How to import form China on a limited cash flow

How to import form China on a limited cash flow. 

Whether you are an experienced importer from China or you are just taking some first steps to start your own business, cash-flow problems are common. Cash-flow hassles are more likely to be experienced by small-medium sized importers, the problems are particularly common in the Chinese market – due to its complexity and volatility - and even more undermining in the import- export sector where payment terms are generally stacked against the buyers cash flow cycle time.  If not tackled appropriately, cash flow shortages can result in significant threats to the profitability and stability of your business.

The potential danger of cash-flow shortages are a menace which financial and sourcing organizations have been trying to combat. So there are some solutions out there for businesses in order to help avoid said cash flow issues. Here we summarize a few of the options, some are really new and some have been around for a while but are not that widely talked about.

1. One touch via Alibaba

Jack Ma's celebrated sourcing giant has recently launched a new credit financing service which provides for companies buying in China. It only take a few minutes to apply for but at the moment is limited to companies registered in the UK, USA and Spain. I agree this is limiting for most of us but the plan is to roll out the service elsewhere. They have the power to do it. With regards to the eligibility for such service, it is very easy to find out whether you meet the requirements. Generally speaking, if you have some experience player in the sector you should not be encountering major difficulties in securing finance for 90 days at competitive rates.

2. Export Insurance - Sinosure

A popular and painless solution to the cash flow conundrum that has helped to revolutionize many foreign importers' businesses, Sinosure's basic premise is that buyers/importers can leverage the insurance policies of sellers/exporters. Sinosure was formed in 2001 from the export credit insurance arms of both the PICC and the China Export Import Bank; to date it has financed exports and investments of around 300 billion USD. In the past 10 years, Sinosure has been catering not only for the big stuff but also small and medium enterprises making their services as accessible as possible. Along with the obvious cash flow benefit, another advantage is that if you are a victim of poor/faulty products then Sinosure will listen to complaints if you can back them up. Finally this option is also accessible to new companies and first time importers.

3. Supplier Agreements

Always think about making a supply agreement with your manufacturing partner in China. Often buyers come in too timid in relation to payment terms, immediately losing the upper hand to the supplier. There is nothing terrible about agreeing to a 30% deposit and 70% on a copy of the B/L if you're comfortable with that and are really confident about the product quality. However if you need a bit more leeway and easing of cash flow pressure to allow your business do the things you want, then you need a different plan. 

4. China Exim bank

China EXIM Bank represents is a government-owned bank and so should be a pretty reliable partner. Their central mandate is to facilitate the import and export of mechanical and electrical products but not solely limited to same. The EXIM bank normally deals with very large development projects such as overseas infrastructure, credit can be extended for up to 10 years for the really big stuff. As is often the case for banks, the process to receive financial assistance can be long, even though –in this case- it is not as draining as applying for a conventional loans. Clearly, you have to adhere to some specific criterion. For more detailed information you can contact us.

Comments

Alma Blake

China is a country on top with the highest economy. This post about importing from China on a limited cash flow is so informative. Entrepreneurs should not miss to read this post.

Maklein Cruz

This information is very helpful. It's nice to know that we can refer to this if we want to do business in China. Since they have the lowest cost of labor.

Sharon Lopez

Monitoring cash flow is crucial in business. Maintaining cash on hand is a material thing in order to address those upcoming activities which are imperative for the smooth flow of business transactions. It is an interesting thing that you mentioned about supplier agreement. This could be a great help for importers. Acquiring terms for a certain transaction could really help the importer in maintaining a smooth cash flow which is very important in a business.

Tom Esthber

Is this why Chinese products are so cheap? I love buying from Jinhao and other Chinese pen brands.

edgaE Tamayo

Good to know such information, in this article. Actually, the content is not for small entrepreneurs, However, it will still be a reference for bigger market owners who want to do a credit facility.

Therese Marie Baguio

One major struggles of small business owners in opening their doors in China is the complex and volatile payment centers. It is extremely hard to send and receive money in China especially in the provincial districts. This article is truly helpful for the small-medium scale businesses for options to prevent cash-flow hassles.

Nnaemeka Odimegwu

The facilities you have mentioned in the article are good for business. It shows that China is very much interested in facilitating export-import business. That explains why China is a huge manufacturing hub.

Maury Cheskes

Interesting piece. It must be frustrating to run into so many problems when China is such a leading country for imports. I like the Sinosure promise to listen to clients' complaints and redeem them.

Kevin Jonson

It is a bit disappointing that Alibaba opened credit services only to those three major markets. Any updates on when it opens for Asia?

Lester Powell

Not great options

Faith Marfil

I heard of this topic before and learned that Alibaba is the go-to for most people because their rules and regulation is easy plus, there's low chance of denial.

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