Adapted from an article by Jack Daniels at Buyers Bridge Corporation

Is your company doing business in China?  Are you thinking about entering the Chinese market?  If so, please read these tips to produce results.

1. Focus on products that have high labor content value. Products whose selling price is dominated by raw material costs (corrugated stock, sheet metal, bulk wire, chemical feedstock, etc.) aren’t likely to cost less in China than they do at home. Instead, focus your procurement efforts on value added products that require multiple steps to manufacture and package.
2. Get terms. Credit terms use to favor the vendor abroad but times are changing. It’s time to push back. Customers with long-term trading relationships should ask for a minimum of net 30 day terms. Remember that net 30 is still the equivalent of prepayment when you factor in ocean shipping times.
3. Deal directly with your vendors. Forget working with agents, brokers and trading companies that markup your cost and don’t offer real value.
4. Negotiate the price in RMB. Small and mid-size North American companies now have access to foreign exchange banks and can arrange for direct payments in RMB. Paying your vendor in yuan takes currency variation out of his court and makes you a more attractive customer.
5. Know your vendor! Pick up the phone, visit, make a plan to reach out and establish a direct relationship.