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Electronics Manufacturing in China – What to Expect?

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Sooner or later any "electronic" project either dies (as a variant – falls into a coma "until better times"), or matures to the stage of "pilot production". That is, from the assembled "by hand" units the time comes to switch over to the production of a hundred or two, maybe even thousands of devices. And then it turns out that on the territory of our vast country it is not so easy.
What does a modern electronic device consist of? This is one or more assembled circuit boards, housing and accessories (cables, antennas, etc.). What adventures await us along the way?
1. Need to make a run of printed circuit boards. There are usually two problems: small circulation and complexity. With a small circulation few people want to mess with (in fact, all roads traditionally lead to Rezonit), and the price of such quantities is usually not humane. But if your board belongs to the category of "high-tech" (um), ie it is multi-layer (6 or more layers), and even with cunning micro-holes (eg, HDI), then to find a performer in Russia is somehow quite difficult.
2.You need to find the components in the required quantities. Well, here everything is as usual – expensive and not always available in principle. For example, just now we had a shortage of white LEDs from Cree… We bought 2-3 of them from different companies.
3. Surface mounting on a run of 100-1000 boards. Only the cost of setting up an SMD machine (if someone will do such a "thing") makes this process very unbudgetable.
4. Making an enclosure. The hull is usually plastic – i.e. options are available (in the usual ascending order of price per unit) printing on a 3D printer, making on a CNC machine, casting in silicon or conventional molding (under pressure). In any case, the same problems as with printed circuit boards: expensive and hard to find a performer for a small run.
Like many others before us, our company at one time came close to solving all these problems. And we solved them with the help of Chinese factories. If you’re interested in this way of solving some problems and acquiring others, you are welcome under this tab.
Cooperating with the Chinese helps solve some problems, but also adds a few others. So let’s look at them in order.

1. Search for performers.

Here you have three options. Search online, visit a trade show, or use the services of an intermediary. The first two show obvious risks, of which the main one is communication problems. It is unlikely that you will communicate with the Chinese in Chinese, Russian is almost irrelevant, and English is not a native language for you or for them. So it is quite possible misunderstanding, which leads to technical errors. Well, everyone knows about the peculiarities of working with intermediaries. By the way, if the Chinese on the other side speaks English – most likely it is an intermediary, just carefully hiding it. But if you talk to any Chinese girl in Russian – a good chance that it’s a large factory, specially hiring Russian-speaking (well, as they think themselves) staff. In any case for the pleasure of communicating in an understandable language (whether English or English) you will have to pay a little extra, it will be taken into account in the final quotation (quotation is a "commercial offer", which describes all the conditions from the artist).

2. The contract and the transfer of money.

The contract with the Chinese to conclude, in general, no problem. The problems begin when the other side does not want to comply with it (or so you think, at least). Just think – but what, in fact, you can do if the money transferred, but the goods you have not delivered or (much worse in terms of judicial prospects) delivered, but not the right one, defective, etc.? In general, you can say that even a competently drafted and properly executed contract between a Russian company and a Chinese one offers no guarantees, alas.
If the Chinese side is willing to accept money from you via Western Union to a private person, that’s a wake-up call. It’s certainly not a guaranteed scam, but the chances are high. Also, WU is specifically asking you to confirm in the process that the transfer is non-commercial, and it is not good to cheat. Reputable companies prefer to work under the T/T scheme (electronic transfer of money to the company account). The account, of course, is in China, and not in rubles at all. So, for this kind of transfer you at least need to have a legal entity, a foreign currency account, and a properly drawn up foreign trade contract. But a legal transfer has a minimum amount of expenses. Well, just in case: if the sum of deliveries under the contract exceeds $50, 000 USD, you must also draw up a "transaction passport" (no big deal, if you do not forget to do everything in time). In general, all foreign currency transactions must be monitored very carefully, because the penalties there are draconian (up to 100% of the contract amount).

3. Quality control.

It’s rare that everything turns out right the first time. Immediately prepare yourself for a clear demonstration of the justice of the popular wisdom "the first pancake is a pancake. The first contract with this contractor, the first batch of goods, communication problems, weak interest of the contractor in a small contract – all this simply can not but lead to serious difficulties. There are only two options to reduce risks: either you fly to China yourself and control the process, or you hire someone else. There is a whole industry of special "independent inspectors" in China, there are usually a couple of dozen booths at exhibitions at least.

4. Delivery to Russia.

The usual way is by plane. For electronics, and even in small quantities, is something light, compact, and quite expensive. Shipping one kg of cargo from Shenzhen or Hong Kong to Moscow – 5-6 USD (if at least 100 kg will be accumulated, if less – will be more expensive, of course). If your items are packed in cardboard boxes, then you can on the bulk weight get (relatively speaking, the carriage of a box with a cubic meter, but weighing 1 kg, is not at all as transportation of 1 kg). But quickly. 3-4 days – and the cargo is already in Moscow. The alternative – by land or sea. Land is also different – by road via Kazakhstan or by rail via Vladivostok, for example. Due to the peculiarities of Russian logistics, the railroad is usually more expensive than the plane (although slower even than the car). But there is a special category of cargo for which, in most cases, you have to use channels by land – these are lithium batteries.
A separate line can be mentioned express delivery services. From China to Russia, they only work with Russian legal entities, alas. For sending samples (ie up to 5 pieces of the same article, and the total cost, including shipping, less than 200 euros) the best option – FedEx. It is fast and inexpensive. If typed "production lot", ie more than 5 pieces, and / or more expensive than 200 euros (but preferably – no more than 1000 euros, so that there were favorable rates on brokerage services), we will have to send the goods clearance. And here we should focus on DHL or UPS, which have their own brokerage services at relatively reasonable rates.

5. Customs clearance.

If you are driving yourself under your own contract – most likely you will need the services of a broker (if your company is engaged in customs clearance itself – why are you reading this article?). The pleasure is quite expensive, especially when you consider that you have to clear customs at the airport. In Sheremetyevo, for example, the usual "tax" – from 1000 USD for one customs declaration, plus overheads (warehouse fees, etc.), and, of course, all customs fees. Fortunately, in the vast majority of cases for electronics (in the form of assembled circuit boards in the case or not) duty is zero, but there is, alas, and 18% import VAT. To clear the cargo – you need to show a bunch of documents, don’t forget. It’s best to agree on a list before the cargo leaves China. For if some piece of paperwork is missing – the cargo will go to the bonded warehouse (temporary storage, a very expensive pleasure), and you get quite a cheerful charge. Especially funny, if you suddenly find out that there is not enough compliance certificate TR TC or notification of the FSB (these papers are drawn up a minimum of two weeks). So be careful.
If the cargo is delivered to you by some express delivery service, then the only thing that changes for you: a separate contract with the broker is not required. The set of documents remains the same. The cost is also more or less the same in both cases (if yourself – then cheap delivery plus an expensive broker, if DHL or UPS – then expensive delivery plus cheap brokerage).
And, understandably, there are. alternative methods of delivery, in which you don’t have to put any effort into customs clearance. I don’t recommend those ways (no way, how could you?!), but just in case: the cost of shipping electronics through those channels varies usually from 12 to 30 USD/kg, time – from a week to a month. Whoever really wants it, will find it.

So that’s it in a nutshell. I do not claim to be absolutely true, but my experience is quite real. I decided to post this article now, because the Chinese (finally!) came out of their New Year vacations and started to work. Hurray!

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