The truth behind China’s Underground Wholesale Markets.

Andrew Scherer

Andrew Scherer

MarketersCenter.com
Feb 12, 2009
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This is such a good fucking article, I had to share it. If you're involved in ecomm or physical goods, must read.

The truth behind China’s Underground Wholesale Markets.

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Good article. I remember watching a video a while ago from Tim Ferris. He was talking about his trip to China. He said the Chinese live by a "get away with as much as you can" principle. He said it in passing but it has always stuck in my mind. I think it explains a lot of the counterfeit stuff.

I used to work with a Chinese-American broad. She was going to fly to Hong Kong for dragon boat races. (She was competing.) She said she dreaded going there because the Chinese are notorious cheaters and feared her team would be screwed.

And then this gem:

BBC News - Chinese authorities find 22 fake Apple stores

Staff in the original fake shop believed they were working in a real Apple store
Click to expand...

Staff at one fake Apple store in Kunming were dressed to resemble real staffers.
Click to expand...

Despite the craziness, they do sell some good stuff. I met a guy in South America who drove a Chinese motorcycle with some crazy name like Yamazuki or something. It was cheap and rugged.
 
cliff:

In china you can buy fake stuff but good luck trying to import it
In china you can buy cheap shit and try to compete with 100 sellers on ebay
In china genuine electronics cost more than in the west
In china they can take your money and disappear
In china middle men try to make money from you

sorry but yawn.
 
charlesmartel said:
I used to work with a Chinese-American broad. She was going to fly to Hong Kong for dragon boat races. (She was competing.) She said she dreaded going there because the Chinese are notorious cheaters and feared her team would be screwed.
Click to expand...

She dreaded going to Hong Kong or mainland China? There's a huge difference in culture between the two places, and there is also border between HK and China. Hong Kongers are far more honest imo, but you always need to vet anyone you do business with carefully regardless of nationality.

Hong Kongers and mainland Chinese hate each other, and personally I am on the side of the HKers since they're much more civilized and don't do shit like spit and shit on the street. Also HKers know how to form a queue while mainlanders push and shove.

The stuff about Chinese wholesale markets is nothing new for anyone who has been doing any kind of trading activity in China. It's also better if someone who looks like Han Chinese that you trust do the negotiating on your behalf if you are white or another race. Also manufacturing goods in China isn't as cheap as it used to be.
 
I wanted to also edit this in, but ran out of time:

Two years ago my wallet with about $6000 HKD in it (about ~$850 USD) and all my credit cards + ID fell out of my pants while I was dealing with a big package. An hour later in a panic I realized I lost it, but thankfully a HKer found it and returned it to the security guard at my building and all was good. Every dollar was still there. In the mainland my wallet of have been long gone.
 
bluechinagroup said:
She dreaded going to Hong Kong or mainland China? There's a huge difference in culture between the two places, and there is also border between HK and China. Hong Kongers are far more honest imo, but you always need to vet anyone you do business with carefully regardless of nationality...
Click to expand...

She dreaded going to race in Hong Kong. Does the "get away with as much as you can" principle have some influence in HK? Tim Ferris also mentioned some student artist scam in China where they prey on unsuspecting Europeans, Americans, etc. Some girl will approach you on the street and ask you to buy some of her student art. Of course, it's all over-priced and not made by her. Probably mass produced stuff.
 
charlesmartel said:
Does the "get away with as much as you can" principle have some influence in HK?
Click to expand...

I mean yeah there's some influence of that. Who doesn't want to maximize their profit?

Some HK shopkeepers only sell to mainlanders since the tour groups bring them to there. These shop keepers without a doubt take mainlanders for a ride.

There's also camera shops that will try to squeeze as much out of you as possible. But I think that's changing now because a new consumer protection law was passed last year that doesn't allow pressure selling. If a shop is reported then HK customs will investigate and they're actually very responsive. Personally I am not too crazy about this new consumer protection law, but I am definitely in the minority.

Generally speaking, HK shops are law abiding. HK people are also pretty law abiding.

With China there's no rule of law so anything goes really.

I've seen the student artist scam in Taiwan. In HK we have a lot of fake monks who try to collect money; these bogus monks are all from the mainland too.
 
Didn't learn anything new but good for maybe someone who doesn't understand HK

Guy seems a bit sheltered
 
I've got some people behind the scenes of the Chinese wholesale markets. I'm not talking about the peons on the front lines that this blogger is dealing with - I'm talking about the people who run most of the industry in the 7 major districts.

I will ask them to do a post here when I take a trip out there next.
 
The Brit behind that youngmoneychina blog also has a service sourcing stuff from China. I sent in a request for a product I've been looking to source/sell. I'll reply back on how it goes and if he is competitively priced.
 
bluechinagroup said:
I wanted to also edit this in, but ran out of time:

Two years ago my wallet with about $6000 HKD in it (about ~$850 USD) and all my credit cards + ID fell out of my pants while I was dealing with a big package. An hour later in a panic I realized I lost it, but thankfully a HKer found it and returned it to the security guard at my building and all was good. Every dollar was still there. In the mainland my wallet of have been long gone.
Click to expand...
lost my wallet plenty of times, always came back as did my phone.
lost it in switzerland, germany too, no find it... (not proud, but happens to me a lot)
i think it's more down to luck, you lose that in hk on the wrong corner, some guy will regard it as mr unknowns downpayment for a suit
once in shanghai i dropped 30k rmb through a whole in my jacket.
no wallet, just cash, old guy found it, ran after me like one block and slapped me, giving me a lecture to be more careful and handed it back.

fun fact if anyones interested in how much money they make, these stalls in good locations shenzhen, guangzhou, beijing, shanghai like the ones with just a kid sitting there will probably rent for 700-1500$ the sony one in his picture, with that size, in a market probably upwards of 6/7k$ they make plenty of money.

second thing i know, this isn't always the real deal, they may not be knock offs, but they sell zipin quite often.
which are broken products.
every factory produces a certain number of faulty products together with the good ones, this number is higher than you think.
each industry or brand has it's standard, say sony says maybe if the tv has 3, scratches and inside this circuit is bad than you don't deliver it.

the factory than has to destroy it because it's not allowed to sell it by law. also if they gift it they have to pay taxes for it.
so there is guys who "destroy" them and bring them to the markets.
 
Just to follow up from my post above, I haven't heard a word for that Brit on my product request. So far I'm not impressed.
 
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