
China's Underground Wholesale Markets - gdilla
http://www.youngmoneychina.com/2014/08/the-truth-behind-chinas-underground-wholesale-markets/
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ameister14
You know, I don't think I'm alone when I say I'd actually get a lot out of a
blog post on 'how to open a foam recycling plant in China.'

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joshvm
Indeed, it was a fascinating article. I've read similar things from the guys
at Dangerous Prototypes who shipped out there to prototype products; plenty of
blog posts where they come back with a suitcase full of tactile switches or
find out the best way to print onto heatshrink. Always carry a calculator
seemed to be the main takeaway.

And then I read the bio and read "I bought a factory" and "For my second
factory". It sounds like it's a fairly straightforward deal to do that in
China (if you have the cash). I'd also be really interested to see what kind
of hoops you have to go through, the regulatory process, hiring/maintenance
and so on. And of course how much does it cost?

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erikb
Straight forward is way way off the track. When doing business in China it's
more like hunting in the jungle. There are some people better suited for the
jungle than for the well structured city life, though. And because these are
only a few, they have a relatively easy life in China. Don't take that as a
hint that everybody can go there and buy factories like Pokemon trading cards.
Even big, successful companies are constantly failing in China.

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Terr_
Strangely, this reminds me of some sci-fi story, "First Contract".

In a nutshell, aliens buy Jupiter (most of the mass in the solar system) for
the space-colonial equivalent of shiny beads, wrecking the world economy with
an influx of tech-goods. One down-on-his-luck CEO struggles to get Earth out
of "third world" (solar-system?) status by--how else--using cheap labor to
export kitschy crap :p

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IkmoIkmo
Where can I find this?

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joshvm
Here: [http://www.amazon.co.uk/First-Contract-Greg-
Costikyan/dp/031...](http://www.amazon.co.uk/First-Contract-Greg-
Costikyan/dp/0312873964)

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IkmoIkmo
Thank you!

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youngmoneychina
Thanks for the comments.

Yes there are some of these places that are not "underground" but obviously
there are the suppliers and areas that are less known and more used by traders
like me as opposed to the more touristy types.

Regarding bitcoin, yes it does away with the payment issues but thats not the
only problem with ordering from china i guess, things like ensuring the
product is the correct quality, arranging freight on large consignment orders
and needing to buy from multiple suppliers are why a lot of buyers like this
guy buying the tv's come to china in person.

Thanks again.

Daniel

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yeezul
Pretty good read. I'd love to go down there and visit some of these shops,
just for the hell of it. I buy quite a lot of accessories from AliExpress
myself

The server seems to be down/extremely slow to load. Try the Google cache
version:
[http://webcache.googleusercontent.com/search?q=cache:UevJZk_...](http://webcache.googleusercontent.com/search?q=cache:UevJZk_wcOQJ:www.youngmoneychina.com/2014/08/the-
truth-behind-chinas-underground-wholesale-markets/+&cd=1&hl=en&ct=clnk&gl=ca)

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zkar
AliExpress seems to have many sellers selling fake (copy) products. How else a
Samsung Galaxy S5 would sell for < $200 whereas the market price is between
$500 and $600.?

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ISL
The AHAMAY outboard motor is worth the scroll.

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joezydeco
I have to wonder if it says "YAMAHA" on the other side, as if someone was
handed a photograph of a Yamaha motor and they just flipped the artwork for
the other side, not realizing it was text.

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youngmoneychina
The police here ride AMAHAY bikes,

Im serious.

Its even written in the same font.

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bce
The Zhong Fa Electronics Market in Beijing looked like I imagined the DigiKey
warehouse to: resistors stall, oscillators stall, FPGA stall, etc.

Photos (note: less crowded because I went on a Sunday morning):

[https://drive.google.com/folderview?id=0B6vx0hWnq-
f-V3Z5M0FR...](https://drive.google.com/folderview?id=0B6vx0hWnq-
f-V3Z5M0FRMUJDeWc&usp=sharing)

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nathannecro
Unfortunately, the author seems to be doing a bit of hocus-pocus hand-waving
to make these "underground" malls seem like some mystical place. If it's too
inconvenient for any of you to make it into China, you can always stop by Hong
Kong.

In the district of Wan Chai (a fairly touristy area of Hong Kong), there's a
fairly well known place known simply as the "Computer Centre". In it, you'll
find two floors of a giant warehouse packed floor to ceiling with shops
selling everything from a refurbished matte black MacBook from 2006 to an
"iPhone 7". I do have to say that the vast majority of the products are
legitimate, but there are booths which cater to the less-discerning customers.
The great benefit of buying in Hong Kong is that you'll often find products
from the mainland side and from the factories in Taiwan.

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youngmoneychina
Hi,

Sorry if you feel like that, i thought it was pretty straight forward no
bullshit article.

You can't really compare these underground markets (That are actually markets,
physically under the ground, many of them illegal and only for wholesale
buyers) I'm talking about to the shopping malls in Hong Kong which are just
flashy shopping malls that anyone can walk in to.

But sure yeah, you can buy things from Hong Kong, its safer, you likely won't
get ripped off but at the same time your not going to get rich doing it.

Thanks for the feedback though.

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newaccountfool
Funny that, just purchased one of those fake iPhones. Looks and feels the
same, runs an android OS that replicates iOS perfectly. Pretty good fake if
you ask me. The lower price genuine android phones will dominate the lower
priced foreign markets in my opinion.

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imjustsaying
Do a netstat on the open connections on your highly esteemed hardware and be
amazed at the backdoors tunneling straight to china.

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contingencies
This is mislabeled. It's about Guangdong (likely mostly Guangzhou and Shenzhen
specifically), not about China in general.

Chinese markets in general are about the domestic market, with very few
exceptions in some border regions (a few regularly sell to Russia and Mongolia
in the northeast, Southeast Asia in the southwest, and Central Asia in the far
west).

Guangdong by contrast cut its teeth on export during the glory days of the
Shenzhen special economic zone which began in 1980.

[http://en.wikipedia.org/wiki/Economic_reform_in_the_People%2...](http://en.wikipedia.org/wiki/Economic_reform_in_the_People%27s_Republic_of_China)

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gambiting
Ha. The bit about Poland reminds me about what my dad used to do. He would
drive a van delivering things to Germany/Netherlands/UK and bring it back full
of second hand things to sell in Poland - usually at 4-5x the value, because
after the fall of communism people would buy literally anything in any
quantity. Good times.

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dharma1
good article, thanks. What are the prices usually like on these wholesale
markets, can you give some examples to get a sense of what the retail margins
could be like?

Then shipping - containers? Costs? I have a feeling a lot of Chinese ebay
retailers (the ones who ship from the UK, probably have a warehouse here)
don't pay import duty/taxes - how do they get around it?

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youngmoneychina
30-60% depending on the product. Some stuff carries a much higher margin but
requires extremely high volume purchasing and sales like phone cases for
example.

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theklub
This is exactly like alibaba in physical form.

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erikb
If you follow Jack Ma, this kind of market place online was also his vision
when creating Alibaba.

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erikb
Looking at this blog I feel a little reminded of Ultima Online. Everybody's
out there doing their own little business.

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bx_
Very skeptical of any article that begins with "The truth behind..." Also, a
little annoyed by the authors misused of "underground" here -- these malls are
not underground at all, and are often far more popular than the 'real' shops.

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youngmoneychina
Hi, Sorry your not happy with this blog.

I was trying to give a real straight forward look at these markets.

The markets I'm talking about are underground in both senses of the word, if
you look at the first pic you will see you actually have to go underground to
get inside.

Maybe were talking about different places as there are certainly touristy
malls similar to this but they are a waste of time for business use.

Thanks

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pmorici
"Like this guy below who has travelled here to buy two hundred 32” lcd tv’s
his boss needs for the hotel bed rooms in his latest development because there
is no place where they come from to buy such things. Many times I have shown
them the price in the UK on my ipad and they have been close to jumping on a
plane to make a call into an Argos store."

This seems like a problem that will be solved by Bitcoin. The reason people
like this can't just buy 32" LCD TV's from Amazon or Overstock right now is
becausue of the payment fraud risk. Bitcoin removes that.

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ww520
Why won't direct wire transfer solve the payment problem? With a sizable order
of 200 TV, the cost of wire transfer is miniscule. Unless you don't want the
order to be traceable.

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Renaud
After doing some electronic goods trading with China, I can say that the main
issue is to make sure that what you receive is what you paid for.

Specs have a way of changing without you being informed. Consistency of
quality is pretty random as well.

So you have to make sure you inspect the goods before you take them. Also,
almost all manufacturers and distributors will make you pay before at the
latest at the time the goods are departing. No 60 day or 120 days credit here.

You get the cash, you get the goods, most of the time.

If you're a larger trading company, you can have the support needed to inspect
and ensure that the goods are up-to-spec.

Then there is Alibaba. Small quantities for direct sellers are usually OK
(although quality varies greatly). At least you have buyer protection and the
sellers are very careful about maintaining their reputation so they are
usually prompt and efficient.

Finding a factory for something you want to manufacture (or for large orders)
can be fraught with issues, the first of which is that I'm yet to find a
factory that can honestly tell me they can't do something; whatever you ask,
you'll get a "yes". If you have no production experience, you're in for a
ride.

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youngmoneychina
Excellent comment Renaud, you know what your talking about.

