Since a nation’s VAT (value added tax) has a direct impact on price and profits, it is important to understand the VAT of the country where manufacturing and products are being sourced. Here is a look at China’s VAT and how it affects China sourcing.

How VAT works and how it applies to China sourcing.

While VAT works differently in different countries, it is basically a tax paid on the value added to a product as it moves down the supply chain to the end user. For example, the raw materials of a widget are purchased by a manufacturer and a tax is paid. Then, when value is added to the materials by turning them into a widget, a tax is paid on the added value. Finally, a tax is paid on the final added value of the widgets when they are sold to the final consumer.

For example, if the VAT is 10% and the manufacturer pays $50 the materials, $5 goes to the government. Then, if the manufacturer sells the widgets for $80, $8 go to the government ($3 additional dollars since $5 was already paid). Finally, if the widgets are sold to the final consumer for $100, $10 goes to the government (an additional $2 since $8 has already been paid). VAT can also be looked at as a kind of a sales tax that is paid in part before the goods ever reach the final end user. Because the tax is being paid earlier and more often, it is more difficult to avoid than a regular sales tax.

In China, the VAT rate is 17% on most goods. However, the government often refunds at least part of the VAT when the goods are exported. The amount refunded varies with the product, and the Chinese government uses the VAT as a tool to influence industry. Usually, the refund is highest on those goods the government wants to encourage production of in China (e.g. higher value-added products) and lowest or non-existent for products the government is less interested in seeing manufactured in China. An example of this was seen in 2007 when the VAT system was changed and VAT refunds for many high-energy, high-polluting goods were greatly reduced or eliminated.

In its most simplified form, the VAT refund for an exported product works like this. If the VAT rate is 17%, and the refund rate is 10%, on a $17 VAT paid, $10 would be returned to the exporter while the government would keep $7.

Why understanding the VAT is important for importers

Importers who do not understand the VAT system are exposing themselves to the following potential problems and extra costs:

The best pricing starts with transparency. When breaking down pricing, comparing between suppliers, negotiating etc., it is critical to know the suppliers true costs. Without an accurate breakdown of the costs with the VAT rate clearly stated, the supplier has more room to manipulate the price.   Some manufacturers may not tell the purchaser about the VAT refund or tell them the refund was a lower rate that they actually received and pocket the difference (it is also sometimes possible to negotiate the customs classification and therefore the VAT rate). To get all the cost saving due through VAT refunds, every importer needs to be fully away of the classification and rebate for the products being purchased.   If a manufacturer lacks the proper import-export rights or VAT processing abilities, they may be forced to rely on third parties that will likely inflate the price and make the relationship with the manufacturer more complicated.   In a gray area of the law, some suppliers are able to avoid the VAT for smaller orders. While this will give the purchaser a lower price in the short term (although this runs the risk the goods will be trapped in China without proper documentation to export them), the importer will suddenly be hit with the tax when their business grows and the order size reaches a point where the VAT cannot be avoided. This tax increase will likely to be greater than any discount from larger order quantities.

With these point in mind, when doing business in China or any nation with the VAT, is imperative to know the classification and VAT for every product and ask the supplier to outline their VAT policies. Doing so will enable the purchaser to avoid unexpected costs or other problems while getting the best price possible.

Bariatric surgery for weight loss may be a life-saving procedure, but it is not cheap. Although a number of insurance companies cover the procedure, many individuals find that their medical insurance providers balk at the cost. Most insurance companies require a letter outlining a patient’s weigh-loss history and the medical necessity for the surgery before they will even consider financing the procedure. Even with a carefully crafted letter, many insurance companies will refuse to authorize the surgery.

If this happens, the patient should not give up hope, since most insurance providers give patients an opportunity to appeal a denial. Most insurance companies require that patients appeal within 30-60 days after receiving a denial of coverage. The bariatric surgery insurance Appeal Letter should include information disputing the insurance provider’s reason for denial. As a last result, patients may need an attorney to help prove the medical necessity of the procedure.

For patients with no insurance, there are financial alternatives available. A number of financial institutions offer financing specifically for healthcare expenses such as co-payments, deductibles, and procedures not covered by insurance, including bariatric surgery. Some offer no-interest, same-as-cash plans as well as extended payment plans. Some bariatric surgery centers contract with finance companies to offer financial assistance to patients who are interested in this type of surgery but do not have the insurance to pay for it.

Finally, a patient can take out a home equity loan to finance the procedure. Those patients who do elected to pay for bariatric surgery themselves should keep in mind that it may be tax deductible, since it is considered a major medical expense. A consultation with an accountant may e in order.

A car loans after a bankruptcy is one way to help build back your credit history. In fact, once your bankruptcy closes, you can apply for a car loan the next day. To get approved with the best rates for your car loan, follow these tips.

Review Your Credit Report

Before you start applying for a car loan, check out your credit report and make sure all your accounts are in order. It is not uncommon after a bankruptcy to see open accounts that should be closed, which hurt your credit rating.

While looking at your credit report, consider adding a page explaining the situation that resulted in your bankruptcy. If there were extenuating circumstances, lenders may approve you for a better rate than under normal conditions.

Plan Your Car Purchase

Before purchasing a vehicle, decide what you can afford in a monthly car loan payment. This will help you decide which financing package is best for you. Both the loan amount and length of payments will determine your monthly payments, so there is flexibility in determining which vehicle you can afford to purchase.

Use A Car Loan Lender

Car loan lenders make their money by finding you a loan. Car loan lenders work with several financing partners to back loans with all types of credit risk, including bankruptcies.

Online car loan lenders deal with thousands of loans, and can usually find you a better deal than your local car dealerships. Online car loan lenders will send you a check when you are approved, basically making you a pre-approved car loan buyer.

Explain Your Situation

Car loan applications will ask if you have ever declared bankruptcy and why. This is your chance to explain what led up to the situation and what steps you have taken to resolve your credit situation. Be sure to include improvements in your financial history too.

Consider Refinancing

Once you are approved for a car loan, keep your eye on future refinancing. By making regular payments on all your bills, in a year’s time you could qualify for significantly lower interest rates. In three years, you can build your credit score to near excellent and qualify for even lower rates.

To view our list of recommended auto loan companies online, visit this page:
Recommended Auto Loan
Companies Online.

The May 12th earthquake in western China’s Sichuan Province will have effects reaching further outside China than Beijing is letting on. Sichuan Province holds the key to China’s hydroelectric power generation plans in its renewable power targets and the area is also a hub for worldwide outsourced wind turbine equipment. Both were badly damaged.

This infrastructure will take months or years to repair, but in the meantime Chinese media report that “The quake in dollar terms is minimal and it seems unlikely to set back China’s economic growth by very much.” I beg to differ.

This earthquake cracked dams and roads, but at the same time it cracked holes in the myth that an ever-expanding China can accommodate an infinite number of companies wanting to open facilities there. We have been hiding behind a wall of outsourcing dependence to solve our domestic pollution and economic problems and that great wall is about to collapse.

The hydroelectric crutch: The quake zone area generated 62 percent of Sichuan province’s total electricity production by way of hydroelectric dams, of which “396 dams were believed badly damaged and many of the power stations on the river systems were damaged and several major reservoirs are being drained to prevent their dams from failing. The seismic safety of these dams is a concern and it is expected that many of them will need repair and strengthening,” according to Ministry of Water Resources minister Chen Lei.

Even before the quake, Beijing had admitted there are major flaws in many of the country’s 87,000 dams. “Roughly 37,000 dams across the country are in a dangerous state,” Ministry of Water Resources deputy minister Jiao Yong said earlier this year, noting that many had been built decades ago.

Two weeks after the quake, the Water Resources Ministry acknowledged that 69 reservoirs and dams were on the verge of collapse, and nearly 3,000 throughout China had sustained damage.

If the always secretive central government is publishing this type of information, I can only conclude that reliable power from that region is no longer assured. This single set of facts revolving around hydroelectric production in western China is a link in a chain that stretches from China right around to your back yard, and that link has broken.

Don’t count your renewable energy eggs before they hatch: China has more dams than any other country – about half the world’s total. And the 11th Five Year Plan pins its hopes on rapid and massive development of every metre of flowing water in the rivers of Yunnan, Sichuan, and Gansu Provinces in the west to satisfy the insatiable power demand for factories and homes. The Chinese government will now have to reconsider its aggressive dam-building program.

If hydroelectric projects are scrapped there will be continuous permanent electric shortages throughout the country. China’s hydroelectric consumption was around 7% of their total prime energy consumed in 2007.

Pre-quake, the central government was thinking: ‘Sichuan possesses the country’s largest possible reserves of hydropower resources, estimated at more than 110 gigawatts. Yunnan has a number of hydropower stations under construction on the lower- and middle-reaches of the Lancang River, with 11 GW and plans for dozens more projects between now and 2016. Gansu’s abundant Yellow River hydropower resources can provide electricity for the neighbouring provinces of Qinghai, Shanxi, Sichuan and Ningxia, and their further potential is great.’

Not anymore.

The China Electricity Council believes less than 20 percent of the country’s hydroelectric resources are being utilized. According to the pre-quake governmental plan, the hydroelectric installed capacity should have reached 125 GW in 2010, accounting for 28 percent of total installed capacity; in 2015 it could have reached 150 GW and by 2020 the goal was 300 GW. These plans are not likely to go forward as planned. This will leave China far behind its electrical generation goals and far short of the capacity it needs to attract manufacturing businesses to that part of the country.

The slow decline: China’s Go West Campaign is designed to lure college graduates and businesses to western parts of the country, thereby spurring the economy in China’s less affluent interior.

The bait most frequently used by the central government is in the form of Major Economic & Technological Development Zones, Special Economic Zones and City Industry Zones, which confer tax-free status along with preferential transportation and wage agreements. This is great when there is a continuous power supply, but now in the western region that is anything but assured. China’s State Power Grid announced Sichuan’s electricity grid is running at 76% of pre-earthquake levels. Notice how they conveniently leave out the surrounding provinces, which also sustained damage.

A recent article appearing in the China Daily – “China expects power shortages amid surging demand” – quotes the State Electricity Regulatory Commission general office as saying “Guangdong Province would be short of 5.5GW, Guizhou 1GW, and Yunnan 1.5 GW.” Yet again they left out shortages in Sichuan, Gansu, Inner Mongolia, Zhejiang, Jiangsu and Shanxi provinces to get a reliable total. This will be the fifth consecutive year of power shortages countrywide. Now consider this: the last four years were short with all of the country’s hydropower up and running.

This year, power is likely to be 10 GW short, so keep an eye on the power ratings – “normal shortage”, “severe shortage” and “power crisis” – to see how your favourite town or industrial zone is getting along.

It seems there is a masking of the real numbers. What business would want to set up in a country with consistent electrical shortfalls?

Devastation in Beichuan: Combine electrical shortages with the amount of factories that need to be relocated now that fewer enterprises will want to rebuild on an active fault line and the veil begins to lift on what they are hiding. Labourers are refusing to return to work until government inspectors sign off on the integrity of the buildings, despite the fact that it might take months or years before they get around to every company. The psychology of danger for the worker and investor is the overlooked factor X in the Chinese equation. Now, how appealing are the Regional Development Zones in western China??

As for us living outside China, outsourcing heavy industry to China is the norm. Even the worldwide renewable energy sector has many of its wind turbines and solar panels produced in China. Unfortunately, Deyang – a town about an hour and a half north of Chengdu – had wind turbine operations including majors from Europe, Australia and North America carrying out some of their production at Dong Fang Turbine. In the same area there were also carbon fibre blade, wind tower and ball bearing operations supplying parts to Dong Fang. Buildings in the surrounding area from Deyang to Mianyang were heavily damaged or flattened.

Business Week sums it up in an article titled “Dongfang Turbine Badly Hit.” The operations of Dongfang Turbine, China’s largest steam turbine producer and third largest domestic manufacturer of wind turbines was virtually wiped out. Dongfang, which produces 30 percent of China’s locally made turbines estimates direct losses from the earthquake will reach $1 billion. Its parent company, Dongfang Electric Corp., has seen its stock price plummet as the steam turbine business accounted for 20% of its operating revenues in 2007.

Although Chinese media reports suggest that facilities for its wind turbine business was unaffected, sources inside the company said that most of their wind business’ senior engineers have unfortunately perished and one of their wind components factory was badly damaged.

The electric shortage earthquake triangle: Where does this leave us? Peak Oil is apparent and can no longer be denied. We as a world need to begin a transition to renewable power and these circumstances will set the wind industry production in China back a year or two. China’s answer to the electrical shortage will be to build more coal-fired power plants. As outsourced production is now being limited by fault lines and electrical shortages, what will our answer be?

The electric shortage earthquake triangle from Kunming in the west to Chongqing in the east and Lanzhou to the north with Chengdu in the centre is all sketchy territory from now on. The central government was funneling new business to this exact area because there is very little space along the east coast. That’s why there is a massive push to send the economy west. If you have been to coastal China you have seen how densely packed a society can be.

Price is the main reason we buy Chinese goods and have our industries there. However, when something is in short supply it costs more. Electricity is no different. There are now daily diesel shortages along the east coast, electric shortages in the west and along the coast. Add in the recently appreciating yuan and China is no longer the utopia for business it once was. Until the damage in western China is repaired, increased usage of oil, natural gas and coal will replace hydropower to an extent. This in turn creates higher prices in China’s manufacturing sector. You will pay at the check out counter.

Please understand: The rest of the world is far less dependent on China’s exports than China is dependent on the rest of the world. We need to prepare to take care of ourselves again. As oil prices continue to rise and the global economy declines, I believe we will see a resurgence of light industry returning to our home countries. China’s electric problems could be partially solved if light industry moved elsewhere and left heavy industries in China. Unemployment is going to become more and more ferocious over the next few years as our fossil fuel based economy declines.

What a great way to put millions of people to work: Bring companies back home. This will take one link out of the globalization dependency chain, and save energy along the way.

Securing funding for a new venture has always been a challenge for business owners. Ensuring that the company has the proper level of financing is one of the most critical tasks. However, finding financing for a new venture can be very hard. On one side, you can try and secure venture or angel funding. This type of funding will require that you give up a portion of your equity/ownership in the business. It means you will end up with additional partners – or managers – in your company.

Another route consists of trying to get conventional business financing, such as a business loan. However, few startups can get business loans because most financial institutions require that the company have a track record of successful operations and substantial assets. Since most startups don’t have long track records and have few assets, few can meet these requirements.

Cash flow can even be more problematic for companies that sell to other businesses or to government agencies. This is because they usually have to invoice when they deliver the goods, and then wait 30 to 60 days to get paid. Growing a business while waiting a month or two to get paid can be hard to do. Many times growth is delayed and opportunities are passed. This is an alternative however.

What would happen if you could get your invoices paid in 1 or 2 business days and essentially ran a cash business? Would you still need financing? Would you still turn away opportunities? This can be accomplished by using a neat financial trick – factoring your invoices.

Invoice factoring enables you to get a substantial portion of your invoices paid immediately, providing you with the funds you need to pay suppliers and employees. More important, you get the funds you need to keep up with your growing orders. If you have a business that is firing on all cylinders, factoring accounts receivables can really help fuel your company’s growth.

Factoring offers a simple proposition. A finance company, called a factoring company, advances you up to 80% of the net value of your invoices. You get the immediate funds while the factoring company waits to get paid. Once they get paid, you get the remaining 20%, less the factoring fee.

One of the more important features of factoring receivables is that factoring companies biggest criteria (though not the only one) for providing financing is the quality of your clients. This means that if you do business with large credit worthy companies you stand a good chance of qualifying for financing. Furthermore, invoice factoring can be setup quickly. Usually it takes a week or two to set up an account, and after that, funding can be done daily.

Although factoring financing has been around for a long time, it has been gaining traction and notoriety recently as a solution for growing companies. It offers great flexibility, as your financing is determined by your sales and the quality of your clients. This makes it a great solution for companies whose biggest asset is the clients that they do business with.

On May 19, 2007, the Ministry of Agriculture confirmed that an outbreak of H5N1 in Hunan Province has occurred, prompting the slaughter of more than 11,000 heads of poultry. The provincial government immediately implemented an emergency plan, culling an additional 52,800 birds to prevent the spread of the disease. This was the country’s first reported outbreak in three months. Across this expansive country, millions of farmers are living in close proximity to billions of chickens. With the environmental conditions throughout China, it should come as no surprise that birds—and humans—continue to become ill.

Throughout history, China’s people have depended on the waters supplied by her seven major rivers for life itself. But over the last 20 years, water quality has deteriorated to a grave state. The Yellow River, long regarded by the Chinese as the birthplace of their civilization, has been so heavily overused for consumption, irrigation, and factory production that the amount of water flowing through this once powerful river has occasionally been reduced to a trickle. According to the World Bank report published in 2001, “China: Air, Land, and Water—Environmental Priorities for a New Millennium,” 40 percent of the water in large stretches of the Yellow River has been classified as “unsuitable for human contact, irrigation, and agriculture.”(1)

The list of river pollutants, lengthy and disgusting, includes industrial chemicals, heavy metals, dead animals, and untreated human excrement. Couple this with nuclear waste that comes from the river’s headwater in Tibet and the millions of dead chickens contaminating the groundwater, it is only a matter of time before more human outbreaks occur in China.

The Chinese State Environment Protection Administration reports that industrial animal farms have become a major source of pollution. In 1995, more than 1.7 billion metric tons of unprocessed manure was dumped into rivers that serve as water supplies.(2) In China’s second largest river, the Yangtze, conditions are much the same. More than 23.4 billion tons of sewage and industrial waste are dumped into the Yangtze each year. More than 15 percent of water samples taken in 2001 from the Yangtze were classified as “unsuitable for human contact.” That percentage has certainly increased since 2001, and will continue to climb with the westernization of the Chinese culture.

The influx of rural peasants into cities has stretched the sewage infrastructure beyond capacity. The operators of most new buildings report that the structures are connected to sewers, but none of the waste is being treated; up to 80 percent of raw sewage is still released directly into the water supply.(3)

In Northeast China, the Liao He River is the principal waterway flowing to the Yellow Sea from Shenyang, the capital of Liaoning Province. In 1999, this river was classified as “only suitable for industrial purposes that do not involve direct human contact with the water.”(4) Surely, it is far more contaminated in 2007. It should be no surprise that Liaoning Province has been the location of many reported human cases of avian flu and many large outbreaks among poultry over the last three years.

Beyond the severe problems of contaminated water, China is home to nine of ten cities indentified as having the worst air pollution in the world. Respiratory diseases linked to air pollution are the leading cause of death among both children and adults throughout China, according to a November 1999 report by the World Resources Institute, Urban Air Pollution Risks to Children: A Global Environmental Health Indicator. Chronic obstructive pulmonary disease (COPD) and pneumonia are the leading contributors of death in adults and children, respectively.(5)

Air pollution has been blamed for health ailments among millions of Chinese residents, including lung cancer and decreased immune function. The air is so bad throughout southern China that women in Yunnan Province were found to have the highest rates of lung cancer ever recorded: 125.6 cases per 100,000 women. Compare this to the national averages for lung cancer among U.S. women tops out at 6.3 persons per 100,000.(6)

The symptoms and diagnoses of the patients hospitalized and then confirmed to have bird flu have been catalogued by the WHO. All patients developed symptoms of fever, cough, respiratory distress, and pneumonia. Conditions for developing pneumonia can include inhaling fumes and other toxic airborne particles. To expel the congestion, an overabundance of mucous must be produced, creating the perfect environment for the rapid replication of the invading organisms. If the mucous contains a mixture of dioxin and other chemicals, the likelihood of death from influenza could be exponential.

Considering that chronic lung disease and pneumonia are among the most common causes of death in China, the identification of H5N1 may have had little to do with their demise. Perhaps the cause of their pneumonia was environmental toxicities complicated by the presence of H5N1.

Poultry and ducks have been killed by the hundreds of millions over the last four years and yet, outbreaks continue across China and Southeast Asia. Until the underlying causes are addressed and a massive environmental clean up is undertaken, poultry and human outbreaks will no doubt continue to occur.

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REFERENCES

(1) Outbreak of bird flu in central China village. www.chinaview.cn

(2) Dooley, Erin E. “Reviving China’s Ruined Rivers,” Environmental HealthPerspectives 110 (2002)

(3) Nierenberg, Danielle. “Industrial Animal Agriculture—the next global health crisis?” World Society for the Protection of Animals, November 2004.

(4) Schmidt, Charles W. “Economy and Environment: China Seeks a Balance,” Environmental Health Perspectives 110 (2002).

(5) Table: Changhua, Wu, et al. “Water Pollution and Human Health in China,” Environmental Health Perspectives 107 (1999).

(6) O’Neill, Marie S, et al. “Health, Wealth, and Air Pollution: Advancing Theory and Methods,” Environmental Health Perspectives 111 (2003).

(7) Schmidt, Charles W. “Economy and Environment: China Seeks a Balance,” Environmental Health Perspectives 110 (2002)

Many people across the United States are embracing the “less is more” philosophy with popular television shows teaching homeowners to clean out their closets, purge their attics, get rid of all of the extra stuff in their lives that they don’t use on a daily basis. This includes grandmother’s china set that is stored in the dusty corner of the basement.

For most, it’s generally thought that you don’t want to throw out the set because it was grandmother’s, and you remember as a child having Thanksgiving dinner with one of those plates only after you were old enough to not break a piece of the set so carefully cherished for years.

But it’s chipped and maybe stained, and you don’t know what else to do with it, except store it in a box in the basement. There are a few things you can do to move that set from the corner of the basement into your showcase.

Repurpose:

You can repurpose your set into another function. An artfully designed mosaic can be a beautiful use for your broken bits. You may choose the most beautiful part of the piece to create a small piece of jewelry or a put a small piece of the choice painted bit on display.

The drawback is of course that a mosaic only uses pieces and parts of the whole.Having grandmother’s beloved china further broken up doesn’t quite feel right. And what happens to all of the discarded pieces?

For some people this is definitely not the way to address their nostalgia. It may be chipped maybe, but at least they’d like to keep it whole.

China Repair:

There are a few artists who specialize in china repair and porcelain restoration. The techniques they use are incredible with invisible repair lines and museum quality restoration. It is important to remember that these repairs do not usually allow the owners to use the china for meals. It’s generally discouraged to eat food from a repaired plate.

However, a professional china repair can allow you to display grandmother’s china set in your hutch as a whole set. A displayed platter sitting next to several teacups with an entire stack of plates artfully arranged can allow you and your modern family to always enjoy the nostalgia, history, and family tall tales at every special family event.

You should also be aware that you need to clean and your repaired items carefully. If you have monetarily valuable china pieces – beside sentimental value – you must clean them with care. A thorough scrubbing can damage and greatly reduce the value of your item. It can simply remove the patina of age and indeed its antique value or perhaps even its sentimental value.

A professional china restoration artist is experienced in cleaning pieces with tremendous attention to the value of the piece, with museum accepted solvents, and professionally standard cleaning agents.

If you have a set of grandmother’s dinnerware that you would like to bring out of the basement and use in your family’s home, china restoration should be a definite consideration for displaying your set in a beautiful arrangement and setting.