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Doing small business in China

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I am in China. Again. It’s my fourth time here and sometimes I wonder why I come back. Then I go to the Canton Fair Complex and remember why. Football stadium sized buildings, each with a half dozen floors, fill city blocks in the Southern Chinese mega city of Guangzhou. Inside, nearly everything: Furniture, electronics, clothes, food – can be found at factory direct prices.

Without exception, every week of the year manufactures compete for space in the megalithic buildings, space where they can display their wares and space where you can buy them. Twice a year, for three weeks each time, the competition explodes, tens of thousands of foreigners visit for the Canton Fair and during this time, the buyers sign contracts for most of the things you see in the supermarkets.

Cultural Industries Fair in ChinaThe fair is a great place for a big company, but also for you. You can explore, you can find out which products are good and which aren’t worth your time, you can buy samples, and you can find great products that you can ship home and sell. That’s why I am in China for a fourth time; to buy, to ship, and to sell things that I think are well worth it. I’m not trying to make myself rich, just trying to make enough money to have a good life.
You might think – why bother going to china, after all you can buy everything online and then resell it, right? Wrong. If you go online and buy from one of the business to consumer websites like EBay or Amazon, then you are buying from me at a price I set for something I picked up in China. If you instead go to one of the business-to-business websites like Alibaba, you will still be buying a product that has been marked up and by the time you find, buy, test, buy more, ship and resell it, your profit will be low and the product may already be out of date.
Canton Fair in ChinaThis year I spent a lot of time exploring the electronics halls. Not because it was hard to choose, but because it was an adventure. The venders try to sell you everything that you need and even more of what you don’t. The eye massagers, the USB/Flashlight combo, the remote controlled light bulbs, and the heavy-duty E-ink tablet were not for me. They were all fun to look at, but if I can’t find a good use for them, then I doubt I can sell them. However, the flash drives, the rotary shavers, the speakers, the cellphone power banks and the external hard drives peaked my interest. I filled my arms with free and paid samples and headed back to my room.
I took my tablet with me and when I liked something, I checked its price on Amazon and Ebay. Because of the low cost of goods in China and the high cost of buying these same goods in the USA, it’s easy to turn a profit. I prefer to sell on Amazon and Ebay. It’s very simple to add them to your sellers list and wait for the orders to come in.
The United States doesn’t have VAT (Value Added Tax) and most electronics are imported tax-free or the tax is very low, so shipping for me isn’t an issue. However, some areas do add on a VAT and there are some items that are taxed and even a few with very heavy taxes. The tax on importing peanuts from China to the US is more than 100%. There are dozens of websites online where you can check taxes on products, so make sure to check before you send them.
canton FairIf I like something, I need to get it to the USA, and I don’t want to waste my time trying to cram it into my suitcase. In China, finding a shipping company is easy. If you want to ship a lot, just walk downtown, ask around, and within a few minutes you will find yourself in an office of one of the thousands of shipping companies. If you just want to ship a cubic meter of goods then the best choices is to check out Alibaba and search, “International shipping rate.” I found 270 pages of companies offering shipping services. Expect four to six weeks before your goods arrive.

China CantonA good conservative estimate for shipping a cubic meter from China to the US is $100. Which, isn’t much considering how big a cubic meter is. The formula to find out how many of something would fit into a Cubic meter is: H * W * L measured by millimeters then divide this sum by 1 billion. You heard me right: 1,000,000,000. I know it’s a big number but that only goes to show you how big a cubic meter really is. It also means that the shipping cost for most items is just a few cents.
Back in my room I measured and tested everything. Before I buy a lot of something, ship it back home to the US and try to sell it there, I want to test it first, I want to make sure it really works.
The 16GB flash drives were great, they gave me three for free and told me I could buy others for $2 each as long as I bought at least 100. I tested all three, filling them up, testing movies and transferring files. The best thing about them is that they are so small that if I wanted to fill a cubic meter, I would need millions! Lucky me, the same brand of flash drive is selling for $9.99 on Ebay.
I paid $4 for the rotary shaver, took it home and 5 minutes later my face was smooth and I was convinced. The minimum order for them was 20 units. And each took up only about 1/850th of the cubic meter. The same shaver sells on Amazon for $22.99.
The speakers cost $1.5 in China and sell for 15.99 Amazon. They worked well enough for the hotel to complain about the videos I watched on the flash drives. The thing is, they were a little big, so big that if I ordered 134 of them, they would fill a cubic meter. I like the speakers, they work well for me, and I know I could make money off them, but not enough to motivate me.
119 Import and Export FairThe cell phone power bank wasn’t cheap. At 10,000 Milliamps the factory wanted about $9 each. It’s kept my phone fully charged, works well and I’m sold. Even with the very thick packaging, these power banks will make money, so of course I will buy 100 or maybe 200 and sell them alongside similar power bank online.

The one terabyte external hard drive works well, but at $33 dollars each with a minimum order of 100, I would need to shell out a lot of money and wait a few months for my profit. I could do it, but I won’t. Instead, I will just keep this one for myself and go look for more things at the fair.
In the end I filled up half a cubic meter with shavers, power banks, and a shoebox of flash drives. I went back the next few days and picked up more things, but not for resell, just for my personal use.

Eric

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1 Comments

  1. You revealed my secret !

    During the last 5-6 years, I traveled frequently from Egypt to China to do lot of things, explore the Chinese culture, meet old lovely friends, enjoy local meals, living in hostels, couch-surfing sometimes (at your place few times). I cover travel expenses through buying some few stuff as you mentioned, put it into my luggage, then sell it back to my friends and coworkers, gain a profit that cover the whole trip expenses.

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