In recent years, China has taken a top spot in the global production of consumer products.
For the enterprising business owner, the opportunity to buy and resell Chinese manufactured goods can yield an excellent profit.
According to recent data, about 216.7 billion U.S. dollars worth of Chinese products were exported globally in February 2023. China also remains the strongest trading nation since 2013.
Affordability is a key factor in importing products or manufacturing materials made in China, but it’s imperative to research before embarking on this strategy.
When companies opt to import products from China, they typically do so in massive quantities, which can understandably raise eyebrows. However, Chinese factories have huge establishments equipped and accustomed to churning out sizable products with ease.
Importing from China can be a complicated process, and requires planning and relationship building. Failing to plan can lead to delays, missed deadlines, and profit loss.
Here are 7 steps you can take before importing products from China.
Step #1 – Choose products to import
The first step in becoming a goods importer is determining whether you have the legal right to import a particular item.
The country of landing for your exported Chinese goods may impose guidelines on certain items and it’s best to understand what restrictions may apply.
China also has its own set of regulations, such as restricting the export of goods like faux-designer clothing or handbags and animal by-products.
Familiarize yourself with the import/export laws of both China and your own country to avoid running into any legal issues.
Here are some products from China that required regulatory compliance and should be avoided when importing:
Meat, poultry, and animal by-products
Seeds
Fruits and vegetables
Cosmetics, medical products, and pharmaceuticals
Any flammable fabric
Tobacco products
Explosives
Precious metals
Any branded products, real or fake
Alcohol (without proper licensing)
Boats or motor vehicles of any kind (without proper licensing)
One of the most critical pieces of your business is finding an excellent product for resale. Do some research to find what sells well, and even better if this is something you have at least a passing knowledge about. This way, you can feel comfortable and confident marketing your product.
Check into the profitability of your preferred product and be sure that there is a market for it. Calculate the costs of purchase vs. the price at which you can reasonably sell.
Be sure to do your due diligence in finding out what is legal to import. Remember that there are restrictions on many items; be careful to avoid these.
Step #2 – Find a supplier
Once you have decided on a product, make a list of Chinese suppliers who can get this product for you. This is where you source your products from China.
Exporters will typically seek foreign partners through trade websites and online forums. There are online sourcing directories available.
You can also opt to import your products directly from factories in China or consider using a professional sourcing company.
But to understand which sourcing method fits best with your business, let’s look at the pros and cons of each.
A sourcing company can be a better choice for a beginner who has no experience dealing with Chinese exporters. This allows you to network with trustworthy sources and gives you access to suppliers you might not be able to find on your own.
Keep in mind, however, that this will cost you a finder’s fee of 3 to 15% of the purchase price.
Step #3 – Examine the product
When you find a supplier, ask them for product samples and information about the manufacturing plants.
They should be willing to offer this so that you can get an idea of the quality of the product.
While price is important, you also want to ensure the quality is such that you can stand behind your product confidently.
Step #4 – Classification and calculation
Now that you have a product, the next step is to classify it with a ten-digit tariff classification code.
Using this, you can calculate the rate of duty for importing.
This number can be added to the product price and shipping prices to determine what you will charge your customers to make a profit.
Working on this estimate is important–you probably won’t have an exact number until you receive your first shipment.
By getting as close as possible to the cost, you will avoid losing customers or earnings.
Just be prepared to reconcile the actual cost against the estimate after the first shipment…it is not unusual for fluctuations in the cost due to unforeseen fees.
Step #5 – Placing an order
Minimum orders and shipping agreements will vary from company to company. The majority of companies in China will require an order of at least 10,000 units per.
It is common for Chinese exporters to expect an initial deposit of 30 to 50% to start production. The remainder is due upon delivery.
You can choose to ship your items one of two ways.
Carrier airmail is fast, but is better for smaller orders and can be expensive. Sea Freight is ideal for larger items or shipments and is more affordable.
You can ship either as a Full Container Load (FLC), which is using an entire shipping container or as a Less than Container Load (LCL) which is sharing space with other shipments.
The FLC is cheaper if you have a large enough load to make it worthwhile. If shipping by sea, make sure that you allow plenty of time for arrival. There can be delays due to customs hold-ups, the vessel not sailing on time, or any other reasons.
Also realize that there will be a day or two necessary to get cargo from the factory to the port, and another couple of days for regular customs procedures.
Step #6 – Prepare for and await shipment
You can make the process a lot simpler by hiring a customs broker.
This professional will complete and file the necessary paperwork, estimate costs, navigate regulations, and otherwise smooth the process.
If doing it on your own, make sure that you file the Import Security filing, a document required when shipping by sea.
You will also need to submit the initial import documents.
These include the following:
Packing lists
Certificate of origin
Bill of lading
Customs bond
Commercial invoice
When the order arrives, be prepared to pay import duties and arrange for the pick up and transport of your product.
Check for damages and contact your supplier to inform them the shipment has arrived.
While the initial process can be a bit daunting, importing and selling Chinese products can be a lucrative business.
Just be sure to do your research, and expect that there will be some bumps along the way.
Work step by step and don’t be afraid to network and reach out to others with questions.
You have to start somewhere, and with a little experience, your business can thrive.
Step #7 – Make payments to China
A big part of importing is when you need to send money to China for your supplier.
Recently the Chinese government has allowed the Yuan, or RMB, to appreciate in value.
This means that if you purchase RMB and use that RMB to pay your supplier in China, you’ll find yourself in a more advantageous position to negotiate better deals.
You’re giving Chinese suppliers a currency that is not only stronger but usable in their own country.
Bottom line
When importing products from China, it’s important that you understand the necessary steps in order to not only ensure your business is successful, but also sustainable, provided that you follow the right procedures.
Understanding the procurement process in China can be worth your every minute. It can help you invest wisely and essentially keep your sales healthy, while also building the right relationships with your suppliers.
In order to ensure that your transactions are worth your time and to avoid any mishaps, opening a business account can be one of your options.
With a virtual business account, you can make and receive payments with no obligations, like when you do with banks.
A business account also offers several benefits whether you’re a business owner or an online seller. Like having a multi-currency account, no maximum transactions, and much more.
Your first point of contact will be the manufacturer itself. You likely spent a good deal of time trying to find the right manufacturer for your product, and you hopefully have an excellent working relationship with them thus far. The import/export moment is a critical step in the supply chain, and you want to ensure that they have your best interests at heart.
It’s important to remember that while this may be your first time with a Chinese manufacturing company, this is almost assuredly not their first time dealing with someone in the United States. If you stumble at any point in this process, you can leverage your relationship with your supplier to entice them to guide you.
When you check with your manufacturer prior to shipment, you want to make sure that all products are built to your specifications. Get photos or even arrange to have a sample product shipped. You want to make absolutely sure that your products are going to be ready for resale.
Once you have cleared the products with them, you may want to consider negotiating packaging of your inventory.
Note that there are independent freight forwarding companies and import clearance firms that can help assist you with this step. However, it is always advantageous to have your manufacturer handle this part, because fewer “touches” of your product means fewer opportunities for errors. If you have to pay a bit more to have the manufacturing company package your parcels, it will be an expense worth incurring.
The import process may appear daunting, but breaking it down into steps can make it manageable. Here’s how to get started:
Step 1: Conduct Thorough Market Research
Before reaching out to suppliers, analyze your market to identify high-demand products. Importivity offers product sourcing expertise, helping you discover trending items and best-sellers in various markets.
Step 2: Source Reliable Suppliers
Suppliers is crucial to avoid risks associated with unreliable partners. Importivity’s team specializes in supplier vetting and negotiation, ensuring that you work only with reputable suppliers, reducing the chances of receiving substandard products.
Step 3: Negotiate Terms and Place Orders
Establish clear terms with your suppliers, covering pricing, delivery timelines, and quality standards. Importivity’s negotiation services help you get competitive rates and favorable terms, protecting your interests.
Step 4: Quality Control
Quality control is essential in maintaining your brand’s reputation. Importivity provides on-site inspections and third-party quality checks to guarantee that the products meet your expectations before shipment.
Step 5: Handle Shipping and Logistics
Shipping internationally involves logistical challenges. Importivity takes care of shipping arrangements, managing everything from packing and labeling to selecting the most cost-effective shipping method.
Step 6: Manage Customs Clearance
Customs clearance can be challenging, with extensive documentation requirements. Importivity streamlines this process by handling all necessary paperwork and advising on tariff requirements to ensure a smooth transition across borders.
Step 7: Final Delivery
Once the shipment cleared customs, it’s ready for final delivery. Importivity works with trusted freight forwarders to guarantee timely delivery to your business location, ensuring that your products arrive in perfect condition.
Before delving into the details of importing from China, let’s take a look at some important statistics that highlight China’s significance in global trade:
China is the world’s largest exporter of goods, with a total export value of over $2.5 trillion in 2020.
The United States is the largest importer of Chinese goods, with imports valued at $436 billion.
Other major importers of Chinese products include Japan ($149 billion), Germany ($99 billion), and South Korea ($87.2 billion).
Top products imported from China include clothing and textiles ($233 billion), computers ($173 billion), and broadcasting equipment ($161 billion).
When importing products from China, you have two main transportation options: air freight and sea freight. Each option has its advantages and is suitable for different types of products and urgency levels.
Air Freight
Air freight represents only about 5% of the total volume of Chinese exports. This is primarily due to its higher cost, with urgency being the main reason for choosing this method. Air freight is more efficient in terms of time but not in terms of cost.
Air freight is suitable for:
High-value, low-volume products (e.g., electronics)
Urgent shipments
Perishable goods
Sea Freight
Sea freight is the most common method for importing from China, accounting for the majority of shipments. It’s more cost-effective for larger volumes and less time-sensitive goods.
Sea freight is ideal for:
Low-value, high-volume products (e.g., clothing, accessories)
Bulky items (e.g., furniture, machinery, spare parts)
Non-urgent shipments
we understand the importance of choosing the right transportation method for your imports. I recommend the digital logistics platform allows you to compare door-to-door freight quotes for both air and sea freight, helping you make an informed decision based on your specific needs.
Understanding Incoterms for Importing from China
Incoterms (International Commercial Terms) are standardized terms that define the responsibilities of importers and exporters in international trade. When importing from China, the most commonly used Incoterms are:
1. EXW (Ex Works)
This is the most basic term, where the seller makes the goods available at their premises. The buyer is responsible for all transportation and export/import procedures. While common among Chinese suppliers, it can be risky and complex for inexperienced importers.
2. FOB (Free on Board)
Under FOB terms, the seller is responsible for delivering the goods to the port and loading them onto the ship. The buyer assumes responsibility once the goods are on board. This is often recommended for imports from China as it indicates the supplier has experience with exports.
3. CIF (Cost, Insurance, and Freight)
With CIF, the seller covers the costs of freight and insurance to the destination port. However, the buyer is still responsible for unloading and further transportation.
I recommend using FOB terms when importing from China. the digital logistics platform can help you navigate these terms and ensure a smooth import process, regardless of the Incoterm chosen.
Proper documentation is crucial when importing products from China. Here are the essential documents you’ll need:
Bill of Lading (BL): This document serves as proof of shipment and includes all the specifications provided by the exporter or importer.
Packing List (PL): A detailed list describing the contents, weight, and volume of the imported merchandise.
Commercial Invoice: This document should include the exporter’s details, importer’s tax information, agreed Incoterm, and the commercial value of the imported goods.
Customs Clearance Authorization: This must be correctly filled out, signed, and stamped.
Copy of ID or NIE (for Spain)
Copy of Passport
Form 036/037 (for Spain): This document is required if you’re self-employed and want to opt for the equivalence surcharge.
In addition to these general documents, certain products may require specific certifications or test reports to comply with European regulations. It’s essential to consult with your supplier about any additional requirements for your particular product.
digital logistics platform simplifies the documentation process by allowing you to automate shipment documents, ensuring accuracy and compliance with all necessary regulations.
Incoterms (International Commercial Terms) are standardized terms that define the responsibilities of importers and exporters in international trade. When importing from China, the most commonly used Incoterms are:
1. EXW (Ex Works)
This is the most basic term, where the seller makes the goods available at their premises. The buyer is responsible for all transportation and export/import procedures. While common among Chinese suppliers, it can be risky and complex for inexperienced importers.
2. FOB (Free on Board)
Under FOB terms, the seller is responsible for delivering the goods to the port and loading them onto the ship. The buyer assumes responsibility once the goods are on board. This is often recommended for imports from China as it indicates the supplier has experience with exports.
3. CIF (Cost, Insurance, and Freight)
With CIF, the seller covers the costs of freight and insurance to the destination port. However, the buyer is still responsible for unloading and further transportation.
we recommend using FOB terms when importing from China. Our digital logistics platform can help you navigate these terms and ensure a smooth import process, regardless of the Incoterm chosen.