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Importing From China: Things You Need to Know

The manufacturing job market is growing rapidly in China and sure is not declining a bit. Currently the manufacturing sector is one of the largest employment sectors in China and at the rate it is growing it sure is a concern for US manufacturers.

Economists believe if a sector grows in all parts of the world, then it is advantageous for all. But now we find that the manufacturing sector in China is growing and that is not the case for US manufacturers.

The boom started prior to 2001. Initially it was primarily private investors who initiated the boom, but today it is governments and businesses from all over the globe who seeks out to reap the reward of Chinese manufacturing.

According to analysts, China holds over 100 million workers in the manufacturing industry, while the US holds close to 60 million. These 100 million workers exclude the millions of migrant workers that China utilizes.

In China factories that are outside of city limits are frequently overseen by a different agency or body. The China Ministry of Agriculture oversees rural factories and the Ministry of Labor oversees urban factories. Rules and guidelines are stricter for the Ministry of Labor and thus on many occasions it will be more cost effective as a rural factory, not being obligated to pay employees certain benefits and the likes.

Consider this startling fact. There are 300 million people in the USA. China has a population of 1.3 billion. Of this 1.3 billion, approximate 200 million people are unemployed. Almost as much people as the USA has alone. Thus China has a huge reserve of labor and costs will still stay low for some time in the future. “Low” in terms of international standards.

Having looked at all of these considerations, China is a country rich in human capital to drive the manufacturing industry and definitely worth to be considered.

The possibility of importing merchandise from China is both energizing and frightening for some venders. On one hand there is gigantic potential for profiting from exchanging wholesale products bought efficiently. In any case, then again, dialect and social hindrances exhibit various challenges to merchants. The fundamental issue that everybody is stressed over is installment: How would I pay? Will my cash vanish?, et cetera.

The trouble lies in the way that most Chinese wholesalers will just acknowledge Western Union and wire exchange installments. These are not secure installment alternatives so they should be treated with alert. Recently some people start using bitcoins for payment. However, it's still not easy to buy and sell bitcoin in China.

Nonetheless, the primary motivation behind why these are the main installments acknowledged is that they are in reality the main installment techniques accessible to the Chinese. Getting a Visa in China is a to a great degree troublesome undertaking with a considerable measure of government directions and strict criteria for getting a card.

So then, in spite of the dangers required with utilizing Western Union and wire exchange, these are the techniques you need to utilize on the off chance that you need to import from China with generally suppliers. To minimize this hazard, our recommendation is to begin with a genuinely little shipment of products so you are not remaining to lose a lot of cash if everything goes into disrepair. At that point, as trust is set up, bit by bit develop your request after some time.

All in all, most Chinese suppliers are certifiable, dedicated individuals who need to build up a long haul association with you. They require your business, so it's far-fetched they'll attempt to intentionally screw you over!

Another enormous issue for merchants importing from China is correspondence. It can be amazingly overwhelming attempting to arrange complex business issues when correspondence is so troublesome.

To get around this issue, we generally approach another contact for their WeChat or email deliver and visit to them on the web. They have a tendency to be agreeable and appreciate conversing with individuals who communicate in English as a first dialect (this helps them enhance their correspondence as well), in addition to it gives you an immediate purpose of contact in a flash.

With correspondence now settled, you can continue to make inquiries and inspire them to send you pictures of stock et cetera. Once we've developed a relationship, we then request that they send me an example request. For any honest to goodness organization, this isn't an issue and it permits us to see the nature of the item direct. We can then be genuinely sure that the organization is dependable, and this is the item we wish to import.

One thing we haven't discussed so far is quality. This can be another real sympathy toward venders who frequently experience issues telling whether a brand name item is honest to goodness or not. In addition, since many websites are blocked in China, you need to use a good VPN in China to unblock sites such as Google and Gmail. There's a Chinese word for this: Fanqiang.

As far as we can tell, most by far of brand-name merchandise that originate from China are either imitations or fakes. We firmly suggest that you expect this is the situation in the principal occasion. eBay is at present splitting down intensely on individuals offering fakes and it is not a region of business we propose you get into!

For the most part, we find that Chinese suppliers are most appropriate for shoddy bland merchandise (they are made there so you won't find less expensive anyplace else!) that can be sold at higher rates in Western nations. For instance, a portion of the most recent patterns are pocket bicycles, bikes and non specific electronic merchandise. These merchandise don't need to have a brand name to offer well and they can be acquired wholesale at great costs in the event that you are not kidding about importing from China. 

This ought to surrender you a heads if taking a gander at managing wholesale suppliers in China! Keep in mind, dependably keep a receptive outlook, make inquiries and do your examination!

Additional incentives offered by local and provincial governments significantly increase the foreign investors incentive package. They tend to become more generous as one moves westward from the coastal provinces to the heavily populated interior, this allowing the foreign investor to cash in on Chinas fierce domestic competition for foreign investment. There are national regulations, however, that are applicable to the tax incentives that a local government is entitled to offer Foreign Invested Enterprises (FIEs), and if these limits are exceeded by overenthusiastic local governments they can be revoked by the national government (hopefully any such revocation would not apply retroactively to FIEs).

Central Chinas Henan province serves as a good example. Henan offers manufacturing-oriented FIEs complete waivers of business tax and a many local administrative fees. Furthermore, FIEs that are engaged in technology transfer, development, and related consulting are eligible for a full refund of business tax already paid.

Regional Tax Incentives Offered By Henan Province

Production-Oriented Foreign Invested EnterprisesWaiver of Local Income Tax and fees for city construction, urban expansion, water resources protection, landscaping, and wall reconstruction. Transaction handling charges for purchasing production / operation sites are also waived.
Enterprises and R&D centers dealing with technology transfer, development and services Certain income can be exempted from corporate income tax after approval.

Below are some incentives for importing from China.

Municipal governments tend to be even more generous than the provinces. Zhengzhou (a city of about 4 million in central China) is a good example. Zhengzhou offers the following incentives to local FIEs:

Tax Incentives for Reinvestment of Profits Locally – Local FIEs that reinvest their profits locally receive a 30% refund of the locally retained portion of Enterprise Income Tax paid on the reinvested profits (the national government offers an even more generous refund of the nationally retained portion).

Investment in Pillar Industries and State-owned Enterprises – Zhengzhou grants a 50% refund for three years on the locally retained portion of Enterprise Income Tax already paid on foreign investment funds invested in designated pillar industries. It also offers financial incentives for investing in provincially administrated state-owned enterprises. In order to discourage mass layoffs, this incentive is increased if the FIEs retains a given percentage of the enterprises original employees.

Inward Remittance of Export Earnings – Zhengzhou offers cash payouts of 0.2% to 0.5% of every dollar of hard currency export earnings that is remitted inward (the best payouts are reserved for the export of technologically advanced products).

Matching Funds – Zhengzhou provides one-to-one matching funds for international market development funds of small to medium-sized exporting enterprises if they are supervised at the provincial level (whether an enterprise is supervised at the provincial level or the national level depends the size of its investment – its Registered Capital; see examination and approval authority for details).

Anti-Dumping Insurance – Zhengzhou will assist FIEs in responding to antidumping initiatives. It also offers subsidies for expenses arising out of participation by exporters in antidumping responses to the extent that these initiatives are not already being subsidized by provincial or national authorities. It may seem a bit odd for a U.S. company to establish an enterprise in China, get involved in a lawsuit filed by the United States for dumping its products, and be subsidized by the Chinese government for expenses necessary to defend the lawsuit, but its possible.

Interest Subsidy for Loans Secured by Tax Refund Accounts- Zhengzhou will subsidize a sum equal to 70% of the interest payable on loans that are secured by a tax refund account. If the FIE has not taken out such a loan, Zhengzhou offers a subsidy equal to 50% of the interest that would have been paid on such a loan had it been taken out it will even provide the fund from which the interest is subsidized. Enterprises that have an annual export volume of at least US$5,000,000 in the previous year and are verified by the National Tax Bureau to have an increased tax refund due for the current year will receive a 100% subsidy.

Export Incentives – An export enterprise with either (ii) an annual export volume of at least US$10,000,000 and actual export volume of at least 25% more than the previous year, or (ii) annual export volume of at least US$5,000,000, an increase in export volume of more than 40% over the previous year, and inward remittances from exports at least 80% of sales volume, will be named a Zhengzhou Advanced Foreign Exchange Generating Export Enterprise and awarded a 30,000 RMB prize (roughly $3,500 US dollars) as long as it has not committed serious regulatory violations during the year preceding the award.

Basic Tax Rate – The nationally-mandated basic Enterprise Income Tax rate for foreign invested enterprises is 33%, including a 3% surcharge that is retained by local governments. However, because Zhengzhou has been classified by the national government as a city open to foreign investment and trade, the Enterprise Income Tax rate of production-oriented FIEs located within the city is reduced to 24%. Furthermore, since the Zhengzhou Economic & Technical Development Zone (an industrial park located within urban Zhengzhou) has been designated as a National Economic & Technical Development Zone, the Enterprise Income Tax rate for production-oriented FIEs located therein has been further reduced to only 15%.