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Benefits And Drawbacks About Importing Merchandise From China: Critical Factors
Each time we find the tag "Made in China" we are reminded that China is a place where goods are manufactured for a fraction of the US cost and distributed to more than a billion potential consumers. Corporate giants like Wal-Mart are investing massively in China. Thousands of small to medium sized businesses are getting in on the action too. In fact, we can say that 2000 was the decade that got thousands of entrepreneurs to investigate how to import goods from China.
China has enjoyed an average 9.5% yearly growth within the past decade, and its Gross Domestic Product (GDP) skyrocketed from $ 300B in 1985 to $ 1,600B in 2004, larger than the state of California. In the meantime, its export-import volume has increased twelve-fold! Foreign direct investment has hit $ 550B during the same period. China's blistering modernization from 1990-2010 made importing goods from China highly interesting to retailers across the globe.
The country's first production census found that from 2004 to 2007, the GDP growth rate was of 10% per year. In 2007, the officially recorded GDP growth rate was 11.4 %. In 2008, the worldwide economic crisis started to reduce China's growth rate. To settle the crisis, the government made the decision to pump Rmb (China currency) 4 trillion into the economy as an economic stimulus package consisting largely of investments in fixed infrastructure and human capital.
Even though in the early September 2009 mainland China was engaged in new trade dispute with the US over the imposition of an emergency duty on Chinese tires, a full-blown trade war is unlikely as this is not in the best interest of each of those countries. Mainland China is the biggest creditor of the US, while the US is the Mainland's second biggest export destination after the European Union. A trade war between two of the world's leading economies will additionally be detrimental to the global recovery just underway. China import export is here to stay, for the moment.
Northern Asia in general (Japan, South Korea, Taiwan, Vietnam, and Mainland China) is an excellent region for manufacturing products (Vietnam is similar to China fifteen years ago).
The clear value of Mainland China today comes from its low production, workforce and improved quality control measures, making it by far the most appealing part of the region.
Moreover, bear in mind that Chinese companies will deliver you with what you ask, even when it differs from their production standards. They have an incredible capability to create a very unique design by blending some existing designs you might have submitted to them. While Westerners do not normally like (or are even able to) adapting their production standards to special customer demands, a Chinese company would perceive this a standard feature of their service.
Standardization such as ISO or 6-Sigma is not so common in China, but is followed by the higher end manufacturers. However, regardless of your order quantity, quality control with China is a MUST. You must get what you order and in the exact way you ordered it. From unsophisticated to sophisticated products you have to oversee quality control with Chinese manufacturers. Use multiple QC check points during different phases of manufacturing. An importer's worst nightmare is getting a full container load of products that is defective due to a wrong screw size, for example. If you still try to sell them, or sell goods that you don't know was defective and later falls apart, this equals substantial merchandise returns, angry customers, and an accounting/billing department nightmare. As the CEO of your own venture, you are responsible for making sure that your products satisfactorily meet desired specifications.
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