Top Sourcing

Frequently Asked Questions (FAQs)
Is it advantage to source from China?
	This is a decision that only you can make. China is called the world factory for the manufacturing industry. With 20 years rapid developing, now China is more and more important for the world supply chains. In spite of the cheaper cost on the labor and materials supply, the favorable local and export policy make it to be the most competitive manufacturing base in the world from the needle to the airplane. With the more strict quality control and the flying development on the technique and High-tech, sourcing in China is becoming a common and popular acknowledgement all over the world.
Is China suitable for my sourcing?
	·Do you have a plan to expand internationally? ·Are you thinking of expanding your product lines and expanding market shares to some of the fastest growing economies in the world? ·Do you feel that to remain competitive you need to transfer your manufacturing operations to a lower cost location like China? ·If you do not manufacture but instead source products for resale from others, to remain competitive, do you feel you have to lower your costs by sourcing your products direct from the manufacturer in a lower cost location like China? ·Are you willing to put up with a time difference that may require you to work a bit later at home at night to take phone calls or answer e-mails, travel long hours to China, meet and work with new people. ·If you answered Yes to one or all of the above questions, then talking further with our company could benefit you and us. Shanghai Top Sourcing helps businesses do the above. We’ve helped U.S. and other companies smoothly expand their operations and we can help you too.
How can I assure the security and economic upon sourcing in China?
	Although it is lower cost than other regions in the world, there’s some risks and uncertain situation while sourcing in China. With the continued developing for years, it is easier to do business in China, however the credit is still the primary problem occurred in the most of the business dissensions. To avoid any lost in your business in China, you should be aware of the industry situation, local cost, government law and regulation as well as the detailed factory investigation. The inspection is also very important, especially for the initial shipment or new products.
What is the most efficient method for sourcing in China?
	In recent years, the E-business is growing very fast and you can find many information you will be interested on the website. So it is becoming the most efficient way to contact your business partner or supplier. However, there will be some problems since the Internet is virtual world and you can’t entirely believe what you get from the Internet unless you saw the fact. So some business trip and factory visiting is still crucial for you. Of course, we can setup your branch or office to hire local employees; also you can find some experienced, reliable partner or agent to work for you.
Which companies are currently doing business in China?
	All Fortune 500 companies are currently doing business in China. Some well known names: Ford, GM, Microsoft, Wall Mart, Motorola, Oracle, Cisco Systems, Hewlett Packard, Compaq… but also small and medium sized U.S. companies including small to medium sized family owned companies.
Brief economic information about China:
	China is the fastest growing consumer economy and unless conditions change will soon surpass Japan as the largest Asian economy and the second largest world economy. Some facts on China - GDP growth has averaged 8% throughout the last 20 years; 1.3 billion people; major cities are: Beijing, Shanghai, Tianjin, Guangzhou and Chongqing. Twenty years of economic growth have created a middle class in more relatively affluent coastal areas and in Major cities. Many Chinese now have cars, own their own apartments, condominiums or houses, eat out frequently and are willing to buy western products, eat in western restaurants and shop for new products and services. China will host the 2008 Olympics Games and EXPO 2010 in Shanghai. China entered into the World Trade Organization (WTO) in 2002. China has a pro business government and progressive economic policies that encourage foreign investments.
Does China have modern infrastructure to support its economy and my business?
	Believe it or not, China has the highest number of cell phone users in the world. The quality of the phone lines in many locations can be better than those in most developed countries because quite often China has gone from nothing right up to the most modern systems without the now aging equipment. Highways in China and in much of China are as good or better as the U.S. Highway systems, the autobahns in Germany and the cross country links in Canada and Australia. Driving from Beijing to Shanghai can be just as convenient as driving across the U.S. Air transportation is as modern as anywhere in the world. Beijing, Guangzhou, Shanghai and many other sites in China have brand new airports. Air links exist daily to most major cities throughout the world and are on state of the art Boeing and Airbus planes. Railway transportation is quite convenient throughout China and China is now just starting a multi-billion dollar rehab of its entire systems. In the cities, you will see modern skyscrapers, well laid out streets and all the consumption culture with shopping malls, etc. as seen in the west. Office space throughout China is plentiful.
How much does it cost to start a business in China?
	This depends totally on the type of business, the size and the goals. Generally in China, labor to meet highly intensive unskilled work is inexpensive. Skilled workers are getting expensive in larger cities such as Beijing and Shanghai but generally the salaries are still lower than in the U.S. or the EEU. Getting your business registered can often cost a few thousand dollars. Beyond that, it depends on how well thought out are your plans; how many options are evaluated and the particular circumstances of the location chosen. This all can be worked out with Shanghai Top Sourcing. We will work with you to prepare business plans for your venture and to ensure that your plans are well conceived, well research and efficiently commenced.
How do I get my product from China?
	It is very important that you test samples first and to thoroughly do your basic homework before you issue your purchase orders. If your product needs product testing in China, Top Sourcing can help you with several testing laboratories depending on the product you have. The process can take weeks and even a month and will cost you $2,000 or more. We can take you all the way through and provide you with an analysis and report. If you want to get your company registered- Starting in China the following Basic Principles maybe helpful: · China welcome all types of foreign investments almost across all industries. · Getting a company started in China usually requires formal registrations. This can be a headache without expert assistance. With expert assistance, the process can move more swiftly and involve much less of your important time. · All businesses in China require an annual audit, which can be conducted by local accounting firms at inexpensive prices.
Can I get my company into China?
	Top Sourcing has extensive experience in market entry and company registration related issues. As we often get question specifically about starting a business in China, following is the basics on foreign related business structures in China. The current Chinese law recognizes THREE types of business entities that have foreign interest. These are as follows: Type 1: A Foreign Representative Office: This was the earliest and for a time the predominant form of foreign related entity that was/is allowed to do business in China. A so-called Rep office, as it is commonly called, can only perform liaison work between the foreign parent and local businesses. A Rep office cannot generate revenue in China and cannot sign or enter into any types of revenue generating contracts with local businesses. It is solely a communications vehicle that helps its parent company to do business with Chinese clients. Advantage: easy to establish, visible and looks good; Disadvantage: cannot operate as a revenue-generating business, can be expensive and has negative tax consequences. A Rep office is like the face of a foreign company, the flashier the Rep office, the better the image of its foreign parent. Type 2: A Joint Venture (JV) company. This used to be the predominant business vehicle for foreign companies. The foreign company provided the product, the money and sometimes the management expertise, the Chinese company provided the local connections necessary for government approval and local market expertise and the two companies split any profits. In China, a JV is a recognized corporate entity, which is a partnership between the foreign investor and the local Chinese partner. However, the JV is a corporate entity and not a partnership in the western legal sense. A JV can conduct business in China like any other business although there are certain industries that only permit 100% Chinese companies. With China’s entry into the World Trade Organization (WTO), the country is becoming more and more open to foreign businesses. A JV can enter into a vast majority of Chinese industries. Advantage: immediate market entry with local market expertise and understanding of local practice and requirements; Disadvantage: shared decision-making power, which sometimes resulted in conflict, delay or confusion. Oftentimes, less efficient use of resources and slowdown in decision making. We would recommend against entering into minority participation in a joint venture in all cases. There are instances in which the joint venture still makes sense but generally Wholly Foreign Owned Enterprises make the best sense today. Type 3: A Wholly Foreign Owned Enterprise (WFOE). A WFOE is a 100 percent wholly owned foreign subsidiary doing business in China. This is becoming increasingly the vehicle of choice for foreign direct investment in China. The WFOE is a registered local company but the difference with other local companies is that is its’ 100% foreign ownership. Advantage: absolute decision making power, no sharing of profits, more control over company operations, can be quicker decision making, more use of western business customs; Disadvantage: lack of local knowledge, lack of local government connections, less ability to influence government permit, tax and other decisions. This can be mitigated by using expert assistance, hiring qualified local managers and building a quality staff. Top Sourcing has extensive experience in the registration of a WFOE and we have assisted many WFOE clients in various business ventures. We will assist you determine the optimum solution for your company.
How do I get a factory started in China?
	Choosing the location in China to start your business and then choosing the form of your company are only the beginning. Then you need to decide on a region or a city and a site. Cost is one factor here. Also important are access to a stable source of trained labor, quality of local utilities, quality of roads and other infrastructure, proximity to ports, airports, etc. Additionally, you will need to register with required government agencies, select the right local or expatriate key company officials, file licenses, lease or build office space and production facilities, start hiring and many more issues. The decisions are many and the chance for error can initially be great until you gain experience and confidence. The old saying “Experience is often the best teacher” is true. The problem is that often the lessons may not come cheap or without a tremendous expenditure of time and delay. A little help at first goes a long way and can save you time, money and business opportunities. We are here to help.
Where do I start?
	Pick the right consultant. Use consulting service of Shanghai Top Sourcing we are not like the rest of consultants. First we have lived and worked throughout China, understand the law, culture and challenges of living and working throughout the region. We have people on the ground in most areas in China and access to specialists who will put your issue first and handle it confidentially and professionally. Second, we do not seek to be all things or to accept work in areas where others may provide a better service. We will analyze your issue in confidence and if we believe your matter is unlikely to achieve the results you desire or others would represent you better we will so advise you.