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5 Tips For Importing From Alibaba Stock

Importing from China wholesale has become quite popular among young 'entrepreneurial sprits' all over the world. Alibaba stock is one of the first places people run to for that purpose. Importing from China wholesale is relatively cheap, decent quality, and works well. So if you're considering starting up with Alibaba stock business of your own, here are 5 tips for you. My first proper online business was selling false lashes online from Alibaba stock. These are the little strips of hairs that women use to make their eyes stand out.  There was little choice back then, so step by step I decided to enter the market and sell products online. I didn't know much about importing from China wholesale, it all seemed a little daunting at first but I stumbled across a website called Alibaba, which is like an eBay but on a wholesale/manufacturing level. You can find small manufacturers to large factories that cater for the fortune 500 companies, however their minimum purchase quantity is obviously a lot higher. After having gone through the process of finding a manufacturer, contacting them, creating samples to shipping I learnt a fair few things that I would like to share with you. So here are a few tips for people that are looking to use alibaba stock as a source of supplier: 1. Make sure they have a good reputation Look for the badges for manufacturers on Alibaba stock; "gold supplier" badge is one that is a must to avoid the dodgy suppliers, it will also show how many years they have been a gold supplier for, so the higher, the better. Keep in mind that if they are running a sustainable business with this their reputation will be more important than taking advantage of one order, so this is a good background check on Alibaba stock for you. 2. Contact with as many as you like  It's a good idea to speak to as many suppliers as you like the look of. With Alibaba stock, it's really important to be specific with what you want quoted and make sure you send this same request to all the suppliers so you have a great base for comparison. Usually sample images and details down to specific measurements and quantity help. If you have no idea what you can afford you can use the live chat option to get immediate responses from suppliers so you can start to work out the right quantity and quality you can afford. Having a supplier that is on during "business hours" also ensures that the supplier is a legitimate operator and enough staff to serve customers. The chat button is found on the supplier profile. On Alibaba stock, having someone contact you in a timely manner also ensures that it is more likely they will respond to you in a timely manner when something goes wrong, so favour those that provide you with an accurate and fast response. (Careless responses not included, although they may be quick) 3. Create a sample Before you spend your whole budget on an order, make sure that you are meticulous with creating samples. If it is a new supplier, maybe try running a minimum purchase quantity to begin with, as sometimes the quality of the batch may differ from the sample as well as on Alibaba stock. How the product withholds is also important, because if you pick the wrong supplier that uses poor quality materials, it may be detrimental to your brand. For example, I had a large batch of bracelets made, and after wearing one for a month I found the gold plating faded away to an ugly grey with wear and tear. It's best you find out with a sample, then order a large batch. In my instance, I was lucky I hadn't actually sent any out so, I just had to include a little card that warned the user that if exposed to water, it may lose its gold. A warning is better when you sell products than an unpleasant surprise when it comes to Alibaba stock. 4. Get orders with tracking  For those that are less versed in shipping methods, make sure you get tracking for your Alibaba stock. Separately pay attention to air shipping methods as well. Trusted carriers such as DHL and Fed-Ex are always good. Feel free to leave a comment with your experience if you have anything else to add. 5. Consider labelling and packaging  You will most likely need another manufacturer to create product labels and pack your products, but instead of having them shipped separately here from Alibaba stock, you can save a lot of time and have them all packed in China before it gets sent here. A lot of manufacturers have partnerships with packing companies so if you don't want to go through the process of finding another supplier you can ask they introduce you to their trusted partners. They will be more than happy to do this and you will also skip the part where you have to find products. Don't forget to get a sample shipped from Alibaba stock though! That's the best way of having started with importing from China wholesale.I hope these tips help you on your Alibaba stock journey. Make sure you always choose the suppliers that have a good reputation and great communication. I've had many that disappear on me after a few emails, if they feel you are a small order (luckily I didn't purchase). These tips can be used for any manufacturer on Alibaba stock, but because I've only had experience with the Chinese manufacturers, you may want to do some research as well into the regulations of other countries. To get cracking on your social media, don't forget to join our January blog challenge by simply blogging. To create a new blog post simple use this create new article link when you are logged in.  Do you have some other tips for importing from Alibaba stock? Let us know!

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6 Tips for Start-ups Wanting to Take Advantage of the Free Trade Agreement to Source from China

With the signing of the free trade agreement (CHAFTA) there is a big opportunity for Australian SME’s to start sourcing products directly from China with no duty rates. Elyse Daniels, founder of custom jacket company Exodus Wear has been sourcing from China for over 5 years and has experienced many of the pitfalls that can come along with it. Below she goes over her 6 tips for start ups to successfully source from China.1. Build relationships with face to face meetings You don’t need to pick up your passport or step foot in an airport to source wholesale products directly from Asia, but even with a language barrier, nothing beats an old fashioned face to face meeting for relationship building. Just because the transaction can be completed remotely, don’t forget that technology connects and disconnects people. Your suppliers are an extension of your business, so at least in the first instance, I recommend a trip to China or Hong Kong, to meet with factories directly. One of the most effective and economical ways to do this is by looking at the calendar for the exhibition centres and finding a trade show related to your industry. On day one of the tradeshow meet everyone, see what they can offer and create a shortlist of exhibitors to meet with. It can be difficult to schedule everyone in, and being on show the Factory staff are pretty busy and might be tempted to try to meet with you at the trade show stall. In anticipation of this when booking the meeting, highlight the need to meet away from the stand so you are not interrupted, this also signals that you are serious about doing business.2. Don't put all your eggs in one basket There’s a good reason this saying exists. Once you have found a good factory it can be tempting to put all your orders through them, but this is a big mistake. It doesn’t matter what type of business you own, whatever you are selling shouldn’t come from one source. While the relationship may seem great at first, don’t forget ­every relationship does. And, like every other relationship there will come a time when things change. Eventually you might need to renegotiate pricing or terms. If you don’t have anywhere else to go, you could be left in a vulnerable position. Sourcing can be a volatile business so spread your risk.3. Build the volume to negotiate China is notorious for only wanting to deal with high volumes. For a company starting out this is a bit of a catch 22. It's difficult to grow your volume if you can’t start producing the product in the first place. To get going, my suggestion is do whatever it takes to build the volume. Realistically until your business builds volume, you need to either produce locally or source from China, but pay a premium, to have a small amount made as a first run. Sure, this might decrease your profit margins, but its a better approach than taking a gamble and ordering a high volume or product to start with. Once you get regular sales and need to start ordering larger volumes you have the sales history to negotiate better pricing. 4. Engage a freight forwarder with an office in Hong Kong So you’ve found your supplier(s), and have the volume for large orders from China. Don’t be fooled, you’ve won the battle not the war. Getting your product out of China can be a battle in itself. Many factories don’t have export licences and utilise a third party trading company and freight forwarder as a work around. All companies are welcome to choose their own, but the energy placed here will have little return. Most freight forwarders have their own recommended trading company; this is generally the best solution. When picking a freight forwarder, choose someone with an office in Hong Kong. There is a lot of power being on the ground and understanding the local requirements. If the company is small, don’t get turned off, often smaller companies will give you better service. The Freight Trade Alliance is a great organisation that can connect you to a freight forwarder. Note: To take advantage of the free trade agreement it is not enough to just source the goods from China; they need to have a Certificate of Origin to qualify for the free trade agreement (keep in mind that Hong Kong is not included in the free trade agreement).5. Understand the cultural differences It can take a while to get used to the way business is done in China. At first factories will seem like they won’t want to deal with you, but they are actually trying to seem not too eager. In China, if they appear to be too eager it implies they are desperate for your business, so they like to give the impression that they don’t need your business, however they will work with you, but only because they like you. Your gender and age has a big influence when sourcing. Being young and female has been challenging at times. People have literally laughed in my face and I’ve had to convince them to work with me. Only once they see the volume of stock we order, all of a sudden we start getting treated like a treasured customer. For myself, a workaround has been to bring an older man to the meetings with me, it seems ridiculous but this route was less painful than doing it on my own. There are a number of other cultural considerations to make. Austrade has a very useful guide that can be found here.   6. Factory audits and payment terms And finally, the most important point has been saved for last. Factory audits and payment terms are absolutely critical to a successful import. Always, always, always engage a third party quality inspection company to audit the factory and inspect your goods. Be careful not to use the standard template checklists from the factory. If your product has specific requirements make sure you create a suitable checklist for the inspector to use. Never pay for your goods upfront. A 30% ­ 50% deposit is standard practice and it is reasonable to suggest that payment will not be made without a physical sample. After the order is complete send in a third party inspection company to check the goods prior to making the balance payment.

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Have you really thought out your Offshoring decision?

Simply by taking a quick look through our website you will find that a key competency of GBOS is facilitating the transfer of manufacture to offshore vendors. So then you might wonder why would we potentially discourage customers from using this service by asking them to think carefully before they proceed.  Well I think it is about time we actually departed from the traditional bipartisan approach: Manufacture Onshore using Lean or automation vs. Manufacture Offshore. The reality is neither solution provides a cure all for your company ailments.  I once worked for a company that was manufacturing onshore, we found out that an offshore competitor was actually selling a more advanced product for less than we could purchase components for manufacture. We were trying to trade on being Aussie made. We had a consultant with Lean expertise come in to advise us how to streamline our operation and reduce waste. But the reality of the matter lies in the initial fact. The competitor sale price (not manufacture price but the actual retail market price from an onshore reseller) was going to destroy the business no matter how Lean the factory became. Commercial clients were already aware of the competition and were quickly failing to see any benefit in paying significantly more for a local product which was generations behind the competition.  The above is an extreme case. The Lean consultant should have looked into the pricing fact before taking the contract and advised the company that, in reality, his consultation will not provide sufficient benefit to fix the inherent pricing and product issues. Similarly had an offshoring consultant been contracted the same reality should have been revealed, there is no point in proceeding with this particular product because the company is too far behind in both design and costing to ever regain the ground. Sometimes honesty can be a bit brutal but it is better than pouring hundreds of thousands of dollars into a doomed enterprise. Ok so now getting back to a resolvable situation. Let suppose your company manufactures products that either has some IP advantage over the competition or still has the ability to remain competitive on pricing with some tweaking. Knee-jerk reaction is to send it off to China to get made for less. (I'll discuss country options in a later blog - it's a BIG world out there and outsourcing to China may not be suitable for your business). The cost price quoted by the Chinese vendor is significantly less than what we are paying to make it offshore. You need to order 2 years worth of product in a single order and pay 100% before shipment and terms are EXW.  The initial problem with the above is the customer is only considering the EXW (ex- works) price in their consideration. There is no consideration for the costs to transport your goods to the nearest port, customs clearance (China and Australia), shipping, warehousing, potential yield issues, scrap or obsolescence and the fact that you now have a significant amount of investment tied up in stock that will not likely be recovered for more than a year (supposing a 50% price markup). The EXW price looks fantastic at first glance, we make a direct comparison between this and our internal costs and say "Wow look at all the money we are saving here!" 2 years down the track we are then sitting trying to explain how such a great price from the offshore vendor resulted in the company being in the same financial position (or worse) after the program has been successfully run.  IP risk issues aside, sometimes offshoring is simply not going to reap the rewards you are expecting. Sometimes you may benefit more from implementing Lean practices onsite. Sometimes the net cost of the product in your store when you add up all of the incidental (hidden) costs actually ends up being more than what you were paying locally and despite the attractive price quoted by the vendor, the move to offshoring actually has a net detrimental effect on your business. Do your research, add everything into the pricing before you start to make comparisons to your current cost. There is a Build vs Buy online tool free on our website if you want to make a start.

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Information Overload

Transferring manufacture to an offshore company is an interesting venture to say the least. Often when company representative are visiting the factory for the first time, it is the first time they have been in the region and possibly the first time they have visited a factory to look at a cost-down manufacturing option by moving offshore. There is often a  sense of urgency attached to this in that most delegates have defined a set of goals that they want to achieve whilst in the country / meeting with the factory management. Understanding the time constraints of the visit there is a tendency to "dump" everything onto the potential supplier. Company history, staff members, growth, sales, products we are currently making and products that we are looking to manufacture here often gets verbally relayed to the manufacturer within a very short time period.  Unfortunately, as interesting as all of this information may be, adding it into the mix when the manufacturer and your company as just starting out a relationship does not benefit anyone and actually can do a little damage to the timeline of getting your primary manufacturing target completed and the focus of the manufacturer. Imagine this from the perspective of the manufacturer for a minute, while he / she may appear to have a reasonable grasp of the English language in order to be communicating with you, this is likely not a daily occurrence. The grasp of the English language, does not extend so well to complex situations, multiple variables and "Aussie" nuances. So initially the manufacturer went into the meeting to address your primary objective of getting a particular product (a trial product for this manufacturer) completed based on your discussions. In the time since you agreed to meet and discuss this in person, your company has come up with a plethora of add-ons to the project. While the manufacturer is not likely to be deterred by the fact that you want more work done, keep in mind 2 things: 1. Firstly and foremost, you have yet to formally trial this manufacturer on ANY product. They may have great references, but any combination of a multitude of factors (either with your specifications or  with the factory) can lead to the first product failing unless it is properly managed and monitored from start to finish. Start slow, get the first one manufactured successfully. 2. All of the extra information you have just added to the table has likely left the manufacturer dazed and confused. He now is likely confused about priorities and where to start because he has so much information to try to mentally translate back to his native language on top of the initial objectives. If you are in a situation where you feel the need to add more information about your company, products and other facets of your business, generate a PowerPoint presentation and send it to the factory at least 2 weeks before you arrive. Then on your visit you can focus on the details of the job you want to complete to evaluate the manufacturer and address any questions THEY raise about the presentation and your company and avoid the manufacturer leaving the meeting lost and confused.

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Innovative tools for SMEs: broaden your horizons

The situation facing a business wanting to export or import can be hard to navigate. Even the basic information you're in need of can be difficult to attain without spending far too much time looking for it, pouring valuable hours into a task, and following up on several things at once. It can seem daunting, not to say completely overwhelming. Additionally, the stakes are often higher for a smaller company because you just don't have the elbow room for any serious losses, and you might not be in a position to employ someone just do deal with those stresses for you. SMEs risk losing out simply due to time pressures, and complicated regulations.   Finding a comprehensive source for your needs is a great help but until quite recently, no such thing has existed in Australia.   Australia thrives on imports and exports The effects that importing and exporting have on the Australian economy are not to be understated. Foreign trade and FDI are essential building blocks to the Australian economy, as they are for most developed economies. Exporting especially is the bridge that can connect Australian business with countless markets around the world, opening new opportunities for SMEs. Business Insider has identified evolving technology and digital advances as a key factor that assists the Australian economy by increasing export and import opportunities.   Founded a few years back by three people who all had extensive knowledge of the processes involved in exporting and importing, CargoHound aims to provide a way for businesses to easily move their goods and equipment through different countries. Founders Ian Smith, Pete Johnson and Kim Mauch, all people with experience in the industry, set out to start a business that understood its objectives and market from the inside out.   Innovation goes hand in hand with foreign trade The new National Innovation Agenda gives Australian businesses the chance to broaden their horizons. Innovation and exports are certainly linked, through innovative tools that make foreign trade accessible to SMEs but also through lone entrepreneurs. Business Insider argues that not only does it further Australia's own innovation, but also exposes Australian businesses to new markets and healthy competition with leading innovators. Digital advances are driving industries across the globe and Australia's new determination in that area is a welcome new trend, since agricultural products alone account for a significant turnover.   Doors opening for the smaller business Recently acknowledged by Anthill for their dynamic and flexible business, CargoHound is providing some very innovative solutions for SMEs. It works by bringing together importer/exporters with freight forwarders through a platform in which needs and quotes are (anonymously) discussed until a deal is made. CargoHound charges freight forwarders a subscription fee and a commission fee, which pays the bills but also serves to reassure exporters and importers that they will be taken care of by the company. For those looking for a freight forwarder they can access reliable companies, and they're spared the headache of due diligence.   The idea to make use of a platform designed that makes the waters easier to navigate and is hugely beneficial to any smaller business hoping to expand globally in any way. CargoHound aims to eliminate that uncertainty as much as possible, with a goal to provide transparency and clear terms for all parties involved.   Dun and Bradstreet report that there is still only a small number of businesses involved in exporting, despite the many potential benefits of reaching out to foreign markets.   For an SME, or an entrepreneur this is a great tool that makes it much easier to start the process of import/export even if you're diving into brand new waters.  

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Minimum Order Quantities - 'it depends'

All factories have a minimum order quantity.  If you want to order more, there’s no problem, but if you only want a small quantity things can get difficult very fast.  I'm always being asked, ‘What’s the minimum order quantity?’  Unfortunately, it's not an easy question to answer and my first response is usually 'it depends'.  I know that's frustrating, but let me explain some of the factors you need to consider.   1. It depends on the product value. Generally, low value items have a higher minimum order quantity.  For example, you might want non-woven bags with your logo printed on them.  The biggest cost in making these is setting up the machines and testing to get the colours and the logo right – this is a fixed cost whether you want 100 bags or 100,000 bags.  The bag material itself is cheap and factory only needs one person to flick a switch to make thousands of bags, but it still has to cover the cost of setting up.  If you only want a small number, the price per bag simply gets too high. On the other hand, the materials cost for high quality packaging (say you want to present your jewellery or premium wine or homewares in a rigid shaped box with a leather-look exterior, lined with velvet and stamped with your logo in silver both inside and out) is much higher.  The production process is also more labour-intensive.  So overall, fixed costs are a smaller proportion of the total cost and a smaller order is more practical.   2. It depends on the product specifications. If you simply want a blue bag with a white logo, that’s easy and doesn’t require much setup.Now imagine you specify the PMS colour for the blue and you require the logo to be positioned precisely 3cm from the top left corner of the bag, plus you want a gloss finish on the blue but not on the logo.The limitations on the blue may increase cost.Setup time increases.Quality control becomes more complex.Wastage goes up. The same principle applies across all kinds of products. 3. It depends whether the entire order has exactly the same specifications. Think about sizes for clothing or shoes.  Colours and designs for fashion and homewares.  You might order 10,000, but if you have 5 different sizes and 4 different colours, you actually ordered 500 each of 20 different items.  That’s a lot more setup and quality control work for the factory.   4. It depends on the factory size. Let’s say setting up the machines to produce bags takes 30 minutes.One factory has capacity to produce 1,000 bags per hour, another can produce 10,000.You want 50,000 bags.For the first factory, that’s several days’ work and worth considering.For the second, it’s not even one full day of operation.They probably won’t be interested. 5. It depends how busy the factory is. Then again, if they have no other orders, maybe they will consider a half-day job.   6. It depends whether there will be repeat orders. Everyone wants a long term customer and repeat business which they know how to do.  Don’t expect too much from this at first though.  Unless the factories have some reason to believe in your repeat orders, or have done work for you before and see you as a steady customer, they’re more likely to focus on what is guaranteed.   7. It depends how urgently you need the product. If you’re willing to wait until it suits the factory’s convenience to fit in a small job around their bigger orders, they may consider a smaller quantity.   With all these issues to consider, you can see why it’s difficult to set minimum order quantities on the spot!  It gets even harder when clients want a custom-designed product. You might ask, after so many years of experience, can't we sense whether a particular order quantity is likely to work?  Yes, but we still don't want to commit until we're sure.  We's rather be cautious than let you down later.  So the first answer's still likely to be 'it depends'!

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P.M. Pupperty.

Manufacturing with on offshore vendor introduces a myriad of complexities into the equation. Some are obvious such as potential counterfeiting and quality issues and the need to become more intimate with the finer details of your product than you ever wished (or thought possible) in order to be able to give direction to the supplier on the minor issues that can result in major brand dilution. Outside of the obvious concerns we also need to be mindful of the way in which we conduct ourselves both within the factory environment and (possibly more importantly) outside of office hours when we are trying to foster the relationship with our new manufacturer. In Western society we like to make the separation between work activities and social activities and feel that what is done socially does not reflect highly on our working relationship (in the most part). Within an offshore setting it is sometimes the actions that we engage within that hold more weight on our future working relationship with the supplier than anything we have done within the confines of the factory. One of the largest predictor for your future business relationship with a supplier is how easily you can be pressured into doing something in a social setting that you obviously did not want to do. "Have a cigarette", "Lets go for Karaoke", "Do you want to play..... (game) ", all seem fairly innocuous invitations and by imposing a popular Western ideology of doing whatever is required to get the contract across the line onto these invitations, a lot of first time visitors to the region will (reluctantly) engage in these activities.  I am not saying that if you sincerely LOVE karaoke you should refrain from doing so with your supplier (probably not to the extent depicted in the movie "OLD DOGS"), but if you show reluctance and then do it anyway can be interpreted as "This customer is very flexible and easy to convince on process and quality issues, just look at how easy he decided to jump up and sing karaoke / have a cigarette... etc.." You are setting a precedent for future business and social engagements with the supplier without knowing it. You are sending the message" This is what I want, but if you want something else, I am happy to do things your way". If you were standing up in front of a Board meeting and relayed the above message, you would  be ruthlessly massacred by the more senior and experienced executives. Another mention should be given to the excessive consumption of alcohol whilst on social outings with your supplier. After work drinks to "close a deal" is often a cultural norm. If you can tolerate alcohol without embarrassing yourself then feel free to match drink for drink with the manufacturing team. If you cannot then drink what you can tolerate and feel free to stop when you have had enough. I have seen senior representatives obviously on the first trip to the country go out for a "blinder" with the factory representative. Sitting a few tables away, I could hear them giving away a multitude of business secrets and insider tips in their inebriated state, not only to the factory representative but to 90% of the establishment. It should go without saying but "Know when to say enough!" Be yourself while meeting with offshore manufacturers, don't do things that you normally would avoid and don't drop into holiday party mode. You will find the factory is significantly more respectful and co-operative, viewing you as a Professional rather than another gullible Westerner puppet.  

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Relationship advice for offshore manufacturing

Long distance relationships are hard. You wonder what they are doing, lie awake at night sometimes wondering if they are interested in your needs and desires. Sometimes you wonder if they are even cheating.  OK, before you start getting the wrong impression here, I am actually talking about your relationship with your offshore supplier.  Once you start looking to manufacture offshore you are developing a long distance relationship with this supplier and in a similar way to your personal relationships, this needs to be fostered and nurtured in order to develop into a long term partnership. Many companies tend to think offshore manufacturing is an easy fix to your financial woes, they pay minimal attention to developing the customer - supplier relationship. They never contact the supplier unless it is to place an order or lodge a complaint. I understand you are busy trying to run your company with all of the domestic pressures and doing this on a skeleton staff to keep your wages bill low, but consider the argument from the suppliers perspective for a minute.  If you are the above offshore model, I can guarantee that your suppliers see you as a detached customer who never stops complaining, does not work with them to resolve the issue, just wants to blame and criticize, likely they cannot even put a face to your name. So the only reason they stick with you is because they have no better option. There is no mutual respect between your companies. I'm sure you have dealt with this type of customer yourself in the past, you know the one where you are constantly telling yourself "Once business picks up, I'm going to kick this customer out the door!" Just because you are dealing with supplier from another country, don't fool yourself into believing the same sentiment does not exist if you mistreat them. Especially in an Asian culture where they place great value on how they are perceived amongst their peers and colleagues, if you are a disrespectful customer they will quickly learn to resent your business. If schedules are going to be pushed back due to new work, you become first on the list (you are going to complain about something anyway).  I once worked in an office with paper thin walls so I could hear the neighbouring company on the phone to his Asian suppliers. There would be a screaming session down the phone almost daily. This was how he thought best to deal with his suppliers. In the years I worked there, the pattern never stopped nor did the frequency reduce. There was supplier problems obviously, but all of the screaming and blaming did not do anything to fix the problem. The supplier obviously grew to resent his business an developed a tolerance for his incessant screaming.  So when you are in a customer -supplier relationship with an offshore vendor remember show a little respect, work together, don't just contact them to criticize. When things go well consider dropping them a complimentary email or call. I know the topic seems a bit touchy-feely but I guarantee you will start to see the rewards in the quality and reliability of your products and eventually you will sleep better at night knowing they value your business and will go the extra mile to make sure you don't decide to leave.  

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