On the world stage, in terms of economy, the People's Republic of China occupies the second position, second only to the USA. Almost a third of the world's commodity products are manufactured in the PRC. And since the goods produced by the Chinese are relatively cheap, the number of foreign partners of Chinese companies is increasing - commercial cooperation with it brings solid profits to entrepreneurs.
The following text describes in detail the priority features and prospects of partnership with the PRC. The article contains recommendations for starting a business related to the resale of Chinese goods and highlights the most relevant points important for its success.
Advantages and opportunities of doing business with China
A couple of decades ago, industry in this country with the largest population on the planet was considered cottage industry. Now it has changed radically - the Chinese have begun to produce products that meet international quality standards. This includes the production of equipment, clothing items, cosmetics, etc.
Therefore, cooperation with the PRC has several advantages for domestic businessmen.
Price availability
It is explained by the decrease in the cost of production due to the cheapness of labor in China. When reselling goods made in Ukraine, our entrepreneurs can make a markup from 10% to 20%, no more. And the same option with Chinese products allows you to raise the price when reselling by at least 50%, and sometimes by all 100%.
Endless choice
China has learned to do literally everything. Such a huge selection of commercial products opens up the possibility for our businessmen to choose any niche, including one that has no alternative on the Ukrainian market.
Product exclusivity
Many Chinese manufacturers specialize in manufacturing products unique to our country. As a result of establishing direct contact with these enterprises, you can purchase their exclusive products, which will definitely be in demand among domestic consumers, without intermediaries.
Results-oriented
For Chinese brands, every client and partner is valuable. This phenomenon is explained by high competition and large dumping in the local market. That is why Chinese companies are really ready to work with minimal batches of goods, provide product samples to potential partners for free, be in touch with them around the clock, and offer favorable delivery terms.
Of course, some Ukrainian consumers now order the necessary goods directly from China. But such a service has its unpleasant nuances - they consist in the need to search, the need to carefully study the assortment, and a long wait for the delivery of orders.
Another factor that works in favor of the success of Ukrainian entrepreneurs in doing business with China is the outright reluctance of many Chinese companies to engage in retail sales.
Starting a business in China: step-by-step instructions
To start such a partnership, domestic entrepreneurs need to complete several tasks in the algorithm below.
Decide on a product for resale
The point is that the buyer must choose their niche, choose a specific product within it, and choose the methods and ways to sell it.
At the same time, you should clearly understand the scope of your potential client audience and pre-calculate the amount of likely earnings.
After that, the businessman looks for a company from which he can purchase such products more profitably.
For example, an entrepreneur decides that he will resell baby clothes. These textile products are always in demand.
Given the breadth of its range, it is advisable to create a specialized online market, as well as a sales account on the popular social network - Instagram.
In this case, the female audience of buyers will dominate, so they should be the ones to connect with first.
After reviewing about a hundred websites of Ukrainian online stores selling such goods, and portals of manufacturers of the corresponding products in the PRC, the business applicant calculates that the real possibility of "cheating" the price is about 90%. This means that the funds invested in the purchase of his batch will almost double.
That is, having invested 10 thousand hryvnias, you can realistically get 19 thousand hryvnias. From this amount, you should deduct marketing costs. As a result, the profit still remains significant.
If a novice entrepreneur initially lacks the money to purchase a large batch of goods in bulk, it is better to first purchase a small quantity of the relevant commodity product for a small fee to test it. This service is offered by the Taobao marketplace.
And if a candidate for commerce lives in the PRC, it is better for him to visit the local market.
The starting point for choosing a product is to compare its prices in China and in Ukraine. But this decision is individual for everyone. You should also take into account your own experience and competence and pay maximum attention to preliminary analytical work and testing processes.
Find channels and choose methods for purchasing goods in China wholesale and retail
China's most famous global shopping platforms are Taobao, AliExpress, Alibaba and 1688.
At the same time, Aliexpress and Taobao offer retail, and 1688 and Alibaba offer wholesale. In addition, it is advisable to use Alibaba not for purchasing, but for finding suppliers and communicating with them in writing.
AliExpress is the only portal that does not require the participation of an intermediary. An intermediary company is relevant, because without it, problems and risks are not excluded. The help of such a commercial structure consists in buying your goods for a percentage and sending them to Ukraine to the required address. In addition, the intermediary resolves all issues with customs services. Interaction with him is simple, convenient and effective.
Perform niche testing work
The relevant process is initiated after collecting a list of ideas, analyzing demand, and finding the product.
This procedure involves the rapid creation of a website (the fastest way to copy a competitor) and setting up test advertising with minimal costs. The result is determined by the number of orders received from customers.
If there are many relevant requests, the product should be purchased and active sales should begin. If the result is negative (few requests), it is necessary to move on to testing another idea.
This work continues until appropriate monitoring shows the desired results. Its goal is to save as much money as possible before purchasing the product.
Choose channels for selling and sending orders from the PRC to buyers
There are many such sites, among which the following portals are considered the most common:
- online stores;
- social networks (on Instagram – an account, on Facebook – a group);
- sites in the form of well-known classifieds boards (for example, OLX);
- Landing page – target web pages of advertising specificity;
- stationary retail outlets – offline stores (less common option).
Before making the right choice, you should study a lot of information. This information concerns opening an online market, the specifics of earning on OLX, creating your own website, and the practical use of the dropshipping sales model.
To conclude
This is the final step. At this stage, the entrepreneur has already completed the following actions:
- selected product and defined niche;
- selected place of purchase of products of the corresponding product category;
- their testing was carried out, the best test options were identified;
- Effective advertising methods and implementation methods have been identified.
All that remains is to purchase a batch of goods and sell them, gradually increasing sales volumes and activating marketing that will contribute to this.
Official moments stipulated by the Law
As with any business activity, business with the PRC is subject to certain legal norms and rules.
Such a code requires a number of conditions from a businessman:
- Registration of your company (sole proprietorship or LLC).
- Pay taxes.
- Have documentation for the goods.
In practice, this means that you should register your company, preferably by opening a sole proprietorship.
You should also open a bank account - it is needed to accept cashless payment for goods.
For online sales, it is advisable to give preference to the simplified taxation regime, which has the "Income" base. For a stationary store - UTII.
Individual entrepreneurs should submit their reports within the stipulated time frame. Using appropriate services will greatly simplify accounting work (accounting and tax).
For those products that are subject to mandatory certification, it is necessary to have a certificate of conformity.
Ideas for business with China
Experts currently consider several industries to be win-win for commercial cooperation with Chinese manufacturers.
- Gaming industry. This refers to the sale of computer games, which have become extremely popular among users of different ages, genders and social status. A significant advantage for a businessman is the absence of additional costs associated with the transportation and production of such popular products. In this case, entrepreneurs can expect to receive a net profit of 25 to 50%.
- Pharmaceuticals. Commerce related to the sale of medicines. It is rapidly gaining momentum, and not only in the PRC. Every year the turnover of this industry increases significantly. This phenomenon explains the expediency of investments by merchants-sellers for the purchase of pharmaceuticals for the purpose of their subsequent resale.
- Cosmetics. In terms of sales volumes, China's cosmetic industry ranks 5th in the world. Every year, this area grows by at least 15 %. And based on the mark-ups of such products in Ukraine, the profit from selling them for domestic entrepreneurs will be up to 90%.
- Children's goods. This category includes toys, special food and care products for babies in their first year of life. The most profitable among them is the sale of toys - in this case, the profitability indicator is 50-60%.
It is worth remembering that two factors are key to choosing an idea: the potential of the niche and consumer interest in its products.
What is worth knowing about risks?
There is always the possibility of risks and mistakes during any business venture, including with partners from the PRC.
Such a negative phenomenon can be caused by three categories of factors – how to avoid them is explained below.
Legal
To prevent such problems, you should thoroughly study the cooperation/supply agreement concluded with your partner and pay attention to the correctness of the drafting of this legal document.
It is imperative to provide references about your future partner in advance. This should be done before starting official cooperation with him.
A necessary aspect is a preliminary legal assessment of the partner company from China. Ignoring this point is a gross mistake.
Legal risks may also be due to the Ukrainian side's insufficient competence in the legal system of the PRC (meaning tax, economic, customs, administrative law, etc.).
Management
They lie in the lack or absence of experience in commercial work with China, difficulties associated with communication (language barrier).
Sometimes the reason for failure is information leakage due to insufficient confidentiality during negotiations.
A business risks failing if its founder does not fully understand the cooperation model or fails to adequately develop the work plan.
Financial
These problems arise due to errors made during project cost calculations and biased assessment of cooperation risks.
Ukrainian businessmen are completely unaware of the specifics of China's economic development, which can also become a pitfall.
The greater the experience and scale of the business, the less chance an entrepreneur has of making mistakes.
How to ensure business success with China: recommendations
Beginners of such entrepreneurship should take into account several important tips, which are given and explained below.
Initial investments in such a business should be minimal, and the investment turnover should be increased gradually. After all, any undertaking is not without risk factors. It is more advisable to invest as you see a positive result.
It is better for a complete beginner to first learn from competitors who have already gained experience. Independent learning is a long process. And the modern market, as it develops, changes, and very dynamically.
The products themselves, the demand for them, and the sales of these products by competing companies require in-depth analysis. The methods of this thorough work include evaluating Internet inquiries, reviewing prices on Chinese websites, and prices from other domestic sellers of similar products.
Real, sustained interest in the result and perseverance are half of the success of a business. Otherwise, a novice entrepreneur is unlikely to cope with the large amounts of routine work that cannot be avoided at first.
The statement that by dedicating a couple of hours every day to a suitable job, you can earn well is 100% false. It is an axiom that does not need to be proven.
Each sample of a commercial product requires not only a visual but also a tactile inspection. First, you need to order it for yourself to touch it, assess its quality, and then sell it. This is necessary to make sure of the quality of the product and to be able to talk about it in as much detail as possible.
An independent business is advisable at first. As it develops, it is delegated - this is a condition for rapid growth.
It is better not to limit yourself to sales in your own city, but to offer products throughout Ukraine.
Since competition is a normal condition for business success, this phenomenon should not be feared.
If you approach such a responsible business comprehensively and carefully, the chances of making a profit and developing it are significant.
