Finally,  The Customs Declaration Form: The information on this document is normally presented by your customs agent and it basically takes into account all the information of the invoice, packing list, bill of lading and form A. 

This document is generated automatically by customs and in many countries it is an automated process thru the computer.  

This document will calculate the value of the goods in your currency, the total duties you need to pay, and the total tax you have to pay to the government. 

A Pearl of Advice for you : Inform  your customs / forwarding agent of the goods that are on the way. Different descriptions normally pay different duties. Eg declaring child scooters as a toy may pay a 4% duty, but declaring it as a vehicle can pay 12%. This is a legal way of turning the system in your favour and your customs agent will know what to put. 

Of course, it may happen that the customs decide to open the container and check the goods.  

As long as you are not bringing in anything illegal, you can always defend your case that you believe it is a toy ( following the above example). In most cases you will end up paying a minor fine in order to clear the goods and close the chapter since obviously you don’t want the goods to be held up. 

By the way before I forget, 2 more things you should know: 

a)Since the customs cannot physically check 100% of all documents      ( you would be a gradfather by the time they would release your container to you), normally once documents are presented, the customs computer ( depending on the country) randomly decides which container is passed Green, Orange or Red colour. 

-green means that the container can be released without even presenting the actual physical documents to customs ( it is electronically presented by your customs or forwarding agent ).

-orange means that the container can be released but once they check the actual physical documents.

-red means that the container will be placed in a separate place and the it will be opened and the goods will be revised. This by the way means an average of 3-5 days delay , plus port charges in positioning the container in a special place and inspection charges. 

Forget complaining. You cant do anything about it. 

b)If it is the first time you are importing, I suggest you don’t do any “hanky-panky” since there is a 100% chance that your goods will come up Red and will be checked as you are new in the system. 

To make my point clearer, I don’t suggest or advice to doing any hanky panky ever. 

Another Pearl of Advice: Normally the customs computer ( depending on which country we are talking about ) calculates the exchange rate based on last months average. Hence you can delay / advance the presentation of the documents depending on whether it is in your favour or not. ( of course you got to balance against the port charges incurred in delaying taking your container from the port “parking space”, etc ). 

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CERTIFICATE OF ORIGIN: As simple as a certificate issued by the China Export Authority certifying that the goods are of china origin, ie. That they have been made in china. 

The China Certificate of Origin used to be essential till about 5-6 years ago in order to not pay that high duties. Now adays however with the new age of lowering of tariffs and duties globally , you end up paying in majority of cases the same duties whether you have this certificate or not. 

It is however advisable to always have it just in case for mainly 2 reasons: 

a)You can many times know who is the actual factory producing the goods for you ( you can in this way bypass the exporter ).  

Though,  Dont get too excited about this. Exporters have become smart.  

As a matter of fact one of my good exporter friends in hong kong used to have a pad of about 100 signed and chopped certificate of origins in his drawer ( they are known as “Form A” ) all with the same name of manufacturer. Whether he exported lighters or dvds, the same manufacturer would appear in the buyers form a, hence they would never reach to his direct factory.  

The other side of the coin is that not all of them have those contacts to be able to do the above, and hence you can at least find out the region or town where the goods were manufactured. Many times this is enough since chinese factories are like “ant colonies”.  

Where there is one, in 2 seconds you have a million of them.  

Here is another Pearl of Advice for you: Knowing the town where one factory is can SAVE YOU TIME AND MONEY, not only in finding other sources of supply for the same item, but also in having offers to compare with.  

b)The second reason, we have really already taked about.  

The fact that for some items, there is a lower duty to be payed due to the cross-border agreements on import duties and tariffs if a Form A is presented in customs.  

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PACKING LIST : As simple as a list which lists the pieces per cartoon, weight per cartoon ( both net and gross ) as well as the sizes. This wll be helpful when calculating your final costs ( though you should have these calculated already ). 

BILL OF LADING : As simple as that document that tells you that the goods have been shipped. This document is one of the most important since:

-         it tells you what quantity has been shipped

-         it tells you when that quantity was shipped

-         it tells you on what vessel / carrier it was shipped

-         it tells you what was the total weight

-         it tells you who has shipped the goods

-         it tells you to whom have the goods been shipped

-         it tells you who needs to be contacted to claim the goods 

Without this ORIGINAL document you cannot release the goods when they reach the port. REMEMBER THAT. There are ways around that in case the document gets lost. 

At the same time it is also a document which can be forged easily with the right contacts.  

By the way if it is an air shipment you don’t need to have the Original Bill of Lading ( called Airway Bill of Lading ) in your possession. The moment the goods arrive at the aiport you can already clear them. 

That’s the reason why unless your supplier trusts you, he will not send you the goods by air before receiving prior payment. If you receive the goods and you don’t pay, he cant really do anything.   .   

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Lets continue with the “real stuff”. 

We already got out of the way the Sales Contract and Purchase Order, which are always the initial stages of the deal. What documents come into play next?? 

The next in line are written below, however i´ll give you a Pearl of Advice:: Once the shipment is done, make sure each and every day you ask your supplier to send you a sample copy by email or fax of what is going to be written on the next set of documents. 

Your supplier normally takes between 5-15 days to send the documents to you. You want to make sure early, specially if you are dealing with Letters of Credit ( more about that later ), that all the descriptions, prices, and details are correct before the final original documents are issued. 

Just by doing the above, you can save and save and save so much money and time in unnecessary silly mistakes. Ask any importer, he will tell you the stupid silly mistakes commited. 

Furthermore , you can even change the description early  to save on duties ( more about that later ).  

COMMERCIAL INVOICE: As simple as a normal invoice which in actual practice will contain all the details of the sales contract, plus the shipping date, etc,etc.  

Since it is an invoice from abroad , first of all it will be in USDollars which is the primary currency used for exports from china. Secondly there will be no tax on it since it is an import of goods.  

Locally in your market as you know, if you purchase an item for lets say usd 1, you will have to pay your supplier a price os usd 1+ the local tax,in spain it is 16%, in the uk it is 17.5%. The commercial invoice issued by your supplier will not have the invoice , only the net amount. The duties, taxes,etc you will pay locally in your market ( more on that later )   

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Yes, you are reading correctly. The Title is not a misprint, it is true, dont let them think. If you follow what i show you, you wont let them think. 

Ok, lets get into the “real stuff”. 

Here are the type of documents you will need to handle in your import adventures. There might be more, but these comprise 99% of all dealings.  

Most important for you is that I have written them down in  SIMPLE english for you to grasp it  quickly . Ill also be putting this guide up in pdf format so you can donwload it as a resource and reference guide. 

You will encounter the following documents in this order: 

SALES CONTRACT : This is the contract the chinese supplier will send to you informing you of all the details of his items, price, reference, delivery times, payment terms etc. He will ask you to sign back. 

What i normally do is copy the details into my Purchase Order and i send it to the supplier for him to confirm back to me. There are many reasons fow why i do this. 

From my experience, we as buyers assume that the supplier already knows what we want. I dont know if this is simple lazyness from our part  or that we have too many things to do and forget the fact that WE CANNOT LET THEM THINK. My experience has taught me that this is the worst mistake we can make.  

Treat them as children and all will be fine. Let them think and you will spoil everything. You got to realise that they have never been taught to think the way you have. They have been used to following orders, that is how they brain works. It is not their fault, but it is the way things are. 

Hence it is your job to know this and make life simple for them and for you. 

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The basics of success are simple and true to every part of life, whether it is business of personal relationships. 

You want to buy, they want to sell, you want the goods at your price, they want to sell at their price , you both agree and  sign a negotiated contract which is to be excuted and delivered.  

The reality however is much different. 

You want to buy, they want to sell. You want the goods 100% delivered as you saw them in their factory at your price, they want to make as much money from the product by lowering the cost. 

You both agree on a deal and sign a negotiated contract. You “hope” that the goos arrive in good condition. They “hope” that you don’t realise the difference in quality and / or the delay in delivery. 

You can imagine what kind of Disaster is lying ahead. 

You need to be prepared for what you are about to face. Be prepared both mentally and physically for what is lying ahead of you.  

- Be prepared to change course from time to time. 

- Be prepared to face some of the hardest and longest negotiations you’ve ever seen.  

- Be prepared to always have an ace up your sleeve. 

- Be prepared to have patience, a loooot of patience, ( even more than with your wife… ). 

- Be prepared to tell white lies. 

- Be prepared to make friends. 

- Be prepared to give respect and receive respect. 

- Be prepared to not believe anything they say. 

- Be prepared to not judge them. 

- Be prepared to acknowledge that in most cases they have a short-term business outlook with you.  

- Be prepared to know that in most cases they don’t know the value of a lifetime customer. No one has ever taught them. 

- Be prepared to not try to change them. They are the way they are. 

- Be prepared to have a plan B ready in case all fails. 

- Be prepared to know that there will always be someone who buys cheaper than you. 

- Be prepared to know that there will always be someone who buys more expensive than you. 

Finally, be prepared to know that China is unique.  

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I have met many importers and exporters from many parts of the world in my 10 years of travel. From spain, the uk, poland, greece, india,etc. and I have seen that the great majority of them miss out  on a very important and critical point. 

That point is the What? If you have already figured out the Why of Why you need or want to do business with china, then the next step is to figure out the What. 

What do I want to buy??

What do I want to exactly find??

What do I need to know before I go on this path??

What knowledge am I lacking??What if it all goes wrong??

What exit strategy do I have??Etc,etc,etc. 

This  is a pearl of advice I am giving you here. Follow this  this sequence in the following order and you will never get your next business idea or relationship wrong.  

The sequence is as follows:

Why

What

Who

When

How  

Want to know more?? Log onto www.resultsfoundation.com  The best to explain this is  Roger Hamilton. Roger believes in creating world wide wealth. He is a multimillionaire and heads the XL results foundation for worldwide wealth. 

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The other side of the coin is that it can be a tough place to do business in . 

Your company’s so called “China Experts” are challenged continuously to deliver results on time , every time, guaranteed. And you are only a small player in the market. Lets face it, even some of the world’s biggest and best companies have stumbled hard in doing business with China.

Understanding the right path to do business from a micro perspective  for your company is key. 

Too many books and so called professors out there try and teach you how to import  from a macro economic perspective where they assume that you have multimillion turnovers and that you have 30-40 people staff sitting in your hong kong office.  

My approach is different. 

I am going to assume that you are a baby. I am going to assume  that you have no experience, and hence I will talt to you in plain english.  By the way, don’t get discouraged if you are an experience buyer / importer. I guarantee you that you will find many  resources or “pearls of advice” as I call them,  to your advantage that will make your life simpler.  

And if you don’t ( though I doubt it ), then I would like to hear what alternative you may have. After all we are all here to learn from each others experience. 

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Hi. 

Are you in business already ??? Are you starting a business??? Are you a student doing a thesis for your MBA???  

Whatever your reason, know this. If you want to exceed in profits, you need to be working with china sooner or later. My suggestion,  the sooner the better. 

You need to understand that China is a giant that has been consitently growing at a 9% average rate of GDP consistently in the last years. 

You need to understand that  the improved margins usually come a mixture of:

-lower utility costs,

-greater manufacturing competition,

-more and bigger buying power,

-huge amounts of investment into technology & research being,

-young and relatively cheap labour-flexible manufacturing workshop. 

None of the above ususally work anymore in our societies. 

You need to understand that doing business with china is like doing business anywhere else, its all the same ball game. The only thing that changes are the rules.  

And believe me,  the peculiarity is that these rules keep on changing and changing. 

But,  that is life isnt it. Everything is evolving. Nothing is static. In order for you to compete in the global arena, you must become a master buyer / seller and dealer with  China.

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