Doing Business in China

Import Export Businesses Market Research product service end user country trade channel

Here's a rapid-fire overview of your market research tasks. You'll want to do some in-depth investigation into each of these areas:

The product or service you'll sell
The end user you'll aim for (mass-market consumer, heavy industry, light industry, medical or hospital use, government, business or professional)
The country or countries you'll export to or import from
The trade channel you'll use (direct sales, representative, distributor or commission representative)

One of the catch-22s of being in business for yourself is that you need money to make money--in other words, you need startup funds. These costs range from less than $5,000 to more than $25,000 for the import/export business. You can start out homebased, which means you won't need to worry about leasing office space. You don't need to purchase a lot of inventory, and you probably won't need employees.

Your basic necessities will be a computer, printer, fax machine and modem. If you already have these items, then you're off and running. Several of the traders we talked with started from ground zero. "We started from nothing," says Wahib W., but once they got a large project, that was all it took."

Peter P.'s company started from a similar financial position. "We had very little money in the bank," he says. What they did have was a carefully built relationship with suppliers, and this valuable asset the company was able to get up and running.

One of the many nifty things about an import/export business is that its startup costs are comparatively low. You have the advantage of homebased-ability, which cuts office lease expenses down to nothing. Unless you're starting as a distributor, you can get away with purchasing no inventory, which means no outlay of funds for pretty doodads to grace display spaces (you have no display spaces!). Your major financial outlay will go toward office equipment and market research expenses--and if you're like many moderns, you already have the most expensive piece of office equipment: a computer system.

But let's take it from the top. The following is a breakdown of everything--from heavy investment pieces to flyweight items--you'll need to get up and running:

Computer system with modem and printer
Fax machine
Internet/e-mail service
Software
Market research and/or trade leads
Phone
Voice mail or answering machine
Stationery and office supplies
Postage
Travel expenses for conducting market research on foreign turf
You can add all kinds of goodies of varying degrees of necessity to this list. For example, a copier is a plus. It's also nice to have bona fide office furniture: a tweedy upholstered chair with lumbar support that swivels and rolls, gleaming file cabinets that really lock, real oak bookshelves.

But let's consider that you're starting from scratch. You can always set up your computer on your kitchen table or on a card table in a corner of the bedroom. You can stash files in cardboard boxes. It's not glamorous, but it'll suffice until you get your business steaming ahead.

What can you expect to make as an international trader? The amount's entirely up to you, depending only on how serious you are and how willing you are to expand. Annual gross revenues for the industry range from $30,000 to $200,000 and beyond, with an average of about $75,000. Some traders work from home, supplementing 9-to-5 incomes with their trading expertise. Others have launched thriving full-time businesses that demand constant care and feeding. Wahib W.'s export company has a staff of five that oversees multimillion-dollar contracts.

"There are tons and tons of opportunities for [export] trade," says Wahib W. "U.S. manufacturers are at least 10 years behind the clock in exporting." So the potential for growth is entirely up to you--as long as you're willing to put in the time.