If you have been considering purchasing your products from China, you may also be thinking about whether or not it makes sense to travel to China to visit suppliers, attend a trade show or discover new products.
For most traders, it’s a big decision. Travel is costly, the country is huge and maybe a bit intimidating, the language and habits of the Chinese people are sometimes different to those of most US and European buyers. Is it worth it?
1. To Go or Not to Go, That’s The Question
Opinions are all over the board about whether or not it’s necessary or prudent to go to China. In general, unless you are intending to invest in large purchases, it’s simply not worth the money. You should not spend money going to China just to “kick the tires.”
Good advice: Before you decide that you will buy from China, take a good look at the costs versus the profit. Be sure you add the cost of shipping and customs duties. Make sure it’s worth it on paper before you make the commitment.
If, however, you are planning to make a substantial investment, or if you have been importing from China, know what you want to buy and are looking for new sources, it makes good sense to inspect factories yourself, forge strong personal relationships, and experience new product possibilities.
Caution: Beware of trading companies that claim they have factories all over China; that’s rarely the case.
Caution: Don’t even think of going to China without a well planned itinerary and a set of meetings with contacts arranged in advance. Travel and logistics can be very difficult. If you’re not well organized, you’ll waste your time trying to get from Point A to Point B. If you are visiting a Trade Fair before visiting the factories, it’s true that you won’t need an appointment, however you should still evaluate potential trade partners from the comfort of your office or home before you visit the fair. This will help you sort amongst thousands of exhibitors, many of which are likely to be factory agents (and therefore middle men) cutting into your profits.
Although many traders have lot of cautions about going to China, most who have done so can confirm it’s a terrific experience, and can be extremely profitable if planned properly.
It’s the perfect opportunity to find new products and new suppliers, and establish better relationships with your current ones.
Bottom line: If money is no object, go and enjoy the country and see what you can see. If, however, it’s strictly a business decision, make your choice based on accurate pre-planning by calculating your costs, objectives and potential returns in advance.
2. Organizing the Business Side of Your Trip
You need to establish all your contacts before you go. Research suppliers through a reputable directory or through the Trade Fair’s online exhibitors list, shortlist your preferred suppliers, make initial contact by email or live chat, and finally inform them you’ll be visiting their factory or at a fair.
While you can just show up at a factory, notifying the manufacturer ahead is good business practice, will ensure you get attended to on your terms and that all the relevant staff will be available to assist you, and it also shows you are a professional businessman.
Beware of any supplier who seems uncomfortable about your visit. And, be sure that you will be able to visit the factory, not just meet the “owner” and see pictures of the factory.
To save on your flight costs, you should consider flying into Hong Kong, then traveling to mainland China, because flights are less expensive.
We’ll talk about visas later but we want to point out that, while a number of traders wait until they get into the country before arranging traveling papers, we think that it’s a better idea to get all the paperwork lined up ahead of time. You don’t want to have a problem in-country and waste your time on administrative hassles.
Many newbies want to know where to go in China. Of course, if you are setting up contacts ahead of time, the location of those contacts will define where you will travel. However, if you are also generally interested in seeing what China has to offer with respect to products, here are some suggestions.
Everyone says that you have to go to Shenzhen for electronics. Many suggest that while you may travel through Hong Kong, it’s not worth spending time there for purchasing purposes. It’s much better to get into China where the factories are.
4. Travel Documents
Of course you know that you must have a passport to travel to another country. The bigger question is the visa.
If you are going to China for a short time, a tourist visa is acceptable. If you plan to stay for more than a week or plan to make multiple trips in a year, you will need to apply for a business visa. If you want to get a one year (multiple entry) business visa then you will need an invitation letter from a Chinese company. You can contact your local Chinese embassy, or a local travel agency, for details. If you are planning to attend the Canton Fair, go to the website (www.cantonfair.org.cn) and register so you will receive an invitation. You can use that invitation to obtain a visa.
You must obtain a Chinese visa at your local Chinese embassy before you are allowed to enter China. There are options to obtain a Chinese visa from Hong Kong, however regulations are changing regularly and China is limiting the types of visa it will issue to foreigners applying in Hong Kong. If for whatever reason you are unable to obtain a Chinese visa before you land, you can try these options:
5. Travel and Accommodations
Travel costs vary, not only by where you’re flying in from, and where in China you will be staying, but also by the time of year.
Remember to buy travel insurance. Also, if you are entering China with more than USD 6,000, remember to declare it at Chinese customs.
It is less expensive to stay in a Chinese hotel rather than a global chain hotel, but you may not be as comfortable, because Chinese hotels don’t necessarily have all of the same amenities. Aim for a 3+ star hotel owned by a global chain, where you are sure to find English speaking staff, an Internet connection, and other services which will make your permanence a lot smoother. Chinese hotels are generally not expensive; the prices range from $30 to $100 per night for a decent hotel. But, you need to book your hotel in advance to get a discount.
Also, by staying in an international chain hotel you will meet other business people, and can get good advice and useful contacts.
Good idea: After you book your hotel, but before you travel, check again to be sure your booking is on record and confirm the price in a currency that you understand.
Try to arrange to be picked up at any airport in China; the hotel may have a service or in some cases, the factory you are visiting will arrange pickup for you. There are always plenty of cabs but it’s a bit of a mob scene usually, and most Chinese cab drivers can’t speak English. You can end up paying too much or taking the long, long way to get there. If you do travel by cab, be sure you have your destination written down in Chinese, and agree on a price in advance. You should also be sure the price is written down in a way that you can understand.
Caution: Remember that Chinese cabs are not likely to be equipped with credit card machines so be sure you have enough RMB with you to pay.
All that being said, taxis are still a good way to travel around cities in China. Subways are only available in big cities, such as Beijing, Shanghai, Guangzhou and Shenzhen. Buses are cheap but slow. Plus, it may be difficult for you to know where to get off the bus because most street signs are in Chinese.
Keep in mind, that factories are often located in the outskirts of cities. This is especially true in Shenzhen, where the factories are frequently located far from the central city.
6. Language Barriers and Other Cultural Issues
It’s always a good idea to learn a few phrases in Chinese. Your Chinese counterparts will be pleased with your effort. You probably won’t be able to do more than that unless you plan to really study the language. Remember that there are two major forms of Chinese, Mandarin and Cantonese. Many Chinese people living in other countries speak Cantonese because the people of the southern shoreline are more likely to emigrate. However, outside of that southern shore area and Hong Kong, most people speak Mandarin. The two dialects can be quite different.
You will almost always need to hire a translator for your discussions with factory owners. Even if you have been exchanging emails with them in English, you’ll find that their spoken English is simply not as good. Don’t rely on the factory to provide the interpreter. If the interpreter is not working for you, it’s too easy for them to translate in a way that favors the factory owner.
Good idea: Get someone who is knowledgeable in the industry who speaks the ‘lingo’. As a first timer this will really help you to open doors and also to increase your chances of getting a better deal.
Keep in mind that the Chinese like to establish relationships before they talk business. Courtesy is very, very important. Don’t use a first name unless given permission. And remember, the Chinese write their last name first so if you are dealing with Mr. Wang Tao, he is really Mr. Wang.
You’ll be really pleased with the food. A great meal costs between $10 and $20. But, you’ll probably be asked to dinner and your Chinese host will pay for the meal. It’s a matter of honor for the Chinese host to take care of the bill.
Caution: Traders say that suppliers’ excessive generosity can make you feel very guilty about bargaining but you need to do it anyway. It’s expected and you will only get the best price if you push for it.
7. Trade Shows, Markets and Cash-and-Carry
Should you go to the trade shows or the markets, or just visit the factories? Our traders generally believe that while it’s fine to go the trade shows, you should really plan on visiting targeted factories to see the real deal. The trade shows are great for getting ideas and making contacts, but you need to be sure that the show supplier can really produce by seeing the factory.
The markets are terrific for picking up small quantities of things (for example the SEG Electronics Market in Shenzhen), but they are generally not designed for bulk purchasing. However, we say that with the caveat that sometimes the market stall backs up onto the family residence or factory where the product is being made.
When visiting trade shows, consider dressing casual, wear a shirt and trousers, rather than a suit. Firstly you will be more comfortable, and secondly if you wear a suit you will likely come across as a novice. Also wear comfortable shoes, there will be lots of walking to do.
Caution: don’t bring too much cash around with you, there are plenty of thieves trawling fairs and markets for an easy pick. Also try not to accept invitations from strangers, many scams start that way.
Bottom line, it’s great to pick up what you can in the markets, but it’s not a sensible strategy for getting product.
Going to China is not an obvious or simple decision. Weigh your reasons and the costs and benefits carefully. If you decide to do it, establish contacts and plan an itinerary ahead of time. Be prepared for travel challenges. But, also be prepared for delightful, savvy business people, wonderful food and a cultural adventure.