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.
Import from China is a long and complicated process. It requires good preparation and familiarization with the reality in China. Many factors make up the whole process. Starting from supplier search and verification for the transport of goods and customs clearance. Each of these stages requires knowledge that is necessary to avoid fraud or additional, unforeseen fees.
When planning to start importing, first of all, you should find the supplier of goods. On Alibaba or Made in China websites, you can find many Chinese suppliers, but choosing one can be troublesome. First, verify if the supplier is a reliable source. You have to pay attention to whether it is a trading company or a producer, and most importantly, you have to be orientated in the certification it has on the product you are interested in. The importer’s primary duty is to ensure that the imported product is safe and complies with the standards in force in the European Union. It would be best if you asked the supplier for documentation. It depends on the type of product, but most goods imported from China to the EU must have the CE marking. After receiving the documents, it is necessary to verify them.
Importing from China requires customs clearance and payment of customs duties. It is very important to know the customs rates for the product we are interested in. You can plan whether it pays off to import the goods or in what quantities you should import products so that the transaction is profitable.What is more, you can also check whether there are any restrictions imposed on the product. Providing the HS code on customs documents or commercial invoices can significantly speed up the entire border control procedure.
Find your supplier in China and place an order.
Place your order with the vendor, shipper or exporter and identify shipping terms that will be used.
When shipping overseas, be aware of packing, labeling, documentation, and insurance requirements and regulations. Make sure that the merchandise:
Is packed correctly so it arrives in good condition.
Is labeled correctly to ensure that the goods are handled properly and arrive on time at the right place.
Has correct export/import documentation for customs requirements.
Has insurance to cover any damage, loss, pilferage, or delay.
Once you have selected your supplier, request a P/I (Proforma Invoice or Quote Sheet) for your prospective purchases to include the harmonized system number, description & value per item. Your P/I must show the weight & the packed dimensions as well as your term of purchase.
What is a proforma invoice? It is a non binding document helping budgeting your future purchases. It is not a purchase order nor does it creates a legal obligation.
Attention:
1. Ensure the supplier will agree to shipping under FOB terms from their nearest port or airport as this will greatly reduce your shipping costs and give you more control over the shipment.
For example, if you were importing from China and the closest port to the supplier is Shanghai, you would request FOB Shanghai terms.
* If it’s trial order or small shipment, EXW will be also ok.
2. Keep in mind shipping by ocean is indeed quite slow, and this means that certainly requires a lot more long-term planning compared to domestic product purchases. Besides, the time required to export goods, including documentation, inland travel, customs clearance, and port or terminal handling for a container of goods can cost upto 7 days.
In general, we recommend place an order at a minimum 3 months before you need your goods at your door.
We suggest NOT:
1. Always looking for the lowest price.
If you come across a quote that is significantly cheaper than the others, raise a red flag. You should know that there is no lowest price in China, only the lower and lower prices. Lowest price always accompanies with high risk, maybe quality, quantity or reputation.
Just find a reliable supplier and grow with them in a healthy way.
2. Failure to clarify product details.
If you aren’t extremely clear to your supplier about your required specifications, there is a big chance you would receive exactly what you didn’t want. Not clear means the factory will make the decision for you based on cost saving.
Ensure you double check the materials and the manufacturing process of each quote so you can feel confident in the products you are purchasing.
Make sure your supplier has totally confirmed every spec of your target product, including the packaging. Sometimes, it’s necessary to send the sample for recheck.
3. Showing distrust towards your supplier.
International trade is based on mutual trust. If you don’t trust your supplier, nobody will look after your production in the factory, and nobody will sincerely help you when trouble happens.
Arrange your cargo transport.
International trade requires distribution infrastructures that can support trade between several partners. Three components of international transportation facilitate trade:
Transportation infrastructure. Concerns physical infrastructures such as terminals, vessels, planes, rails, trucks and networks. Efficiencies or deficiencies in transport infrastructures will either promote or inhibit international trade.
Transportation services. Concerns the complex set of services involved in the international circulation of freight. It includes distribution, logistics, finance, insurance, and marketing activities.
Transactional environment. Concerns the complex legal, political, financial, and cultural setting in which international transport systems operate. It includes aspects such as exchange rates, regulations, quotas, tariffs, but also consumer preferences.
Once your order in process, consider how to best ship your goods efficiently, securely, and legally. Start by checking with a few different international shipping companies to compare costs and available services. Along with their expertise in shipping documentation, many freight forwarders specialize in certain types of shipments.
Also, be sure to familiarize yourself with INCOTERMS, a set of internationally accepted terms spelling out which parties are responsible for various costs and details throughout the shipping process such as freight, insurance, duties and taxes, customs clearance, and documentation.
There are many costs associated with shipping goods, including container fees, packaging, terminal handling, and broker fees. In order to get a complete picture of shipping costs, each of these factors should be taken into account.
Once happy with the freight quote, you will need to send us or forwarder your supplier’s contact details. We’ll take it from there. We’re going to keep close touch with you and your supplier, make sure your shipment transportation quick and safe.
Check the details:
1. Top 2 things to consider when shipping from China
2. Sea freight
3. Air freight
4. Rail freight
5. Courier service
We suggest:
1. Always consider that delays might happen during the process, such as goods might not be produced on time, the vessel might not sail as scheduled, goods might be held by the customs. Be prepared and plan accordingly.
Do not expect your cargo would leave the port as soon as completed in the factory. Because it needs at least 1~2 days for your cargo transport from the factory to the port. And the process of Customs Declaration needs your cargo to stay at the port for at least 1~2 days.
Besides, there’s only one route frequency each week in some cases. Missing the day of this week, you will have to wait till next week.
2. Choose a good freight forwarder partner.
Logistics is a highly valued aspect of modern business. Shipping costs include both the direct and indirect costs of transporting products from their point of origin to their destination market.
If they get it right, and choose a good logistics provider; they are guaranteed smooth operations, manageable costs, and continuous cash flow.
If they get it wrong, at the very least they could have rising costs and wastage. At worst, they could be facing a failing business model that has to be eventually shut down. Companies will continue to lose money if their logistics is not managed well.