drop shipping warning

[Lucidtoys]

Hello,

As I have returned from China and reviewed the accounting of our drop shipping friends, it didn't make sense how they were making money. I had actually started our business as a drop shipping company selling Nike Jordans in 2003 while studying for my MSc in Business & Enterprise. I met a Chinese bloke and we started our electronics business selling high-end audio-video equipment. After a few years, there wasn't much money in the pipeline and we had to jump ship and start selling HDMI cables. I realized that the drop-shipping model doesn't work in the long term.

The major issue with drop shipping is that the receiver is set as the importer and gets hit with a nasty surprise. The only way to get away with this is to pay duty and VAT in China, which is not reclaimable. So, some companies declare the goods at a low value (illegal).

JinSan does not give special prices to anyone, and the owners don't meet Western clients. You need to know Mandarin to communicate with them since they don't know English and don't bother to learn it.

We thought Starbucks and McDonald's were popular in China, but the answer is no. Starbucks is closing all over, and McDonald's has virtually no customers left.

When you buy an item from a UK supplier, please ask for an invoice that includes VAT. If the supplier's address is in the UK, they might be below the threshold for VAT. However, if they are not in the UK, the VAT threshold does not apply, and they must pay VAT to HMRC. If the VAT is not correctly paid, HMRC will come after the importer.

The English have moved to a new electronic system for clearing goods, and everyone will be subject to checks in the near future.

On the other hand, the Germans are vigilant and now audit 50% of the goods being imported into the country.