Make Money Importing From China
Transcript of Make Money Importing From China
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Make Money Importing From China
A Free Guide For You To Explore New OpportunitiesOffered Through Opening Up The Doors To China AndLearning What It Takes To Make A Successful Business
Importing!
Brought to you by Mark Ames
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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 Chinas Trade Surplus ................................... 6
In-Depth Impact of Chinas Exchange Rate Policy .................... 9
A close look at why the Quick Rise after the Slowdown ............ 11
Is Internet Censorship Hampering Chinas Trade? ................... 15
Deciphering The Foreign Trade Law of China .......................... 17
Doing A Background Check On A Chinese Supplier .................. 19
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FREE TRADE WITH CHINATHEPROS 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 its 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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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 Chinas 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
nations 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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REASONS BEHIND CHINAS 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 Chinas 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.
Lets look at how on a smaller scale it works.
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Chinas 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 lets say a loaf of bread cost either a Yuan or a Dollar in your
own country. Okay, now lets 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 lets 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 Chinas 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. Thisis 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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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 Chinas
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 Chinas trade imbalance.
A major revaluation would definitely be required to get the Chinas trade
surplus to a moderate level. At this point it does not seem likely Chinas
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, its 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
worlds biggest exporter!
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IN-DEPTH IMPACT OF CHINAS EXCHANGE RATE
POLICY
For the past couple of months, Chinas 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 Chinas 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
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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 worlds demand of
making changes to Chinas 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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ACLOSE LOOK AT WHY THE QUICKRISE AFTER THE
SLOWDOWNIn 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 countrys 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. Its Clear As China proceeds on its path of progress,
its 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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CARRYTRADE AND ITS 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 andwill make the US dollar the worlds 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
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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 its 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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IS INTERNET CENSORSHIP HAMPERING CHINAS
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.
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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
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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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DOINGABACKGROUND CHECKONACHINESE
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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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 dont 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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