During many years, China has been a place where European and American companies moved their manufacturing facilities, mostly in order to take advantage of cheaper labor. “Reshoring” is the opposition of offshoring, it means moving said facilities back to the companies’ home countries. Several media outlets have jumped on a reshoring bandwagon, claiming that the “cheap China” period has ended, and publicizing some of the most famous cases, such as Caterpillar or Philips.
The knowledge of the most important terms used in international trade is crucial for mutual understanding. We will present the most common international trade terms accompanied with the detailed definition.
What is the Certificate of Origin?
Generally speaking, it is a document, which proves that the goods in a particular export shipment have been wholly obtained, produced, manufactured or processed in a particular country. The name can be abbreviated to C/O or COO. The origin of goods is important for tax and tariff authorities (for example duty is applicable in the case of buying goods in country A, but not in country B). While a lot of Chinese products are exempted from duty, there are still some categories in which the EU uses duty as a market protection tool.
It is very hard to avoid conflicts in business. It gets even harder, when both parties come from two different countries and represent two different cultures and traditions. That’s the case of doing business in China. Sometimes it is the court passes the judgment and resolves the matter, but it takes a lot of time and money, hence the growing popularity of arbitrage and mediation.