Some people have found great success with a decision to do business with China. Even when success is found, however, there is still a certain danger to doing business with the world’s most populous nation. It would be difficult to describe many business relationships with China as being warm and friendly, but sometimes it may be the lifeline a small business may need.
Are you thinking about doing business with China? Before you do, we have some pros and cons to think about just to make sure that you’re making the best decision right now.
What Are the Pros of Doing Business With China?
1. It can kick your business opportunities up to the next level.
Many small businesses, especially in the United States, find it difficult to locate a manufacturer that fits within their price range or can handle the product which needs to be made. By doing business with China, you can locate the manufacturing needed at a cost you can afford so you can stay in business here at home.
2. You get more variety at a lower cost.
At the center of every business plan is a focus on profit margins. You need to make money to stay in business. By doing business with China, you get the chance to expand upon the products you’re offering while still being able to keep your price points at the low levels you may need. Depending on the product, costs can be cut by up to 80% in China.
3. You gain access to better levels of service.
Of course this won’t be the case for everyone, but in general, if you take China seriously, then you’ll be taken seriously. The same isn’t necessarily true if you’re looking for domestic manufacturing. If your order levels aren’t large enough for them, then you don’t matter enough for a response. These issues are also present in China, but with far less prevalence for small businesses.
4. You receive duplication capabilities.
Small businesses can save a lot of time thanks to the extensive manufacturing presence in China. If you have a product to make, then there’s a good chance a form of that product is already being made somewhere in China. Just send over your dimensions and the manufacturing process can be duplicated rather quickly. This is an advantage that is almost 100% exclusive to the Chinese manufacturing industry.
What Are the Cons of Doing Business With China?
1. The quality of products may not meet your standards.
Business owners need to do extensive research on the manufacturing processes in China before signing any deal. The fact is that not every manufacturer will make products that meet your high standards. Even if a manufacturing relationship has been successful in the past, changes to standards may be made at any time that you may not catch until taking delivery of your inventory.
2. Communication can sometimes be an issue.
Many people who represent Chinese business interests can speak other languages quite well – English in particular. What they may not do is offer you a response if they think the answer they’re going to give you is something you don’t want to hear. Many small businesses have found it necessary to work with a trade representative in order to keep lines of communication open.
3. These relationships can’t be forged online.
Small businesses make a dangerous assumption if they believe that making an order online without inspecting the manufacturing site will pay off for them. If you can’t travel to China, then you should pay for a trusted individual to make the inspections on your behalf. Face-to-face relationships are the best way to create a mutually profitable relationship. Otherwise you might be setting yourself up to take a loss. When you show up, China does a better job.
4. Scams are everywhere.
Small businesses need to check the registrations of their potential manufacturing partners before making a purchase. You may even need to pay for the cost of having a local lawyer investigate the manufacturing center at the provincial office. Far too often, there isn’t a company in China even thought it might look like it online. Even if you do find a company, there is a certain negative stigma that hovers in the air when you talk about doing business overseas these days.
The pros and cons of doing business with China are often worth the risk, but you need to perform your due diligence before signing a deal or sending money over. Without enough research, you might find yourself taking an unexpected loss.