China’s business market is vast and robust, yet many seasoned and successful companies do not tap into its full sales potential. In fact, they do this entirely by choice.
There are two main reasons why international companies limit themselves in China, and both are related to trading. The first reason involves selling products only to customers that can conduct foreign exchange transactions. Yet the majority of Chinese companies actually prefer using local currency to purchase their products, because they wish to shy away from the hassle and bureaucracy that comes with foreign transactions. By bypassing these potential customers due to trading formalities, international companies are giving up a lot of business.
On to reason number two. Many international companies choose to manufacture their products in China and sell them in overseas markets. Since they can’t manufacture the products themselves, they use a local OEM. But by doing so, they neglect the local Chinese market.
Why do international companies limit themselves in this fashion?
The main reason is that many companies think that they can’t sell their products in China (especially in local currency) without setting up a local Chinese entity. They are also concerned that if they sell their products to Chinese consumers, their OEM will take notice and begin selling to the same clientele for cheaper prices.
These are all legitimate trading concerns. The purpose of this article is to offer a solution – because it is a shame to allow such massive business potential go to waste.
If you’re an international company operating in China and have experienced the dilemmas described above, then you should be aware that in most cases, establishing a local company in China to sell in local currency to Chinese customers is not required. All you need is a trusted trading partner.
PTL Group has been providing trading services in China for over 20 years. We act as a trading services partner for numerous international companies in China. We will now pinpoint several challenging trading scenarios in China, and elaborate on how they can be effectively dealt with.
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How do you sell your products in China to customers who want to pay in RMB?
In the scenario that you want to sell your international products in China, to customers who want to pay in local currency, and yet you don’t have a local entity – you’ll be smart to use a reliable trading partner who can sign a local contract with the customer, receive RMB payments and issue a local invoice. Make sure to select a trading partner that has the specific selling licenses you need, and who can also take care of product delivery and payment collections & transfers. When the trading partners signs a contract with your customer, it will also need to sign a “back-to-back” contract with you.
How do you start selling your locally-manufactured products in China, without turning your OEM into your main competitor?
You don’t want your OEM to start poaching your customers. That’s a legitimate concern. A trusted trading partner in China can sell your products for you – without any indication that your company is involved – acting as an effective buffer between you and your local manufacturer.
How do you pay local manufacturers and suppliers in China, who want to receive payment in local currency?
A reliable trading partner should have no difficulty signing purchasing orders with each of your suppliers. That’s one aspect. Another important aspect is collecting and storing the goods your suppliers deliver to you. This is something a good trading partner should be able to do with ease – VAT export refund applications included.
How do I purchase goods from local suppliers in China and send them to a local OEM factory for assembly – and then sell them to customers both in China and overseas?
Ask your local trading services partner to deliver this full supply chain service on your behalf. This will require your partner to act as your company’s Import Of Record and local purchaser. As a company that provides trading services in China for over 20 years, we can confidently say that a good trading partner should be able to make sure that all of your rights are protected, while significantly minimizing risks.
What about licenses? How do I sell my specific products (electrical, cosmetics, medical, and more) without local import licenses and sales permits?
To sell products in China – especially imported products – import and selling licenses are required. A trading partner in China can help you obtain the licenses and sales permits you need. To do so, it will apply for them on your behalf, and will be in touch with all relevant parties in China.
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Business and Commercial Services in China
Over the years, PTL Group has acted on behalf of numerous international companies in China, who relied on us as their trading services partner of choice.
We provide a range of sales and distribution services that include import and sales license obtainment, product importation, RMB sales contract signing, consignment agent services, RMB fund collection & repatriation, credit control, and order dispatch arrangement. Our extensive procurement service portfolio includes signing RMB purchasing and selling agreements, local purchasing from suppliers, overseas exporting, and VAT export refund management. In addition, we also provide e-commerce solutions and manage e-commerce financial transactions.
By partnering with us, you will benefit from a holistic, multi-disciplinary, comprehensive support package that includes a wide range of trading services – far more than any distributor can offer. If any challenge arises, our experience and expertise can be counted on to solve it.
For more information on our trading services in China, get in touch today. We’ll be happy to discuss your needs.
