HOW TO START A BUSINESS WITH CHINA IN 2021 FROM SCRATCH

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The majority of consumers in the world are already accustomed to reacting to the mark made in China on both branded and high-tech products. The price of Chinese products makes it possible to earn even on a single resale without much investment. However, before starting a business with China, a merchant needs to determine the direction of activity, target audience and calculate the start-up capital.

Business preparation with China

Before starting an active commercial activity and conducting real trading operations, it is better to determine:

Direction of work. Your own sales experience, education and even hobbies will help you to determine a potentially promising market niche and select partners. After that, you need to assess the potential market capacity for the selected category and the interest of buyers.
The way of doing things. This means not only cooperation with suppliers, but also the model of interaction with the client: dropshipping, wholesale or retail supply, joint purchases or the organization of an online store.
The size of the initial investment and working capital.
A way of finding new customers and promoting products: online or offline sales, advertising, maintaining communities in social networks.

Choosing a business model

If you consider the option of how to start a business with China without money, dropshipping will be the most acceptable. The essence of the method is that:

the seller (dropshipper) finds a promising product at an attractive price on one of the trading floors or directly from the manufacturer;
advertises or displays a product on its page, attracts a buyer and advises him;
receives payment to his personal account (cost + shipping + extra charge);
sends funds to the supplier (cost + shipping);
monitors the receipt of the goods by the consumer (the buyer's address is initially indicated) and resolves issues of return or compensation when receiving low-quality items.

For a business without investment, dropshipping with China is the only way to start earning. Novice traders cannot work directly with the manufacturer, so they look for suppliers on marketplaces such as AliExpress and Alibaba. More favorable conditions are offered only to those who buy out wholesale or small-scale wholesale lots.

If the entrepreneur has initial capital, then you can try other models of doing business:

Wholesale sales - direct cooperation with factories and factories at the best prices. A large batch can be split up and resold at a premium to smaller retailers in your country.
Retailing through your own online store or point of sale. At the same time, a wholesaler can sell part of the batch to other entrepreneurs, and put up the rest at his place, and even then outperform competitors due to a lower purchase price.
Joint deliveries are the reverse scheme: in this case, several small traders unite (add up in money, and sometimes share the responsibilities of negotiation, escort and delivery) in order to purchase a batch of goods directly from the manufacturer at the lowest possible price.

Benefits and risks of dropshipping

The dropshipping scheme described above is attractive precisely because it allows you to organize a business reselling goods from China without spending your own funds. The positive aspects include:

absence of unclaimed and low-liquid balances: the order and payment are made piece by piece, exclusively at the expense of the client and only according to his parameters;
since the address of the buyer is indicated in the order form, the transportation of the goods is shifted to the supplier - due to this, the geography of customer coverage is significantly expanded, far beyond the location of the dropshipper;
fast business reorientation: if the product item “did not go well”, then you can easily switch to another manufacturer and even change specialization.

The dropshipping scheme itself contains risks:

difficulties may arise at the stage of completion of the transaction: unscrupulousness of buyers who declare non-receipt of an order or non-existent defects in order to receive a partial or full refund is not so rare;
upon detection of flaws or violation of the terms of delivery, the intermediary must negotiate with both the client and the supplier, while the terms of the trading floors sometimes do not imply a return at all;
most of these orders are placed remotely, through a website or a page on social networks, so bad reviews will ruin your reputation with potential customers;
if settlements are made through a bank account or card indicating the content of the transaction, then the dropshipper will be responsible if the buyer does not receive the goods (however, this can only be achieved through court).

And yet, even taking into account the possible troubles, trading without investment and transportation costs is a great way to start your own business with the prospect of further growth.

Initial capital calculation

A small business selling Chinese goods does not require significant financial investments, but it will not be possible to do without investments at all. Briefly, the list of expenses will consist of:

The value of the goods. The amount will depend on what exactly is planned to be purchased - expensive smartphones and tablets or cheap kitchen utensils.
Funds to create a website or other trading platform; if a page on a social network is created for free, then you have to pay for domain registration and hosting annually.
Training costs for doing business with China - Finding and building relationships with suppliers may require costs for a translator or for learning the language, customs, and even the specifics of the products offered.
The cost of hiring hired personnel as the business grows or at the stage of its creation. To ensure the legality of trade, it is necessary to register not only an individual entrepreneur or a legal entity, but also to officially employ workers, and not forget about the requirements for the payment of minimum wages in Russia.
Advertising costs. This concept includes not only the cost of website promotion, but also the organization of promotions, sweepstakes, discounts and gifts.

It is possible to establish a profitable business with China from scratch without spending savings. This is the main difference between dropshipping and traditional commerce, when the purchase of goods is made without reference to a specific customer.

Although often it is the actual availability of products in the warehouse without the need to wait for delivery that becomes a decisive factor for the buyer. It is possible to increase profitability due to the combined work with customers: guaranteed “running” units can be purchased in advance, and more specific goods can be sold under a personal order.

Identifying a promising niche

Availability of free finance does not guarantee profit if initially the choice of the direction of work and assortment was made incorrectly. It is better and easier to start a business in the industry that you know by profession, hobby or as a result of acquired life experience.

When starting your search for your own niche in the market, be guided by several selection criteria:

The product should be in demand and, if possible, not have a large number of analogues.
The demand for various types of products differs depending on the place of business and seasonality: it will be possible to actively sell picnic equipment only in the warm season, and down jackets for extremely low temperatures are unlikely to find their consumer in the southern regions.
The initial choice should be focused on the target audience to which the merchant has direct access. For example, a practicing hairdresser might offer hair cosmetics to his clients along the way.
You shouldn't dwell solely on the current state of affairs: China produces a wide range of copies of famous brands that can be sold profitably if the price-quality ratio is acceptable for a potential consumer.

Search for suppliers and resellers

Sooner or later, a joint business with China forces you to look for your permanent supplier or a reliable intermediary working with several manufacturers. Search methods and the choice of the type of cooperation will depend on the size of the entrepreneurial endeavor:

Dropshipping does not imply large parties, so you need to look for a normal partner on trading floors. AliExpress or Pandao will do. You need to be guided by the recommendations and reviews of real buyers, preferably with a photo, or better - your own experience.
Joint purchases are usually made by several merchants who are already somehow familiar with the product or manufacturer, so they can navigate by the name of the supplier indicated on the labels of the sample item, or use the same mechanisms as the dropshipper.
Wholesale buyers cannot rely on the opinion of strangers and dubious advice, especially since wholesalers often buy new items that are not yet in the Russian Federation. Therefore, the best way out is to visit exhibitions or real production facilities.

Since not every trader is able to work with Chinese suppliers-manufacturers (they do not exchange for small parties and prefer to work through representatives), it is beneficial to cooperate with an intermediary. In this case, the new partner can offer a good price and convenient delivery terms. An additional bonus can be a wider assortment due to contracts with several manufacturers.

Verification of a potential partner from the PRC

As soon as the business has reached the level where it is possible to communicate directly with the manufacturer, the question arises of how to do business with China as profitably as possible and not to face fraudsters.

For those who are looking for a partner at exhibitions and fairs similar to Cantonese, or just online, there are a number of recommendations:

You can distinguish an intermediary from a manufacturer by the assortment he offers: if it is too diverse, then this company is engaged in resale, which means that it cannot offer the lowest prices.
If the supplier refuses to show his industrial capacity, then he also has nothing to do with the manufacturer.
The lack of documents for the conduct of activities should be alarming.

The China Industry and Commerce Authority reserves the option of online verification of the vendor's business license, provided that the vendor consents to the disclosure.

To obtain data on the permitted types of activities, the amount of the authorized capital and the tax status of a potential Chinese partner, it is enough to install a special application on a smartphone and scan a QR code from a paper copy of a business license.

The download guide and instructions for using the service are available on the website of the Registration Service. All information will be provided in Chinese.

Determination of profitability

The resale path only seems simple until a person decides to organize a business with China himself. And often difficulties arise already at the stage of price formation for the goods being sold.

It is important to immediately find a balance between the entrepreneur's desire to make money and the emotional willingness of the consumer to pay the set price and stop looking for more acceptable conditions.

In order for the fear of losing a client not to force them to idle, setting an unreasonably low margin, the entrepreneur must determine the break-even point and the level of profitability.

The first indicator is a kind of price threshold, beyond which a businessman will face losses. In trade, the marginal limit for reducing the cost of a unit of goods is calculated by adding:

the original price paid to the supplier;
shipping cost. In this sense, small businesses are interested in the platforms AliExpress and Pandao, which offer options for free transportation to the end consumer;
costs of operations for transferring funds (commission of a bank or electronic payment system, including currency conversion);
possible customs expenses. According to the decision of the Eurasian Economic Commission, postal parcels for personal use are not subject to duties only if they are lighter than 31 kg and less than 500 euros for a single shipment or in total for a month;
tax fees, if it is decided to formalize the business as an individual entrepreneur or LLC.

Taking into account the overhead costs, the profitability of each unit sold (the ratio of the profit received to the amount spent) can be only 5-10%, or it can be several times higher than the purchase cost.

Delivery conditions

It is better to start your own small business with China by working on trading floors. Their functionality includes not only a fairly simple search for a supplier, but also mediation in settlements, dispatch and tracking of goods, arbitration in the event of a dispute.

However, the terms of delivery of goods on different trading web resources are not the same:

In most cases, AliExpress offers an option with free shipping (in this case, the period will be several weeks), the administration takes care of the issues of clearance at the Chinese customs, but warns of possible additional fees in the recipient's country. Delivery takes place by mail to the nearest branch to the customer.
Toabao - the cost of delivery is not included in the price of the goods and often exceeds it. In case of refusal from an already paid commodity item for this reason, the supplier has the right not to return the money. The site will be convenient only if you know the Chinese language.
Pandao is a platform adapted for buyers from Russia. A definite plus in free delivery, however, its term can reach 75 days. The terms of work are largely the same as AliExpress, there is an instant refund service if the cancellation is sent within 4 hours after the payment was made.
Alibaba is not retail-oriented, but small wholesale quantities can be found. There is no delivery to the Russian Federation by default, the site offers to negotiate with the supplier directly or use paid logistics services based on the trading service itself. The site offers not only goods, but also services for organizing a business based on a franchise.

Search and expansion of the circle of buyers

Probably the most unstable and unpredictable factor in trading is the client itself and the correct assessment of his preferences. If an entrepreneur plans to conduct offline sales, then the location of the outlet and its transport accessibility are important.

When product promotion is supposed to be done without geo-referencing, you can get started with:

notifications of the nearest environment (acquaintances and friends);
search for potentially interested persons in specialized forums or in groups. By joining the community, you can order mailing to its members or place an advertisement by agreement with the administration;
analysis of private messages on the "wall": sometimes a person is looking for exactly what a Chinese merchant can offer him without any problems.

If an entrepreneur establishes a business with China via the Internet, then finding a client through advertisements in the media and even on television is ineffective: potential buyers simply will not see them or will not notice them in the general flow of information.

Trial purchases

Testing of products before the start of sales is the most responsible decision of the trader, because numerous reviews and photos on the network will not give an objective idea of the quality and functionality of the product. In addition, if new items are planned to be presented, objective information will not be available.

Spending on trial copies may seem like a waste of money, but if the product is of poor quality or does not match the stated description, you can open a dispute with the supplier and return the funds.

A novice businessman may lose money on currency conversion and commissions, but he will gain useful experience and check a business partner.

Starting a business

Desire and determination alone will not last long. Only one who has structured disparate commercial ideas and developed an approximate strategy can build a profitable long-term business. You can start active actions if:

an industry has already been chosen, the trader has experience in this area or a deep understanding and ability to present the product;
the choice of the supplier was not made in theory, but on the basis of personal purchases or the purchase of test units of goods;
a preliminary analysis of demand was carried out: online surveys, trial order collection, studying the experience of competitors;
a decision was made on the form of legalization. If the first sales gave hope for a successful continuation and expansion in the form of opening offline retail outlets, then one cannot do without state registration of the business.

Top positions for resale

Earnings from the resale of Chinese consumer goods remain attractive, but to spur demand and increase profits, it is necessary to track new items. Business ideas with China for beginners, associated with a radically new approach to solving problems, can benefit:

High-quality replicas (copies) taken from original products of well-known brands - if we are talking about clothes, that is, factories that sew from high-quality materials in compliance with tailoring technology, but at a more than affordable price.
Autonomous power supplies - the Chinese are already presenting their analogs of expensive batteries of various capacities, from those capable of powering media devices to ensuring the functioning of an entire "smart home".
New items for kids - 3D pen, drawing tablet and magnetic constructors.
Household and personal care products - such as a quick manicure printer, heated socks, a vacuum facial cleaner, a brush for detangling hair and straightening curls.

It is not worth building a business solely on an experimental product; it is better to offer specific items as an addition to the main assortment. But it is also impossible to remain in a static position, because the list of top goods from China for business is dynamic and changes from year to year.

Organization of wholesale deliveries from China

Until the business has gained momentum, it is more convenient to work with suppliers through trading platforms, using their capabilities to deliver orders directly to the client's door.

When sales are growing, you can think about switching from dropshipping to wholesale purchases with further resale to both the end consumer and other merchants.

It is more difficult to organize a wholesale:

for a start, you can contact the supplier with whom you already have established business ties - he can reduce the price for a large batch or contact the manufacturer for a fee;
It is also possible to establish a business with China without intermediaries, but an independent visit to the country will be required (trips to exhibitions, fairs, factories and factories, at the invitation of a supplier), preferably accompanied by a knowledgeable consultant or at least in the company of an interpreter;
you can use online intermediaries in your country or the co-purchase mechanism by partnering with the same merchants.

Wholesale trade will require customs clearance of the cargo as a commercial one, which means payment of import duties.

Tips for beginners

It is important for every merchant that the first purchase does not become the last. Therefore, you cannot deceive a client by presenting even a very high-quality copy as an original of a branded item. Such an attitude can turn the consumer off forever, even lowering prices and promotions will not help.

In addition to deception, the client subconsciously cannot stand monotony. New items should appear in the assortment of the store so that the consumer is interested in regularly visiting the site or the Internet community.

However, do not force things too much. A massive flow of advertising information will be perceived as spam and will cause irritation.

When the first success comes, there may be a desire to immediately invest in the purchase of the product at the expense of future sales. It is better not to spend earned money without a test purchase and exploring the potential of the new model.

It is all the more unreasonable to switch from dropshipping to forming trading balances after the first profitable deals. Knowledge and the ability to predict the demand for individual products will only appear with experience.

Conclusion

The undoubted plus of commerce with China lies in the fact that you can start making money without even investing a lot of money. Convenient trading platforms help you find a supplier, carry out settlements and protect yourself from fraudsters. In addition, manufacturers do not stand still and constantly release new models.

The lion's share of all Chinese production is based on copying well-known world trends, and often a cheaper replica fully satisfies the needs of the client. However, there is also a share of risk in this: the quality of an externally similar model can be very low and it is impossible to determine this without purchasing a test copy.

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