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b2b Magazine
07.09.2018 | Альбина Весина

"Russia – China: new opportunities for sustainable business development"

At the forum «Russia – China: New opportunities for Sustainable business development», which will be held within the framework of the exhibition «CIF-Children's Fashion», topical issues of cooperation between the two will be discussed countries in the field of production and supply of children's goods. Leila Pavlova, Head of Between2countries, told about which key points will be discussed at the forum and which formats of cooperation are preferable.

 

 

China – the strategic production site of the whole world. And Russia and the countries of the Single Customs Union are one of the coveted markets for Chinese manufacturers. Commodity groups purchased in China today account for about 75% of the turnover of companies in Russia and CIS countries. At the same time, we see that the domestic market of the Russian Federation is undergoing classic changes: sales markets are shrinking, the multi-stage distribution system is a thing of the past, companies are beginning to actively fight to increase margins, the Russian government has simplified mechanisms for importing and exporting goods, medium-sized businesses and chain retail are entering the international business zone.

 

Turning towards China from purchases on the domestic market, it is necessary to take into account key control points and traditional risks of working with Chinese manufacturers - the quality of goods, delivery times, difficulties with concluding contracts and making payments.


There are several ways to solve these problems.

 

To begin with, the banking sector of China and Russia is beginning to actively use payment by letter of credit. The advantages of this system are saving money on intermediaries, the ability to return the payment in case of low-quality goods, the formation of additional loyalty in the banking sector, flexible financial management of the transaction, additional quality control when accepting goods in the Russian Federation. However, there are also disadvantages, in particular the fact that prepayment is not included in the payment system with a letter of credit, funds are "frozen" on the bank account. In addition, not all banks, accountants and even Chinese partners themselves are ready to use these technologies.
 

When working with Chinese factories, it is necessary to work out quality control at three stages: purchase of raw materials, control for the presence of hidden defects in production, final quality control. Traditionally, an agency control system is used. Today, new opportunities are emerging at the state level, which are also supported in China. Each industry has developed certain quality standards for raw materials, and goods enter the domestic Chinese market only if they meet these standards. All norms are fixed by certificates. In each region there are independent quality laboratories with professional European equipment. At the same time, violation of quality standards in the domestic market is punished very severely. Thus, the Russian counterparty has the right to demand a certificate for each type of raw material, and for each batch of raw materials there is an internal letter of compliance with these standards. The main disadvantage is the increase in the cost of products.

 

China is developing a leasing system for the purchase of equipment for up to 2 years and commodity loans for trade transactions for a period of 30 to 180 days. The technology is similar to the Russian overdraft system. The cost of such lending depends on the reliability and willingness of the factory to provide consent to this lending system.
 

The truth that does not change with time – the reliability of the partner. Experts strongly recommend that you first check the selected factory and only after that build a relationship with a Chinese manufacturer. The fact that "a miser pays twice" is doubly relevant when working with China.

 

Photo provided by the organizers.

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