Sharing my lifetime experience in export/import. Product sourcing specialist.

[jlocker]

Walter,

Thank you for your contributions - the book and thread add tremendous value!

While most of the thread has been focused on B2C sourcing/selling, I am interested B2B.

B2B: Validation and Selling Platform
1. How would you recommend to validate B2B ideas vs. validating B2C (Trial order / Amazon)?

2. What B2B selling platform (Direct Mail - already mentioned by you, eCommerce, trade show, etc.) has worked best for you / franchisees?

Best,
John

 

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[DKNJ]

Thanks for the info Walter. Do you happen to know if there is a time restriction on exporting a commodity class EAR 99 product to Iran after getting a license from OFAC? I am possibly investing in an export start up and was wondering if we may be limited to a 1 or 2 year window for distribution.

 

[M&A]

How exactly does importing work, If I order goods from Alibaba (small amount one person could carry easily) does it come straight through to my door by way of local post/courier and i pay customs vat charges on it then ?

When I buy goods from the US to EU I pay customs+VAT+handling fee to whoever delivered the package such as Fedex or the national post company.

But then again those were for personal use.

Im really new to this.

 

[Walter Hay]

Walter,

Is lack of experience in a given industry a deal breaker in most situations? I know you had experience with your first business, but it doesn't seem that you went into your second business with any prior knowledge of the industry.

It seems to me that if you have a quality product, acquire knowledge on the industry, and provide fantastic service, it shouldn't matter about your prior experience. Potential customers might disagree however. So in your opinion, how important is it to have prior experience in an industry before you start a business in it?

Experience in an industry gives a decided advantage but is not essential. You are quite right about the benefits of thorough study of your product/s and industry, together with the imperatives of product quality and outstanding service.

If you have prepared yourself well, the customers will never know that you are new to the industry. One thing that I had to learn in both of my business start ups was the industry jargon. Once you know that and the real meaning of the jargon you will sound as though you know what you are talking about, but don't overreach yourself or you may get caught out.

Regarding service, I once made a product (in China) precisely matching the corporate color specified in the customer's manual. Unfortunately the product was rejected because it did not match the color they actually used, which was contrary to the corporate specification! I replaced the goods with ones that I then made to match the wrong color that they had become accustomed to.

There's another lifetime customer for the cost to me of the landed cost which was only 30% of the order value. As a result I only made 30% instead of my usual 60% when I delivered the replacements, but subsequent orders produced 60% each time.

 

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[Walter Hay]

Walter,

Thank you for your contributions - the book and thread add tremendous value!

While most of the thread has been focused on B2C sourcing/selling, I am interested B2B.

B2B: Validation and Selling Platform
1. How would you recommend to validate B2B ideas vs. validating B2C (Trial order / Amazon)?

2. What B2B selling platform (Direct Mail - already mentioned by you, eCommerce, trade show, etc.) has worked best for you / franchisees?

Best,
John

Hi John,

1. The best answer I can give is to describe how I validated the market in another country for the product type which I had successfully sold and franchised at home. First I did all the research I could regarding the market for that product. Then I registered a company in that country and traveled there on a dry run sales mission, with a supply of catalogs from my home country.

I visited potential customers and informed them that we were about to launch in that country, outlining why we had been so successful at home, emphasizing our two USPs - Free set up and good old-fashioned service. In most cases the response was great with invitations to send them literature and pricing as soon as possible.

With that relatively unsophisticated market survey information under my belt, I then began selling franchises within that country and soon the launch was under way.

2. Trade shows can be very beneficial if you have a product that can be demonstrated. That did not suit my business. Direct mail was extremely successful, mainly because I was able to include a sample in each mailing, but also because I used attention grabbing headlines. Faxes worked very well also. No sample, but the headlines worked. Next most effective was cold calling. Very few people are suited to cold calling, so I devised a system of "Warm Calling."

This boiled down to walking into the front office, handing to the receptionist what really consisted of a mailing package, but not in an envelope, with the request that she/he hand it to the person responsible for buying such products. It was quite common to get a call on my cell phone before I was half a mile away. OK, so I was playing messenger boy, but I had warm leads and made sales every day.

Print Yellow pages were highly effective because I broke the rules and filled the adverts with words. In more recent years we had a corporate website that was not a great producer. Conversion rates were low. It was very fancy; professionally produced. I wanted to try the many words approach, but met too much resistance from franchisees, so I can't say whether or not it would have worked.

Walter

 

[Walter Hay]

Thanks for the info Walter. Do you happen to know if there is a time restriction on exporting a commodity class EAR 99 product to Iran after getting a license from OFAC? I am possibly investing in an export start up and was wondering if we may be limited to a 1 or 2 year window for distribution.

This is an area where I would seek specialist help myself. Although trained and experienced I never tried to keep up with the ever changing rules, preferring to pay experts who do that for a living.

A good freight forwarder may be able to help, but if not, you might have to ask a lawyer specializing in international trade.

Try http://www.universalcargo.com who are very good forwarders, or www.steptoe.com who have an international legal practice in 30 countries.

 

[Walter Hay]

How exactly does importing work, If I order goods from Alibaba (small amount one person could carry easily) does it come straight through to my door by way of local post/courier and i pay customs vat charges on it then ?

When I buy goods from the US to EU I pay customs+VAT+handling fee to whoever delivered the package such as Fedex or the national post company.

But then again those were for personal use.

Im really new to this.

The same procedure works for commercial quantities.

You should ask your supplier to quote you for door to door delivery.

Please read as much of this thread as possible because I think you might be starting off without enough understanding of the sourcing and importing process.

Regards,
Walter

 

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[Walter Hay]

Where Do You Rank In The Product Supply Food Chain? Are You Only a Bottom Feeder?​

The terms wholesaler and distributor are used quite flexibly, with different people meaning different things by those terms. Many wholesalers, distributors, and agents pretend to be manufacturers. Added to that are a multitude of sourcing agents who will offer their services to you to help you find suppliers.

Strictly speaking the hierarchy should be something like this:

1. At the top of the pile is the manufacturer. These people have a factory where they actually produce the goods. Some will supply direct to resellers such as you, but you will find that if you approach local manufacturers you will often encounter barriers. They usually have their sales network already in place and small resellers are seen as a nuisance. If however, you approach real manufacturers in China, or other exporting countries, they will usually welcome you with open arms. When you are buying from manufacturers you are almost certainly getting the lowest price possible, giving you the highest profit margins.

2. Next come the distributors who have been granted the right to sell the products to people such as you. They buy from the manufacturers at a discount because the manufacturer does not want to deal direct with resellers. Many people either out of ignorance or desire to deceive call themselves distributors when in fact they are resellers just like you, or maybe because they are actually wholesalers.

3. Wholesalers usually buy very large quantities and carry them in stock for sale to resellers like you. They have usually obtained the products at the best price that the manufacturer or distributor will agree to. They will sell to you at a price which is supposedly lower than the recommended retail price, but in many cases they charge resellers the same as or very close to the same as they charge individual customers. Those who do this are not genuine wholesalers, but are retailers in disguise.

4. Resellers, (you) are near the bottom of the food chain. The individual consumer is at the bottom. You buy at the lowest price you can negotiate, and try to make a profit on reselling the goods.

Profit margins are incredibly variable. I teach that it is best to go direct to the manufacturer if you want to maximise profits. The difference between wholesale prices and direct from the factory prices can be staggering. You may think that because you can only place small orders then you cannot buy direct, but that is not the case. There are ways to negotiate with manufacturers and get them to accept small orders even if they quote big Minimum Order Quantities. Profit margins, even on small orders can be amazingly high.

I have not included dropshippers because they are in effect wholesalers, unless they are “middle men” who pretend to be wholesalers. These people often set up turnkey dropshipping sites that provide free websites. The worst of them charge you to join. Although I said the consumer is at the very bottom of the food chain, dealing with middle men puts you in a similar ranking, but is far worse because it robs you of any hope of making any worthwhile profit.

Don’t give up. Make your way as near as possible to the top. Buy direct from the factories. If you know how to sell physical products that is the hard part. Safely sourcing them even in small quantities at best prices and then importing them are the easy parts.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
■ Introduction. Dealing with myths and misinformation.
■ Some things you should know or do before you start product sourcing.
■ Part 1. Traveling to source supplies. Do you need to visit China? Trade Fairs.
■ The difference between Alibaba and Aliexpress.
■ Alibaba and the 2236 Thieves.
■ Sourcing from countries other than China. Is it worth it?
■ Part 2. Traveling to source supplies. Visiting factories in China.
■ Parallel Imports USA.
■ Do your suppliers use child labor or slave labor?
■ Inspection Services.
■ Sourcing Agents and Quality Control.
■ Misinformation Is A Wealth Hazard.
■ B2B Scams
■ Q & A 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16
■ Protecting Trademark, Copyright, and Other Intellectual Property.
■ How to find Unique Products
■ Success Story
■ Just in Time
■ Hot Selling Products

 

[axiom]

Where Do You Rank In The Product Supply Food Chain? Are You Only a Bottom Feeder?​

The terms wholesaler and distributor are used quite flexibly, with different people meaning different things by those terms. Many wholesalers, distributors, and agents pretend to be manufacturers. Added to that are a multitude of sourcing agents who will offer their services to you to help you find suppliers.

Strictly speaking the hierarchy should be something like this:

1. At the top of the pile is the manufacturer. These people have a factory where they actually produce the goods. Some will supply direct to resellers such as you, but you will find that if you approach local manufacturers you will often encounter barriers. They usually have their sales network already in place and small resellers are seen as a nuisance. If however, you approach real manufacturers in China, or other exporting countries, they will usually welcome you with open arms. When you are buying from manufacturers you are almost certainly getting the lowest price possible, giving you the highest profit margins.

2. Next come the distributors who have been granted the right to sell the products to people such as you. They buy from the manufacturers at a discount because the manufacturer does not want to deal direct with resellers. Many people either out of ignorance or desire to deceive call themselves distributors when in fact they are resellers just like you, or maybe because they are actually wholesalers.

3. Wholesalers usually buy very large quantities and carry them in stock for sale to resellers like you. They have usually obtained the products at the best price that the manufacturer or distributor will agree to. They will sell to you at a price which is supposedly lower than the recommended retail price, but in many cases they charge resellers the same as or very close to the same as they charge individual customers. Those who do this are not genuine wholesalers, but are retailers in disguise.

4. Resellers, (you) are near the bottom of the food chain. The individual consumer is at the bottom. You buy at the lowest price you can negotiate, and try to make a profit on reselling the goods.

Profit margins are incredibly variable. I teach that it is best to go direct to the manufacturer if you want to maximise profits. The difference between wholesale prices and direct from the factory prices can be staggering. You may think that because you can only place small orders then you cannot buy direct, but that is not the case. There are ways to negotiate with manufacturers and get them to accept small orders even if they quote big Minimum Order Quantities. Profit margins, even on small orders can be amazingly high.

I have not included dropshippers because they are in effect wholesalers, unless they are “middle men” who pretend to be wholesalers. These people often set up turnkey dropshipping sites that provide free websites. The worst of them charge you to join. Although I said the consumer is at the very bottom of the food chain, dealing with middle men puts you in a similar ranking, but is far worse because it robs you of any hope of making any worthwhile profit.

Don’t give up. Make your way as near as possible to the top. Buy direct from the factories. If you know how to sell physical products that is the hard part. Safely sourcing them even in small quantities at best prices and then importing them are the easy parts.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
■ Introduction. Dealing with myths and misinformation.
■ Some things you should know or do before you start product sourcing.
■ Part 1. Traveling to source supplies. Do you need to visit China? Trade Fairs.
■ The difference between Alibaba and Aliexpress.
■ Alibaba and the 2236 Thieves.
■ Sourcing from countries other than China. Is it worth it?
■ Part 2. Traveling to source supplies. Visiting factories in China.
■ Parallel Imports USA.
■ Do your suppliers use child labor or slave labor?
■ Inspection Services.
■ Sourcing Agents and Quality Control.
■ Misinformation Is A Wealth Hazard.
■ B2B Scams
■ Q & A 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16
■ Protecting Trademark, Copyright, and Other Intellectual Property.
■ How to find Unique Products
■ Success Story
■ Just in Time
■ Hot Selling Products

Did you ever think of moving your own businesses higher up the chain? Would there be more potential money the higher you are?

 

[Walter Hay]

Did you ever think of moving your own businesses higher up the chain? Would there be more potential money the higher you are?

In the case of my first business I was at the top, because I was the manufacturer and handled the export side of it myself.

The importing business was a different matter. Most of the products were produced by very labor intensive means. I investigated the possibility of manufacturing, but all of my cost calculations resulted in the conclusion that even if I set up production offshore I could not operate as efficiently as my suppliers.

I settled for being one step from the top, because that was more profitable than being at the top of the food chain.

 

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[jazb]

Walter, does your ebook include websites which should be used instead of alibaba ?

 

[OperationMyWay]

Walter, does your ebook include websites which should be used instead of alibaba ?

Not Walter, but have the ebook, and yes it does have alternative sites in it along with a lot of other useful stuff. I'm not even in ecommerce/sourcing from overseas at the moment, but found the info very interesting, value adding and for a reasonable price.

Disclaimer: Not affiliated with Walter in any way

 

[Walter Hay]

Not Walter, but have the ebook, and yes it does have alternative sites in it along with a lot of other useful stuff. I'm not even in ecommerce/sourcing from overseas at the moment, but found the info very interesting, value adding and for a reasonable price.

Disclaimer: Not affiliated with Walter in any way

Thanks for your kind comments.

For the benefit of @jazb I should add that the book also details websites for sourcing in 15 specific countries other than China, and other sites that can also be used for sourcing in countries worldwide. In some cases I provide detailed navigation instructions because they are not so easy to use as the big sites.

I do not recommend Alibaba, but for the sake of those wedded to the idea that Alibaba is the sourcing Eldorado, I have posted several times the advice to only use Assessed Suppliers displaying a red tick in a blue circle, with the proviso that prospective buyers read the full report attached to that Assessment. Not all Assessed Suppliers are real manufacturers.

 

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[Walter Hay]

I have noticed that a few "experts" have picked up on my suggestion that if you really must use Alibaba as your sourcing platform, you should only look for suppliers there with the red tick in a blue circle (Assessed Suppliers). The problem is that they still insist on advising people to use Alibaba or one of the other major B2B sites that have appalling records.

It is good to see that these experts are adding to their experience, even if it is by reading my book, which I know a number of them have bought.

 

[Jinxus]

Thanks for the thread, Walter. Your ebook is the first info product I've ever bought online.

 

[Walter Hay]

Thanks for the thread, Walter. Your ebook is the first info product I've ever bought online.

@Jinxus, Thanks for your message. On another forum I had someone post a rather skeptical message about deciding whether to buy my book. It might interest you to know that you are not alone in being hesitant about buying info products, so I quote in full:

"I was looking for some impartial reviews on Amazon before I decide to buy based on the authors word alone... turns out that I couldn't seem to find your book on Amazon at all.

I searched the net and I found a few blogs that were either anonymous or an affiliate, but not much else.....that seems very curious.

I would never let one or two bad reviews sway my decision to buy something that is worthwhile, but there seems to be NO naysayers anywhere, and that doesn't happen in real life. I have never a product that I have enjoyed that did not have at least ONE bad review.

I'm not knocking anything on a personal level...just being a cautious shopper, that's all." He has since bought the book.
I hope the book lives up to your expectations @Jinxus. Keep an eye out for notification when I publish the next revision in a couple of months, because as with all my book buyers you will be entitled to a free copy of that new edition.

By the way, I am not deaf to constructive criticism, and over the last couple of years I have taken a number of suggestions into account when revising the book.

 

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[Walter Hay]

A Few Hints On Product Sourcing and Importing.

There is a lot more to the sourcing and importing process than just searching a site for suppliers, so I have set out a few hints that you can use to make sure you have at least done the basic work before you get in too deep.

I see too many people on forums like this who jump in at the deep end without doing adequate research.

I could just give out the names of a couple of safe B2B sourcing platforms, but I know that some newbies, maybe even a lot of them, would go there, like the trustworthy suppliers they find, and start placing orders. That could still cost them big bucks.

It is not uncommon for people to go off half-cocked knowing almost nothing about what is involved in buying overseas. In effect they treat the overseas buying process as though they were buying from the corner store. Some even turn to me for help after they have ordered goods without knowing what to do about actually getting the goods delivered to them.

I have on my files tales of woe that include one who ordered a large shipment of bulky goods. Great price! The problem was, this person discovered that freight was going to cost several times the value of the goods and by the time she came to me for help she had already paid for the goods. I find it hard to believe how careless some people can be with their own money.

If someone intends going it alone without obtaining expert guidance, they should at least think carefully about the project from start to finish. Here is a very brief step by step guide. Intending importers should at least complete the first two of the following steps before even starting to source products.

• Market research. What to sell, how to sell it, are you sure you will be able to sell it, and what prices can you confidently expect to sell it for at a profit. That confidence must be based on thorough research, not just checking sold prices on eBay or Amazon.
• Determine what maximum landed cost is affordable in order to be profitable, making sure you take into account all selling costs. See first point.
• Search for suppliers using a safe sourcing site. Don’t just go to any site casually suggested on forums, because on many of them everything is not what it appears. For example, “Verified” means the business actually exists. “Gold” or “Premium” Supplier means they paid out hundreds or sometimes thousands of dollars to gain that status. Alibaba were for almost a year discounting that fee by 90%, so that means a whole lot more suppliers have bought status without scrutiny.
• Remember that Chinese businesses almost invariably trade under multiple different names, so bad reviews don’t bother them and bad feedback rarely appears. They simply leave their bad record behind and trade under the next name on their list.
• Avoid suppliers falsely claiming to be manufacturers. Some popular B2B portals have big lists of suppliers claiming to be manufacturers, but they are not. They add their profit to the prices they pay real manufacturers. You lose that part of your potential profit.
• Avoid middle men falsely claiming to be wholesalers. They do not even carry inventory, but are opportunists who will offer for sale anything from paper clips to million dollar machinery.
• Avoid dropshippers too because they take profit out of your pocket.
• Conduct due diligence on the chosen suppliers.
• Convince the supplier to allow you to order much less than their stated MOQ.
• Get quotes. Don’t forget freight.
• Beware of freight collect quotes. A common scam in this area could lead to your bankruptcy.
• Negotiate payment terms. Beware of W.U., and Telegraphic Transfers. Scammers love them.
• Ensure that all costs to your door are covered and that you have them in writing.
• Obtain sample/s. Beware of freight ripoffs in this part. Ask for delivery by the postal service.
  
• If satisfied, place a small trial order crossing every “t” and dotting every “i”.
• Pay deposit.
• Pay balance as negotiated.
• Check the goods.
• If all is well to this point, you are in business. You can do your test marketing and be ready to place another order.

Now this is not an exhaustive list, but it may help those who prefer to risk their money rather than seek expert advice. There is much, much, more. It takes me 83 pages to set it all out in detail for those new to importing.

 

[10lapsdown]

Hi Walter,

It's my first post in this thread so firstly I'll say thank you for sharing everything with us and also your book. It certainly does provide some very useful information.

In your experience how difficult has it been getting manufacturers to supply new businesses with their product lines? Especially those that have a name to protect and nurture. It's almost the new graduate looking for a job; need experience to get a job to get experience. Or is it exactly like that to the point where you just keep pitching to manufacturers until someone gives you a break and you work from there?
It's ok if your intention is to just buy generic stuff from China and sell it on Ebay, etc. They will sell to whoever has the money by the sounds of it but what of other industries where the manufacturers are the branders and they have whole lines that live within those banners? I'd imagine they would be very reluctant to conduct business with any newly minted company.

Also, what are your thoughts on those manufacturers that have their own websites which they also sell products from and thus set their own RRP's? I have been looking into businesses for sale in my chosen area and most that I've scrutinised have profit margins of maybe 100%. Often less. All are branded products so I guess, for lack of better word, they are the inventors and the top tier. This is why I was looking at sourcing other brands from different countries, namely Europe to be both from my B2C website but also as a distributor in Australia (B2B?).

I apologise if this is beyond the scope of this thread.

Cheers

 

[Walter Hay]

Hi Walter,

It's my first post in this thread so firstly I'll say thank you for sharing everything with us and also your book. It certainly does provide some very useful information.

In your experience how difficult has it been getting manufacturers to supply new businesses with their product lines? Especially those that have a name to protect and nurture. It's almost the new graduate looking for a job; need experience to get a job to get experience. Or is it exactly like that to the point where you just keep pitching to manufacturers until someone gives you a break and you work from there?
It's ok if your intention is to just buy generic stuff from China and sell it on Ebay, etc. They will sell to whoever has the money by the sounds of it but what of other industries where the manufacturers are the branders and they have whole lines that live within those banners? I'd imagine they would be very reluctant to conduct business with any newly minted company.

Also, what are your thoughts on those manufacturers that have their own websites which they also sell products from and thus set their own RRP's? I have been looking into businesses for sale in my chosen area and most that I've scrutinised have profit margins of maybe 100%. Often less. All are branded products so I guess, for lack of better word, they are the inventors and the top tier. This is why I was looking at sourcing other brands from different countries, namely Europe to be both from my B2C website but also as a distributor in Australia (B2B?).

I apologise if this is beyond the scope of this thread.

Cheers

It seems that the main problem you are referring to is finding a cooperative brand owner in Australia (or for US members, in the USA). They usually have a distribution network and are not interested in small fry. The post on Monday by @RoadTrip in his thread
Ambiente Fair: Looking for Importing Advice is well worth reading in this context. Here's one invaluable statement: "I've definitely been able to spot new trends, find companies without distribution in either EU or USA and even found some of the smaller companies who are just starting out and looking for any type of distribution."

There are many trade fairs in all western countries and at most of them you will find a mix of local suppliers and those from other countries. @RoadTrip found that the Chinese exhibitors offered very ordinary products, and I would add that many of them will only be traders. It is probably worth a visit to any fairs that might be connected to a niche market that interests you particularly if looking for someone looking for a distributor.

The picture is very different when you look for suppliers from outside your home country. As a general rule they will be much more eager to do business with you, but as I mention in Chapter 8.7, when contacting them you should invent a business name if you don't already have one. Big brand names from China should not even be considered because they will invariably be fakes, counterfeits, or illegally sold genuine items. Having goods branded with your own name is possibly a good alternative.

I would not expect that manufacturers who are selling retail would be good suppliers for you, but I am not an expert in online marketing.

 

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[Journey2Million$]

How did you manage to find out information, make contacts, get capital, and find out what to do in the export business way back before the internet in the very beginning when you started in 1967? It seems like business would be 1,000 times harder without the internet, at least for someone getting started from nothing. I mean without the internet, how can you even find out any information? Libraries don't seem helpful. There was no one to give you advice or tips. And you also had to pay for a brick and mortar place of business.

 

[Jinxus]

I'm highly considering moving to China out of boredom and for life experience. I have the time and money, so figuring why not? Learn a bit of Mandarin and make some Chinese friends. From what I've read, you've been to China several times. Would you say there would be a huge advantage in moving to a larger city such as Shanghai or Hong Kong vs a smaller city? The smaller cities have lower costs of living which would help so that all the money could be sent towards fastlane ventures instead of basic living expenses.

Could you recommend any specific cities?

 

[Walter Hay]

How did you manage to find out information, make contacts, get capital, and find out what to do in the export business way back before the internet in the very beginning when you started in 1967? It seems like business would be 1,000 times harder without the internet, at least for someone getting started from nothing. I mean without the internet, how can you even find out any information? Libraries don't seem helpful. There was no one to give you advice or tips. And you also had to pay for a brick and mortar place of business.

There is no doubt that the internet makes business easier than it was nearly 50 years ago, but there have always been information sources available. I learned a lot from my work experience before starting my own business, and like all entrepreneurs in my day I knew how to use the information sources available.

Print Yellow Pages were indispensable, but if you wanted to look further afield than your own city, it was necessary to go to public libraries to use the YPs from other places. YPs provided information on suppliers and possible customers. This worked well for me until I started exporting in 1978.

Although fax machines were commonly in use by then, most of my communication was text only, so I used Telex, and had my own cable address, as did most of my overseas customers. Finding those customers was quite an effort.

I had already traveled overseas extensively on family holidays, and I used those trips to look for potential business, keeping detailed diaries. (Tax deductible holidays.) I also spent time looking for information sources and obtained business magazines from various countries. I found a lot of information through business organizations and Government bodies such as Chambers of Commerce, Official Trade Departments, Industry Organizations, and World Trade Centers.

I am a great believer in networking, and as a result my mainland Chinese agent was found through a contact in Taiwan. Fortunately the economic reform program under Deng Xiaoping began that year and small entrepreneurs were popping up in major cities.

My use of networking paid off after I sold that business and started importing in 1987. I had numerous contacts in Taiwan, Hong Kong, China, and other Asian countries, and they had offered me various products to import. Still without the internet, I used those contacts to gain information on suppliers, and I also used my knowledge of the organizations I mentioned above.

Where possible I obtained copies of English versions of the national YPs but more importantly, I subscribed to every trade magazine I could find. I used these extensively for product sourcing. Communication by this time was almost exclusively via fax.

I did not use the internet until 1994, but still used faxes for a lot of communication, particularly drawings, until about 10 years later.

As for financing my export business, by the time I got to export, I had made sufficient profit to be able to use reserves to finance the purchase of the large amount of raw materials.

 

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[Walter Hay]

I'm highly considering moving to China out of boredom and for life experience. I have the time and money, so figuring why not? Learn a bit of Mandarin and make some Chinese friends. From what I've read, you've been to China several times. Would you say there would be a huge advantage in moving to a larger city such as Shanghai or Hong Kong vs a smaller city? The smaller cities have lower costs of living which would help so that all the money could be sent towards fastlane ventures instead of basic living expenses.

Could you recommend any specific cities?

I have lost count of the number of times that I have visited China, and although I feel quite at home there, I would not like to live in China for an extended period. My main problem is with the food. I enjoy Chinese food in Western countries, but not the real thing in China. If you want to eat Western style, it will add considerably to your cost of living. If you buy Western style meals in many of the restaurants that specialize in them you will find that they will mostly taste Chinese. As a result you will have to pay big money to eat in top hotels if you want food that tastes familiar.

There are business advantages in living in certain cities, but to some extent that will depend on what product types are of interest to you. For overall business, big centers such as Beijing, Hong Kong and Shanghai would be hard to beat. Cost of living in Hong Kong will approximately equal your cost in New York, but cost in Beijing would be about half that. One thing that will cost you more in China is .... believe it or not .... clothing! That is, unless like me you shop in the little local clothing shops in the back streets.

Finally, there is no doubt that if you are resident in China you will more easily gain the respect of business contacts.

 

[Walter Hay]

STRAIGHT FROM THE HORSE’S MOUTH
Quote from Alibaba.com under the heading: “How to find legitimate companies on Alibaba.com”
“ In short, a Gold Supplier on Alibaba.com is a company that has had their legal business licenses and contact persons verified. However, this does not automatically rule out all dishonest enterprises – it just means that the company is registered with the government, and has a valid license to operate a business.”

"Registered with the Government" simply means they have a business registration without which it is not possible to legally conduct a business in China. That does not prevent an invented name being used by scammers. A lawyer in Beijing tells me that even business registration forms are now being forged, so the inspections by Alibaba and the other B2B sites that do them are useless unless they make a search in the Administration of Industry and Commerce records in every region of China. There is no national registry such as you will find in Western countries, except for those companies with national registration. Complex I know, but the Chinese system is still evolving.

The statement quoted above from Alibaba's own website proves that Gold Status is worthless as an indicator of an honest business. Don't forget that similar status symbols are sold on most B2B sites.

 

[Awesome Fury]

Hi Walter,

I hope this question has not been asked already. But I'm wondering how you would check if a product has a patent already attached to it?

I'm looking at importing a product that is sold on amazon by a few different people, but not sure if the design has a patent and if there would be any issues selling it in my local area(australia).

Cheers

Patrick McMahon

 

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[Walter Hay]

Hi Walter,

I hope this question has not been asked already. But I'm wondering how you would check if a product has a patent already attached to it?

I'm looking at importing a product that is sold on amazon by a few different people, but not sure if the design has a patent and if there would be any issues selling it in my local area(australia).

Cheers

Patrick McMahon

Hi Patrick,

Patents should be declared either by being printed, etched, or otherwise displayed on the product or marketing material, but it is not a legal obligation to do so. Consequently a product may be the subject of a patent and until such time as the patent owner issues a cease and desist notice, you may be unaware that the product is patented.

The first thing I would do is to obtain a sample and see if there is a patent claim displayed. If there is, it is worth then checking to see if the patent has been approved in the jurisdiction where you wish to sell it; in your case, Australia.

Patents are very expensive to obtain and maintain, so you will often find that a product's patent only applies in the major market, or the inventor's home country.

NOTE: This is not to be taken as legal advice.

 

[Awesome Fury]

That makes sense. this is probably out of the scope but I'm just worried that if I import a product then it turns out that it was a copy or patent, I would have to pay a License fee or some other legal/copyright issue?

Like most others, I'm finding it hard to figure out whether a company is a manufacturer or trader. Alibaba lists them as both. Other sites say manufacturer but not verified. Also apart from alibaba I can't really find many companies selling the product, ( on other sourcing sites)

I find this a good thing, but as my first import wouldn't mind some help?

 

[Walter Hay]

That makes sense. this is probably out of the scope but I'm just worried that if I import a product then it turns out that it was a copy or patent, I would have to pay a License fee or some other legal/copyright issue?

Like most others, I'm finding it hard to figure out whether a company is a manufacturer or trader. Alibaba lists them as both. Other sites say manufacturer but not verified. Also apart from alibaba I can't really find many companies selling the product, ( on other sourcing sites)

I find this a good thing, but as my first import wouldn't mind some help?

If the product is patented in the countries where you are selling it, and if they don't display any patent claim, and if they find out that you are selling the patented product, chances are that unless you are taking a big slice of the market they won't pursue you because of the legal cost involved.

The legal cost of protecting a patent in another country is very high, and the chances of success are in my opinion ( NOTE: This is not to be taken as legal advice) very slim if there is no patent claim displayed.

Finding out if a supplier is really a manufacturer is a major problem, and I take up quite a lot of space in my book in dealing with that subject. Alibaba is a big culprit in that regard because they will accept anything the supplier says, without checking. Other big sites do likewise.

If you care to send me a message identifying the supplier/s I can usually establish the truth within a couple of minutes. All such correspondence is kept totally confidential.

The first DIY thing for you to do on Alibaba is to see if they are an Assessed Supplier with a red tick in a blue circle. That does not necessarily mean they are manufacturers, but if you then read the assessment report in full, that will tell you one way or the other.

 

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[Awesome Fury]

Thanks, I have been gathering a list of potential Suppliers.

Reading, then reading some more. So much conflicting advise. Hard to know exactly who's giving the best advise. Ill send you through my list shortly.

 

[Awesome Fury]

If the product is patented in the countries where you are selling it, and if they don't display any patent claim, and if they find out that you are selling the patented product, chances are that unless you are taking a big slice of the market they won't pursue you because of the legal cost involved.

The legal cost of protecting a patent in another country is very high, and the chances of success are in my opinion ( NOTE: This is not to be taken as legal advice) very slim if there is no patent claim displayed.

Finding out if a supplier is really a manufacturer is a major problem, and I take up quite a lot of space in my book in dealing with that subject. Alibaba is a big culprit in that regard because they will accept anything the supplier says, without checking. Other big sites do likewise.

If you care to send me a message identifying the supplier/s I can usually establish the truth within a couple of minutes. All such correspondence is kept totally confidential.

The first DIY thing for you to do on Alibaba is to see if they are an Assessed Supplier with a red tick in a blue circle. That does not necessarily mean they are manufacturers, but if you then read the assessment report in full, that will tell you one way or the other.

I assume if a manufacturer is making a product for a company with a patent/copyright they would not be able to sell the product to others? (They would have some exclusive deal?)