China Products
-
Upload
vinay-artwani -
Category
Documents
-
view
216 -
download
0
Transcript of China Products
-
8/13/2019 China Products
1/21
-
8/13/2019 China Products
2/21
2 MARKETING OF CHINA PRODUCTS
INVASION OF CHINESE GOODS IN INDIA- THE WHYS
AND HOWS
Come any occasion and the Indian consumer is ready to make a beeline to purchase another
of those Chinese goods. For one, these Chinese goods are substantially cheaper than Indian
goods and come in wide varieties. In very simple terms in Economics, we know that anything
like large scale dumping and imports can spell a disaster for the economy. In simple
Keynesian terms, it is a leakage of Income from the Economy. This article focuses on the
background of the Pricing Policy by China, the damage or not it can cause for the Indian
domestic industry, the anti dumping tariffs adopted by the Indian government, the latest
Statistics and we conclude with some Policy suggestions.
As the memory of an Indian consumer goes, this influx of cheap Chinese goods started in the
late 90s and gained momentum thereon. Every article, be it an expensive Barbie doll or a
painting you want to adorn your house with has a Chinese alternate to it. Why are the Chinese
goods priced so cheap? The cost of production being less in China is an obvious answer but
when we dwell deeper into the world of Chinese manufacturing, the reasons abound. Chinese
goods are known for their moderate quality, prompt delivery and affordable prices in
comparison to Indian goods.
-
8/13/2019 China Products
3/21
3 MARKETING OF CHINA PRODUCTS
Why are Chinese Products Cheaper?
Chinese products of comparable quality, novel conception and low prices have been flooding
the Indian market. The differential in price ranges from 20% to as high as 50%. ? Dumping!?
Has been the outcry by our businessmen, nurtured over five decades by the license raj, and
many industry circles have been clamouring for protectionism. Conversely, companies are
sourcing products for the Indian market from China and some like the Patel Group are
proposing to shift their entire operations to China.
One of the mainstays of the Chinese strategy of following a mass-production and mass-
consumption formula, is to keep the profit margins low and cover the gap by the subsequent
boost in sales. With ?Think big, think global? as its motto, the huge scale of operations of the
Chinese industry is geared towards supplying not only the large domestic market, but also
exporting extensively to global markets at cheap rates. When China opened up its economy to
foreign investors, it simultaneously provided a significant thrust to the export potential
through a judicious mix of state incentives and the free market mechanism. It created Special
Economic Zones (SEZs) that were given preferential treatment. The export sector was given a
boost by creating an extensive export network and dismantling impediments to the import of
technology. The benefits accruing to Chinese manufacturers are essentially due to seven
factors: economies of scale in manufacturing, tariff differentials, lower cost of capital
investment, higher labour productivity, lower transaction, power and transportation costs.
An oft ignored aspect of the Chinese business acumen is the Chinese manufacturer?s vision
to climb up the value chain and China's competencies in the higher end of the technology
spectrum that requires highly skilled labour. The country?s state-level research institutions
and major universities have opened research centres and bases that combine production,training and research.
China is doing what Japan did in the 1970s and South Korea in the 1980s. An alternative
strategy for India could be to concentrate on building competitive advantage in the services
and knowledge based sectors, allowing the Chinese to rule the manufacturing domain.
-
8/13/2019 China Products
4/21
4 MARKETING OF CHINA PRODUCTS
Following are some of the reasons behind Chinese goods being cheaper
than Indian goods
1. China does not have stringent intellectual property rights (IPR) issues so come anynew product in the world market; China is ready with a cheaper alternate. Thus there
is no cost of research, designing and redesigning of any product.
2. The labor is not demanding and does not go on strike.3. Where most Indian companies are striving for a Total Process Review (TPR) for
quality satisfaction, Chinese companies are not so particular.
4. China does not have any after sales tax on its products leading to a further lowering ofcosts.
5. Are we enjoying the cheap Chinese goods because the Chinese currency isundervalued leading to purchase of cheap Chinese goods? This needs to be carefully
studied.
6. The cheap Chinese labor is another major reason for the dirt cheap Chinese goodsespecially like toys where intensive labor techniques are employed
7. With the removal of quantitative restrictions (QR), the ending of the textile quotaregime and Chinese accession to WTO, the dumping activity by Chinese has
increased manifold.
8. Lower rate of Indirect taxes on Inputs9. High level of cash subsidies being offered by the Chinese government to its producers
and exporters
10.Lower taxes enable the Chinese companies to participate in the world market at alower margin and thus dominate it. Adopt the business model focused on higher
volumes is a natural progression in this scenario
We must also mention here the advantages of the high economies of scale and higher level of
Productivity achieved by highly skilled labor. We must remember here that China could not
have been able to do it alone. The import of technology and Infrastructure from West has
played a very important role. Had West not opened its gate to the Chinese products, China
could not have boasted of such huge trade surplus. China Imports very little from the rest of
the world.
-
8/13/2019 China Products
5/21
5 MARKETING OF CHINA PRODUCTS
It is noteworthy to mention the reverse Chinese model of manufacturing.
China produces in bulk and sells in bulk. Rather than waiting for the
orders and then producing, Chinese have mastered the art of
producing first and selling it later.
This is possible due to low interest rates and low taxes Chinese government imposes. This
model helps the buyers as they do not have to wait for the produce. They can inspect, pay and
ship the delivery in a single day!
Since Chinese accession to WTO, China has been much more liberalized in reducing Tariff
and Non Tariff barriers. The Liberalization measures taken by China have been more broad
and deep in nature though it entered WTO in 1991 whereas India has been a member since
Inception.
Dumping Meaning and Effects- The simple meaning of dumping is to sell your countrys
products in other countries at unfair lower rates than the domestic rates prevailing in the
country of Export leading to losses to domestic suppliers. China has indulged in large scale
dumping all across the world; India being majorly affected. Here it has to be remembered that
everything you complain against will not be qualified as dumping. According to WTO, if
Investigations prove for such goods falling in the anti dumping bracket that the exporter is
charging a price below than what he charges in his domestic market or if the volume of
imports is too high so as to cause a disadvantage to the local producers can be called as
dumping. Thus, we conclude that not any and everything will be classified as dumping. Once
a complaint is filed, it has to be investigated by a designated agency taking into account the
WTO laws.
Dumping wars have gained strong ground especially in the times of recession, with India
filing maximum number of anti dumping cases against China. A growing insecurity for India
in resorting to levy of high anti dumping duty is the current high trade deficit with China.
Can we forget to mention here the case of green veneer tape, where the Interest of the local
monopolist was protected at the cost of consumers getting a better product at more
competitive prices? Besides dumping is not the only way Chinese goods enter India, much of
it enters through Illegal route of Nepal.
-
8/13/2019 China Products
6/21
6 MARKETING OF CHINA PRODUCTS
China leads in the number of anti dumping cases filed against any country in the WTO.
Between 1995 and 2005, India filed more anti dumping complaints against China than any of
the developed nations of US and Europe. Anti dumping measures have become more popular
today to offset unfair competition, in relation to other measures such as QRs and import
quotas which are non discriminatory in nature and require injury in severest form. To India,
the pinch is more in those areas where it is also a large producer such as chemicals, toys,
electronics, leather and textiles. Recently anti dumping Import duties have been filled on
acrylic fibers, Analgin, potassium permanganate, paracetamol, sodium nitrite, caustic soda
and green veneer tape. From 1995-1999, India initiated 140 anti dumping investigations
which are highest for any country. Many feel this is not fair. It is also seen that the amount of
anti dumping duties levied are against the basic rules. This also arises due to the non marketeconomy (NME) status of China in countries such as US. As we examine, we find out that
the entire amount of duty which is levied against the Chinese goods is flawed. Here it is
pertinent to understand the meaning of a Non Market Economy. In very simple terms, a Non
Market Economy is one which does not operate on market principles of cost and pricing. For
NMEs, the value of its goods do not reflect the true price. In most cases in US, it is seen that
where the Chinese companies fail to respond against the AD case, (Many a times due to
Ignorance of the legal structure) it gets more of an unfair deal.
Chinas relation with US- It has already been mentioned that the boom in China is made in
USA. Another question which is being asked commonplace today is Are Economies such
as US and Europe overly dependent on cheap Chinese products? The answer is no as
Stephen Dunaway rightly points out, that due to intense competition, the cost differentials
between China and other counties has indeed narrowed down. Another point which needs
mentioning is that Chinas Economy is highly export dependent on countries such as US, so
we may as well study the dependence the other way.
China is facing strong opposition of dumping from the European countries as well. These
Countries are levying a high import duty on vast scales Chinese dumping of leather goods. To
salvage their own domestic Industries countries like Japan are resorting to high level
investment in China to sell back in their own domestic economies. This will soon be followed
suit by many other Economies. FDI is playing a big role in Chinas technological process
with China becoming an attractive destination. India and China are considered at par in terms
-
8/13/2019 China Products
7/21
7 MARKETING OF CHINA PRODUCTS
of investments. India with its paranoid behavior is lacking in many respects to provide a
suitable ground to MNCs to invest in the country thus losing big on FDI.
Current StrategyThe Protectionist path: What stand has India taken on Chinese Dumping?
Indias strategy revolves around Imposing high tariffs and taxes on Chinese goods whereas
countries like Japan have resorted to a high level investment in China to counterfeit Chinese
dumping. How does this work? Does it affect level of FDI in our country? With the dumping
allegations against China Increasing; what holds good for India now? Is putting high level of
tariffs the only solution? One, a high level of tariffs does promote a menace called smuggling
and offers no solution. Indian consumers end up paying more for products they could have
brought cheap. Doesnt the simple theory of comparative advantage tell us that two countries
should produce and exchange products with each other in which they have a comparative
advantage in? Also trade between two countries should be a multiple of their GDPs.
Antidumping tariffs are not a solution, for one as suggested by many an economists, the line
between protecting the producers and consumer welfare is very thin. Anti dumping games
only prevent the competition rather than the competitors.
In some cases where the product is being used as a raw material and an anti- dumping duty is
levied on it, the end user industries suffer because of the cost of rise in their raw materials.
They come at the mercy of the monopolist, duopolistic or the cartelized arrangements in their
own country; thus the entire arguments of levying the anti-dumping duty become a faade.
This is clearly illustrated in the case of imposing a safeguard duty on soda ash. It was
vehemently opposed by the detergent and glass manufacturers. Their arguments being that
imports of soda ash are less than 10% of the total domestic production and it doesnt qualify
for dumping. These imports just help in keeping a reality check on the prices.
The Government recently imposed a 6 month ban on the import of Chinese toys to India and
withdrew it within two months after Beijing warned of going to WTO. The Domestic
industry is now alleging China of becoming a price predator (Price Predation refers to selling
at lower prices to acquire market share and increasing prices in future) this time. Is it a case
of artificial pricing or high intensity of competition amongst Chinese products which make
similar products cost upto70% less is to be seen. Another Important fact to be mentioned here
is that anti dumping Investigations take long time for final settlement which can easily
-
8/13/2019 China Products
8/21
8 MARKETING OF CHINA PRODUCTS
damage the domestic Industries. This has to become faster paced especially in authentic cases
wherein the domestic producers are affected.
Where does the solution lie? Are not increasing the Tariffs an easy solution for India or does
it needs to work on its own domestic problems? How competitive is Indian manufacturing?
Why are we not able to offer price parity with the Chinese? India has a rather dismal rate of
competitiveness. The World Bank gives India a low rank of 40 out of 46 countries in terms of
its manufacturing prowess. What is it that is holding the manufacturing sector? These are but
a few questions we may ask in context of the given study. It is very clear that there is a trade
off between the benefits to the consumers and the producers and a balance has to be
maintained for the sanctity of justice in trade is to prevail but easier said than done, the
solution isnt that simple.
It is time the Government of India examines its own policies. All fallacies do not lie with the
manufacturing sector.
1. Indian manufacturers do not get adequate Infrastructure.2. They have to pay high level of taxes.3. To remain in the reserved sector to get certain privileges by the Government they
have to remain small and cant then enjoy the Economies of scale as enjoyed by
their Chinese brethren.
Time has come to develop and enhance inter industry trade with China; knowing that Chinese
exports have substantial complementariness with Indian imports. FDI in India till now has not
entered the way it has entered China; owing to Chinese tax breaks, business tax exemptions
given to foreign firms which has not happened in India. These are few of the factors which
raises the cost of production for Indian goods making it difficult to compete on price basis
with Chinese. Imposition of anti-dumping and safeguard duties are not solutions; Time has
come to raise the efficiency and Competitiveness of our own Industries.
Unfair Methodology adopted by US, India and other Countries - We discuss some unfair
practices adopted by countries in the anti dumping war against china.
1. The anti-dumping margins are grossly overstated2. The domestic producers use them as their weapon to get advantages to the hilt.
-
8/13/2019 China Products
9/21
9 MARKETING OF CHINA PRODUCTS
3. The zeroing methodology is widely criticized.( Zeroing methodology means thatwhen the Indian price is higher instead of assigning a negative value to this, it attaches
a zero, thus eliminating the negative trade margin) This is against the basic rules of
WTO
4. The going of the collected anti dumping duty to the domestic producer in the USdoubly hurts the Chinese companies. They have to pay penance in the form of anti
dumping duty and their revenue is dispersed to their domestic competitors.
Market Economy status for China and Impact on India- With Chinas entry into the WTO,
there is much talk happening about granting of MES to China. (MES-When the exporting
country is treated at par in terms of transparency and prices are known to be decided by the
economic forces. What forbearing it has for India? For once a market economy status doesnt
take the anti dumping prowess from you. It will be in the best interest if India does it earlier
rather than becoming a mere follower to other countries. This has more political
considerations rather than economic. It is also to be remembered that granting of MES to
China will not have any effect on the trade deficit. On the upside, it will ensure that Indian
manufacturers improve their efficiency at the earliest possible along with substantial
developments in the infrastructural development. Investment linkages between India and
China will also grow in coming times.
Reforms need to be Implemented by WTO- The need of the hour is not the complete
dismantling of Anti Dumping duties but some reforms to be implemented at the WTO level.
The WTO rules and regulations in terms of the anti dumping measures are entangled with
many rules and regulations. Reexamination of duties imposed after a certain time period, a
maximum limit to the amount of duty imposed, making the concept of Injury clear,
abolition of back to back cases, time taken for the finalization etc need to be worked upon
Future Prospects- As all good things come to an end so will the heavenly rights enjoyed by
China. The price of Chinese products in near future will be more realistic as IPR is enforced.
The west too is realizing the huge trade surplus of China, the recent imposing quotas on
Chinese textiles (Better known as the Bra War) bringing China to reality grounds. Also
though China has maintained the price of its goods as static to capture large share in world
volumes but it is sooner or later going to face the rising cost of raw materials. China would
-
8/13/2019 China Products
10/21
10 MARKETING OF CHINA PRODUCTS
soon increase its prices when it enters the market economy status which is 2016 for US. We
must not forget that India and China produce similar kinds of goods in terms of their export
basket to the West. China has highly skilled labor and a comparative advantage in the
assembly stage of technology. India has to improve its manufacturing prowess; Non tariff
measures such as Anti Dumping will only prove to be detrimental. In many cases, it has been
observed that the mere filing of a case leads to a total disruption of trade. Trade relations in
the coming years between these two BRIC giants are bound to improve, Chinas imports are
surging into India on account of their product diversification and competitiveness. The reality
is that 72% of the products imported are at par with Indian Quality or even superior. The
World today sits back to notice when a professor claims that in 2050 the trade relations
between India and China will be the most important economic relationship in the world andthese countries will drive the growth of the entire world leaving far behind the Giant four.
-
8/13/2019 China Products
11/21
11 MARKETING OF CHINA PRODUCTS
WHAT MADE IN CHINA MEANS - PRICE LESS, QUALITY
LOW, IMPACT MARGINAL
With the entry of China in WTO the demand of Chinese goods has increased globally due to
their cheaper price. These cheap Chinese goods are posing a stiff challenge for Indian exports
in the international markets. In the Indian hospitality equipment sector however, despite
Chinese and Taiwanese companies making a foray, they have had marginal impact. "Chinese
products are not really giving competition to Indian manufactured products, only to American
and European products because the pricing is 30-40 per cent lower than western goods. Some
three-star, two-star and small standalone properties are going in for Chinese products,"
informed Rajendra Mittal of Mittal International, a company which imports Chinese products
into India.
Currently, the share of imported products in the hospitality segment is in the range of 35-40
per cent. American and European products dominate the segment. According to Mittal, the
Chinese products have made some inroads in kitchen equipment and refrigeration categories
in the lower end of the hospitality segment because price conscious hotels and restaurants do
not want to pay for high quality.
Yes, quality is the area where the goods from China are taking a beating. "The Chinese
products are scoring because their pricing is 30-40 per cent lower, but quality-wise they are
much inferior. Even some Indian products are superior in quality," said Sagar Sachdeva of
the Butler Hotel Supermarket.
Conceded Nirmal Khandelwal of FCML, "Despite cheap price, Chinese products are not a
rage because their quality is not really good except for products of European and Americancompanies who have set up their manufacturing unit in China."
It is significant to note that well-known brands like Kohler (sanitaryware) and Cisa (security
locks) have set up their manufacturing units in China to produce cheaper goods.
Mittal explains the situation better, "The general impression about the quality of Chinese
goods in the market is not really good because India mainly imports medium quality
products, which are cheap. The reason is five-star hotels in any case go for American and
-
8/13/2019 China Products
12/21
12 MARKETING OF CHINA PRODUCTS
European top brands since under EPCG license they have to pay just five per cent import
duty. The high quality Chinese products can compete with western brands, but they are
costly. The price-sensitive segment is not ready to pay that price for a made-in-China label."
Hence, Indian manufacturers who also tap the lower end of the hospitality segment are facing
some competition. For instance, a hotel or restaurant would not mind paying Rs 250 for a
Chinese salver because of the imported product tag, though a Made In India label would
cost a little less. Products like kettles, salvers, bread slices, meat minces, commercial knives,
mixers, hair dryers etc are doing moderate business. "Chinese products in future can give
competition to Indian manufacturers because of low price, high production volume and
availability in the market," opined Sachdeva.
The products manufactured in China are cheap because electricity is cheap. They have highly
sophisticated machines of mass production, they have huge domestic volume with no
competition from outside and all export is subsidized. Further, raw materials are procured by
major import houses and distributed at lesser rates to manufacturers and credits are adjusted
against exports. "If Indian manufacturers are to compete, the government should remove duty
on raw materials and components and give the EPCG license to manufacturers," according to
both Mittal and Khandelwal.
-
8/13/2019 China Products
13/21
13 MARKETING OF CHINA PRODUCTS
IMPACT OF CHINESE GOODS ON OUR ECONOMY
Because of cheaper prices products made in China are becoming more popular among the
Indian masses. This has had a very negative effect on our own manufacturing units and as aresult many of them have had to shut shop.
There seems to be no way to escape the DRAGON!!!
Yes, the Chinese goods have invaded almost all the sectors of Indian market and seem to be
bringing tougher times for the Indian Industry. Because of wide availability of cheap and
apparently technologically advanced Chinese goods, many economists fear decline of local
manufacturing units or the small-scale industry in India. The rise in demand and sudden
popularity of Chinese products, which are available at cheaper prices, is giving nightmares to
the Indian industry to the extent that they have started sticking Made in China stickers on
their products to boost their sales.
Chinese manufacturing units produce goods on a large scale. They are using the big Indian
market merely to dump their products and by doing so they are killing the Indian units. For
example last year during Diwali, China made crackers were sold in the Indian market. These
crackers reportedly contained Sulphur. Sulphur is more harmful than Nitrate, which is used in
India to make crackers. Since the Chinese crackers were cheaper than the Indian crackers, so
they managed to attract gullible and largely illiterate Indian lot. As a result the Indian cracker
industry saw a decline in the revenue.
China is our major competitor in sectors like software, hardware, electronics etc. We should
not allow China to dump their excess produce here. The small-scale industry (SSI)
contributes 35-40 per cent to the total manufacturing in India. So it is the SSI, which suffers
most because of Chinese goods. For instance, data reveals that 60 per cent of the industrial
units in the industrial belts of Thane and Bhivandi near Mumbai have been closed down.
Many small-scale Indian companies have stopped manufacturing their own goods as now
they import them from China. Thats why many Indian workers have lost their jobs. This
shows that the objective of SSIs of providing employment to the rural youth of India is
defeated completely.
http://www.merinews.com/city-news/mumbaihttp://www.merinews.com/city-news/mumbai -
8/13/2019 China Products
14/21
14 MARKETING OF CHINA PRODUCTS
In the last one decade Chinese labour has developed the skills of manufacturing electronic
goods like semi-conductors, telecom equipment,
power equipment etc, which helped them to capture
big markets of America and Europe. It is no surprise
that they have been successful in capturing the
Indian market too. Although Indian labour can meet
these challenges by improving their skills, the Indian
manufacturing scenario is hampered due to stringent
and weak labour policies.
It is the high time that our political leaders change
their mindset and bring about the right kind of
reforms without losing precious time in endless
discussions. We must take necessary steps so that we
do not fall prey to the DRAGONs designs of
capturing a major share of our growth, which could prove to be a setback for our economy in
the future.
-
8/13/2019 China Products
15/21
15 MARKETING OF CHINA PRODUCTS
CHINESE IMPORTS- HOW MUCH HARMFUL AND HOW
MUCH USEFUL FOR INDIA?
The cheap imports in every sector- toys, electronics goods, printing media etc has now
reached such a proportion that we have much more 'Made in China" things than made in
India things in our shops any where in the country.
these products have no safety standards, no quality controls and comes without any standard
packaging with required information on manufacturing date etc. We keep on hearing of blasts
in mobile phones, toys every next day. But the most important thing is the typeof financial
frauds being done ...how mcuch of import duties is being cheated and what amount of moneyis being mde in trading..what about the tax on that?
And this is not ruining the manufacturing industry as almost all the big known houses also
gets things manufactured in china and just put their brand name...Loosing jobs in
manufacturing industry isn;t it?
The only good thing is-things have become cheaper. and some innovative product(sans
quality) has come to the market.
http://toostep.com/debate/chinese-imports--how-much-harmful-and-how-much-useful-for-inhttp://toostep.com/debate/chinese-imports--how-much-harmful-and-how-much-useful-for-inhttp://toostep.com/debate/chinese-imports--how-much-harmful-and-how-much-useful-for-inhttp://toostep.com/debate/chinese-imports--how-much-harmful-and-how-much-useful-for-in -
8/13/2019 China Products
16/21
16 MARKETING OF CHINA PRODUCTS
POSITIVE ASPECTS
RELATIVELY CHEAPER THAN THE REGULAR/KNOWN BRANDS ADVANCED FEATURES AFFORDIBILITY, COMMON MAN CAN EASILY PURCHASE WIDELY AVAILABLE HIGHER PROFIT MARGINS FOR DEALERS
NEGATIVE ASPECTS
UNSAFE PRODUCTS NON LONG LASTING RESULTED IN CLOSURE OF MANY BUSINESSES, WHICH LEAD TO
UNEMPLOYMENT, LOWER TURNOVER
OUTFLOW OF CAPITAL INCREASED IN IMORTS , DECREASE IN EXPORTS
-
8/13/2019 China Products
17/21
17 MARKETING OF CHINA PRODUCTS
TOP 10 TIPS WHEN IMPORTING FROM CHINA
Pay close attention to business nature of your potential supplier. You may want tomake clear whether they are actual manufacturers or third party suppliers or exporters
in China. Dealing with manufacturers and exporters have respective advantages and
disadvantages in terms of international trade. Manufacturers in general can have faster
responses to your requests for product designs, product development and production
arrangements. You may also be able to get more competitive so called factory direct
pricing. However, the third part suppliers and professional exporters typically have
much broader channels and connections in various industries so they may better
satisfy your broader needs for diversified products. In addition, professionalexporters in China may be able to save you some hassles as they tend to have much
more experiences than manufacturers in dealing with potential issues related to the
international trade, among which regulation compliance, quality inspections and
logistic coordination are just few example. In general, working with any "fourth-
party" suppliers is not desirable so not recommended.
Establishing close but healthy personal relationship with key staff, preferably themanagement of your potential supplier is very important in the process of doing
business in China. As the matter of fact, the word "Guanxi", meaning "relationship" in
translation, is a very famous and popular term in China's business arena. Please also
keep in mind that saving other's face is a very important gesture in Chinese culture.
You must have a good estimate of the landing cost before placing your order with asupplier in China. The landing cost is the sum of FOB cost of goods, transportation
costs quoted by your freight forwarder including the ocean freight, land freight and
local freight as well as port/warehouse charges, import duties if any, and any fees
imposed by logistic service providers such as inspection charges, agent fees etc. There
may be some hidden costs in the chain. We would advise you to consult with a
professional import management company to find out what hidden costs could
potentially incur in the importing process of your specific products. The simplest way
to avoid significant cost surprises is to make a small test order.
-
8/13/2019 China Products
18/21
18 MARKETING OF CHINA PRODUCTS
Pay attention to import duties. Import duty assessments are based on HS code of thegoods you are importing, the country of origin, which is China in this case, and
destination. If your Chinese suppliers have some export experience, they shall have
the knowledge of HS code for your product. However, you still should do your
homework by checking product descriptions of the HS code corresponding to the
product you are importing. In some case, product definitions are somehow vague. A
wrong HS code in the bill of lading may delay custom clearance of your shipment.
In term of payment terms, a letter of credit is commonly used and also suggested touse in trade with the suppliers in China, especially when doing business for the first
time. Consult with your bank to obtain detail formality and cost.
There are two types of exporting companies in China. One is actual exporter thatdirectly handles goods and merchandise for exporting. The other is called "export
agent" that is hired by Chinese manufacturers to process exportation documents. The
export agents sometimes may also provide certain logistic services to the
manufacturers.
Failure to fulfill product compliances can be very costly. It may significantly delaycustom clearing process and force you to pay extremely high and unexpected customs
taxes such as anti-dumping duties. Delays in custom will subsequently result in a
large amount of storage expenses at a railway station or container yard. Therefore, it
is critical to make sure all products you import from China comply with all
government regulations of the destination country.
Visiting trade shows and international business fairs is a great way to meet potentialsuppliers face-to-face. You can find the lists of upcoming trade fairs in many China
sourcing websites. Most of trade fairs featuring Chinese manufacturers and suppliers
are hosted in large cities in Asia, such as Hong Kong, India, Dubai and Shanghai.
-
8/13/2019 China Products
19/21
19 MARKETING OF CHINA PRODUCTS
If the goods you are going to import from China must be packed in wooden cases,pallets or crates for safe transportation and easy loading unloading, standard
fumigation is required before entering the United States. All wooden packaging for
export must meet the nimp15 treated wood specifications. Such compliance must be
certified in official export documentations including "bill of lading". Discuss with you
freight broker for details.
Find an experienced and professional Freight Forwarder to manage your requirementssuch as Pinnacle.
-
8/13/2019 China Products
20/21
20 MARKETING OF CHINA PRODUCTS
NEWS ARTICLE FROM TIMES OF INDIA DATED MAY 10th
,
2012
China imports losing ground in India
MUMBAI: The share of 'Made in China' goods in India's consumption economy has eased as
the dragon struggles to keep its cost-competitive manufacturing story going. China's
overwhelming grip over supplies of stationary products, fabrics, toys and lighting products
started loosening over the past year.
Consider this:ITC sourced 100% of its stationery products like pencils, geometry boxes and
scholastic products marketed under Classmate brand from China. But imports will fall below
10% this year as the Indian behemoth moves sourcing back to India in a big way.
Chinese products had over 70% share of the domestic toy market, which is falling to about
50%. Fabric sourcing from China by the local garment makers declined 10% in the last 12
months. It's share of the lighting sector - where the market for CFL bulbs was mostly
developed by Chinese imports a decade ago -has dropped to 15% from over 50% in 2007.
Indian manufacturers are sighting gains even as China's factory prowess weakens on the back
of an appreciating yuan, rising inflation and soaring wages in the wake of labour reforms inrecent past.
Indian companies are bringing production back home, or taking it to other competitive
markets - part of a broader global phenomenon playing out for almost two years now. "We
are developing vendors here now for all our products which we were earlier importing.
Imports will now be restricted to select premium products. China used to cater to the world's
stationery requirement. Now, some of it will come to India. It is already moving
intoVietnam," said Chand Das, chief executive of ITC's education and stationery products
business.
China's discomforts present a significant opportunity for local manufacturers to serve a robust
domestic demand as well as book a pie of the global sourcing from transnational
corporations. Funskool, India's leading toy company, has been approached by global biggies
to source production from its Goa plant to offset rising costs in China. "All the big players are
looking at India for manufacturing support. WhileIndonesia has already got many orders,
some are expected to come to India as well," said John Baby, CEO, Funskool (India), a joint
venture between MRF and Hasbro of USA. "Two to three companies have approached us and
http://economictimes.indiatimes.com/itc-ltd/stocks/companyid-13554.cmshttp://timesofindia.indiatimes.com/topic/Vietnamhttp://timesofindia.indiatimes.com/topic/Indonesiahttp://timesofindia.indiatimes.com/topic/Indonesiahttp://timesofindia.indiatimes.com/topic/Vietnamhttp://economictimes.indiatimes.com/itc-ltd/stocks/companyid-13554.cms -
8/13/2019 China Products
21/21
21 MARKETING OF CHINA PRODUCTS
are doing audits at our factory. We will be able to add capacity if we get these orders," said
Baby.
The story is similar for the lighting industry where the Chinese glow is dimming fast. The
350-million-unit CFL bulb market in India has witnessed dwindling share of imports from the
neighbouring giant. The evolution of the lighting industry in the past decade, from
incandescent light bulbs, which did not require much of electronics, to LED lamps, which are
entirely made from electronic ballast technology, has encouraged indigenization of the
lighting industry.
"Chinese CFLs initially flooded the Indian market. But eventually they failed to create an
impact because they couldn't meet Indian market conditions where power situation varies in
different parts of the country," said Arun Gupta, managing director, NTL Electronics India,one of the largest electronic manufacturing companies in lighting in India. Gupta also argued
that electronics, driven by intellectual properties, has become the backbone of lighting
industry, where China has lagged behind.
But Chinese supplies have made inroads into India's infrastructure and capital goods industry
at a time when its hold over the consumer products market has weakened. Anil Ambani's
Reliance Group, for instance, has struck major equipment sourcing contracts in China for its
power and telecom businesses in return for cheaper loans. Chinese equipment makers have
also backed telcos like Bharti Airtel in their recent 4G roll-outs.