Ok, low end computers have tiny margins, a lot of places went under trying to sell them. Gaming machines are different, but then you compete with the DIY's. Its a tough call.

The cheapest will be direct from China with cargo containers via ship. Not sure of the cost, but its dirt cheap transport.... But you do have to be careful, as corrosion will occur... Been there done that, not fun.

Building your own machine as a business has a lot of regs, fortunately they are not enforced very often (quite unlike the mid 80's), but the fines in the US for mfgr a computer without following the regs can be $50,000/day. However, its quite unlikely the govt will come after the little guy, but it could happen.

So figure on $50,000 for regulatory compliance in the US and/or Europe if you go for the cheapest possible parts.

As far as money goes, run a break even analysis. See how long it will be until you are profitable. Usually its 6 months for retail, but is to some extent seasonable.

Check out the costs for advertising, eg, if you have a good location $20-$50/square, advertising can be less expensive, if the location is cheap sub $5/square, your ad cost will be much much higher.

Determine the line of credit you will need.

Heres another thing, computers are a tough one to deal with in volume as they depreciate so quickly. Thus a cargo container of machines may be cheap, but unless you can turn them quickly enough, you can loose money in a hurry.

Per memory, typical retail turns range from 2-8, with most being in the middle, and Walmart at or around 8 for a lot of items. Perhaps some retail members could elaborate.

Good luck
Ron

Thanks a lot Ron for your helpful answer.
I am in Southamerica, Ecuador.
Today I search the net for infoormation about computers from China, I have still not found something usefull, I found a website I would like you see, its www.Taiwanhightech.com, its about manufacturers in china.

Well now that you have help me to decide in wich country I should be interested for this kind of business (China) I find it difficult to know, the name of a distributor from china, I have nothing where to start.
What should i search on the net?

Can some one help me? can you help me Ron?... the objetive is to know, to what enterprises I should contact, if they give distributor prices... or maybe even less than that?
Here in Ecuador, like a retailer I receive from the distributor a complete computer with
Pentium IV 2.8 GHZ, with Hard Drive of 80 GB, 256 MB of Memory and Monitor 15 inch.. in $577.
If I import my own computers or computer parts from China Ill have to contact with some enterprise like this distributor on ecuador? I mean a counterpart of this distributor in my country, or some kind of enterprise more "high" in this chain of business?
I hope something "higher", I want to be sure of that, that Ill have a list of options with the right enterprises in china I should contact in case I will import, so I will get a much better price than $577, right?
I hope it could be possible to do business with the manufacturer itself of this computer parts or complete computers.

hope you can help me friends

Thanks again, Daniel

What you might do is check out http://www.cesweb.org/ I met a number of OEM's and distributors at the show in past years. It may be that you will be able to find an outfit in the archive pages.

The closer you get to the OEM level, the lower the price, but the higher the volume. For example, you may well find a price of say $250 a machine, but you have to order 100,000 units and accept them all at once. For a new venture, you may well have to pay upfront. Thats the whole issue with distribution, the price is less, but you can order much lower volumes, say 100 at a time, or do a yearly blanket order with scheduled releases for a lower price, but then the machines will not be discounted very much.

I have no familiarity at all with Ecuador, but I'd try to find a local distributor to work with. Your risk will be a lot less, plus, you aren't up all night talking to China, and you won't have the language barriers.

I'm currently working with an OEM from China, through a local distributor (no its not computers). My distributor handles all of the details, thus I pay a much higher price, but I have a lot less risk and problems as well. The distributor did however arrange a meeting with the factory guys when they were in the US. I thought that was pretty cool, to actually meet them in person, especially that they would take the time to meet with a startup in rural Minnesota.

Ron

Hello Ron,
I see you did understand my english,... then the closer to the OEM the cheaper but higher the volume, I didnt expect that =(
Here in Ecuador, I buy from a distributor, in theory they are mayorist!, (I dont even know if this word exist in english) but it means they sell in big quantities, for business, they have no retail stores, well, I can buy from this distributor a computer at a time if I want, .. there would be the possibility of buying only one container of computers from an OEM? No?
I have read that in a 20 feet container can be 450 monitors of 15 inchs.

About distributors, I think we have a different concept, there in the USA, it seems they give you some kind of service, like importation, transport, contacts in china, thats what it seems to me from what you tell me.... here on Ecuador, the distributor only sell me things, and I am sure they dont have and interest at all in giving me information about exportations from china.
I realized that with the price the distributor gives me I could not in compete with some retail stores, then If I have the dream of expanding a business, expanding computer stores throughout the country, I need special prices to succeed.
Thas why the importation becomes so interesting for me, because that would be one of the keys of success for this business, and because, I want to reach the people with less money, who cant afford a standard pc with its price of $600 to $700 and up
Publicity is another of the keys of success, and because publicity is expensive, the Importation is vital to keep the prices low for this people.
Ill be sincere, I dont have the money for 100.000 computers or units, thats too much, but then, maybe not so close to the OEM?... I could obtain a much better price than that of the Distributor from Ecuador Right?

A meeting with a startup in rural minnesota thats fantastic, I wish you more of this, you are a important client for them, I some day would like to visit china, I even have unknow family there!... I have been reading on the net and every enterprise I found is close to the word GUANDONG, its seems to be the most important place for this kind of manufacture and commerce in China, I think there is where my grandfather came from many years ago, and there is still family that I dont know.
I hope you could know some of the names or contact information of this Chinese computer exporters.

And another thing.... is correct to search for chinese COMPUTER EXPORTERS?.... I mean, maybe that doesnt exist that for a small client like me, maybe like a small business I must get the contact information of a lot of enterprises, by example, one or 3 enterprises for motherboards... one for mouse, keyboard, speakers, other enterprises for case, others for cables, other enterprises for hard drives and floppy disk, and CD RW, DVD/DVD-RW, other enterprises for Monitors, and others for video cards, or sound cards, others for processors, others for other electronic equipment like, MP3 players, digital cameras, or printers like Hewlett-Packard, Canon, Epson, Lexmark, ?Samsung too? (Corean brand)
you have my Idea... one only needs one or 3 enterprises with a price list of each one, with the computer models they offer, and you buy what interest you, or in computers, you have to buy in parts from many enterprises?....

Thanks Ron

Daniel

I would expect distributors are very much the same in both our countries. They have the same fear, that if the volumes go too high, that the OEM will then cut them out of the chain, and deal direct.

As such, if I need 10,000 parts my distributor has no concerns, the factory is not interested. If otoh, I need 250,000 parts, the distributor sees that he will loose a lot of business. As such, most distributors here in the US will all of a sudden do everything possible to establish a good relationship between you and your oems such that they can serve as a go between, and still make a percentage, albeit a whole lot less than serving as a distributor. Not all of them work that way though.

I have a meeting with a guy at the end of May who used to be involved with importing from China. My current connections only deal on the oem level, this guy may be closer to the distribution side of things. He is currently doing some legal work in Nigeria, and I don't want to bother him until he returns.

As far as being an important client.... from the US standard, I'm a nobody, just another one of thousands of startups. However, in my past dealings with people in China, the relationship comes first, business later. As such, the Chinese factory seems very interested in estabishing the relationship, well knowing that it may take 2-3 years to become really profitable for them if at all.

A lot of it is due to my past experience and prior connections. Eg, my past as a corporate type created a reputation of a guy that always went for win win solutions and had a long term vision. I never shafted a vendor, and more than a few times asked them to requote something if it seemed to be good to be true. I developed some great relationships that way, and in the long term, often times, I was able to get better deals than those who always took advantage of clerical errors or other mistakes. Otoh, I was also known as the cheapest guy ever to deal with...

As far as assembling a computer from components its tough. You may be able to save some as far as piece part prices, but you still have to pay for assembly labor. In the US, the cheapest fully burdened assembly labor is roughly $15/hour. In some places in China, it may be as low as $0.30/hour. I don't know about Ecuador though.

Another thought is to buy quantities of overuns. A P4, 2.8Ghz is not yet in that category, but will be in under a year. Then you can often purchase smaller quantities direct from the importers, often times at cost, or sometimes below in order for them to clear out their warehouse.

Good luck
Ron

.

All I can say is THANKS!
I dont want to abuse and make you questions everyday, you have teached me important things, Ill be happy to receive any important information from you or about your friends, china or anything you want to share with me.
Daniel

A lot of us had to learn things the hard way....... As such, I made it my new years resolution to join a few forums, and share my knowledge.

I try to spend about 15-30 minutes/day on the activity, in between busy work. Plus I type pretty fast, so its generally pretty easy.

Thanks
Ron

If thats the case, then Ill take advantage of this unique opportunity,
Ron, these days I have been talking on MSN with a chinese girl that sells computer cables, its a little difficult making her chat, she is a little weird, I even think she have insult me putting a sick MSN face After I told here something, well, at least she have told me that one container from china to ecuador would cost from $600 to $1000, what do you think Ron?
She also told me that the retail price of a pentium 4 of 2,8 GHZ and 80 Gb could be a little more than $400 and that she needs some time to "develop" a relation with a manufacturer
I also made the question about if when buying computers from china, Ill have to buy from several enterprises or just with one
I mean, I have read that those enterprises are spe******t in certain type of product, like cables and cases by example, then it makes me think that in theory I should buy from several enterprises to gather all the components for the computers

One more question Ron, if you were interested in selling computers with TV publicity, you think it would be more easy for you, in the usa or in ecuador?
I make this question to know if you consider the competition in the usa too much, because the competition here in ecuador is not that big
Thanks
Daniel

Some quick thoughts, as I have to get up in about 3 hours....

I don't like the idea that she has to "develop" a relationship... That might be a warning sign.

I will check with a friend in the cargo container business to see if thats reasonabl. The problem is that we don't have any ideas about Ecuador and shipping, but at least we would have a figure in the US.

The big problem with multiple vendors is compatibility. That can be a major headache, as things are "supposed" to work and fit together, but they don't always.

One thing for sure, before you commit to anything, you realisitcally should travel to China to verify the deal, and the oem's quality in person. Or get someone to do that for you. There are way too many things that can go wrong.....

As far as TV goes, its really spendy to get the right audience. I've never used it, but some of my clients have, and their results to some extent were predicated upon what they paid.

The competition is very high here, especially for the little guy. One has to find a niche market to make a decent profit. Computer stores tend to run on very thin margins if they try to be all things to all people, and thus the success rate is not that good. Many have other profit centers, eg support, service, and training.

Ron

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Ron, in on a site called international business forum (Looks old) I found this info in the part of "Ecuador", do you think its important for me?

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