Reducing risks is paramount to most exporters. Below are five areas where companies can reduce their risks when selling into China:
- Be always conducting due diligence on the buyers in China
It is not unknown businesses and customers to be instantly shut down by the tax authorities in China.
Business in China moves fast and, your Chinese buyer’s situation can change overnight. Sellers to China must always be vigilant about the buyers in China.
Government policy changes in environment and health requirements have also forced some companies to relocate their business to other parts of China. It can result in challenges to exclusivity agreements which exporters have with the original incumbent buyer.
TCI provides “On the Ground” intelligence services for companies who are exporting to China.
- Avoid Selling on credit
For the last ten years, growth in China has been by credit. Many companies in China struggle to repay these debts. Some Chinese buyers resort to seek out foreign companies to supply them with products and provide them with trade credit while knowing that they would be unable to pay these international companies for the goods when the payment terms became due.
The recent Coronavirus outbreak in China has led to companies of all sizes going bankrupt.
The simplest solution is to offer no trade credit facilities to buyers or if a buyer in China demands credit, advise them that they need first to build a 24 month trading history with your company. Your company could research into any government trade credit facilities
TCI China receives calls every year from exporters who are struggling to get paid from their buyers in China. Our Credit Collection team can discuss with you about your options when it comes to getting paid.
- Confirm that there are no export restrictions for your products in China.
China is increasingly voicing its disapproval of foreign governments policy’s through its targeted restrictions of that countries products into China. It can affect companies who are already successfully exporting products to China.
The UK recently had its live crabs restricted so that all live crabs sent to China needed to be checked & tested by Chinese customs. It ended all export sales of live crabs from the UK as the crabs had a lifespan out of the water of a few days while the customs required a few weeks to test and process the crab’s import papers.
For companies which do not have a history of exporting products to China, there is a process which they need to follow. This process includes
- Registering with the Chinese Customs to be an approved exporter to China.
- Checking that the products, which you wish to export from your country, are permitted by the Chinese government to be imported into China.
You should contact your local government trade support office to find out what Chinese processing and procedures requirements applies to your company and products.
TCI China assists its clients to register as an approved seller with the Chinese Customs.
- Protect your Intellectual Property in China
You should ensure that your brand name and logo are registered in China. China works under a first to file system, meaning the first person to record an IP right there will own that right when granted. It is therefore essential to register your rights in China to be able to defend and enforce them. The process usually takes 18 months to be completed
Another item which should be registered is your company’s Chinese website address. It needs to cover both the .cn and .com.cn domains
TCI China offers a China trademark registration service and a Chinese Website Address Registration Service.
- Suitable Chinese Import licence
Food Fraud has become a significant issue in China. Many exporters who operate a “Farm to Fork” traceability system are now seeking to control the entire supply chain for their products, including using their import licence in China. TCI China has licencing facilities which can enable these exporters to maintain full traceability and control of their supply chain.
For other exporter companies, it is vital to ensure that the buyer in China has the proper import licences and is registered with Chinese Customs to import your category of product into China.
Apart from offering its licencing facilities, TCI China always recommends that exporters use its Buyer Audit service. It assists exporters to avoid wasting time and energy dealing with unsuitable buyers in China.
There are many opportunities to develop sales in China. TCI China offers companies seeking to generate sales in China a wide range of services, including China Market Entry Consulting and China Market Research and China Outsourced Support Services.
Ecommerce sales have begun to make it easier for foreign companies to try and generate sales into China. If you are interested in learning more about ecommerce, please visit our Ecommerce Consulting page.