is sometimes possible to find undiscovered products that can really take off.

Drop shipping
One attractive way for some to sell wholesale products is by drop shipping. This eliminates the need to keep inventory since the product is shipped directly from the China wholesaler to the customer. However, the drawbacks are that the unit costs will likely be higher without bulk purchases, and having each product shipped separately from China will cost more, although this may be at least partially made back since it will not be necessary to warehouse the product and send it to the customer from there.

Taxes and import duties
On top of shipping costs, any taxes and important duties must be figured into the total costs. Although these are generally low for electronics, they are much higher on others. Consider these costs when deciding on what products to buy and sell.

Getting the best price
Always look around and consider as many suppliers as possible. Buying in bulk and stressing long-term relationships can help lower unit costs. However, do not become so fixated on price that the quality of the products or the reliability of the supplier is sacrificed.

In addition, remember that goods need to be covered by warranties, and orders should ship with services such as DHL and EMS which allow the packages to be tracked when possible.

China factory direct
One option for those who want the lowest prices from China is to make a custom order with a factory. While this is certainly the way to go in many circumstances, keep in mind that it is not practical for the typical small business. There are a number of issues that come with placing a custom order in a Chinese factory. Apart from sampling, payment and shipping, there is the order size to consider. Although it is sometimes possible to place relatively small orders for custom goods, it is not usually economically practical since unit costs will probably be comparatively high without a larger order. Therefore, custom manufacturing should generally be reserved for those situations in which bulk orders can be placed.

China export agent
Fortunately, there are many existing products in China that can be purchased directly from factories and wholesale. For those new to China, this is best done through a China export agent. These agents monitored and encouraged by the Chinese government to promote Chinese goods overseas. A good agent will help find goods, monitor quality, arrange shipments as well as documentation, help with price negotiations and everything else in the process.

These agents also can be a great help when going to China directly. This includes booking hotels, arraigning transportation and meetings with suppliers to help them make the personal contacts that are so important for doing business in China.

Whenever looking for goods China wholesale, it is always vital to use reputable agents. Many can be found on sites to include alibaba.com or direct web searches. Never select an agent with first checking for reviews and other feedback. The agent should be upfront about any compensation and costs. In addition, ensure that the agent is not simply directing customers to those places that pay commissions since their goods may not be the best option.

When done properly, using an export agent helps buyers get some of the lowest unit costs possible. However, this system is not practical for many small businesses since order quantities are still relatively large and payments usually must be made by wire transfer.

Ecommerce platforms
For smaller operations, the best way to go China wholesale is often though ecommerce platforms. Some of the biggest players in this field include Alibaba, Made in China, Global Sources, Favordeals and SaleHoo. These services allow buyers to browse through all kinds of products and then connect directly with the suppliers. The suppliers will include manufacturers, wholesalers, liquidators and dropshippers.

While the terms will vary with the supplier and quantity, buyers can often find much smaller order quantities and more secure payment options to include credit cards. In addition, these sites will screen their suppliers to weed out those who may be substandard. This does not eliminate the need for buyers to exercise caution when selecting a supplier, but it does make the process easier.

Dropshipping is an attractive option for some. When using a dropshipper, the goods will go directly to the customer. Therefore, the seller does not have to handle and ship products or keep an inventory of goods. It also makes it possible to offer wholesale products from China and other places worldwide. This business model generally comes with higher unit costs for products and has other drawbacks that mean it is not for everyone. However, it works very well in many situations.

Caution when sourcing
Depending on the product, country and other circumstances, there may be high import taxes and other fees. Everyone importing goods from China and elsewhere needs to research and get an idea of what they will be before making any purchases.

Quality control should be another area of concern. While things have been changing, Chinese factories and wholesalers often do not have the same way of looking at quality as most in the West do. Therefore, measures always need to be taken to ensure quality control before goods are shipped.

It is also vital to make sure the goods being imported will not have any special restrictions placed on them. It may be best to stay clear of products like food and toys that will generally that have the most government regulations placed on them.

It was not long ago that China had the image of a backwards and poverty stricken military menace in the minds of many. While it was sometimes feared for its numbers and ideology, it was not considered a serious economic force. However, since the market oriented reforms that really started kicking into gear in the early 80’s, it has marched steadily forward to become an economic superpower.

Able to keep its economy at a healthy growth rate while much of the world has struggled, it can be argued that growth in China is vital to the rest of the world economically. Now increasingly becoming a consumer as well as an exporter of goods, the Chinese market is very important to more and more nations and has outstripped the US as the number one export market for some. This has allowed China to flex its economic muscle much more than it ever could in the past.

Relatively scarce on resources, especially when one considers it has a fifth of the world’s people, China is now aggressively signing deals abroad for energy, minerals and other resources to feed its economy. While this can be expected from a nation that is acting as the factory for much of the world, some worry it is setting the stage for future conflicts over resources as its economy continues to grow.

However, it is important not to be too dazzled by China’s economic success. It has fiscal, social and other issues that may cloud its future. With its enormous population, it still ranks low in per capita income in spite of having the world’s second largest economy. Still closed politically, there are many problems with corruption, cronyism and public discontent that are not being properly addressed.

Very dependent on exports for economic growth, China needs good relations with the rest of the world if it to keep its economy humming. With its state-run banks saddled with bad loans, often made for political reasons, it needs to tread carefully if it is to avoid its own financial crisis.

Having taken steps to greatly reduce its birth rate well before becoming wealthy on a per capita basis, China may also soon be facing demographic problems with fewer younger people to support an aging population.

Furthermore, while China is still a relatively poor country and wages are low by the standards of richer nations, they are rising fast. This has made manufacturing in China less competitive than it once was and some lower wage manufacturing has begun to shift elsewhere.

Still, China has an industrious and disciplined work force. Moreover, for all the problems with its closed political system, it at least has stability and is free of the kind of strife that hurts so many nations economically. These factors, combined with the massive infrastructure investments being made, are likely to keep China competitive and growing as an economic powerhouse.

With its much larger population, it remains on course to eventually surpass the United States too and become the world’s largest economy. If that day comes, the effects on China, and the rest of the world, will certainly be huge.

When China first opened to the West, living standards were a fraction of those of the outside world. A seemingly endless pool of workers happy to work for wages others would reject and favorable investment laws made it very attractive to businesses looking to compete through lower labor costs. While issues such as bureaucracy, corruption and different attitudes toward business and quality often made conditions less than ideal, the benefits outweighed the costs for many willing to brave the risks.

In time, as the investment regions and supply chain developed, China become more attractive and accessible to the less brave. It became possible for more businesses to take advantage of what China had to offer, and the quality of the manufacturing improved as China moved up the supply chain and began to produce higher-value goods.

With this success came problems both from within China and without. With its massive trade surpluses, more nations have pushed China to lower them. In response, China begun letting its currency rise (most analysts say it was kept at an artificially low rate to make exports cheaper) and eliminating preferential tax treatment for exporters.

Within China, as living standards have risen, wages for factory workers have increased. This has been especially true in booming coastal provinces where factories often cannot find enough workers and must bid up wages. Workers have become more aggressive too and strikes have increased.

Also, trying to emulate China’s success, other nations have also created economic zones offering favorable treatment to outside investors and exporters. Furthermore, free trade deals the US made with Mexico and other nations has given those nations cost advantages as China’s expense.

In response, China has taken steps to encourage investment in less developed regions in the interior where labor is cheaper and in greater supply. It has also begun to move higher up the supply chain where labor is a smaller portion of production costs.

While some production has begun to shift away from China to cheaper regions or back to countries where the products will be marketed, China still has advantages that will keep it the world’s factory for many products. China has invested heavily in infrastructure and has developed an impressive network of suppliers. This, combined with decades of experience in Western markets, means China will continue to be very attractive as a place to manufacture, albeit production is likely to keep shifting to new areas and more to higher-end manufacturing.

Also, average wages, particularly in the less-developed regions, will remain low by Western standards for the foreseeable future.  No other nation can offer the kind of labor resources and infrastructure that China currently does. For these reasons, China will remain a manufacturing force to be reckoned with. However, exactly what kind of a force it will change into remains to be seen.

The amount that can be invested in production is an obvious factor. With economies of scale, it is best the place the largest order one can afford to get the lowest unit cost. Up to a point, the larger the order the lower the unit cost. Also, shipping and other costs tend to be less when ordering in bulk. Shipping by full container gives the best rates. These factors need to be balanced with storage costs, projected sales and the amount the organization buying the product wants to invest.

One factor when deciding the size of a production run is trust in the manufacturer. Sampling is not always a clear indication of the quality of work a factory will ultimately produce. Until the manufacturer has demonstrated they produce quality work on a consistent basis, it is prudent to limit exposure in any single production run and source in smaller quantities.

Time will also dictate how large a production run should be. When time is limited, it is sometimes necessary to do a run that is smaller than would otherwise be optimal.

Setting up a production run requires time and money. Machines and parts often need to be purchased, workers trained and factory floor space set aside. If the manufacturer does not believe the order quantity will generate enough profit to make the production set-up worthwhile, they will simply refuse to take the order. Therefore, while there are a few products that can be ordered by the hundreds, the vast majority require production runs in the thousands, tens of thousands or more.

Suppliers are also often a factor. Buying on the open market is usually considerably more expensive, so materials need to be purchased in bulk from suppliers. Even if a manufacturer is willing to do a smaller run, they may have to purchase materials in much larger quantities than needed for the production run. Since manufacturers are rarely willing to store materials, any leftover materials will be considered waste and will add to unit costs.

The type of product is also a major factor to consider when deciding on the quantity of product to order. Some products, such as plastics, need molds and therefore require some of the largest production runs. Not only does the mold need to be produced, which usually requires a significant investment, but the materials for the plastic must be purchased in bulk. Furthermore, machines need to be set-up to produce the mold.

Molds and tooling are major factors in determining production runs. Since they usually require a significant investment, a larger order quantity may be needed to allocate the set-up costs over more units. If the purchaser is planning future orders to recoup these costs, they should stipulate they will own the tooling.

On the other hand, products such as bags are easier to source and their production runs tend to be less complicated to set-up. They can sometimes be ordered in much smaller quantities.

While every product is different, carefully considering these factors will help in deciding the quantity of a product to order with the factory.

The mechanics of the VAT and its application to China sourcing
While VAT works differently in various countries, it is basically a tax paid on the value added to a product as it moves down the supply chain to the end user. For example, the raw materials for a widget are purchased by a manufacturer and a tax is paid. Then, when value is added to the materials by turning them into a widget, a tax is paid on the added value. Finally, a tax is paid on the additional added value of the widgets when they are sold to the final consumer.

For example, if the VAT is 10% and the manufacturer pays $50 for materials, then $5 is paid to the government. If the manufacturer then sells the widgets for $80, a total of $8 will be paid to the government ($3 additional dollars because $5 was already paid). If the widgets are next sold to the final consumer for $100, the government will have collected a total of $10 (an additional $2 since $8 has already been paid). VAT can also be viewed as a type of sales tax that is paid in part before the goods reach the final end user. Because the tax is paid periodically during the production/sales process, it is more difficult to avoid than a regular sales tax.

In China, the VAT rate is 17% on most goods. However, the government often refunds at least part of the VAT when the goods are exported. The amount refunded varies with the product, and the Chinese government uses the VAT as a tool to influence industry. Usually, the refund is highest on those goods for which the government wants to encourage production (e.g. higher value-added products) and lower or non-existent on products the government is less interested in having China manufacture. An example of this was seen in 2007 when the VAT system was changed and VAT refunds for many high-energy, high-polluting goods were greatly reduced or eliminated.

In its most simplified form, the VAT refund for an exported product works as follows. If the VAT rate is 17%, and the refund rate is 10%, and a $17 VAT is paid, then $10 would be returned to the exporter while the government would keep $7.

The importance of understanding VAT when importing
Importers who do not understand the VAT system are exposing themselves to the following potential problems and extra costs:

• The best pricing starts with transparency. When breaking down pricing, comparing suppliers and negotiating, it is critical to know the supplier’s true cost. Without an accurate breakdown of costs with the VAT rate clearly stated, the supplier has more room to manipulate the price.
• Some manufacturers may not tell the purchaser about the VAT refund or they may tell the purchaser the refund was at a lower rate that they actually received and then will pocket the difference (it is also sometimes possible to negotiate the customs classification and therefore the VAT rate). To fully obtain all cost savings due through VAT refunds, every importer needs to be fully aware of the classification and rebate for the products purchased.
• If a manufacturer lacks the proper import-export rights or VAT processing abilities, they may be forced to rely on third parties who will likely inflate the price and make the relationship with the manufacturer more complicated.
• In a gray area of the law, some suppliers are able to avoid the VAT for smaller orders. While this will give the purchaser a lower price in the short term (although this increases the risk the goods will be trapped in China without proper documentation to export them), the importer will suddenly be hit with the tax when their business grows and the order size reaches a point where the VAT cannot be avoided. The tax increase will likely be greater than any discount from larger order quantities.

Therefore, when doing business in China or any nation with a VAT, is imperative to know the classification and VAT for every product and ask the supplier to outline their VAT policies. Doing so will enable the purchaser to avoid unexpected costs or other problems while getting the best price possible.