Importing from China: A Complete Guide

Are you interested in learning how to import from China?

Then you must understand how to import from China. It is critical to understand the prices involved, as well as the time period for delivery and a variety of other factors. Importing goods simply refers to purchasing things from a provider located outside of your nation.

China is the most important nation from which individuals in the United States, Canada, Australia, and Europe import goods. The goal of this article is to show how importing from China works, as well as how Homefish sourcing can assist take the anxiety out of importing and help you expand your import business.

This is an excellent guidebook for both small and large enterprises all around the world. A table detailing each subject we will discuss is provided below.

Terms used When Importing from China

EXW (Ex Works)

EXW, or Ex Works, is an international commerce arrangement in which the supplier is required to have items ready for pickup at his or her company location. Once the cargo leaves the seller’s business address, the buyer is liable for all fees and responsibilities associated with it.

When selecting these shipping options, the customer is solely responsible for the cost and hazards of sending goods. This means that Ex Works allows the customer to have a better idea of the costs required ahead of time. The buyer will also have complete control over the shipment, preventing the vendor from boosting their local expenses.

FOB (Free on Board)

FOB, or Free on Board, is a contract that specifies whether the buyer or seller is liable for items damaged in transit. The term “FOB shipping point” means that the risk is borne by the buyer if the items are delivered, but “FOB destination” implies that the seller bears the risk of any loss until the customer receives the products. FOB refers to non-containerized marine freight or inland river travel. It does not refer to the transfer of property ownership.

C&F (Cost and Freight)

C&F, or Cost and Freight, is a legal remedy phrase used in international trade under which the seller is not required to get marine insurance against the risk of loss or damage to the items being shipped. The seller is expected to provide for the carriage of goods by sea to a port of destination and to provide the buyer with the relevant paperwork under this term.

CIF (Cost, Insurance, and Freight)

CIF, or Cost, Insurance, and Freight is a commercial phrase that requires the supplier to arrange for the shipment of goods by sea to a port of destination as well as deliver the relevant documentation to the buyer. The CIF value is used by EU nations to calculate the duty that must be paid on imports.

B/L

A B/L (Bill of Landing) is a document issued to a shipper by a carrier or its agent. It is a contract for the carrying of goods. It also serves as a receipt for cargo that has been accepted for transportation and must be shown before the products can be delivered to the destination.

A bill of landing has several components, including the names of the consignor and consignee. – Departure/arrival ports – Vessal name – Departure and arrival dates – List of products being carried – Packaging specifics – Freight weight, volume, and cost

AWB

The AWB (Airway bill) is a form of a bill of landing that allows cargo monitoring. Once the plane takes off, the cargo rights will be transferred from the provider to the consignee. The Airway Bill acts as a carrier’s receipt of goods and a contract of carriage between the shipper and the carrier. It explains the terms of carriage as well as the carrier’s responsibility limitations and claims processes. The AWB is a non-negotiable instrument that does not specify the flight or time of delivery for the package.

ETA and ETD

The terms ETA and ETD (Estimated Time of Arrival and Estimated Time of Delivery) relate to the time and date that a ship will arrive at a specific port. The expected delivery date is determined by the supplier’s processing time, the shipping provider utilized, and when the cleared payment is received. Knowing the expected delivery date will allow you to estimate how long it will take you to get your goods.

FCL and LCL

FCL (Full Container Load) and LCL (Less Container Load) are shipping terminologies used in international trade. FCL refers to a full container load (20″ or 40″) of freight for a single importer. When importing items from China, is the most cost-effective mode of transportation.

LCL refers to goods held by many importers and grouped together in a single container. It allows importers to ship tiny amounts of cargo that do not fit inside the FCL option.

POD and POL

POD (Port of Destination) refers to a shipment’s anticipated ultimate port of arrival.

POL (Port of Loading) refers to the location where the cargo is loaded into the ocean vessel by the carrier.

RMB

The People’s Republic of China’s official currency is the RMB (Renminbi). The yuan is its base unit.

PI

A PI (Proforma Invoice) is a sales contract or an estimated invoice given by a supplier to an importer prior to a shipment or delivery of goods. It depicts the kind and amount of commodities, their worth, and other pertinent information such as weight and transit costs. They are frequently used as preliminary invoices in conjunction with a quote or for customs purposes when importing items.

MOQ

MOQ is an abbreviation for Minimum Order Quantities. Chinese vendors are used to receiving 10,000-unit orders for their own sector. As a result, people often look down on anything less than 500 servings, which does not always match well with a small-scale firm or start-up.

Importing from China 101: The Chinese Culture

A number of trends have emerged that influence how people do business in China. For example, solid economic expansion in China’s rural areas, rapid market changes, and government reforms have transformed China from a low-cost manufacturing country to an appealing destination for business transactions.

Unfortunately, despite China’s growing impact on the global economy, individuals wishing to do business in the nation face significant hurdles as they embark on their path of importing from China. Intense rivalry, corruption, business etiquette, language, and cultural hurdles all make it difficult for small enterprises to prosper in China.

It is critical to comprehend Chinese culture through the notion of “face.” This entails a combination of cultural awareness, public perception, social roles, and self-esteem. These have the ability to either damage or create commercial connections. A foreign CEO may offer “face” by attending meetings on time, graciously accepting invitations, occasionally presenting expensive presents, and being attentive to Chinese culture.

Entrepreneurs, on the other hand, might lose face by offending someone in public, declining invites, or acting in undesirable ways that are perceived as a lack of self-control. Although the instances above are extreme, basics like addressing a person when meeting them may be crucial in creating business ties.

Chinese businesspeople value cultural diversity and do not expect outsiders to completely integrate into their society. One thing you should realize is that the Chinese are quite pragmatic. They will be willing to conduct business with you if you have what they desire. Developing mutual trust is a crucial aspect of running a successful Chinese import firm. Furthermore, you must be respectful to anybody you are interacting with.

Importing from China 101: Deciding What Products to Sell

Choosing the proper goods to import from China is one of the most difficult considerations for individuals who wish to begin importing products from China. Importing stationery is as popular as importing clothing, shoes, purses, or gadgets. However, this part is about selling Chinese items and how identifying things that can be purchased off-the-shelf (wholesaled) in China. The most essential thing is to focus on product specifics that will benefit you.

The actions to take are highlighted below:

Know Your Niche

You need to know your niche to choose the right product when importing from China. Make sure to pick a product that you know very well (this is a great mistake that new importers make). If you don’t know the niche in which you will be operating, you will not know how to conduct quality inspections.

Your hobby or area of interest is a good starting point in identifying which product to import. In case you don’t have a suitable hobby, identify an area that you can learn about.

Choose A Niche With Less Competition

In order to be successful when importing from China you need to start with a relatively small niche.

The best niches to operate in are those in which major retailers do not operate. The focus here is to choose a popular customizable product. See below a quirky example, customized toilet role.

You can easily identify a good niche by visiting a magazine stand at your local grocery store. If the niche that you’re interested in has a magazine devoted to it, then there’s a hungry market for it and it’s a profitable niche to delve into.

Choose A Product That Retails For More Than $20

This tip is useful if you’re just starting out. Higher ticket items will give you more room for error. You can go for lower ticket items when you have experience and a deeper idea of the true costs of the entire process.

Choose A Product With Low Risk

Importing products that hurt someone is one thing you want to avoid by all means. Product liability can ruin your business. Go for products with low risk. One such product is dining room furniture.

Choose Products with small size（less than 18″/45cm）

As a new small business owner with a very tight budget, it’s important to import products in small sizes. This will reduce shipping costs and improve your ROI. It is important to note that these products must have a high value.

How to Decide on What to Sell Using Amazon

Import from China sell on Amazon is very popular using the Amazon Best Seller Categories Tree is another useful method that can be used to determine what products to sell.

For instance, if we use Flying Toys, we can have:

Toys & Games / Novelty & Gag Toys / Flying Toys

My best advice is to choose a product in the third-level category or even lower. Doing so will help you to focus your area of expertise and you’ll also have a great opportunity to introduce variety to that category.

Use the Amazon-related search suggestion below:

Products to Avoid

Do not import counterfeit products. For instance, if there is a product with brand names such as Samsung, Gucci, Rolex, Apple, etc. then you need to know that such a product is fake. Also, if you see signs such as ® or ™ beside a product, such product is trademarked and therefore counterfeit.

How to Validate Your Product Ideas

This is a very important step that helps you to avoid wasting time and money on a product that no one needs. Google Trends can be used to validate your product ideas. It tracks the terms that people search for. You can refine the search results by using time period and location to see the relative popularity of search terms at a glance.

Google Trends will give you insights into the different search terms that have changed over time. It will also give you an idea about the trends changing within the last few hours or days.

You can use Google Trends to validate your product idea in the following ways:

Popularity of Your Product

Google Trends will enable you to see the number of people that have been searching for products that are similar to yours and to know the direction of the trend (whether upward or declining). You will be able to know how the trend is doing in real-time.

Where Your Product Is Most Popular

You can also use Google Trends to find products that are popular. This will provide useful insights about those markets that can be tapped into.

Previous Similar Trends

With Google Trends, it is easy to look at crazes that were once in vogue and see what their lifespan looked like. This will go a long way in helping you to decide if there are irregularities in your product.

Times of The Year Most Popular For Your Product

Seasonal products can be researched with Google Trends. For instance, in the picture below, the trend for a wig is fluctuating across the year. However, there’s a significant surge around October for Halloween. These insights will influence your advertising and promotion. You will be able to know the best months to put on offers and the best months to cut your losses.

Sneak On Your Competitors

You can use Google Trends to search for your competitors and see how they have developed. This works for larger companies or Chinese companies that you aim to be like. You will be able to see how they have developed and also know when interest in their product increased.

How to Safely Source Products From Alibaba

Alibaba is the largest B2B (Business to Business) platform/Chinese import website in the world. It connects suppliers and supplier directories with buyers from all over the world. Alibaba has millions of products from China and hundreds of thousands of suppliers. As a result, there’s not much you won’t find on this platform.

Here are how you can safely source from Alibaba:

Search For The Product You Need

Using Alibaba supplier directories is similar to other marketplaces. You can either browse the product categories or search for the particular product that you need.

You can search for a product on Alibaba by either searching for the items based on product descriptions, for instance: dog collars (this will give you thousands of results for dog collar products).

You can also select “Suppliers” from the drop-down menu and then find suppliers that deal in the product that you need.

What To Pay Attention To On Product Pages
You need to pay attention to the following when searching for a supplier on Alibaba (in this case, we’re using the collar dog listing):

• Unit Price

For this listing, we found $1.1 to $1.5 USD FOB. FOB implies that the supplier will pay costs associated with getting the product to the marine port while the buyer pays for the cost of transporting the goods to the ocean from where it will be sent to the final destination.

• Minimal Order Quantity (MOQ)

The minimal order quantity refers to the smallest order (a small order) that the manufacturer is willing to accept. This, however, can be negotiated. In the example that we are using, the order is 100 units. When we multiply that by the higher-end price of $1.5, we’ll have a minimum order of $150 together without shipping costs. Knowing this will help you when negotiating.

How To Select and Verify Suppliers

When importing from China it is important to verify suppliers to protect yourself from scams and from selling products of low quality.

For instance, when we search for “dog collars” (as shown below), we got 1533 suppliers. Crazy right? We can narrow down this huge number of suppliers.

The first step to take in narrowing down this huge number is to select “Gold Suppliers.” Gold Suppliers are registered members on Alibaba and they pay 29800 RMB per year to retain this status. It doesn’t mean this group of sellers is good.

The second step involves selecting an “Assessed Supplier.” This gave 242 suppliers.

By choosing “Assessed Supplier,” you’ll gain insight into the companies’ statuses like product and service, number of employees, total building size, and site images amongst others.

The third step of the verification process involves selecting “Trade Assurance.” This option will protect you from point of making payment till your product is delivered.

You can then choose your preferred payment method as shown below:

You can also choose a supplier based on the number of years they’ve been operating on Alibaba. Suppliers with a higher number of years are more reliable. The first word of the company’s name is usually the name of the city in which the company is located. Ensure that the supplier you settle for is close to your forwarder or the area you want to ship the goods to.

Another factor to consider is the response rate. You definitely don’t want to waste your time waiting for a supplier who will never reply to you.

In addition to Alibaba’s verifications, you can make use of independent 3rd party services that are in China. Such services will visit factories on your behalf to verify the supplier and the quality of their products.

In addition, the aforementioned points, highlighted below are ways through which you can verify suppliers:

Ask Questions And Follow Up

Ask lots of questions as you begin narrowing down suppliers. Ask questions about their business and products. Request for a copy of their business license and phone number (ensure you call it). Also, request photos of the factory and sample products. Ask for anything that makes you feel comfortable doing business with the supplier.

Get Samples

Before investing any significant amount of money, you need to get sample orders to verify the quality of the products. You can contact them through another fictitious name and email to get an additional sample so that you can compare the quality.

Finally, be mindful of prices that are too good to be true. Be ready to walk away if you feel a particular deal doesn’t feel right.

Contacting Suppliers

An email will most likely be your means of communication when importing from China. In most cases, they can be making use of translation programs like Google Translate to translate your emails as their response. However, there’s nothing to worry about because most of the suppliers can speak English nowadays.

To have clear communication, keep your emails short, straight to the point, and error-free so that the manufacturer can give you better replies. When asking your questions, number them so that the supplier can easily reply to each number thereby creating clean and organized communication.

• Requesting For Quote
  This is a simple process. However, it is important to take a few minutes to plan your email so that you can have better replies. Highlighted below are some important questions that you can include in your email:
• (Again) Minimal Order Quantities
  Double-check the MOQ of a listing to ensure it is correct. If the MOQ is beyond what you can afford, you can ask the supplier if he or she is ready to negotiate minimums. Let them know what you can afford. Note that MOQ is almost always negotiable.
• Pricing For Sample Orders
  You need samples to verify the quality of the products. Ask for their pricing for samples. Some suppliers may offer you samples at a discounted rate while some may provide samples for free if they perceive that you’re a serious buyer.
• Production Pricing
  Ask the supplier how much your products per unit will cost. Suppliers usually give a range on Alibaba. You need to ask them for the exact cost of each unit.
• Production Time
  It is important to know how long it will take to produce your import order. Time is critical based on the type of your business.
• Payment Terms
  Knowing the payment terms is important because inventory is a major cost for e-commerce startups.

You can use the email template below to craft an email when contacting suppliers on Alibaba:

Hello,

My name is SyFe and I am with Homefish Company.

I am interested in placing an order for __________. However, before I do, I have some questions:

What is your minimum order quantity?
What is your cost per unit and at what quantity levels do you provide quantity discounts?
What are the payment terms that you accept for new customers?
can you please send me the cost for the sample including shipping to (your address)
SyFe,

www.yourcompany.com

Paying and Shipping Sample

You can pay the supplier through any of these methods:

Upfront TT (Bank Transfer)

This payment method is risky for the buyer. With this method, the supplier will receive 30% as a deposit before the production commences. The remaining amount will be paid before delivery. This is only recommended when you trust the supplier that you’re dealing with.

Letter of Credit

This payment method is relatively safe for both buyer and seller. It carries some complex procedures and it’s recommended for a larger import order (such as $20,000 and above).

Western Union

This is very risky for the buyer. It is not recommended if the payment is not protected by escrow. You should use this method only if you’re dealing with those that you know very well.

PayPal

It is fairly safe for the buyer. It is easy to use and has good buyer protection. It is less popular with suppliers due to the difficulties encountered in withdrawing money, high tax rates, and potential chargebacks from dubious buyers.

Secure Payment(also known as Escrow on Alibaba)

Secure Payment is fairly safe for the buyer. With this service, the buyer’s money will be held by a 3rd party and will only be released when the buyer confirms that he or she has received their order. It protects both buyer and seller.

This option is currently available for wholesale orders. If you intend to use this option for orders that are not wholesale, you need to ask the supplier to draft a Secure Payment order for you.

Here is a quick comparison between Trade Assurance and Secure Payment:

To ship the samples, ask your supplier to arrange for shipping and add the charges to the invoice. Provide your supplier with your address. If they ship the samples via air freight, they can use UPS, FedEx, DHL, or TNT. They can also declare a very low value on your products so that you can pay very little duty. You should, however, note that air shipping from China is expensive.

For additional information about sea freight shipping from China, you can click this link:

Import Duty & Tax from China

When it comes to importing from China, we cannot do without duties and taxes.

• Import duty calculation

In most cases, import duty is calculated as a percentage of the customs value of the import. The customs value varies by country. The duty rate depends on the product classification.

In some countries the customs value is based on the FOB value:

Duty = duty % * product price

In most countries the customs value is based on the CIF value:

Duty = duty % x(product price + cost of shipping + cost of insurance)

• Sales Tax calculation

Sales tax (VAT, GST, etc.) is calculated as a percentage of the customs value plus the duty paid. Some countries may also factor other taxes, if applicable, in the calculation of sales tax:

Sales tax = sales tax % x (CIF value + duty)

Many countries have a standard sales tax rate to which most imports are subject, but a reduced sales tax rate may apply to certain goods shipped like basic foodstuffs, medicines, books, etc. In some cases, a higher sales tax rate may apply to certain products, e.g. alcoholic beverages.

You could check the standard sales tax rate in your Country from the import duty calculator

Import duties depend on the type of imported products. So, it is important to check the actual rate by using http://www.dutycalculator.com/ (note that you have just one free trial to use this site).

For instance, when you import from China to the UK, the HS code for jewelry is 71179000. We can find the duty and sales tax rates at: www.dutycalculator.com/get-import-duty-tax-rates/

find duty and tax rates After submitting all information, we found that the Sales tax rate (VAT) was 20% while the duty rate was found to be 4% in the United Kingdom. We assume the CIF price is 5322 USD.20 UK Sales tax rates

Import duty from China to UK = duty % x(product price + cost of shipping + cost of insurance)

=4%*5322

=212.88USD

Import tax from China to UK = sales tax % x (CIF value + duty)

=20%*(5322+212.88)

=1106.97USD

Total landed cost=CIF value+ Duty+ Sales tax

=5322+212.88+1106.97

=6641.86USD

Import duty is usually between 2% to 5%. However, some products in different countries can be as high as 11%.

Also, you may not have to pay import duty on some products. Make use of the calculator in the link dropped earlier to know exactly how much import duty you will pay for your goods.

Testing Your Samples

If your sample was shipped by air freight, it should arrive within 3 to 10 business days. If it was shipped via sea, it may take about 15 to 45 days before it arrives. Once you get your samples, here is what you need to do:

• Inspect The Quality
  Is the quality what you expect? Use the item for a while and see if it holds up and how it holds up.
• Packaging
  Check to see if the packaging is sufficient to ship to your customer. If your items are lumped into one box, inform your supplier to box them on future orders.
• Instructions
  If your goods do not come with instructions and if your supplier does not have instructions, then you need to create or borrow some instructions ad include them with your goods.
• Labelling
  Is “Made in China” marked anywhere on the box? If not, ensure this is done on the next order.

Things You Should Know Before Placing an Order

Labelling

You need to pay attention to how your goods are labeled. Most countries have laid down rules on how products should be labeled. A label can provide the following information for the customer:

• ​The manufacturing country
• Order size, product materials, and other product information
• Instructions

Some labeling requirements apply to all products. For instance, all products in the United States must be labeled with the country of origin (i.e. Made in China). Some labeling requirements also apply to specific products such as toys, textiles, and electronics. Each of these products has its set of unique labeling requirements.

Technical Compliance

The product must be manufactured according to technical standards or restrictions so that it can pass the necessary tests.

Document Requirements

You (the importer) need to create and store a set of documents. The documents can include circuit diagrams, design drawings, component lists, and risk assessments.

Payments and Delivery for Bulk Orders

Telegraphic Transfer

It is a form of bank transfer which is a fast way of transferring money overseas through banks. It is, however, risky for buyers to pay through this method because the money goes into the supplier’s shipping account directly before you receive the order.

Letter of Credit

It is a letter from a bank that guarantees that a buyer’s payment to a supplier will be received on time and for the right amount. The bank will be required to cover the full or remaining amount if the buyer is unable to pay. This method of payment has become an important aspect of international trade or trade with China due to distance, government policies, and the difficulty in knowing each party personally.

Documents against Payments

This is an arrangement whereby a supplier instructs the bank to release shipping and title documents to the buyer after the buyer fully pays the accompanying bill of exchange.

Documents against Acceptance

It is an arrangement whereby the supplier instructs the bank to release shipping and title documents to the buyer only if the buyer accepts the accompanying bill of exchange by signing it.

Open an Account

These forms of payments are payments that are posted against one or more outstanding invoices. They can be in form of cash or credit card, a credit on the account by your store, or by an order deposit.

How to Arrange a Third-Party Inspection to Make Sure Googs Are as Ordered

If you have been inspecting orders before shipping but you’ve not been getting the results that you desire, then you need to take these actionable steps to find success with the third-party inspection.

State Expectations And Product Requirements

Tell the supplier exactly what you want on time. By waiting longer than you should before telling the supplier what you want, the factory may have finished packaging your goods by the time you tell them.

Clearly state your expectations and product requirements before the inspection commences and before issuing the purchase order. It is better if the supplier can sign a purchasing agreement before placing the order so that you can address your need for 3rd party inspection, the shipping deadline, and the consequences of not meeting your requirements.

Holding a legal recourse, with the supplier accountable, may not be easy. Thus, it is advisable to hire a local attorney who will draft a contract in the local language. With this, you can take the supplier to court if he goes against the laid down agreement.

Conduct Product Inspection

To be successful with 3rd party inspection, you need to hire a 3rd party to visit the factory and inspect your goods. Inspection (for most products) can occur at any stage of production. For instance, if you are manufacturing upholsteries, you can inspect them before the upholstering stage so that you can check the dimensions, structural integrity, and epoxy binding amongst others.

If you’re manufacturing acrylic sinks on the other hand, you can inspect the finished goods and check them before they are packaged. Your decision on when to inspect will be determined by your budget.

Your budget for inspection will limit the scope of the inspection. You can, however, modify the inspection to align with your budget. For instance, you can merge similar items and inspect them together. You can also decrease the sample size chosen for inspection. You can also cut the landed cost incurred on inspection by hiring a local inspector.

Sort Out Issues With Your Supplier

If the report obtained from an inspection shows an unacceptable number of defects, you need to communicate with your supplier and ask them to either rework or replace the defective items.

You need to discuss how you want the factory to fix the problem. For instance, if the defect is due to an issue related to injection molding, then the factory may be required to trim the excess material by hand. Note that the additional handling of goods can lead to another defect, as a result, consider the method that you’re going for when requesting a rework.

If the factory is not willing to rework the defects, then you can charge the supplier for those goods that were shipped but cannot be sold. Your relationship with the supplier and the value of your PO will determine if you are able to force a supplier to pay for defective products.

Re-Inspect To Ascertain Rework

This gives an added assurance that the defects have been resolved. re-inspection will enable you to know any corrective actions taken by the factory so that you can be sure the order is ready to ship.

What to Do When You Receive Your Imported Goods

Once you have received your goods and have ascertained the quality, packaging, instructions, and labels, send an email to your supplier and inform them that you have received your goods but have not reviewed them. Tell them you will contact them once you review the items and hopefully, make another order.

Conclusion

I hope you like the in-depth explanation of how to import from China! whether you are from Germany, Malaysia, India, Egypt, Saudi Arabia, Bangladesh, or the Philippines. This ultimate step-by-step guide will go a long way in turning a newbie into a professional importer if the points are strictly adhered to and implemented when importing from China. Do you find this article useful? Kindly share it with your friends and loved ones. Also, I would love to listen to your contributions and questions in the comment section below. Feel free to contact us directly via this link either!