“Dealing with imports from China means that you have to face the issue of quality control. Ensure that the company you are dealing with doesn’t take shortcuts, and when the consignment arrives, it meets the original specifications,” explains Duncan Bonnett, director of Whitehouse & Associates, a research and consulting company in Johannesburg.
Quality control can be difficult. Try to cover yourself when arranging the commercial terms of the consignment agreement with your supplier. Hold back payment or part payments until you are satisfied that the goods are the genuine article that you ordered. If there is a specification which has been agreed to, make sure that the supplier truly understands the specification. Global companies such as SGS offer global inspection, verification, testing and certification services.
SGS is recognised for setting a global benchmark for quality and integrity. The company has 48 000 employees and a network of over 1 000 offices and laboratories around the world. This kind of testing agency will ensure that the exporter meets the specifications that have been agreed to. On the Internet there are many scams and dubious traders. “Dealing over the Internet is the worst way to do business with China,” says Bonnett.
Negotiating the price is a skill which Westerners are not experienced at. The Chinese are renowned for their practice of cutting corners on materials and quality to regain any lost margin or simply to make more money. “Often small companies are at the mercy of those they are dealing with. Avoid dealing with Internet companies as it is even harder to check if they are reputable. There is no easy fix – I can only recommend that you put your hand in your pocket and spend on proper research,” advises Bonnett.
Language & Cultural Barrier
Another big issue in dealing with Chinese business is communication. It can be very frustrating negotiating complex business issues when the thinking processes, ethics, morals, expectations, culture, politics, laws and government involvement in everyday business life are very different to those of South Africa. Learn as much as you can about how Chinese business operates. A must-read for anyone wanting to do business with China is Where Underpants Come From? by Joe Bennett. It’s a fun but very informative guide to the do’s and don’ts of doing business with China.
Getting Through Customs
Every importer needs to understand the customs procedure for clearing imported goods. Determining which customs duty applies can be complex and when starting out rather get expert advice. You could make use of clearing agents or a distributor to take over the customs clearing side of the business. If you go this route, be careful – you must find an agent that is experienced in customs regulations. If you don’t, this could lead to problems which could have negative financial implications.
To cover your business against fluctuating exchange rates, it’s wise to take out forward cover (an agreement to buy or sell currency at a specific price). This guarantees an exchange rate on a given date. Forward Cover (FEC) will help if the rand slides against the dollar. Banks are able to arrange forward cover for dollars against the rand.