How to start a small business in China?
Table of Contents
In the giant Chinese market, you can find many inexpensive and high-quality goods and get inspired by China business ideas.
China can be compared to the world’s factory, where virtually everything that can come to mind is produced. The ‘Made in China’ inscription can be found on almost all products in the middle and cheap price range.
In this regard, many experienced and novice entrepreneurs have a logical question- how to start a small business in China?
First, you need to choose a suitable business model for working in China.
There are the following business models and business trends in China:
- Dropshipping allows you to launch the best small business in China with virtually no capital. In this model, you need to take money from the client and then transfer the application for this product to the supplier in China, who will already send it to the applicant. In this case, you earn your mediation commission.
- Joint purchases of a certain number of people come together and buy a product from a Chinese supplier. In this model, you save on bulk purchases and reduce shipping costs from China, which are traditionally higher than the cost of the purchased product. For example, you can buy a batch of branded clothing with your friends, sell it through social networks, and launch an online store.
- Selling in bulk is a scheme similar to dropshipping (only you do not sell goods at retail, but in large volumes, getting your percentage for intermediation); this is one of the best businesses to start in China. There are many offers in China; you just need to find a reliable supplier. It looks like this: find a buyer with an established trading business. Take an advance payment and purchase the goods. As a result of closing the transaction, you get your commission.
- Launching your online store. In this case, you should already have a specific store of knowledge in entrepreneurship. At a minimum, you should know how to find and attract an investor, draw up a business plan, and promote a business. When you create a website, you can start with a one-page landing page or a group on social networks. Analyze prices, form profitable options for your buyers, and promote your offer based on business trends in China.
Steps to Starting a Business in China
- 1. Calculate your starting capital
- 2. Choose a product niche
- 3. Choose a China supplier partner
- 4. Purchase and payments for goods
If you want to immediately fall into the category of heavyweights, launch an online store or a page on social networks. Then start by writing a business plan.
It is essential not to fall for the bait of scammers. Therefore, study the seller’s documents, find accurate and trustworthy reviews, look for those with whom they have already worked. Ask this supplier for product samples. And discuss in advance penalties in case of default. Such rules are essential at the initial stage of your cooperation for a successful private limited company in China.
It is better to check the domain registration period; if it was registered a couple of weeks ago, it is better not to risk it. Check if the contacts contain the company’s address; usually, scammers indicate only the city or nothing at all.
Analyze the details of the Chinese supplier so that these are legal entity accounts, not individuals. Check the products on the supplier’s website; if everything is in order, then it is unlikely that this is a factory.
You can also ask the supplier to invite you to the factory, and their status will be clear from their response. Do not be too lazy to inquire about the company through the Trade and Industrial Company, but for this, you will need a person with knowledge of the Chinese language.
Business opportunities in China
When making a responsible, balanced decision for the best business to start in China, the question naturally arises: how to use all the opportunities provided by Chinese manufacturers? The most frequently implemented project is an intermediary between Chinese firms and types of business entities in China. For the successful implementation of the project, it is necessary to organize long-term cooperation with Chinese manufacturers.
The most realistic are three main options for doing business through a Chinese agent, concluding a contract for representing interests with a consulting company, and working directly in China. Choosing the best way of cooperation requires considering that each option has its advantages and disadvantages.
- Giving preference to the simplest and cheapest way of working through an agent, types of business entities in China, you need to be prepared for various problems arising when communicating with representatives of another nation. The likelihood of immediately finding a professional agent who will successfully defend your interests is low.
- Working through a foreign consulting company is more promising. Experienced employees of the company, working in China and representing the specifics of doing business, will quickly find the best offer and reliable suppliers. The main disadvantage of this option is that the services of such companies are not cheap.
- Opening your own office in China, of course, provides an undeniable advantage for the best business to start in China. Employees will be able to analyze the development trends of the Chinese market, navigate skillfully, and establish close relationships with Chinese business people. Although this option requires a sizable capital investment, and large companies can take advantage of it.
Do not forget about the possibility of concluding contracts with Chinese manufacturers directly; this is the best option for business opportunities in China. At the same time, it is imperative to remember that the Chinese value personal relationships very highly. Since personal communication is essential, not all issues can be resolved by phone, fax, or letter. When discussing business issues or making a deal, a company representative should be present, and the openness of intentions will certainly consolidate good business relations.
Popular business idea for reselling goods from China
Chinese goods attract buyers due to a wide assortment, and sellers by their cheapness and nature of business list in China. The price of goods from China, including delivery, will be at least half the price of analogs from other countries.
It is necessary to plan the assortment of goods, find a source of profitable purchases, establish regular supplies straight from China and find interested buyers to start selling Chinese products.
There are many ideas- for example, you can choose goods that are familiar to everyone (household goods, clothes, accessories) or choose a niche of unique things that you can purchase exclusively in China.
The following are very popular among buyers:
- Household accessories
- Hygiene products and cosmetics
- Plastic containers, disposable tableware
- Children’s things and toys
- Shoes for children and adults
If your plans are a small business for the repurchase and sale of goods, Chinese online stores, such as AliExpress and others, are at your service.
Suppose you plan to open a large-scale nature of business list in China and plan to establish official cooperation with Chinese suppliers. In that case, you can contact them directly or use the services of a consulting firm, whose employees will find profitable suppliers for you, discuss the terms of cooperation and establish regular deliveries of goods from China.
When finding consulting firms that cooperate with China, it is difficult to discover the most exciting proposals for you through a search engine on the internet.
There is a high probability of finding a significant number of inexpensive and high-quality goods in the large Chinese market, but also stumbling upon swindlers. Pay maximum attention by checking your future supplier thoroughly.
In general, to summarize, your success in business with China will be influenced by the level of your knowledge and ability to find a product that will soon grow in demand, correctly calculating the profitability of a business. It is profitable to build work with suppliers and organizational ability to deliver goods and sales to the end consumer. And over time, to automate and optimize the entire business process with China as much as possible.