During 1993, output and prices were accelerating, investment
outside the state budget was soaring, and economic expansion was
fueled by the introduction of Special Economic Zones (SEZs) and
the influx of foreign capital that the SEZs facilitated. Beijing
approved additional long-term reforms aimed at giving still more
play to market-oriented institutions and at strengthening the
center’s control over the financial system; state enterprises
would continue to dominate many key industries in what was now
termed “a socialist market economy”. The PRC government called
in speculative loans, raised interest rates, and reevaluated
investment projects. The growth rate was thus tempered, and the
inflation rate dropped from over 17% in 1995 to 8% in early
1996. The economy slowed in the late 1990s, influenced in part
by the Asian Financial Crisis of 1998-99, with official growth
of 7.8% in 1998, and 7.1% for 1999. Growth accelerated again
early in the new century, reaching 9.1% in 2003, 9.5% in 2004
and 9.8% in 2005.

In December 2005, China’s National Bureau of Statistics
revised its 2004 nominal GDP upwards by 16.8% or Rmb2,336.3
billion (US$281.9 billion), making China the 6th largest economy
in the world. (overtaking Italy, with a GDP of almost $2 trillion
USD.) At the start of 2006, the PRC officially announced itself
as the 4th largest economy, measured by USD-exchange rate
overtaking France and the United Kingdom. At the beginning of
2007 China stands as the second largest economy in the world
measured by domestic PPP (purchasing power) measure, at about
$10 trillion USD, although such estimates must be taken with a
great deal of caution as PPP calculation is very rough,
especially in a country as huge as China, Chinese purchasing
power varies drastically between Shanghai and Sichuan, and PPP
is irrelevant for imported goods and overseas purchases. By the
end of 2008, China is predicted (measured by exchange rate) to
overtake Germany as the third largest economy, and to overtake
Japan by 2020. It would then overtake the United States by 2040
to become the world’s largest economy.

Despite China’s notable economic growth, its per capita and
absolute GDP growth has been outpaced by some nations. From 1999
to 2006, Russia’s nominal per capita GDP increased from $1334 to
$6879 (515 percent), while PR China increased from $870 to $2000
(229 percent) [1] Similarly spectacular are some Middle Eastern
and oil producing nations such as Qatar, Bahrain, United Arab
Emirates, Kuwait, and Brunei. Kazakhstan, Turkmenistan,
Azerbaijan, and Angola have managed to outpace China harnessing
vast energy reserves in the same period. However, Equatorial
Guinea, Africa is the star, having recorded 79% percent real GDP
growth in 2004. Even nations in Asia such as Vietnam have managed
to triple GDP between 1999 and 2006 in nominal per capita dollar
terms, more than China. The reason for this is mainly due to
China’s large labor pool, which helps to contain inflation, and
its refusal to increase the value of the Chinese yuan, which
would have led to faster growth statistically, but may have
sacrificed some stability in growth.

In addition, it must be noted that per capita income in absolute
dollars (not percentage) GDP per capita is rising much faster in
most of the developed world than China, because of China’s very
low base income. However, what China has going for it is that it
may be able to continue this percentage of growth for decades to
come, statistically spiraling growth in absolute dollar terms if
its pace is maintained!!

To fully grasp the fundamental importance of that question, you
need background.

The economy of the People’s Republic of China is the fourth
largest in the world when measured by nominal GDP. Its economic
output for 2006 was $2.68 trillion USD. Its per capita GDP in
2006 was approximately US $2,000 (US $7,600 with PPP), still low
by world standards (110th of 183 nations in 2005), but rising
rapidly. As of 2005, 70% of China’s GDP is in the private
sector. The smaller public sector is dominated by about 200
large state enterprises concentrated mostly in utilities, heavy
industries, and energy resources.

Since 1978 the People’s Republic of China (PRC) government has
been reforming its economy from a Soviet-style centrally planned
economy to a more market-oriented economy while remaining within
the political framework provided by the Communist Party of
China. This system has been called “Socialism with Chinese
characteristics” and is one type of mixed economy. Since being
introduced in 1978, these reforms have helped lift millions of
people out of poverty, bringing the poverty rate down from 53%
in 1981 to 8% in 2001.

To this end, authorities have shifted agricultural work (in
which approx half of the work force is engaged) to a system of
household responsibility in place of the old collectivization,
increased the authority of local officials and plant managers in
industry, permitted a wide variety of small-scale enterprise in
services and light manufacturing, and opened the economy to
increased foreign trade and foreign investment. The government
has emphasized raising personal income and consumption and
introducing new management systems to help increase
productivity. The government also has focused on foreign trade
as a major vehicle for economic growth. While the accuracy of
official PRC figures remain the subject of much debate, Chinese
officials claim the result has been a tenfold increase in GDP
since 1978. Some international economists believe that Chinese
economic growth has been in fact understated during much of the
1990s and early 2000s, failing to fully factor in the growth
driven by private enterprises.

Current GDP per capita grew a paltry 17% in the Sixties, rising
to 70% in the Seventies, and China surged ahead of India
registering a remarkable growth of 63% in the turbulent Eighties
and finally reaching a peak growth of 175% in the Nineties.
However, Chinese prosperity still remains concentrated in the
coastal and southern provinces and efforts have been made in
recent years to expand the prosperity to the inner provinces and
the industrial Northeast rust belt.

In the 1980s, the PRC tried to combine central planning with
market-oriented reforms to increase productivity, living
standards, and technological quality without exacerbating
inflation, unemployment, and budget deficits. The PRC pursued
agricultural reforms, dismantling the commune system and
introducing the household responsibility system that provided
peasants greater decision-making in agricultural activities. The
government also encouraged non agricultural activities, such as
village enterprises in rural areas, and promoted more
self-management for state-owned enterprises, increased
competition in the marketplace, and facilitated direct contact
between mainland Chinese and foreign trading enterprises. The
PRC also relied more upon foreign financing and imports.

During the 1980s, these reforms led to average annual rates of
growth of 10% in agricultural and industrial output. Rural per
capita real income doubled. Industry posted major gains
especially in coastal areas near Hong Kong and across the strait
from Taiwan, where foreign investment helped spur output of both
domestic and export goods. China became self-sufficient in grain
production; rural industries accounted for 23% of agricultural
output, helping absorb surplus labor in the countryside. The
variety of light industrial and consumer goods increased.
Reforms began in the fiscal, financial, banking, price setting,
and labor systems.

China’s economy regained momentum in the early 1990s. Deng
Xiaoping’s Chinese New Year’s visit to southern China in 1992
gave economic reforms new impetus. The 14th Communist Party
Congress later in the year backed up Deng Xiaoping’s renewed
push for market reforms, stating that the PRC’s key task in the
1990s was to create a “socialist market economy.” Continuity in
the political system but bolder reform in the economic system
were announced as the hallmarks of the 10-year development plan
for the 1990s.

For instance, should you wish to apply for a quote for a non-
English or English speaking country and you wanted to know
what the cost per Kg was to get the item to the overseas port
for shipment then this would be expressed on your contract as
FOB (Free On Board). This means the exporter is responsible
and pays for everything up to departure port, including
export charges.

You and your shipper assume full responsibility from that
point. Should you require the same goods’ cost per Kg,
including sea freight then you would write on the contract:
“C/F” (Cost and Freight), which means the exporter has
included cost of goods, the freight and the export charges.
Thus, if you wanted the cost to Sydney, Australia, then you
would write “C/F Sydney, Australia”.

With the incoterms, there can be no doubt to what has been
requested. It really is a total No Brainer!

* Ex-Works – You are responsible for all costs once
merchandise leaves the supplier’s door.

* CIF – (Cost, Insurance & Freight) Supplier pays to send the
goods to the port
of destination and arranges the minimum cover marine insurance.

* DDU – (Delivered Duty Unpaid) The supplier pays for all costs
to deliver to the buyer’s door, with the exception of duties.

* DDP/CARRIAGE PAID – (Delivered Duty Paid) The supplier delivers
to the buyer’s door and pays all of the costs including duties.

The most common shipping quote is FOB – or ‘Freight on Board’.
This means that freight costs to the point of loading are
included in the price – you negotiate the terms you want.

A Word of Warning

‘FOB factory’ has a very different meaning altogether.
“Freight on Board Factory” means that you pay onward costs to
the local port or airport and this can increase the price
considerably – particularly if the company is situated inland.
A better quote to get is ‘CI&F’ or Cost, Insurance and Freight.
This means that in addition to the FOB
price, you’ve been quoted insurance and freight costs. This is
ideal as it means you can budget much more effectively. Or,
if you are extremely fortunate, DDP, where you pay the price
of the product delivered to your door.

The site Export 911 has a great information area for
people new to import/export.
You’ll find detailed descriptions of each stage of the process
and importing terms and requirements. Just remember that this
site is aimed at exporters rather than importers (although
many terms and processes are the same), and the goal of the
site is to get you to use their services, hence processes are
in those terms.

Shipment size

The cost of your shipment will depend on the weight or volume
you ship. You will either need a Full Container Load or a
Lesser Container Load. For a full container load, the
standard container sizes are 20 foot and 40 foot in length
and can accommodate whatever mixture of products you choose.
The shipping cost includes the use of the container, although
you can buy a container if you are making very frequent
purchases.

If you are purchasing from one supplier, the container is
taken to their premises, loaded on site, sealed and collected
for onward shipment to your country. For multiple suppliers,
you can arrange to have all goods delivered to your freight
agent who will load all the goods at their premises.

Full Container Loads are the most efficient way to ship as
cost savings can be made on packaging and less labor is
required. Apart from the obvious advantage of the lower
freight cost, the additional Export/Import processing and
Handling & Haulage costs are all more economical as
processing a full container is calculated as a single
transaction.

If you are not importing a full container load, then your
shipment will be consolidated along with other company’s
goods traveling to the same destination. The rates applied
to a Lesser Container Load are calculated by the volume your
goods take up in cubic meters. Lesser container loads are not
as economical as full container loads because they require
more packaging and more labor loading and unloading at both
ends.

Invoices and Forms

When you have negotiated a deal with a seller, including the
shipping terms, price of goods, and the packaging they’ll be
shipped in, the seller will send you a Pro Forma invoice,
which you pay according to the arrangements you have
negotiated. A pro forma invoice is basically an advance copy
of the final invoice. If you need to apply for a letter of
credit (L/C) and/or foreign exchange (import) allocation,
you will need your pro forma invoice…

I’ve just read an article that says that 40% of Australians now use
alternative medical services such as chiropractors, naturopaths,
acupuncturists, herbalists and so on. This tells me people are sick
(literally) of going to doctors pushing pills and surgery which at best
does little good and at worst actually makes you feel far worse than the
disease itself. (I know all about this, not having taken any pills for
ages and feeling much better for it.)

So what sort of product would these people be interested in? How about…
“How to stay healthy and get rid of your ____________ (arthritis,
headaches, cancer, diabetes, heart problems, asthma etc., etc.) without
drugs or surgery.”

or…
Amazing facts your doctor won’t tell you about your Asthma (or whatever).

or…
Home remedies your doctor won’t tell you about.

Let’s face it. Anyone with a specific problem or interest, be it health,
business, parenting or whatever else, will usually be prepared to pay for
the right kind of information regarding their topic of interest.

For example, if you have cancer…

“How I cured myself of Cancer without drugs or surgery.”
For free information call _____________.

Or if you have migraine headaches…

“How I got rid of my migraine in less than 3 minutes without pills.”
Amazing medical break*through reveals a surefire technique any one can
use to get rid of migraines and tension headaches. Call __________for free
info.

Are you seeing a pattern here? The key as I said is to have the right
topic for the right market. One way to make sure you’ll be successful is
to test the market before committing to any project or newsletter.

Let me repeat that…

Test the market first.
Test the market first.
Test the market first.

The way you do that is to run some classified ads to see if anyone is
interested in what you are selling – your topic. The next thing is to
prepare a sales letter and try to convince them of the value of your
product and sell it to them…

It never ceases to amaze me how much money many people will spend to
set up a business, write a book, develop a product, take out patents,
copyrights and trademarks – without having any idea if anyone is actually
interested in what they are selling. Doing it that way is a recipe for
disaster.

Don’t do it.
Don’t do it.
Don’t do it.

Find a market and test if they are interested in what you want to sell
them… before you invest in the product. Believe me, you’ll save
yourself a lot of money that way.

Manufactures are, of course, more likely to subsidize their
representative’s expenses if the representative handles only their
products. For economic reasons, many manufacturers like to have a
representative establish a branch office or agency. The manufacturer and
the representative have a very close relationship, and the representative
is expected to do much more than a brokers or commission agent.

The advantages to hiring a representative are:

* an expert, who can handle the exports, can be available at a fraction of
the cost of employing someone full time.

* association with a similar product handled by the same representative
can lend credibility and/or prestige.

* due to the representative’s knowledge of the market, information they
gather (particularly credit information) is more valuable and reliable.

* the producer has instant access to world markets and distributors and
dealers in every country, who are interested in their products.

* the manufacturer only pays according to how well the representative
performs as the representative is paid by commission.

* the manufacturer can have representation multiple locations with very
little expense.

* Cultural and language barriers can be overcome with a careful selection
of a representative.

* the manufacturer’s representative brings with them a familiarity with
their own country and its market. To be a good manufacturer’s
representative, it is best to set up outlets in various territories by
appointing exclusive distributors, which you can do as the manufacturer’s
exclusive representative. An exclusive distributor places an initial order
upon signing an exclusive distribution agreement. Then they are required
to import a minimum amount of products per year, which guarantees that the
rep has a steady amount of business, and he does not have to continually
seek out new customers. The rep only needs one distributor per location
(country, state, region, or city) depending on the territory’s size of the
type of product. After setting up a network of distributors, a
manufacturer’s rep has to follow up orders and assist his distributors to
promote their products.

FACTORS TO CONSIDER BEFORE EXPORTING
1. The nature of the product to be exported. Some goods are not
exportable. Perishable items have limited marketability.

2. Supply. Ensure there is enough supply (or surplus) of the product.

3. Demand. Determine the overseas demand for the product, and if it
is short term or long term.

4. Profit margin. Ensure that there is enough potential for profit to
make it worth your time. Work out all costs as accurately as possible,
and consider the selling price.

5. Government restrictions. Check if there are government restrictions
on the export of the goods. Also check for any import controls in the
country you are exporting to.

6. Experience. Ensure you know enough of the process to do everything
properly.

7. Survey. Research the market you are exporting to. Compare your
products with those already on the market, especially quality and price
(see next page).

8. Capital and credit. Since you will be dealing with large quantities
of stock, sufficient capital or bank credit is needed.

9. Common law patent, trademark, or copyright protection. If you are
the manufacturer and wish to promote your products abroad, you should
make sure that foreign manufacturers can’t copy your product and
reproduce it locally. Find out if there are existing treaties to
protect your rights on the merchandise you are exporting.

10. Visit the website: http://www.import-export-secrets.com/dvdrom/main.html

* The sending bank transmits a secure message (via a secure
system such as SWIFT, or Fedwire) to the receiving bank,
requesting that they effect payment in accordance with the
instructions given.

* The message also includes settlement instructions. The actual
transfer is not instantaneous, but may take several hours to
transfer from the senders account to the receivers account.

* The banks involved must either hold a reciprocal account with
each other, or the payment must be sent to a bank with such an
account, or a correspondent bank, for further benefit to the
ultimate recipient.

Wire transfer, done bank-to-bank, is considered the safest
international payment method. Both account holders must have a
proven identity, and there is little possibility of a
charge-back, although wires can be recalled. Additionally,
information contained in wires is transmitted securely through
encrypted communications methods. The price of bank wire
transfers vary widely depending on the bank and its location,
and in some countries the fee associated with the service can
be costly.

Wire transfers done through cash offices, however, are
more-or-less anonymous and designed for funds transfer between
persons who trust each other. It is unsafe to send money by
wire for an unknown person to be collected at a cash office.

Banks within the United States utilize SWIFT to make payments to
banks in countries outside of the United States. For bank-to-bank
transfers that are conducted within the United States, the
Fedwire system is used. This system utilizes the Federal Reserve
System and its assignment of bank routing numbers (in a similar
way to how Automated Clearing House, or ACH payments, use those
numbers to effect the payment and collection of checks).

There are several means of payment for international trade
transactions. One of the most widely used and accepted is
the Letter of Credit…

Letters of Credit

You will, at some point in your Import/Export career, need
to use letters of credit in most import/export transactions.
A letter of credit is therefore one of the most important
aspects of this business.

A letter of credit is the written promise of a bank, on
behalf of a buyer, to pay a seller provided the seller
complies with the terms and conditions set forth in it.

Those terms and conditions revolve around two issues:
1 Documents that show title to goods by the seller.
2 Payment.

Banks act as intermediaries to collect payment from the buyer
in exchange for the transfer of documents that enable the
holder to take possession of the goods.

Documentary credits provide a level of protection and security
to both buyers and sellers engaged in international trade.
The buyer is assured that payment will be released to the
seller only after the bank has received the title documents
called for in the credit, and the seller is assure that they
will receive payment.

Letters of credit can be revocable (can be cancelled by the
buyer), or irrevocable (can’t be cancelled by the buyer),
confirmed (a second bank, in addition to the buyer’s bank,
guarantees the payment) or unconfirmed (payment is guaranteed
only by the issuing bank).

Types of Letters of Credit

There are many types of letters of credit. Each type contains
features designed to meet the different needs of the buyers,
sellers, and banks involved. Some types of letters of
credit are: revolving credits, red clause credits,
transferable credits, and back-to-back credits.

The Role of Banks

It is important to note that a fundamental principle of
letters of credit is that banks deal in documents, not in
goods. Banks are responsible only for issues relating to
documents and the specific wording of the documents as
opposed to issues relating to the goods themselves.

Therefore, banks are not concerned if a shipment conforms
with the documents, only that the documents conform to the
wording of the letter of credit.

Although letters of credit provide good protection, they do
have their limitations. They do not ensure that the goods
actually shipped are as ordered, nor do they prevent other
disagreements or complaints arising from the trade. But the
more you learn about letters of credit, the less likely
these limitations are to hinder your business.

See the Insiders Guide to Import/Export for more details.

There are various other means of payment including:
Telegraph Transfer and PayPal.

… Also known as USP (Unique Selling Proposition), and also
UCBA (Unique Customer Buying Advantage).

So what is a UBA, USP, UCBA?!

*Your* USP is a destinct and appealing benefit or promise that
sets *your* business apart from every other “Me Too”
competitor that no other competitor offers. It needs to be
hairy, scary and controversial. If it’s not, it won’t attract
your potential clients’ attention.

You do not want a *Universal* Buying Advantage, where
everyone in your niche/industry is telling the same story,
i.e. “Buy 2 Get one Free!”, that totally sucks, and costs you
in the hip pocket – BIG TIME.

Some great examples of USP (Unique Selling Proposition), and
UCBA (Unique Customer Buying Advantage)…

Dominos Pizza
“Delivered piping hot to your door in 30 mins, or it’s FREE!”

Video Ezy
“Get the movie you want first time or it’s FREE!”

K-Mart
Not verbalized, but in practice they will exchange virtually
anything without a docket or receipt. Do you think that would
give them more customers?

Federal Express
“When it absolutely has to be there overnight, Fed Ex it!”

Schultz Beer
“It tases so good because the water comes from 250ft under the
lake. The mother yeast is 200 years old. The bottles fo through
5 different processes to ensure no foreign matter or bacteria
is present. The glass walls that seperate the production line
processes are 4 feet thick. All this to ensure the best
possible flavour to you.”

In today’s post, we’re looking at the very first step in the
development of your Import/Export business, which is:

Market First!

This is the most critical step for you to grasp, understand
and internally digest.

You NEVER first buy a whole bunch of stuff in the hope that
someone will buy it… and yet this is what MOST folks do,
unwittingly – even big businesses!

But not you.

Because you will be better informed and be able to make
qualified judgement calls on what sells and what totally sucks!

You learn how to spot trends.

Sell people what they want!

1. People buy for *their* reasons, *not yours*.

2. People *rarely* wans what’s best for them, or most
affordable for them, or most practical for them. This leaves
the importer and exporter with a massive opportunity.

3. Opportunities *always* come disguised as problems.

4. People rarely want what you want to sell them.

The whole point to all this is that you need to uncover “The
One Thing” that they do want, that you can use to propel your
entire sales process.

You can do this by asking 9 simple questions…

1. What keeps them awake at night?
Eyes wide open, staring at the ceiling. This covers both
“pain” and need for pleasure.

2. What are they most afraid of?
This is their problem to which your product offers a solution.

3. What are they most angry about?
…And who specifically are they angry at?

4. What are their top three daily frustrations?

5. What trends are occuring and emerging in their lives and
businesses?

6. What is the BIG secret they desire most?

7. Is there a specific method they use to make purchase
decisions?
Eg. Accountants – Overly Analytical

8. Who else is selling something similar to them and by what
method?
Eg. Newspaper Ad, Website, eBay, Phone, Fax, Email, Letter,
Radio, TV, etc)

9. Who else has tried selling something similar to them and
failed?
How did they fail – ie, Wrong message, wrong time, wrong
price, etc.

Remember
The money is in the marketing of the thing, not the thing
you are selling.
You must follow this paradigm shift in thinking to gain
significant financial rewards.