Risks when shopping in China

The People’s Republic of China is the largest economy in the world and an emerging nation. China has been developing into an economic power for three decades. The low production costs and increasingly effective production processes make the country very interesting for foreign investors and traders. However, there are a few things to be aware of when doing business with Chinese companies. The value system of the Chinese differs greatly from that of the Europeans. The way the Chinese think and act is also very different from that of the Europeans. Finally, entrepreneurs who do or intend to do business with Chinese companies should be aware that the Chinese tend to be strategic.
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Risk when shopping in China
The Chinese economy is strongly characterized by its own momentum and is therefore opaque and chaotic for many Western business people. Many companies that buy in China keep reporting new difficulties when buying from Chinese companies.
Contracts do not have the same standing in China as they do in Europe, contractual agreements are constantly being broken in order to renegotiate certain points of the contract. In addition, the economic situation of many Chinese companies is very unstable, which means that companies close overnight and liabilities are not paid. In such a case, it is very difficult for a European company to assert its claims in China.
Sudden wage increases should also be expected, since the Chinese economy is developing very quickly, the production processes are also constantly being optimized, which also means that wages rise disproportionately. This in turn is reflected in the selling prices of the goods.
Purchasing in China can be very problematic and risky
Another problem is that quality standards are not always met. The quality of a product can vary greatly, which means that buyers have to ask themselves whether they can even find buyers for the goods in their home market.
It is necessary to carry out your own quality controls at the production site to ensure that the agreed quality standards are met.
The transport of goods from China is also very risky, since safety standards are not met, it is not uncommon for goods to be damaged during transport. Another risk when shopping in China is that you may be purchasing counterfeit goods, which is punishable by heavy fines as copyright infringement.
It is therefore highly recommended that when doing business with Chinese companies, the respective company should be examined carefully.
Risks when importing Chinese goods
The prices Chinese goods are often very tempting. As an interested party, you should ask yourself where the catch is. At the latest when and especially after the purchase of such products, it is often recognized that the desired quality is not delivered. In principle, this can have two reasons: on the one hand, the goods can be damaged due to the long transport route and, on the other hand, the company cannot build the parts in the desired quality.

In principle there are three different possibilities Goods from China to Germany to transport, of which, however, only two are used as a rule. Neither land nor air transport are the usual methods. A large part of all goods that are transported from China to Europe are made with the help of container ships. However, it is different with small and handy loads that can be handed over to a parcel service. There are offers from six euros per kilogram of volume. However, if you want to order larger quantities for your company in China, there is no way around container shipping. Of course, these costs must be taken into account when calculating the price. The customs costs upon arrival of the goods in Germany must not be ignored either. Of the Transportation of the goods from China is not the only thing that can cause difficulties for the inexperienced.

Noteworthy in the contract and goods
Not only the bureaucracy in Germany, but also in China could lead to bigger problems. The first meeting takes place as soon as the contract is signed. Not every manufacturer and supplier in China has the right to directly conclude a contract with foreign companies. If cooperation is nevertheless sought, it is necessary to engage an import-export agent, which is also referred to as a Chinese agent. Another recommended point is to check the creditworthiness of the supplier to be sure that the goods discussed will be produced and shipped. It is necessary for your own protection to pay attention to the type of products and in particular the license. It happens again and again that goods are manufactured in China that imitate the products of well-known manufacturers. The import and sale of these goods are illegal in Europe and can result in heavy penalties. The quality of Chinese companies also shows large fluctuations. So you can buy high-quality products for a low price, which have a long shelf life, but also experience a letdown in this respect. In order to prevent this, you should list this and other points in the contract, which should always be in writing, in order to avoid misunderstandings and to have a clear agreement. The points price of the goods, quantity, quality, possibly material, date, shipping, description of the goods and above all the contractual partners should be listed. You can only rely on it once it has been legally signed. According to Chinese law, only the managing director of a company is entitled to do so. This contract also gives the European company security in the event of violations of the agreement. Anyone who feels overwhelmed with all these things can also turn on an import agency. They have a lot of experience and can support an inexperienced person well. The money invested is usually worth it, given the risks involved Import from China can be significantly reduced.

 

Documents for import from China
Not everything can be passed on to the contract. As an importer, you should take your obligations seriously. This includes the REACH license. This ordinance has been in effect since mid-2007 and ensures safe handling of chemical substances so that people and the environment are not harmed. Care must be taken here to ensure that the applicable rights are not violated during an import. Another license is SISVEL, which is particularly common in electronics and engineering. This is mandatory for some products. It is possible to only order goods from companies with a SISVEL license or to apply for such a license yourself. The manufacturer is not responsible for this, but the importer. This applies to wholesalers as well as small Ebay dealers. Violating this license can get really expensive. Another document without which import into the EU would not be possible is the CE marking. This must be obtained for all products that are ordered and delivered. It confirms that the products in question have complied with all directives and regulations set by the EU. However, it cannot be equated with a test seal, since it is purely an administrative seal. Once the goods have arrived at the customs port, you will receive an EORI number, which is only issued by customs in Germany and Austria. In other countries this is done by other authorities. The EORI number, which means Economic Operators Registration and Identification, is the successor to the customs number, which could only be assigned within a country. If you don’t want to deal with all the licenses and regulations yourself, it’s better to hire a professional to do it. Importers who specialize in goods from China can usually manage this much better than you can. This is always better than later being sued for false documents, which costs a hundred times as much as an import company.

Additional costs when importing from China and how to avoid them
There are several causes that lead to additional costs Import from China being able to lead. Only if these are avoided can you really benefit from the cheap prices of Chinese goods. In addition to the costs incurred for the usual documents, experience has shown that most of the costs are due to reworking that has to be carried out in Germany due to poor processing. Such costs could easily be avoided if an in-house employee or a supervisor commissioned for this purpose carries out a final check before the loading takes place. On the one hand, they ensure timely completion and dispatch, proper quality, compliance with guidelines and agreements, and clarify any questions that arise on behalf of the importer. They should also be commissioned if a prototype has already been viewed or if there has been a long-term collaboration. Insurance companies are also aware of the problems that can arise during an import, which is why they also offer products for this. The cost of insurance should be included in the calculation for resale so that no loss is incurred.

commercial legal protection for more security at imports
International trade has become extremely important in recent years – not only for large and medium-sized companies, but also for small ones. There are more and more self-employed people working in the import business. Goods are imported cheaply from abroad in order to then sell them on the German market at a good profit.
However, small companies and lone wolves in particular do not always find it easy to do this. Trading with partners from abroad requires a lot of experience, negotiating skills and, above all, legal knowledge. Legal knowledge in particular is often lacking, with the result that smaller companies sometimes take enormous risks without being aware of it. Business often runs smoothly, but sometimes difficulties arise.
If there are difficulties, the question arises as to how to proceed. Large companies have their own legal departments or can afford expensive specialist lawyers. Small companies and the self-employed, on the other hand, do not have these options or the involvement of an expensive lawyer should be carefully considered, especially since such a legal dispute can be frightening over a very long period of time.
In view of this risk, it is advisable to take specific precautions. This is possible with legal protection insurance. Namely, on the market special legal protection tariffs for the self-employed and small businesses offered. Many of the insurance policies are even designed as practical package solutions with a wide range of services. The conclusion of corresponding tariffs is considered to be comparatively expensive.
When making a selection, however, it is important to take a close look or to deal more closely with the tariffs of the individual legal protection insurers. This measure is extremely important, because it is the only way to ensure that adequate protection is guaranteed and that the insurer will also assume the costs in international legal disputes. If you cannot find a suitable tariff, it is even possible to have protection designed individually. More and more insurers are also offering this option for small companies.
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