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I get asked all the time; how do I get started in China? Well you can go about it multiple ways. Some are good and some are not so good.

You can look up suppliers on multiple trade websites that are geared to connect buyers to suppliers. You can go to trade fairs yourself in China and find suppliers. You can hire an agent in China and tell them what you are looking for. No matter what you do make sure that you go the manufacturer and see the factory for yourself.

So let’s analyze each one of these now:

Trade Websites- These are wonderful resources and make it very easy to find suppliers with the click of a few buttons on the old computer. However, most of these websites do not verify the supplier’s information. Therefore, there are lots of fraudulent companies on these sites. It is almost impossible to tell which suppliers are good ones and which are not. They all have Gold or Platinum status on the site…right???

I wish it was that easy. The unfortunate truth is that they are not all good. There are many postings on these sites that are just there to solicit orders and have them made in another factory for you and mark the cost up 5-100%.

Then there are the ones that are just on there for the sheer reason of taking your money and running, only to setup a new company tomorrow under a different name. This is the worst of them all. You have no right of recourse against them. You are a foreigner in a foreign land and now have to get the police involved in a country where you do not speak the native language.

Going to Trade fairs in China- While this is definitely a better solution than using the trade websites it is still not a fail proof plan. Just because you see them at a trade show both does not mean that they are a real factory. The same problems that exist in this solution as there are in using trade websites, many companies will pose as factories when they are nothing more than middle men marking up the products.

As well there are several companies that are just there to take your money and run. They used fake ID’s and fake company information to get into the trade show and the trade show hosts have no record of how to contact them other than a mobile phone that does not work now. In many ways this is even worse than trade websites, at least trade websites record IP addresses.

Using and Agent- Taking into consideration of the other two options, this is the safest way to go. However you must still be careful. Many agents are known for getting kick backs from the factory as a show of good faith to have them keep you doing business with the factory. Providing that you can educate your agent to do the job exactly the way that you want them to do it, your arrangement should work out.

One of the most critical roles that your agent will play for you is Quality Control. You should take the time to go to China the first time that a Quality Control inspection is needed and train your agent on what is important to look at. Remember no one knows your products like you do, so take the extra time that is needed to ensure the products that arrive to you are made to the exact specifications you outlined.

While this may not be a 100% fail proof way to get your feet into the Chinese market it sure is better than going into thinking that you can do it yourself. Most of all my best advice to anyone is trust no one and question everything and be 100% confident before you give anyone any money at all in China. China is the land of opportunity. However, it can also lead to a crisis if you are not careful.

Many of my clients tell me the same thing over and over. “The factory said that they can make it”. Yet thousands of dollars later for tooling fees, mould fees, and samples and they are no further ahead than they were when they first started dealing with that factory.

One thing that you must learn about Chinese culture is that the most important thing to the Chinese people is keeping “face”. We as western’s can translate this to reputation. However it goes much deeper than just that. To Chinese loosing face is the worst thing that can happen to them. They truly believe that if they tell you “no” you will think of them as a factory that is not capable of doing anything.

The truth of the matter is that most Chinese manufacturers will tell you they can do anything as long as there is good money in it for them. The most difficult thing for a western buyer to determine is when “yes” really means “no”. For native Chinese this task is simple, they can read body language as easy as you can read this blog.

I know what you are thinking….How do I really understand when “yes” means “yes”? Well there is not a real science to this other than have them show you other products that they have manufactured that are equal in construction or complexity to your product. Once they can prove this to you and only then go into prototyping your product. Make sure that you set strict deadlines for things to be accomplished by them.

Make sure that you are the owner of all the tooling and moulds that are needed to make your product, after all you paid for them. If they are not willing to meet your demands and you find your demands reasonable then this can be a real sign that possibly “yes” really means “no”.

There are many books that have been written about this over the years. I would advise you to pick a few of them up so that you have a good understanding of why Chinese say the things they do. This way you will not be so shocked or offended when told one thing but the truth is another.

We have all heard of scams from time to time, right?

Well this one takes the cake. Several years ago I was looking for a printing trade show in China for a client of mine. Their needs were rather specific and I was having a hard time finding exactly what they wanted. It was getting late in the trade fair season and I was running out of options fast. I knew that if I did not find them a supplier in the next week I was going to lose the job. As I was on the internet looking for any factories that were centric to this type of printing I came across a trade show.

I thought this is ironic, here it is December, and I thought that all the trade shows for printing were over for the year and this one starts in two days. After browsing the website for 30 minutes I called my travel agent and booked a plane ticket and a hotel for this trade show. I thought this is great; here I am having a hard time finding a printer to do this job, and BOOM here are several factories that will be attending this show that can do it.

So I got home that night packed my bags and went to sleep early. Woke up at 5AM and went to the airport to catch my flight. I got into my hotel later that afternoon and then went around to see some of the local culture and get something to eat. The next morning I woke up early went out on the street caught a taxi to go to the trade pavilion. Upon arriving I saw big banners everywhere promoting companies that were attending the trade show. One thing struck me as a bit off though. None of the banners and balloons were for printing companies. They were all for Chinese cigarettes and Chinese alcohol (Baijiu). I immediately pacified myself and said nothing to worry about it is a big pavilion, I am sure there are multiple fairs happening this weekend. I then began to walk up to the doors of the pavilion to a very large crowd of people.

There were a lot of rather harsh comments flying around the crowd about “how could they” “what a disgrace” “how can this happen”. At that point I still did not know what was going on. I turned to an elderly man there and asked him what was going on. He says “I came to a fake trade show”. I then asked him what trade show, and sure enough it was the same one that I came to.

I know what you are thinking. This is so ridiculous that it could have not happened. Well I am here to say it did. A person setup a website in English and in Chinese (and I will add a good website) and collected down payments on booth space from thousands of companies and ran with the money. I still to the day do not know if anything ever happened to the person or group that did this. But I can only hope so.

My point of telling this embarrassing story is that many things in China are not always what they seem. I am a seasoned professional of China now and even I can get fooled. No matter what you do in China make sure that you verify everything.

I recently was at the Canton Fair and a person asked me: "What is the single most important bit of advice you can give me for doing business in China?" My answer was simple: find a good agent and train them to do exactly the same thing that you would if you were in the factories inspecting the products yourself. Think of it is a cheap insurance policy that can save you millions of dollars.

The cost of doing an inspection with a qualified agent is minimal when compared to an order arriving completely incorrect for some reason or another. Now you have a container of products that are either going to need to be sent back to China to get fixed or sold on the liquidation market. No matter which way it goes you are going to lose money and time and worse yet, your company will develop a reputation of a company that cannot manage its supply chain.

A common question about dealing with Chinese manufacturers is: when and how often should I inspect my goods? Honestly, it would be great if you had a staff member on-site every day. However, we all know that is not exactly possible. Depending on how complex your product is, you may need to check its progress more often. You or your agent should go to the factory a couple times during manufacturing and, as a bare minimum, conduct a pre-shipment inspection.

I know that having an agent in China will increase your overhead. However, I am sure that you will have a massive savings in comparison of manufacturing your goods in your own country…and you will be able to afford it. After all it is still cheaper than you coming to China every 30-60 days and doing the inspections yourself.

Doing business in China can be the best move that you company ever made and can put you ahead of your competitors faster than ever. Before you jump into it head first though, you should know some of the potential traps that are lying around the corner that you cannot see.

I have talked about how to find factories in many of my blogs before. This time I will tell you about some of the problems that exist after you have found one.

Pitfall #1- Quality Control is one of the biggest problems in China today. Many factories will show you a perfect sample of the product you want to buy but deliver a product that is totally different. As a solution they may offer you a discount on the order. Or they may telling you to ship it back to them and they will fix it. Either way you are going to lose time and money.

Now you have a credit with the factory and in order to use that credit the factory wants you to do another order with them. They assure you that all will be well. So you do another order thinking that they will get it right this time…no one is that stupid…right??? Wrong you are. They deliver another order of goods that are not up to spec. Now you have the same problem as the first time and they are offering the same solution.

Let’s hope that you are not stupid enough to do this again. In some cases depending on your contract you can get the money back instead of a credit and just move onto another factory. In other cases you will have to make a judgment call on whether to call it a loss and move on or go down the same road again. If you do have to go down the same road again, make sure that you do what you should have done on the first order. Do a pre-shipment inspection and verify the goods are what you ordered.

Pitfall #2- The product is good and up-to-spec, or so it seems on the surface. So you begin to sell it to your clients. Now all of a sudden you are getting calls from your clients telling you that they are having problems with the products and that they want an exchange or a refund on the product. All of a sudden your venture into China is not paying off like you thought it would.

So you call the factory and tell them the problem and they issue you a credit and tell you that it was one of their suppliers for a part inside the product was faulty, and they have a better supplier they will buy from next time. They then tell you to place another order and all the QC problems will be solved.

So that is what you do. After all, you need to get stock in ASAP you have returns coming in from all over the place and the longer you wait the more money it will cost you. Then the next order arrives to you and you inspect the product to make sure the problem was fixed. Happy you are and you begin to send out the products to all of your clients again.

Then all of a sudden it is like a reoccurring nightmare, you are getting calls from all over again about your products having failure rates. It turns out this time is something totally different that is going wrong with the product.

And so the cycle begins again. You call the factory and they tell you the same thing over. Only this time it is another supplier.

The moral of this story is that you should always make sure you do several inspections on each and every order you ever do with a factory. Only then will you be completely assured that you are getting what you ordered. I know that this sounds like a lot of work, but I never said doing business in China was easy. I have only said that it would be worth it….if you can handle the work load. My advice to you is to get a good agent that you can train to inspect your products in the exact same manner you do.

I am often asked: how do I tell if a company is real or not? This is not a simple answer. There are no national databases in China for company registration for authentication purposes. That is not saying that everything is done by hand. There are many local databases for cities or provinces that have this information.

The first thing that you need to do is to get a copy of the company’s business license and then go to the local municipal Administration of Industry and Commerce (AIC) office and inquire in person. They will give you a print out of everything they have on file about the company. It should include when it was set up, who set it up, and registered addresses and phone numbers of the company.

Once you get that information you should then go to the registered address on the AIC print out and make sure that it is really the company there and not just an empty hole in the wall that they are paying rent on for the purpose of having a business license.

From there you should do a telephone directory search of the company name and make sure that all the addresses are the same on all the documents.

This is not the end-all, be-all for confirmation. Now what you must do is actually go into the company and make sure that they are doing just what their website, catalogues, and business cards are saying they do.

Once you have done this and only after you have done all this will you know for sure that you are dealing with a legitimate company.

I know what you are thinking…I am going to come to China and go do this…yeah right. Well the truth is that you do not have to do it. Many reputable sourcing companies or legal firms can do this for you for a minimal charge. For just a few hundred dollars you can be a bit more certain that the company you are thinking of doing business with is just that: a company and not a scam.

How do you keep your IP protected in a land where virtually everything is copied? This can be seemingly impossible. You can walk down any street in China and buy DVD’s of movies that have not even hit the big screen yet. If such large companies are having problems how can you succeed where they have not?

Well this is a multiple part answer. The first step is to find a reputable supplier. Yes, the do exist in China. The trick is to find them. So now you have some problems: you don’t speak Chinese, you can’t understand the supplier’s broken English website, and they all look the same from your computer.

So now that you know what to do you need to go out and do it. Find a good agent that will represent your interests and only your interests in Sourcing. The first step is to find a sourcing agent that is willing to disclose the true source of the product to you and are willing to put you in contact with the manufacturer directly.

Then pay your agent for finding the factories but do not let them get a percentage of your order. From there make sure that you yourself or your agent does an audit of the factory. Get to know your supplier before you sign a contract with them. See for yourself if they really can produce your quality of products and at the volume that you need. Nothing beats seeing it yourself!

From there make sure that you get a bullet proof contract with them in English. Make sure that the contract says the manufacturer cannot sell your designs/products to anyone else at anytime and that you now and forever will own the designs, patents, trademarks, and registrations of those products

One other bit of advice on a contract is. Do not ever sign a Chinese contract that you cannot understand. If the factory wants your business they will find a way to interpret your English contract. Remember, shoot high. After all, your version of the contract is really a perfect-world wish-list. Negotiate from there but never start low on what you want; going up is always harder than going down.

So now you have your contract with a factory and a few months later you are shocked. You thought you found a good factory, but you just saw your product on a shelf of a store marketed under a different brand. First thing is first, calm down and make a plan on how to deal with this situation.

First thing that you can do call the company and issue them a cease and desist order and state any applicable patents or trademarks you may have on the item. Secondly, you can have your agent try to locate the factory they are using. If you are successful there then you can take that factory information along with all of your supporting patent or trademark documents to the Chinese consulate in your country and issue a formal complaint about the factory.

Then let things run their course, while China is slow to react to problems it does react. Eventually there will be a person from a local government in the area visit the factory. Depending on the connections that the factory has with the local government will ultimately affect the outcome of the solution or the lack of a solution.

If you are successful this way, congratulations!!! If not, then your last chance is the Chinese court system. However, I will warn you now, even if you do get a judgment against them it will be much harder getting that judgment enforced.
So now you say well how do stop it from happening in the first place. The short answer to this is; it is very difficult. Remember this is China, and copyrights, patents, and trademarks mean very little to the Chinese factory owners. The best thing that you can do is brand and market your product better than your competitors are. Make new innovative improvements to your product, and most importantly stay ahead of you competition in sales with good service and superior supply chain management.

It turns out the China was not as immune to the worsening global economy. Some Chinese policy makers have been saying that "... China would not be affected by the Economic Tsunami." While China may have not been toppled by the initial tidal wave, it is more than evident that the flood waters have reached its shores.

China is much better off than many nations. There is still growth in most sectors across China today. However, this quarter’s growth is the slowest growth that China has seen since the outbreak of SARS in 2003. While Washington policy makers are working overtime to try to keep the USA from sinking any further in the economic tsunami that has affected the world over, China seems to be making several of the same moves.

China has just announced that they will increase the tax rebates to exporters on over 3400 different products. This makes up about ¼ of China’s exports. While some rebate increase may be minimal some are much greater. The tax rebates in China are a very important. Most factories run their products at a near loss and rely on the rebates to make money. It is obvious that China is taking preemptive measures to stimulate the economy before it slides out of the black and into the red.

Domestic purchases in China are still strong. However, imports are down across the board. It is only a matter of time before domestic spending slows as people start to lose their jobs. One of the hardest hit sectors is the toy industry. There have been several very large companies that did OEM work for several large western toy brands that have just closed their doors and ran for the hills.

In the last year China’s manufactures have suffered several setbacks. In recent memory: the lead paint on toys, tainted pet food, and now tainted powdered milk. The trust level of Chinese products has suffered the most. Without trust of a product, the consumer will think twice before purchasing it.

China’s policy makers are making headway on cleaning up some of its PR issues. One thing is for sure: it will take some time for Chinese made products to be trusted as high quality products again.

I was contemplating the other day what "China" meant to most people around the world. I thought that more than likely most people who have never been to China think it is still grass huts along a river bank on a mountain filled with rice paddies.

The truth of the matter is that you would be hard pressed to find such a tranquil setting in today’s modern China. China is all about big business and big manufacturing. There may still be meandering rivers and mountains of rice paddies, however, all of that is in between large complexes of factories and dormitories for the workers.

Yesterday’s China is remembered in all aspects of today’s modern culture. However, it is just that: a memory. I suppose that is like any culture we are all hanging on to our past and we remember ourselves as being part of something that was natural and pure.

China has been part of Big Business for the last several hundred years. Think about all of the silk trading and porcelain trading that happened long ago in China. The truth of the matter is that China has always been a key supplier to the world for items that could not be produced anywhere else. Whether it was from labor or raw goods China has always been the go-to country for traders of the world looking to get a step ahead of their competition. So what is China’s Soul today? Before you can understand the answer to that you must first understand that China is a communist country. However, at the same time, it is one of the most capitalistic countries that I have ever been in. On paper this may not seem like it would work, after all they are polar opposites by the text book definitions. However, they are working very well in my humble opinion. You have the right and the ability to become very wealthy here. Yet, if someone does not have the desire for such treasures, they will also be taken care of to a degree.

As long as a person is working in China and paying taxes, they have access to health care. I can name several first-world countries that do not have this. As long as a person is working they can get government assistance for housing. China has a very adequate welfare system as well. The government seems to believe that as long as people are trying to help themselves and the country, the country will help them make ends meet.

So back to the question: "What is China’s Soul today"? I now can sum this up very easily. China’s soul is a self-procuring, self-driven, take care of your own, keep to your own business, and help your countrymen self governing modern day society of compassionate people. Many people may not agree with my assumption here. However, you have to live here to really understand what I am talking about.

Today’s China is not what it was a couple decades ago that is for sure. Today in China the skylines are littered with high rises and construction cranes. Building is at a record pace today. Whether it is a new building going up, a subway being dug, an airport being built, or a highway being laid, everywhere you go in any city, there is construction.

The Chinese government has made massive commitments to modernize their infrastructure and they are doing an amazing job of it. I can say as a veteran traveler of the globe: I have never had a more convenient place to get around, but I do speak Chinese. Yes, they may not have complete organization on the roadways but the roads are superior. Just be on the lookout for the guy driving on the sidewalk.

How did China get so far so fast you ask? That has a simple answer: they had no choice but to do so. In the 1980’s the Chinese government made a decision to start making Special Economic Zones (SEZ’s). These zones granted the freedom to trade with the west. There were several different types of SEZ’s that were setup. Some were for heavy industrial products, some for high-tech, and some for regular household consumer items. But they all were geared to export finished goods to foreign countries and profit from the low labor costs in China.

The companies that got here early were extremely profitable and were treated like royalty amongst the Chinese government. Today’s China is a bit different than it was in the early years but it still has amazing opportunities for those that are willing to make that plunge.

You don’t have to have your own factory in China to have good profit margins on your products. There are plenty of factories that are more than capable of manufacturing your products. This is a lot less of a hassle than setting up your own factory here. You can contract factories to make replicas to existing products or you can contract them to make your unique products. No matter the products that you are after you can find a supplier that is more than qualified to do the job.

The trick to doing successful business in China is to always watch your back. Get a good agent that can help you overcome the cultural and language barriers that are very prominent. Make sure that your agent is in constant communication with your supplier so that you get what you are wanting.