Exclusive Tips About Importing from China
I want to share with you the very special tips for importing from China
Exclusive Tips About Importing from China
Get to know before importing
Many people want to import goods from China, but always lack confidence in trying it because of some worries, like language barrier, complicated international trade process, scams, or bad quality products.
There are many tutorials teaching you how to import from China, charging you hundreds of dollars as tuition fees. However, most of them are just old-school textbook guides, which are not suitable for the current small business or e-commerce importers.
In this most practical guide, it’s easy for you to learn all knowledge of the whole importing process from choosing profitable products to arranging shipment.
Step 1. Identify if you are qualified to import from China.
Almost every new or experienced businessman will choose to import products from China to get a higher profit margin. But the first thing you should consider is how much budget you should prepare to import from China. However, the budget varies from your business model.
1. Only $100 for dropshipping business
You can spend $29 on building a website on Shopify, and then invest some money in social media advertisement.
2. $2,000+ budget for mature e-commerce sellers
As your business becomes mature, you had better not buy from drop shippers anymore because of the high cost. A real manufacturer is your best choice. Usually, Chinese suppliers will set a minimum purchasing order of $1000 for daily products. Finally, it usually costs you $2000 including shipping fees.
3. $1,000-$10,000 +for brand new products
For those products that don’t need a mold, like clothes or shoes, you just need to prepare $1000-$2000 to customize products according to your need. But for some products, like stainless steel cups, plastic cosmetic bottles, manufacturers need to make a specific mold to produce items. You need $5,000 or even a $10,000 budget.
4. $10,000-$20,000 +for traditional wholesale/retail business
As an offline traditional businessman, you purchase products from your local suppliers currently. But you can try buying products from China to get a more competitive price. Moreover, you needn’t worry about the high MOQ standard in China. Generally, according to your business model, you can meet it easily.
Step 2. Learn what products are good to import from China.
After analyzing the import budget you need, the next step is to choose the right product to import from China. Good products can bring you a nice profit.
If you are a new startup, here are some suggestions for your reference:
1. Don’t import trending products
Trending products like hoverboards, usually spread quickly, if you want to make quick money by selling such products, you need to have a strong market insight into grasping the opportunity. Moreover, an adequate distribution system and strong promotion ability are necessary, too. But new importers usually lack such abilities. So it is not a wise option for new businessmen.
2. Don’t import low-value but large-demand products.
A4 paper is a typical example of such kinds of products. Many importers think it must be profitable to import them from China. But it is not the case. As the shipping fee for such products will be high, people usually choose to import more units to lower the shipping fees, which will bring a large inventory to you accordingly.
3. Try unique ordinary daily-use products
In most developed countries, ordinary daily-use products are usually dominated by big retailers, and people usually buy such products directly from them. Hence, such products are not suitable choices for new businessmen. But if you still want to sell ordinary products, you can try adjusting the product design to make it unique.
For example, the TEDDYBOB brand in Canada achieves success by selling their interesting and unique design pet products.
4. Try Niche products
The niche market means there are fewer competitors selling the same products as you. And people will be more willing to spend more money on buying them, accordingly, you will make more money.
Take the expandable garden hose as an example, several clients of ours have ever reached annual revenue of over $300,000. But the ROI(return on investment)of the products is too low from 2019, it is not worthwhile for them to sell anymore.
Step 3. Verify if products are profitable & allowed to import to your country.
No matter what kind of products you want to import, the vital step is to do enough research about the product cost in advance.
It is important to learn the approximate unit price of the product in advance. The price of products with ready-to-ship on Alibaba can be a reference standard to grasp the price range.
The shipping fee is also a vital component of the whole product cost. For international express, if your package weight exceeds 20kgs, the shipping fee is about $6-$7 for 1kg.Sea freight is $200-$300 for 1 m³ including the whole cost, but it usually has a minimum load of 2cbm.
Take hand sanitizers or nail polish, for example, you should fill 2,000 bottles of 250ml hand sanitizers or 10,000 bottles of nail polish to fill up with 2m³. Evidently, it is not a kind of good product to import for small businesses.
Apart from the above aspects, there are also some other costs like sample cost, import tariff. So when you’re going to import products from China, you had better conduct complete research about the whole cost. Then you decide whether it is profitable to import the products from China.
Step 4. Find Chinese suppliers online via Alibaba, DHgate, Aliexpress, Google, etc.
After selecting the product, what you need to do is to find a supplier. Here are 3 online Channels to search for suppliers.
1. B2B trade websites
If your order is below $100, Aliexpress is the right choice for you. There is a wide range of products and suppliers for you to choose from. If your order is between $100-$1000, you can consider DHagte. If you have enough budget to develop your long-term business, Alibaba is better for you. Made-in-China and Global Sources are wholesale sites like Alibaba, you can also try them.
2. Search on Google directly
Google is a good channel to find Chinese suppliers. In recent years. More and more Chinese factories and trading companies build their own websites on Google.
You can also search for Chinese suppliers on some social media, like Linkedin, Facebook, Quora, etc. Many Chinese Suppliers want to be widely noticed, so they often share their news, products, and services on these social platforms. You can reach out to them to learn more about their service and products, then, decide whether or not to cooperate with them.
Step 5. Find Chinese suppliers via trade shows, wholesale markets, industrial clusters.
1. Find suppliers at fairs
There are many kinds of Chinese fairs every year. Canton fair is my first recommendation to you, which has the most comprehensive range of products. You can know more fairs in China.
2. Visit Chinese wholesale market
There are many wholesale markets for different products in China. Yiwu International Trade Market, opposite to our company, which is my first recommendation market. It is divided into 5 districts. Each district has its own specific products to sell. There are many other wholesale markets. You can learn it from my previous post: Top 35 China Wholesale Markets.
3. Visiting industrial clusters
Many importers would like to find a direct manufacturer from China. So, the industrial clusters are the right places to go. Industrial cluster is area manufacturers making the same type of product are more likely to be located in so that it would be much easier for them to share common supply chains and hire workers with related experiences for production.
Step 6. Evaluate supplier’s background to ensure it’s trustworthy.
So many suppliers for you to choose from, you must be confused about how to identify the supplier as a reliable partner to cooperate with. A good supplier is a vital element for a successful business. Let me tell you some important factors you shouldn’t ignore
1. Business history
As it is easy for suppliers to register in a company in China if a supplier focuses on the same product category for a relatively long time such as 3 years +, their business would be stable to a large extent.
2. Countries exported
Check which countries the supplier has ever exported to. For example, when you want to sell the products in America, and you find a supplier that can provide you competitive price. But you learn that their main customer group focuses on the developing countries, which is evidently not a good choice for you.
3. Compliance certifications on products
Whether the supplier has relevant product certificates is also an important factor. Especially for some specific products like electronic products, toys. Many customs will have strict requirements for importing these products. And some e-commerce platforms also will make some requirements for allowing you to sell on it.
Step 7. Get product quotes based on trade terms (FOB, CIF, DDP, etc.)
When you negotiate with suppliers, you will encounter the phrase, Incoterms. There are many different trade terms, which will influence the quotation accordingly. I’ll list the 5 most commonly used in real business.
1. EXW Quote
Under this term, suppliers quote you the original product price. They aren’t responsible for any shipping costs. That is the buyer arranges to pick up goods from the supplier’s warehouse. Hence, it is not advisable if you don’t have your own forwarder or you are a newbie.
2. FOB Quote
Aside from product price, FOB also includes the shipping costs for delivering the goods to the vessel in your appointed seaport or airport. After that, the supplier is free of all risks of the goods, that is, FOB quote=original product cost + shipping cost from supplier’s warehouse to agreed port in China + exporting process fee.
3. CIF Quote
The supplier is responsible for delivering goods to the port in your country, then you need to arrange to ship your goods from the port to your address. As for the insurance, it doesn’t help if your products got damaged during shipping. It only helps when the whole shipment gets lost. That is CIF quote = original product cost + shipping cost from supplier’s warehouse to the port in your country + insurance + exporting process fee.
Step 8. Choose the best supplier via price, sample, communication, service.
After evaluating suppliers’ backgrounds, there are 5 other essential factors that will determine which supplier you end up working with.
1. The Lowest prices might come with pitfalls
Although the price is a key aspect you should consider when you select suppliers, you may be risky of buying bad quality products. Perhaps the production quality is not as good as others such as thinner material, smaller actual product size.
2. Get samples to evaluate mass production quality
All suppliers promise to say the product quality would be good, you can’t just take their words. You should ask for a sample in hand to assess if they can produce products according to your requirements, or if their existing goods are exactly what you want.
3. Good communication
If you have repeated your requirements over and over, but your supplier still didn’t make products as you requested. You have to spend huge efforts to argue with them to reproduce the product or refund the money. Especially when you meet Chinese suppliers who are not fluent in English. That will drive you even more crazy.
Good communication should have two features,
- Always understand what you need.
- Professional enough in his industry.
4. Compare the lead time
Lead time means how long it takes to produce and get all products ready to ship after you place the order. If you have several supplier’s options and their prices are similar, then it’s better to choose the one that has a shorter lead time.
5. Consider shipping solution & shipping cost
If you don’t have a trusted freight forwarder, and you prefer suppliers to help you handle logistics, then you have to compare not only product prices but also logistics costs and solutions.
Step 9. Confirm payment terms before place the order.
Before reaching an agreement with your supplier, there are many important details you should pay attention to.
- Proforma Invoice
- Non-Disclosure Agreement
- Lead time and delivery time
- Solutions for defective products.
- Payment terms and methods
One of the most important is the payment. The right payment term can help you keep a continuous cash flow. Let’s take a look at the international payments and terms.
1. Common payment methods
- Wire Transfer
- Western Union
- Letter of Credit (L/C)
2. Common payment terms
- 30% Deposit, 70% Balance Before Exporting.
- 30% Deposit, 70% Balance Against Bill of Landing.
- No Deposit, Whole Balance Against Bill of Landing.
- O/A payment.
Chinese suppliers usually adopt such a payment clause: 30% deposit before manufacturing, 70% balance before shipping out from China. But it varies from different suppliers and industries. For example, for product categories usually with low profit but large-value orders like steel, to obtain more orders, suppliers may accept a 30% deposit, 70% balance before arrival at the port.
Step 10. Choose the best shipping solution according to time & cost preference.
After completing the production, how to ship the products from China to you is the next important step, there are 6 common types of shipping methods:
- Sea freight
- Air freight
- Railway freight for full container load
- Sea/airfreight plus courier for eCommerce
- Economic shipping for dropshipping (less than 2kg)
1. Courier for below 500kg
If the volume is below 500kg, you can choose courier, which is a service offered by big companies like FedEx, DHL, UPS, TNT. It only takes 5-7 days from China to the USA by courier, which is very fast. The shipping costs vary from the destination. Generally $6-7 per kilogram for shipping from China to North America and West of Europe. It’s cheaper to send to countries in Asia, and more expensive to other areas.
2. Air freight for above 500kg
In this case, you should choose air freight instead of courier. You need to provide related compliance certifications during the customs clearance process in the destination country. Although it is a bit more complicated than a courier, you will save more by air freight than a courier. That’s because the weight calculated by air freight is about 20% smaller than air courier. For the same volume, the dimensional weight formula of air freight is length times width, times height, then divide 6,000, while for air courier this figure is 5,000. So if you’re shipping big-sized but light-weighted products, it’s about 34% cheaper to send by air freight.
3. Sea freight for over 2 CBM
Sea freight is a good option for these goods volumes. It’s about $100- $200/CBM to ship to areas near the west coast of the US, around $200-$300/CBM to areas adjacent to the east coast of the US, and more than $300/CBM to the middle US. Generally, the total shipping cost of sea freight is about 85% lower than air courier. During the international trade, with the increasing diversified need for shipping methods, apart from the above 3 ways, there are another three commonly used shipping ways, check my complete guide to learn more details.
Step 11. Handle custom clearance, deliver products to doorstep.
The last important step is customs clearance. You should know what documents or certificates are needed in the process.
In the process of the export customs clearance in China, the following documents are necessary for all kinds of products:
- Commercial invoice
- Packing list
- Bill of lading
- Certificate of origin
Of course, there are additional certificates needed according to different customs supervision requirements on products. But for the export process, you needn’t worry about it too much. Usually, the supplier will help you tackle it.
In the process of import customs clearance in your country, there are also some standards or documents according to customs requirements in your country. But 5 documents are needed just the same as the export process, including commercial invoice, contract, packing list, bill of lading, certificate of origin. But some other certificates are different according to countries or products. You can consult the freight forwarder who can help you with logistics.
Apart from the certificates, you need to pay for customs duties. But the standard is different according to countries or products. For example, if you import shoes from China to America, you need to pay customs duties, MPF(merchandise processing fee), and HMF(harbor maintenance fee).
You can consult freight forwarders or your customs broker for documents required and product duty rate.