Make Money Importing From China

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How to Make Money Importing from China- Report

Make Money Importing From China A Free Guide For You To Explore New Opportunities Offered Through Opening Up The Doors To China And Learning What It Takes To Make A Successful Business Importing!

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How to Make Money Importing from China- Report

TABLE OF CONTENTS Make Money Importing From China........................................ 2 A Free Guide For You To Explore New Opportunities Offered Through Opening Up The Doors To China And Learning What It Takes To Make A Successful Business Importing! ..................... 2 Free Trade with CHINA THE Pros and Cons ............................. 4 Reasons Behind China’s Trade Surplus ................................... 6 In-Depth Impact of China’s Exchange Rate Policy .................... 9 A close look at why the Quick Rise after the Slowdown ............ 11 Is Internet Censorship Hampering China’s Trade? ................... 15 Deciphering The Foreign Trade Law of China .......................... 17 Doing A Background Check On A Chinese Supplier .................. 19

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How to Make Money Importing from China- Report

FREE TRADE WITH CHINA THE PROS AND CONS Free trade is nothing but a magnificent system that allows traders to transact business without any government interventions such as subsidies, taxes and tariffs. Free trade is more than just an agreement it’s like a treaty or law for transacting business between the two countries. There are numerous countries such as New Zealand, Australia and some other Asian countries that have signed free trade agreements with China. As the Chinese products are available at cheaper prices than many domestic products, it is good to get into a free trade agreement to supply citizens of a developed country with a high standard of living when buying products from home would be prohibitive due to the cost of labor being very high. Of course many people argue that if a developed country enters into the free trade agreement with China, most of the developed countries people would lose their jobs. This is a well grounded argument but according to the experts in the financial world, China can not manufacture everything at lower costs. While they are specialized in manufacturing some products very cheaply there are many products even they need which they can not produce efficiently. For instance,

China

manufactures

toys

at

cheap

prices

and

America

manufactures computers at cheap prices. If these two nations enter into free trade, it is beneficial to both the countries as they could trade the toys and computers between them.

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How to Make Money Importing from China- Report

There is another argument arising with the wage conflict between the China and other developed countries. If you take America and China for instance; the average wage per person in China would be around $2 per hour and in America, it would be more than $10 per hour. This argument would be correct and possibly matter if both countries where involved in manufacturing the same product or serving the same needs. But in this situation, the countries which entered into free trade agreement with china would definitely concentrate on various other areas rather than the ones China’s specialized area. The countries that enter into free trade with China should be a happy lot because they can get high quality products at a cheap price because of the Chinas’ low labor cost. For the developing and developed countries, free trade with China will provide huge benefits in terms of cheap labor which results in the low cost quality products and services for their citizens. Free trade is one of the best ways of taking advantage of the resources available in different countries. What China has, other nations may not and vice versa and free trade helps bridge that gap for the benefit of both nation’s economies and their citizens. Regardless of where you stand on the above arguments and weather you believe it will benefit your country as a whole, the fact is this is the direction all countries are headed and you must decide if you want to fight the inevitable or learn to profit from it.

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How to Make Money Importing from China- Report

REASONS BEHIND CHINA’S TRADE SURPLUS First of all a trade surplus is defined as a positive balance of the trade, in which the exports exceed imports of the country. This section will gives you a brief explanation of the reasons behind the China’s trade surplus. China is a country which supplies high quality, low cost products because it maintains a stable buisness environment comparable to other countries but with a much lower cost in labor. It is almost thirty years now since China entered into the globalized environment and in that time has become one of the most influential countries but, how? The centralized government of china helped set up manufactures set up process to produce things which the average Chinese citizen can not afford. Because they did this they can now sell to the world hungry for cheap products and then use the income that is raised to pay for things like education and equipment to better the whole country of China as a whole.

Let’s look at how on a smaller scale it works.

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How to Make Money Importing from China- Report

China’s trade surplus can be best explained with reference to the United States. While china is popular for manufacturing low cost via low cost labor products it does so to with another financial major disadvantage the USA exploits. If you look at the Yuan Vs Dollar, it is clearly visible that the undervaluation of the Yuan would result into at least two to three percent trade surplus. How does this work? Well, if you let’s say a loaf of bread cost either a Yuan or a Dollar in your own country. Okay, now let’s say you tried to buy a loaf of bread in the USA with a Yuan but no one would sell it to you unless you had a Yuan and some extra change. Now let’s say you gave a bread seller in china a dollar for a loaf of bread they would give you a loaf of bread and few extra slices! In a nutshell, the low cost labor, less consumer spending and undervaluation of the currency are now three main reasons behind the China’s trade surplus. The trade surplus between the two countries has created a co-dependency between the two countries. This dependency ratio is a major concern for China. If you compare the Chinese individual dependency ratio with the United States, you will get a clear picture. In China, one working individual has to support 0.4 non working individuals where as in United States the figure is around 0.66. This is mainly because the major work force in China depends on agriculture and lives in the rural areas. This obviously leads to low consumer spending.

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How to Make Money Importing from China- Report

In United States, the consumer spending accounts almost 70 percent of the GDP where as in China, the figures are around 40 to 50 percent. Low dependency plus low consumer spending are more reasons for the China’s trade surplus. The Chinese government has made small changes to value of the Yuan but small and moderate corrections in Yuan against major currencies will not solve the China’s trade imbalance. A major revaluation would definitely be required to get the China’s trade surplus to a moderate level. At this point it does not seem likely China’s government is inclined to make such a change. For the foreseeable future it is expected that China will continue to export and manufacture products and that profits from these exports fuel the future growth of exporting. Unless and until China takes some serious issues such as revaluating its currency, it’s unbridled pace of urbanization and building a

proper social

security system into consideration, it will be very difficult for them to move into “reasonable” trade surplus boundaries. Only growth in the demand within China for products it can not produce itself will result in imports that would help balance the trade surplus. For now and the foreseeable future China prepares to don the mantle of the world’s biggest exporter!

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How to Make Money Importing from China- Report

IN-DEPTH IMPACT OF CHINA’S EXCHANGE RATE POLICY For the past couple of months, China’s exchange rate policy has been a question of debate for many economists the world over. In fact ever since China announced to some major changes in its exchange rate policy in July 2005, it has attracted the attention of all the major economic players across the globe and has even been put under scrutiny by them for several different reasons. What many people tend to ignore is the fact that China’s exchange rate policy has helped it in becoming one of major stabilizing forces of the world economy. Many economists believe that China has yet to face the most difficult times from its own exchange rate policy. They believe that the Yuan will soon be forced to depreciate and this belief has been further strengthened by the decrease in Chinese exports over the past 14 months. However, with the exports seemingly recovering and in fact showing an increase since December 2009, economists have been speculating that China maybe in fact looking at more good times ahead due to this exchange rate policy. This belief has been further strengthened by the announcement of the Chinese government to keep the Yuan stable to help the beleaguered exports of the country. The Chinese authorities are facing many challenges with regard to their exchange rate policy that has unfortunately been undervalued by major world economies. The policy has been criticized despite the fact that China 9|Page

How to Make Money Importing from China- Report

has maintained a fast growth rate and increased its exports and is becoming an ever more global economic power. But China is also facing tremendous pressure to appreciate the value of Yuan for the betterment of not only the Chinese economy but the world economy as well. Weather China will budge in front of world pressure and make significant changes to its exchange rate policy, is a question that only time can answer. However as of now, it does seem too inclined to move towards making changes in the policy. The Chinese officials realize the importance of greater flexibility and the need to appreciate the exchange rate, to ensure growth based on greater consumption. If China continues to ignore the world pressure, it might result in a rejection of its exports by the developed world to force the country to make changes to its exchange rate policy. A country cannot be expected to sacrifice its own interest by making policy changes that might hamper its growth. However, the world’s demand of making changes to China’s exchange rate policy can prove beneficial not only for the country with the third greatest global economy, but the entire world as well. Only time will tell.

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A CLOSE LOOK AT WHY THE QUICK RISE AFTER THE SLOWDOWN In the recent years, China has shown an unprecedented growth in its exports with the result that Chinese products are flooding every major market across the world. But, for a short time there had been a significant decline in the export of various goods from China, due to the global economic recession. However, since December 2009, China has once again shown a growth in its exports giving a rise to the hope of recovery from the economic crisis. In January 2010 alone, the exports from China grew by a margin of 20% which many see as a sigh towards the over all economy of the world picking up once more. To put this into perspective you must understand that the Chinese economy is only the third largest in the world. The increased exports are not only helping in strengthening the economy of the country further, but are also enhancing the position of China as a global economic power. Within a few years, China has established itself as a major player in international economy. The growth rate of its foreign trade has been far greater than the rate at which the country’s GDP has grown in the last quarter of a century. China has earned success in all types of products that it has been exporting, be it consumer items, toys or even industrial goods.

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The Chinese government has also promised to stabilize the Yuan to help the exporters who are still reeling in the aftermath of economic recession. The decision has undoubtedly been influenced by the fact that Chinese exports have shown to impact the world markets in a very significant manner. With the recent rise in the Chinese exports, the world markets have also shown a rise in the cause and effect of many stock prices. Since, Chinese exports are having such a great impact on the stock markets across the globe, it is being speculated that the day is not far off when China will become an economic superpower. China has emerged as a tough competitor for other Asian economies that thrive by exporting the same types of products. Seemingly the decision by the Chinese government to allow various Multi-National Corporations to use their country as a platform for exporting goods is paying great dividends. The government has also developed even more new policies to increase productivity with emphasis being laid on the development of foreign trade for economic growth. It’s Clear As China proceeds on its path of progress, it’s government plans to come up with ever better policies and procedures to further enhance exports and establish a much stable economy. Unlike other countries with low labor cost China is a stable country with a stable government able to anticipate the future, plan ahead, execute future plans while still saving enough in reserve, to weather the past economic world recession.

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CARRY TRADE AND IT’S EFFECTS ON CHINA Over the past decade, China has emerged as a major contributor in international trade and economy. With the country shedding its conservative traditions and making way for a more open economy, China has captured a major market share in many various consumer as well as industrial goods.

As such, it is quite obvious that the country is concerned about the future of dollar carry trade and its effect on various currencies and economies across the globe. As per a recent survey, it is estimated that dollar carry trade stands at $1,500 billion, which is much more than any currency trade has witnessed in the past. Currency carry trade is basically a means of earning profit by taking advantage of the day to day difference in the exchange rate of two different currencies. With the dollar strengthening its position quite steadily in the market, it is being speculated that the carry trade will start to unwind and will make the US dollar the world’s most opted funding currency. Undoubtedly, China is looking forward to making its currency, the Yuan as the most favored trading currency. This is important not only for making China as a global economic power but will also help the country in reap the same great benefits from the United States envoys. That is why China is keeping a close eye on the future of dollar carry trade and its affect on various global currencies. While many people feel that China is still a long way from making the Yuan into an internationally acceptable trading currency, the fact is that the country has been on a path 13 | P a g e

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of orderly development for a long time. China does not even seem to need to heed even the most stinging criticism from the Western nations; China has been keeping its companies and financial markets under close scrutiny for this same reason. This has not only led to a steady robust economy in China but it has also allowed China and it’s buisness to gain control over more and more US Dollars.

China has also been quite successful in saving its markets from

opportunistic foreign investment. China is making changes in its economic policies that are aimed at making way

for

new

financial

support

resources

helping

in

the

growth

of

international trade. Even though China had openly criticized the US for manipulating global carry trade, the massive expansion in bank loans by China now have resulted in attracting the criticism and scrutiny of financial experts from both within China and from outside the country. China however seems to have realized that dollar carry trade might eventually prove even more helpful for the growth of its economy and shows no signs of backing down.

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How to Make Money Importing from China- Report

IS INTERNET CENSORSHIP HAMPERING CHINA’S TRADE? The internet has played a very important role in the development of countries all around the world. Earlier it was very complicated for any country to communicate in a quick way and interact as fast in business and trade together, but with the advent of internet things have change considerably. Today, with the help of internet you can know most everything about any US market sitting right in your living room. The internet has virtually linked all the world markets so that anyone can keep a close eye on what is happening almost everywhere all around the world. Not only the stock brokers but also regular and irregular people who are interested in international trading have made huge profits with the help of internet because they can check their transactions online and also receive and send payments with the help of online banking even from their cell phones. However, internet also has its own dark side like hacking and virus attacks on the systems of giant corporations that lead to a lot of financial and personal data loss for that particular company and its shareholder and even sometimes its customers. These kinds of things happen very frequently and we read about it often in the news. 15 | P a g e

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China on the other hand, being a communist country is very strict about the misuse of any technology and therefore they have implemented internet censorship through out their Republic of China, so people there can not misuse technology for personal gain. New laws have been formed by the government of China that creates a kind of censorship on anybody who is using the internet in China which also includes government offices, multinational corporations and independent businesses in China. Although, these stern steps by the Chinese government have been taken in order to neutralize cyber crimes that are happening in China, it has greatly affected the international and national trade in China. One of the main reasons why trade has been affected in China is because China is a developing country and therefore most of the companies there have connections and branches in other countries as well. Even local dealers and traders use the medium of internet to run their businesses. Hence, internet censorship has somewhat isolated Chinese companies from interacting with the companies outside China. Though, there were many people in China that had protested against the internet censorship in China, the government of China made sure that most of their protest blogs, forums and websites were deleted instantly and many journalists and surfers were arrested for accusing the government with false claims. Even today, the Chinese government keeps a close watch on each and every website that is access by an individual anywhere in China. While this may not seem fair by western standards it does mean that any interaction you have via the Internet is closely looked over by a Government

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who wants to build on its reputation that trading with China the easiest, safest and most profitable business relationship you can make.

DECIPHERING THE FOREIGN TRADE LAW OF CHINA The success of any country depends on its trade and commerce. Today, we see United States as one of the most powerful nations in the world, but how did they achieved this place? Trade and commerce are like vitamins and nutrients that run the entire body. Though they are hardly visible they decide the development of our body. Similarly, trade and commerce are something that common man cannot notice because of its macro scale, but it does greatly affect the development of the entire country. China is said to be one of the leading countries that will dominate the world politics in the near future. Hence, it is very important that Chinese government and trade authorities pay close attention to the foreign trade law in China. If you look at the latest foreign trade laws in China, they have come up with many new ideas and strategies that will accelerate the growth at which China is progressing. The laws have emphasized the exports of consumer goods from China to provide them with more and more foreign currency that they can later exchange in order to increase the value of their own domestic currency. To this end they have invited foreign investment companies to visit China and invest their capital in China by lowering the amount of red tape required. These foreign companies can not only freely establish their business in China without seeking any high level of permission, but they can also run their 17 | P a g e

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businesses per their own rules and regulations without much interference from the Chinese government.

Though, China has always promoted exports of goods from China to other countries like United States, UK and countries in South America. They appear to have recently decided that in the near future they will be restricting the flow of exports and imports from China. The reasons for this are mainly because of their own domestic demands. However, international corporations are free to set up their businesses in China and expand their wings into different cities that fall under the Republic of China. This may seem confusing at first but, as per the latest foreign trade laws China has given itself the right to stop or restrict international trade of any company if the government feels that the services or products of that particular company is a threat to national security and public interest. Foreign trade operators are still free to use any currency they prefer while they are making transactions across different borders though because this has been proven to earn China a lot of foreign currency that they can later use for their progress. This last adjustment to Chinese law may affect some traders but so far it seems to have had little negative impact on exporting in fact as mentioned exporting from China is still very much on the rise. It is however an important thing to consider when anyone is deciding what kinds of products they intend to export from China.

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DOING A BACKGROUND CHECK ON A CHINESE SUPPLIER Online trade has really changed the way people do business. With the help of internet things have become simpler today and therefore most people prefer to go online for trading where they can sell their items quickly to a huge audience and get their income immediately online through internet banking. This compared to buying a building or paying expensive rent in a high priced location that gets traffic and hopefully customers. Not only does online trade help us to save money it also helps us to save time because the communication happens really fast and you can inform your suppliers or your customers about the status of any business transaction. With the help of online trade people have started to do transactions with buyers and sellers in other countries like China which helps them grow their business quickly and profitably to add more income so that they can expand their business. However, like any other technology internet also does have two sides to the coin. On one side if internet promotes trade and commerce, on the other hand it also leads to exposure of important data into wrong hands, identity theft, hacking and manipulating business in a wrong way is always a concern.

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Many people who are looking for shortcuts and who have dreams of earning pots of money quickly prefer to use the wrong way. Hence, they make use of the internet in order to create false identities and pretend that they are high level executives of big Chinese companies. Some hackers hack into the system of reputable companies to find the trade secrets and then come up with their own fake websites where people can be redirected unknowingly. To combat this kind of menace in China, Chinese authorities have come up with their own cyber crime patrol that keeps a close eye on IP addresses and people who are involved in such malpractices. Since some of culprits had been Chinese youngsters playing a part of these fraud schemes, the Chinese government announced the internet censorship which has been so controversial. But this censorship is what stops culprits from accessing websites they want to do fraud against. Additionally, Chinese laws alow employers take extra measures to do more thorough background checks on employees exporters will be dealing with. People outside China who are often victims of such online fraud practices have more reasons not lose their faith in employing Chinese suppliers and employees than they would from countries less concerned about building good trade relations. There are many websites that have been launched by the international trade community where they can share their problems and experience and also information about a particular Chinese supplier so that everyone is informed.

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How to Make Money Importing from China- Report

You can learn more about these websites get the whole list and receive more valuable information about trading with China in other publications I offer If your interested in doing buisness I encourage you to visit my website. For those of you who are nervous about engaging in trade with China because it seems so far away let me say this… “Relax; you don’t get to climb to the number three spot in world trade from almost obscurity in little more than three decades by treating your customer bad.” Discover how to make Importing from China part of your bright future!

Dear Reader, I hope you enjoyed and learned from this short guide on how to make money trading with China. If you would like to learn, more please visit How to Import from China by clicking here.

To Your Success, Mark Ames

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How to Make Money Importing from China- Report

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How to Make Money Importing from China- Report