Yiwu, 300 kilometers away from Shanghai, is the largest market of petty commodity wholesales in the world and sees a non-stop stream of foreign buyers looking to place their orders. Along with almost unlimited selection, though, comes a good deal of risk which all Yiwu traders should prepare for. This Survival Guide is meant to help traders reduce their risk and enhance their profit potential.
1. Know who you are dealing with.
We cannot stress this enough! It is absolutely essential that you try to establish the bona fides of your business contact before any money changes hands.
2. Avoid middlemen if at all possible.
It is not uncommon for middlemen to abuse your trust and put together deals with the sole intention of defrauding you. As individuals (as opposed to companies), they are also much more difficult to vet and can be almost impossible to track down should you run into problems.
3. Have contracts translated into your native language.
Never sign anything you haven’t read with your own eyes and are absolutely sure you understand. Don’t rely on others to explain contract terms to you and certainly don’t take the word of a seller or middleman.
4. Work out how to deal with disputes before they happen.
Always include a dispute settlement clause in your agreements.
5. Insisting on stamped documents can help keep your money safe.
The company seal is king in China and should be on every official document you get from the seller. Fancy letterhead and pre-printed forms mean nothing in China.
6. Visit the factory.
Never rely on words alone – pay a visit to the factory if at all possible. If the seller refuses, take this as a warning.
7. Hire a professional interpreter to accompany you to meetings.
Even if your English is great, the seller might not be as fluent. To avoid costly misunderstandings, bring along your own interpreter (preferably one who can speak Chinese and your native language).
8. Record everything using your phone or a small digital recorder.
It might sound sneaky, but if things take a turn for the worse having it all on tape can make a big difference.
9. Visit China on the right type of visa.
If ever you need the police to help you out with a deal gone bad, you don’t want to start off having to explain why you are doing business on a tourist visa.
10. Let a Chinese lawyer review all your contracts before paying.
Legal service in China is, in general, professional and reasonably priced. For all but the smallest deals it makes financial sense to have your documents looked over by a Chinese lawyer. While it is not possible to eliminate risk, this will at least give you a significant second layer of security.