Guidebook of importing from China-standard products
If you are looking to import standard products from China or get a product manufactured in China, you may need to know the process. This step-by-step guide can give you an idea of how to start your own business importing from China and what you should be aware of in the progress.
1. Firstly, find what to sell.
There is a Chinese saying, “万事开头难”, which means ‘It is the first step that is troublesome’. One of the hardest parts in importing business is to find the right product. Have you done market research? Have you calculated the profit margin? Have you analyzed the local & domestic competition? There are many facts you need to think through. Sit down and take some time doing research, analyze the information you collected.
If you need some tips, here are 3 basic tips for you. Find a product you can ship in large quantity, sell at a high price and you are interested or familiar with.
Now you have some ideas about what to import. Is the product you are considering importing from China a standard product (no more design or modification involved)? If yes, please continue reading. Or, if you want to get your unique designed products manufactured in China, you may need to find some OEM/ODM supplier and there are more steps involved, more details you need to pay attention to. The related article is coming soon.
2.Sourcing suppliers online.
I would suggest use Alibaba.com , which is the biggest e-commerce company in China, provides B2B, B2C, C2C sales service as well as electronic payment services (Alipay) and more.
On Alibaba.com you can search products by keywords and categories. You can search suppliers by company keywords/name, industry, product keywords, and locations. You can even post your buying request to let suppliers find you. Anyway, there are so many functions and services Alibaba Group provides, we may introduce them in detail next time on our blog.
-Whilst you are sourcing suppliers you may need to keep a record of every supplier you contacted, their details and quote etc. so you wouldn’t lose track. You can use either a professional CRM or SRM (Supplier Relationship Management) software or just keep the data in a simple excel. We at VerifyChina have created a useful excel sheet for you to easily log all the details you may need to record, feel free to download and modify it based on your need. This tool will come in handy when you analyze the list of potential suppliers and maximize the value of those interactions.
Click pictures to view details
Download this tool → Supplier-Relationship-Management-template-VerifyChina.xlsx
-Most importantly, serious due diligence needs to be conducted on those potential suppliers you are considering engaging in manufacturing your products. You need to verify the Chinese company’s eligibility to export and their licensed business range where you can distinguish if they are a real manufacturer or just a reseller, there are pros and cons with dealing directly with factory and through a third party which we have discussed in more detail here: Situations when you prefer to deal with resellers in China
3. Get a sample.
After (or while) you compiled a list of potential suppliers and verified their legitimacy & eligibilities you may ask them to send you a sample to examine the quality. It could be free or costly depending on the complexity of the product you are getting. You should also be aware of that a reseller may be able to send you a sample as well.
When you received samples from different suppliers, examine thoroughly and determine whom you are going to commence your partnership with after a deep supplier analysis and evaluation based on all the data and information you collected.
4. (Perform a lab-test on the product if it’s required.)
This is not always a necessary step but if you are importing a very specific kind of product, strict-regulated product or it is required by your clients/market, you may need to get the product tested. If that is the case, you can let the manufacturer know in the very beginning so they may advise you if they cannot reach the standards or they have had the test done before and are confident to pass it.
5. Place order and make a payment.
Once you are satisfied with the supplier’s capability, product function and quality (and the test result), you may place an order and send to the manufacturer. Most of the case, manufacturers will have their own order format for buyers to fill in which acts like a contract between you. It is common that a Chinese supplier will provide you with a simple proforma invoice with limited product detail, it is recommended that you request the supplier to itemize the specifics of the product in the purchase contract such as size, material, design, colour, packaging requirements etc. as well as freight (air,LCL,FCL) & pricing terms (CIF,EXW,FOB)
Typically, a 30% initial deposit will be required to start production. Before you make the payment, confirm the bank details and whether it’s their business account or not. (Sometimes the owner of a factory may ask you to transfer to his/her personal bank account for various reasons. For larger orders, it is not advisable to pay into personal accounts). Also, make sure you have talked about those questions: do they accept USD only or they can also accept RMB? Can they receive a bank transfer from a foreign company business/personal account?
If you are dealing directly with the factory, it is not uncommon for them to utilise the services of an export company (as not all factories have a permit to export goods outside of China) which will usually require you to make payment directly to the export company’s bank account. This is common and often required. However, it introduces a third party into the transaction whom will for some part of the process have control over the funds and the goods which of course presents another element of risk. It is recommended you should minimize the risk by performing additional checks on the export company to gather more information about them such as how many capitals they registered and paid up, how many years have they established etc.
6. (Mid-production inspection)
Some people are more concerned about the quality in mass production, which is very understandable. If you feel the same, you may want to perform a mid-production inspection to maintain a high standard quality control. Inform your supplier before production that you will be performing various QC inspections as this may help ensure they stay on top of things from the start, You can never be too cautious.
While the products are being manufactured, it’s time to arrange a shipment, Airfreight, LCL or FCL depends on you and the quantity ordered. If you are buying from a factory that does not have an export license, ask them if they are working with or know any trading company that able to arrange the shipment and do all the paperwork (normally they do). If they don’t, you may need to approach a trading company or freight forwarder yourself to ship the products to your country and clear out customs, this will come at an additional cost starting from 0.5% or more of transaction value.
Remember that you may be required to pay import duties and GST or VAT upon arrival of the goods into your country so ensure you have enough money to cover this or the goods won’t be released to you and you may have to pay storage fees until its paid.
That’s the basics for importing standard products from China and a few things you need to be aware of. If you have your own design you may need to find some OEM supplier and there are more steps involved, more details you need to pay attention to. The related article is coming soon.
A very important principle to adhere to is to assume nothing, pay close attention to detail of the product and trade terms to ensure the salesperson has a good understanding of your requirements as your expectations on what you will receive could differ to what the supplier intends to deliver.
Good luck with your importing business! 🙂