Why Now is the Perfect Time to Start a China Import Business
The yield curve has inverted, recession is imminent, and tariffs are the undeniable culprit.
That, at least, is the headline splashed across many news sites the last few weeks. With President Trump’s trade war ratcheting up and showing no signs of abating, several high-profile multi-national companies are exploring supply chain solutions outside of China. And for good reason. Costs are increasing, as is political uncertainty, factors which alone are enough to spook any Fortune 500 firm with an all Chinese supply line.
Lost in all the hysteria is the simple truth that, through strategic investment and government initiative, China has accumulated a massive competitive advantage in manufacturing infrastructure, especially when it comes to consumer goods. No other country on earth can offer the same level of concierge manufacturing service to both small and large foreign companies alike.
It’s true that places like Vietnam and Bangladesh offer lower labor costs; which is useful in mature, commodity-driven industries such as textiles. German engineering is world famous. South Korea and Taiwan specialize in high-end electronic parts such as semiconductors and integrated circuits.
But there’s a reason ‘Made in China’ has become such a ubiquitous moniker that it needs no introduction nor explanation. That’s because, quite literally, just about every physical good you can think of is made or can be made in China. The sheer variety of the Chinese manufacturing catalogue has no parallel in the modern world. It would take decades of capital investment and geo-political marketing for a Vietnam or Mexico to even begin to rival the capabilities of China.
The second reason now is the perfect time to start a business importing from China is precisely the current climate of uncertainty and fear surrounding trade. The trade war is affecting the Chinese economy as well, creating a perceived lack of new buyers in the minds of Chinese factory owners. I don’t need to spell out the negotiating advantage this offers to the savvy US business owner looking to get a good deal on the products they make and import.
Like any buying decision — it pays to shop around. Soliciting multiple suppliers allows you to play one off the other, potentially securing a higher-quality end product for the price of a lower-quality competing product.
However, the mantra ‘treat one another as you would be treated’ applies to international trade as well. I am a firm believer that ultimately you get what you pay for, but also you pay what you negotiate for. Ask for the deal you want, but know that at some price point you begin to incentivize your supplier to cut corners in places like raw materials, quality control, etc., and you may unintentionally end up with an inferior product than what you agreed to.
Finally, technology now makes it easier than ever to manage an import business from your desk or home office. Whether it’s Alibaba specializing in cross-border payments, supplier sourcing, and inspection services; Freightos and Flexport simplifying the import and customs process; or Amazon FBA perfecting online order fulfillment, now is a unique moment in history for brand and small business owners.
So don’t believe the hype surround the current trade war with China. While it certainly is a threat to the American consumer’s bottom line (and potentially Trump’s re-election chances), it presents a unique opportunity for the enterprising business owner.
And opportunities like this don’t come around very often.
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