The skillful trade with, ‘Middle State’


The PRC, colloquially abbreviated to China is also often referred to as the Middle State. The origin of this is the Shang Dynasty from the years 1700 to 1100 BC. The direct control by the kings of this dynasty territory was a political, economic and cultural center and the seat of the central power; regardless of how many more principalities there were. Their respective prince was granted land and titles by the King of the Shang Dynasty. The Kings of the Shang Dynasty were also geographically situated in the center of the country. The term Middle State served mainly geographic scope to all the other, mostly smaller principalities. Today the whole of China is known as the Middle State and is one of the most important trade partners for German entrepreneurs.

An Asia Import from one of the many provinces in China

The country China is more than two dozen times as large as Germany. The economic metropolis Shanghai is 6,300 square kilometers, a third of the surface area of the federal state of Saxony. In Shanghai, some 17 million people live 900 square kilometers which is equivalent to the German capital Berlin which has only 3.5 million inhabitants. China imports are also so often referred to as Asia imports because China is the largest and most important trading partner in Asia. Irrespective of which region goods are bought from, Chinese sellers have to follow strict regulations and guidelines in order to ensure that deals run smoothly and develops into a successful, permanent business.

China imports only with extensive manufacturer research

Selecting the right and desired trading partner in China is the beginning and at the same time most difficult part in the future with business in China. Often is search only possible on the basis of online business websites. Helpful are contacts with the Commercial Section of the Chinese Embassy in Germany, inversely the German Embassy in China, or to the Chambers of Commerce of both countries.

The contact in the country must be prepared in any case to the company’s management, rather than to individual employees, freeloaders, agents or intermediaries. The manufacturing companies in China have a government export license. This license served as a basis of control in their own country, but reversed is also the evidence that will be negotiated with the China importing literally right man. In the initial phase of getting to know and crosschecked all information should be obtained possible, scrutinized, and confirmed by references.

Clear situation by clear Order Description

The German importer must describe clearly and unequivocally his order in the mutual interest. Terms with “May” & “Can” or subjunctive formulations should be avoided. A conformation of the order is also the basis for the subsequent production / supply contact. The conformation of the order will be annexed as an part of the contract, or the individual points are repeated in the contract. The following points are essential and thus a must for any conformation of the order:

• Exact product definition
• Definition of dimensions for packaging materials such as cartons or pallets
• Packaging details as Label, European Article Number EAN barcodes or Shipping Marks for labeling of shipment and transport boxes
• Incoterms as standard international trade clause with the riskless FOB delivery to German Free on Board
• Documents that are to be provided by Chinese business partners, such as Form A origin certificate, commercial invoice, or as containing packing
• Payment agreement with optional payment, installments and final payment, or as a letter of credit, the English letter of credit, short L / C
• Guarantee and warranty obligations
• Other manufacturers / seller obligations

No Asia import goods without local inspection

Trust is good, control is better! This principle applies also and especially for the first China imports. Before freighting the goods should be random checked and comparable to an inventory counted, weighed and measured to ensure that the supply will be the actually shipped and what has been ordered and purchased. Fall and stack test are as necessary as the commission one Test Institute in high-quality goods, or extensive, valuable supplies.

Sample orders before the first major delivery of goods

At the beginning of a new business relationship a sample or pattern order should be performed by the selected manufacturer or by those who come into the close selection list. For this purpose, a local mediator, a local delegate, just thus a logistic agent should be required. After a thorough examination of its trustworthiness he is requested in order to obtain the desired product samples. This saves time and costs and is overall effective. The patterns resulting products must be examined very closely for any visible or hidden defects turn out. They are an important foundation for the subsequent application, but also for possible complaints to reduction or conversion. The sample dispatch is a crucial foundation for future business relationship.

Contract as the legal basis for the Asia Import

Depending on the nature and scope of cooperation is the contract the beginning and end of the legal basis for the business relationship. This includes for China imports always a pro forma invoice. The must formally be provided with company stamp and handwritten signatures of the executive board. Otherwise, the invoce should meet here known domestic requirements with company address, with contact and banking information, as well as with information on the legal form in addition to the company’s management.

Calculation of cost as a basis for sales value and profit

For an import China, the importer must count backwards to come up with the manufacturer on the same basis in “Middle State”; as it is often called. After the product selection follows the pricing with incoming market and price analysis. This represents the maximum production price, which is the basis for negotiations with producer in China.

From experience the additional cost has shown that a supplement of thirty to forty percent on manufacturer price must be calculated. The concerns cost elements such as customs and other bureaucratic processing costs as the logistics, such as banking and insurance costs.
The total import China must be assessed realistically from the temporal, organizatiosnal and financial effort forth. Lack of own know-how must be replaced with external services, at an additional cost. The customs and import rules for the product must be familiar.

Only when the customs releases the goods delivery, may be disposed about these goods. To import China the Economic Operators’ Registration and Identification Number, the EORI number as successor to the former Customs number is required in any case. You apply in advance simplifies the process when goods are delivered.
Finally, proper logistics choice is decisive for the smooth delivery of goods from the Middle State to Europe. The forwarding required information on the volumes of the supply of goods in cubic meters, in order to calculate. This information must provide the manufacturer accurately and reliably.

Vessel loading and ship transit times are as important as the adequate insurance of the goods. The cargo insurance shall be continuous and without any interface.
Experience shows that a permanent communication with the manufacturer is also appropriate as necessary. On the one hand the importance of the order will be made clear on the other hand a trust will be the result. Despite the distance of 9,000 kilometers flight between Frankfurt and Shanghai, for example, the manufacturer must not get the impression, through lack of contact that his business partner is far away. Among then suffers often the seriousness of performing the contract schedule and satisfactory.