• Entering the Chinese Market: A How to Guide

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    China is switching from being a pure manufacturing economy to focusing more on imports and domestic consumption.

    This has opened new opportunities for overseas brands that wish to expand globally. With that said, selling in China is not the easiest task on hand and requires thorough planning.

    In this article, I explain the basics you need to know when exporting to China.

    Finding Chinese Customers

    According to a survey on Businessweek, 46% of Americas small business owners don’t export because they don’t know how to start.

    That’s sad, as around 97-99% of America’s industrial life consists of small business owners. China has a huge and growing middle class and you can find customers there, it’s not impossible.

    In this article, I present some of the most common ways to find Chinese customers. Let me start and present two major trade fairs that are held on an annual basis in China.

    Trade fairs in China

    Thousands of people attend hundreds of trade fairs every year in China. The majority of the fairs are held close to municipalities like Shanghai, Guangzhou, and Beijing.

    That’s beneficial as you will have fewer issues with communication, transportation, and getting around in these cities. I cannot stop stressing the importance to visit trade fairs thanks to the huge amount of people you meet in just a couple of days.

    The largest trade fair in China is the Canton fair. Importers and exporters and have visited the fair since its start in 1957, in the city of Guangzhou. The city is a municipality in southern China, not far away from Hong Kong and Shenzhen.

    The fair covers basically all product segments and the organizers offer help with accommodation, flights, and interpretation. The products on the exhibition are divided into three phases:

    Phase 1

    • Electronics and household electrical appliances
    • Lighting equipment
    • Vehicle and spare parts
    • Machinery
    • Hardware and tools
    • Building materials
    • Chemical products

    Phase 2

    • Consumer goods
    • Home
    • Gifts

    Phase 3

    • Office supplies, cases and bags, recreation products
    • Food
    • Shoes
    • Textile and garments
    • Medicines, medical devices and health products

    I recommend you to find a hotel in Hong Kong and take a train to Guangzhou. You need two hours to go by train to Guangzhou, and from my own perspective, Hong Kong is more enjoyable if you want something more of your stay. In addition, far more flights arrive and depart from Hong Kong.

    Don’t forget to apply for a VISA before you go to Mainland China. I apply for the VISA at least one month prior to departure. In general, it takes you two to five days, but you should have some margin as the time can be extended.

    Export-China

    Distributors

    You can find distributors on the internet, through personal contacts, if you analyze competitors or if you visit trade fairs (like the Canton fair).

    A good Chinese distributor knows its market well. They can help you with loads of things such as customs clearances, certifications, packaging, import regulations, sales strategies, marketing, and customizations of your products.

    Many exporters are unaware of the latter one, but in fact, that’s crucial if you enter a new market. Be sure to verify the credibility and performance of the distributor, before you sign any agreements.

    The agreement shall include all essential items such as marketing guidelines (who to pay for marketing), sales quotas (to avoid a poor sales performance), trademark regulations and after-market services.

    Certification in China (The CCC mark)

    Your products must comply with regulations and standards in China. China’s quality mark is called CCC (China Compulsory Certification) and mandatory for a wide range of products. Be prepared that the CCC can be required for the following products:

    • Household and electrical appliances
    • Motor vehicles and safety parts
    • Safety glasses
    • Medical devices
    • Toys
    • Latex products
    • Electric tools

    The application process is quite straight forward:

    • You send an application
    • You submit materials about the products and send samples
    • An authorized Chinese certification company performs tests
    • The same company performs a factory inspection
    • If you have got this far, I congratulate you for achieving the certification mark
    • Your products are affixed with the CCC-label
    • Factory inspections (annual check for all factories)

    Costs for a CCC mark

    The costs differ for different product categories. You need to pay for the following fees at a minimum:

    • Application fees.
    • Product tests (including samples).
    • Factory inspections. The follow up inspections are less expensive compared with the initial inspection.
    • Auditors’ travel costs (and other related fees).
    • Costs to issue the permission and printing of the product labels.

    Register your trademark in China

    You shall consider registering your trademark in China. China is a “first-to-file” country and the first person that applies for the trademark gets all rights to that trademark. Can you imagine what consequences that might lead to?

    I recommend you register your trademark before the products are shipped from the country of export. The fee is around 500 USD, which’s negligible in comparison with a pricey lawsuit.

    Pay attention to the fact that if your company base is not in China, you need to hire a Chinese lawyer or trademark agent for the registration. Other persons are not authorized to do so.

    Transporting your products to China

    There are two means of transporting products from Europe to China: With sea freight or air freight. Let me share the benefits of both and why one of them is more suitable for your products.

    Air freight

    Airfreight is more expensive in comparison with sea freight and not applicable for exports of heavy products. That can be machinery, tools, furniture, food, or clothes for instance. Products that require large volumes are not optimal for air freight.

    I recommend you to use air freight for goods with high values and/or low volumes, such as prototypes, test samples, product samples, products to be exhibited at trade fairs.

    In addition, there will be time-critical situations when you simply don’t have time to use sea freight. The reasons might be due to empty stocks at the distributor or replacement of parts that are broken.

    Sea freight

    Sea freight is the most common way of transporting commodities and there’s one major reason for that: Lower costs. Weight and volumes are not as critical as for air freight.

    The lead time is around five to six weeks from Europe to China. But that’s not a problem if you follow order schedules and plan your deliveries well in advance. Be sure to have frequent communication with your importer. I recommend you to use sea freight for heavy and spacious products, for example:

    • Furnitures
    • Food
    • Vehicles
    • Machineries
    • Industrial products
    • Textiles

    FCL shipping (Full container load on boat)

    FCL is used for deliveries of high volumes. FCL is the least expensive option for exporters and utilized if you manage to fill up a 20” or 40” container cargo.

    LCL shipping (Less than a container load on boat)

    LCL is used when the goods cannot fill up a 20” or 40” container cargo. For LCL, you need to share container space with other exporters. And that’s a great option when the size of your cargo is not sufficient to use FCL, but too heavy and big for air freight.


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  • 4 Responses to “Entering the Chinese Market: A How to Guide

    1. James at 9:37 pm

      Very good introduction.
      Thanks!

    2. Ale at 3:46 am

      I have a doubt.

      Lets say I want to participate as an exhibitor in Canton`s fair. It has to be my product, created by me? or I can participate as an exporter: I buy from my local supplier, just ship it to China and exhibit a product thats not made by me (kinda like a reseller).

      Thanks

      1. Marcus Sohlberg at 7:47 pm

        Hi Ale,

        I think you would need a licensing agreement in that case. Have you checked with Canton Fair?

    3. Ian English at 2:10 pm

      Does automotive assembly machinery and equipment come under CCC? I want to purchase a powertrain assembly line in the US and put it into service in China, as far as I can read it does not need CCC. The facility will be CE/UL/CSA approved.

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