With the combination of a population crossing over 1.4 billion alongside having a strong middle class economy enables China to be at the center of International trade. From electronics to clothing and even agricultural products there is a strong demand in China which makes it a completely unmatched export opportunity, and with China being the global powerhouse of all the industries, they import machinery and raw materials from all over the globe.
Nonetheless, this highly proactively and ever developing market has several problems to face such as; managing regulations, dealing with currency exchange, and ensuring that the logistics are smooth, are only a few problems businesses face while importing from and exporting to China. Understanding and preparing for these challenges is a necessity for doing business there.
Compliance issues and Regulatory Policies
Understanding China’s import and export restrictions that are put into place by the GAC and SAFE along with other supervising bodies is an incredibly hard task to do. For exporters it becomes a task to understand the codes for product classification, and tariffs, along with gross tonnage requirements. Similarly, people that are importing items have to tackle issues such as…
The processes would be even more difficult if they had to be conducted without the help of local compliance specialists, since the risk of incurring delays, being imposed blank fines and even the appropriation of goods which a business imports or exports exists. Hence, as the Chief Compliance Officer at Collect&Pay Guldana Ablanos assures, “We are teaming up with a knowledgeable group who will understand every regulatory nuance of the business,” It will help to make compliance easier and ensure that goods will be moving through the system efficiently.
Currency Exchange and Payment Processing
Dealing with the conversion into China’s domestic currency, the yuan, the process of exchanging the payments becomes more difficult. Currency fluctuations are bound to affect this type of business especially when engaging with businesses that handle multi currency transactions. Furthermore international payments deal with a lot of hefty service charges and take forever to process.
However, TransferWise’s platform for instance, enables companies to minimize such risks through their real time exchange battle rates and quick cross border payment processing. Also providing cross border payment processors Collect&Pay allows merchants to optimize their payment flows while saving on channeling costs. These systems improve a company’s ability to oversee their operations as they make their transactions more transparent.
Although due to China’s infrastructure there is a substantial amount of commodities that can be traded, the vast logistics network will make it difficult for the commodity to be exported out of the region. The delays caused by the large volume of activity at some of China’s largest ports, such as Shanghai or Shenzhen, are relatively frequent. In addition to this, shipping goods across the country entails g Local carriers, which makes it even more complicated.
Incorporating dependable suppliers and considering the most efficient systems for vendor transactions is critical to maintaining the regular functioning of the supply chain. Companies also have to be prepared for the risk of interruption; for instance, the imposition of new customs duties or fluctuations in the level of demand.
Trade Tariffs and Political Considerations
The mainland Chinese tariff on top of the world trade organisation (WTO) terms poses a serious dilemma to most businesses with operations in China especially for those industries currently entangled in a trade war. Global commerce is greatly affected by such procedures since the price of goods may become prohibitive. It is vital to continuously monitor shifts in trade policy if businesses are to remain viable in the long run.
This task of breaking down costs and engaging in cost efficiency exercises before signing up for contracts allows companies to instil some dues in the event that a tariff will affect them. This allows major companies to integrate crucial insights through planning tools for optimal decision-making.
To Anthony Bridges , Chief Finance Officer at Collect&Pay, explains where problems emerge: “Efficiency in payment processes is just as important as compliance,” ‘Paying with efficiency will solve many problems but will increase costs when cross border payments with larger amounts have to be made and the company is already on a thin budget. By focusing on the efficiency of the financial workflows the costs and the cash flow of the company can benefit’.”
Building Long-Term Success in Trade with China
The reason for this is that trade with China demands that companies need to be operationally efficient but also compliance and financial strategies factors. Responding to these problems head on enables the companies to be competitive and robust in a world where the economy is changing and growing rapidly.
In this constantly changing environment, working with the relevant experts can be of great help for firms. CollectandPay offers some operational solutions that are empowering and understanding of”Engineered Works” within the financial workspace. Thanks to such expertise, the firms are able to target expansion while maintaining efficient business systems in one of the fastest expanding South American economies.