| Purchase Order Financing- The China
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| | specialized industrial machinery, office
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| Advantage explores why manufactured
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| | machines and computer, telecommunications
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| imports from China to the United States
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| | and sound equipment, electrical machinery
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| of America are on the rise and how you
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| | and parts, road motor vehicles, building
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| can benefit from this trend with purchase
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| | and lighting products, furniture, travel
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| order financing a from commercial finance
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| | goods and handbags, footwear,
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| company.
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| | professional, scientific and controlling
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| As of July, 2007, the Central
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| | instruments, photographic and optical
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| Intelligence Agency for the United States
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| | equipment, timepieces, personal care
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| government estimated that the population
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| | products, and food products such as tea.
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| of China is over one billion three
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| | According to the American Electronics
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| hundred twenty one million people. In
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| | Association, high-tech imports from China
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| contrast, the population of the United
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| | are on the rise.
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| States is estimated to be a little over
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| | What are some of the main risks
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| three hundred two million people. That's
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| | associated with doing business with a
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| 1,321,000,000 versus 302,000,000 people;
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| | manufacturer in China? We do not speak
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| China has over four times the population
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| | the same language, so a good interpreter
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| of the U.S.
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| | is necessary. Our legal systems are
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| In the past two decades China has
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| | completely different and the Chinese
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| completed and put into operation over
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| | legal system is complicated and weak.
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| 2000 large and medium-sized industrial
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| | Therefore it is vital to develop good
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| projects; these include railways, atomic
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| | relationships with the proper trading
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| power stations and completely new cities.
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| | partners. It is also important to have
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| There has been ginormous investments in
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| | excellent international legal counsel to
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| other fixed assets such as basic
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| | comply with the complexities of contract
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| industries, 100,000 new reservoirs for
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| | law, local Chinese law and relevant U.S.
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| water storage, irrigated land, coal
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| | law. Protecting intellectual property is
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| mining, oil-drilling, steel-making, power
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| | a challenge in China.
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| generation, highway construction, and
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| | What does this all have to do with
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| newly constructed and extended ports.
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| | purchase order financing? International
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| China has the world's largest
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| | purchase order financing is complicated
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| manufacturing workforce- over 100 million
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| | and complex in details, but the concept
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| people. In comparison, there are about 14
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| | is simple. If you have a product that can
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| million manufacturing workers in the
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| | be manufactured in China, and you have
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| United States. China's labor costs are
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| | made the proper arrangements for
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| low compared to the United States and
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| | production and shipping but lack
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| many other parts of the world. As of 2002
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| | sufficient capital to finance the
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| statistics indicate that employees in
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| | transaction- with a large purchase order
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| China's city manufacturing enterprises
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| | from a creditworthy customer a commercial
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| received about $0.95 per hour; rural
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| | finance company will agree to have their
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| workers average about half this amount:
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| | bank issue a Letter of Credit to
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| $0.41 per hour. A large majority of
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| | guarantee that the Chinese factory
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| manufacturing employees work outside the
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| | producing the product will be paid. When
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| cities. They earn about 3% of the average
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| | the goods are shipped and delivered to
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| hourly compensation of factory workers in
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| | your customer the commercial finance
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| the U.S. and many other developed
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| | company pays the Chinese factory. Between
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| countries. With low land costs and low
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| | 70% and 100% of the product's cost may be
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| labor costs it is no wonder that the cost
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| | financed depending on the product's gross
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| advantage to manufacturing in China is
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| | margins and the risks involved. Purchase
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| extremely attractive to American
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| | order financing may facilitate your
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| entrepreneurs. When their products are
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| | exponential growth and profits for all
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| manufactured with sufficient quality
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| | concerned.
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| controls, the cheaper costs and effective
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| | When your customer is invoiced for the
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| delivery systems create a win-win
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| | product an account receivable is created
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| situation for those who are able to
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| | which will be paid to the commercial
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| participate.
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| | financing company. Purchase order
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| Manufacturing is a basic Chinese
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| | financing with an international letter of
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| industry. When you take raw materials and
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| | credit can make the deal possible.
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| labor and produce products that can be
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| | Accounts receivable financing, or
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| sold in high quantities at a lower cost
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| | factoring, is the back end financing that
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| than U.S. competitors, and successfully
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| | guarantees payment to all concerned. The
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| import to them to the U.S. and it is
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| | expertise of the commercial finance
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| possible to have excellent returns on
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| | company can be invaluable with regard to
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| your investment. And China's political
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| | helping you succeed in this challenging
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| and economic system is relatively stable
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| | marketplace.
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| compared to other developing nations such
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| | A wise man once said if you put a flea in
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| as many countries in Africa.
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| | a jar with a lid, the flea would keep
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| What is the approximate size of the trade
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| | jumping into the lid time after time.
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| in goods from China? According the U.S.
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| | After a while if you take the lid off,
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| Census bureau, Foreign Trade Division,
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| | the flea will only jump as high as the
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| imports from China in 2006 were over $287
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| | lid. Why limit your potential when it is
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| Billion dollars; for the first five
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| | just as easy to set your expectations
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| months of 2007 imports from China were
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| | higher? For businesses that sell
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| over $120 Billion dollars.
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| | manufactured products to other
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| What are the main categories of products
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| | businesses, purchase order financing may
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| imported into the U.S. from China? This
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| | be the way to reap the benefits of the
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| includes iron and steel products,
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| | China advantage.
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