Importing products from China can be very affordable and achieved in massive quantities.
Ensure to find the right supplier when importing. Use either "trading companies" or source directly from "factories".
Always examine your products by quality. Apply classification and calculation to determine your final costs to boost your profit.
Leverage RMB as your currency option when you make a payment to help put you in a position to negotiate a better deal.
Why import products from China?
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
- Fruits and vegetables
- Cosmetics, medical products, and pharmaceuticals
- Any flammable fabric
- Tobacco products
- 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.
|Products cost lower due to being a direct source||Offers different MOQs options based on some product's trends/demands|
|Flexible options for design, MOQs, labeling or product customization||Poor customer support|
|Wide range of product to select from||Limited design choices for available products|
|More control over the quality control process||High costs for most products|
|Great service and robust customer support||Low to no MOQ|
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.
💡Tip: You can request your supplier/manufacturer to conduct an audit for your chosen products. This way, they are made with consistency and match your specifications.
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.
💱 Is your supplier outside of China? Read more on how you can make payment with 'e-RMB'.
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.
What are the commonly banned exports in China?
How can you ship to China?
What initial import documents do I need to show?