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Import From China – Quick Start Guide

I doubt anyone in the Australia, or even in the world for that matter, doesn’t have at least one item in their home that has the “made in China” label on it. Importing from China can be a complicated task to start, but there are a few steps that can make it a lot easier for you.

1. Select the Product You Want to Import
Not every product suits every person. To be successful, you want to select the right product. Everyone wants profit, but there is more to selecting the product than just selecting the least expensive item available, or the one that allows for the highest mark-up. When considering your product, here are a few things you should consider:

  • Always choose a product you love. It’s easier to stay motivated if you are passionate about something. When others see your passion for something, they want it more (this also makes it easier to sell the products too!
  • Consider the cost for shipping. If you select something you can ship in large quantities, it will save you money. Always consider your product size and how much you can fit into one shipment. If its large, bulky, expensive to ship with small profit margins you may want to change your product .. on the other hand if it’s small and can be transported by air and has high ticket price and high margin (maybe a small tech gadget) then you may be onto a winner. That’s not to say that anything bulky wont make money.
  • Originality is important. You don’t want to produce something others may mass produce. You want something others will want/need, and have to come to you to get. If its in Woolworths, Coles or Aldi then reconsider your product as these big companies will have the market share over this product (unless you market the product with a new feature and you market/advertise it differently!)

2. Write Down Those that Can Provide You with Your Product
Suppliers can be found by looking online for trade directories or professional sourcing companies. There are several good places you can look to find them:

  • http://www.made-in-china.com. This is a directory of Chinese suppliers who provide buyers with company information, product listings, contact details, company culture information and even factory photo tours.
  • http://www.chinayellowpages.org. This is an outsourcing directory which contains listings of products with website URL’s and contact details.
  • http://www.china.cn. This is an outsourcing directory which has thousands of Chinese products, buyers who provide it, and contact information for each buyer. In addition, this website also offers buying and selling leads, tradeshow information, and trading resources for buyers and sellers.

There are so many places to find suppliers – alibaba.com, Global Sources, HKTDC and many more. After doing some searching you’ll discover that every many and his dog will claim to own a factory in China – which is why you tread carefully and attend one of my events to know how to save yourself hours and weed out scammers and ‘middle men trading companies’.

3. Make Contact with Each Supplier You List
When you’ve completed your list of exporters, you need to contact them and ask questions in order to prepare a “short list.” This is a list you narrow down after talking with them. It will help you select the supplier who is best for your needs. Be sure to include things like:

  • References—A supplier should be able to give you a list of client references if they are a reputable supplier. When they give you references or testimonials, it is imperative that you check them. There are fraudulent business listed online, and you want to make sure you aren’t dealing with one.
  • Licensing Information—All reputable business will be properly licensed and in compliance with all trade laws. Make sure any company you is to avoid any future legal problems. Ask if they have an export license!
  • Manufacturing and staffing—You will need information regarding the exporter’s relationship to the manufacturer. Ask if they manufacture the products themselves, and if not, do they get paid by the manufacturer or only work for you. This only applies if you’re dealing with a sourcing agent.
  • Location and Name of Factory that will be Producing Your Product—Ask the supplier to give you the name and address of the factory where the product is manufactured. You’ll want to make sure they are a reputable supplier and that the factory exists! (we show you more on this at our seminars)
  • Experience of the Factory for Producing your Particular Product—There is more to consider than just cost when choosing a supplier. Quality is also important. The manufacturer’s experience producing your type of product is often an indication of the quality of work they do. So ask if they have produced your item or a similar item before as there is also a good chance of saving you costs on moulds (if your item requires a mould).
  • Product Samples—If you are not manufacturing your own product, you’ll want to see samples, so you’ll know the product meets your standards and requirements. The supplier you select should be able to show you samples of the product. You want to make sure you get exactly what you are paying for. When you receive it be sure to STRESS test it for durability, heat, moisture etc

4. Negotiations with Selected Suppler
Chinese customs and culture are the basis for how they negotiate a contract. They don’t negotiate the same as the Western world, so certain tactics are required. To be prepared for Chinese contract negotiations, remember the following things:

  • Relationships—Each business deal creates a new relationship with the person you are doing business with. In China, they aren’t negotiating with a business, but with a person. Chinese exporters will take things slowly until to get to know you better.
  • Moral Influence not Legal Practice—Chinese think of the actual contract as a formality. The relationship and moral integrity seal the deal. It is more than just a legal practice. Forget about how quickly you want the contract signed. You definitely do want a signed contract, but good negotiations rely on the relationship.
  • The Chinese feel in the relationship both you and they are morally obligated to perform, even without a signed contract.
  • Hierarchy—The simple mistake of calling a high-ranking executive by their first name or shaking a low-executives hand first can affect your interpersonal relationship and the willingness of the Chinese executive to negotiate with you. Pay close attention to how executives address each other and follow their lead.

5. Find Resellers for Your Product
This process can take a lot of time. It can also be difficult at times. Doing this process, however, can decrease the time you spend and increase your chances of success. These simple tips will help:

  • Contact the decision maker for each potential reseller by telephone. Take the time to introduce both you and your company to them. Check to see if they are interested in receiving information by e-mail. This will help you to verify their email address.
  • Send an e-mail that is brief. Attach something professionally designed to describe your company and your product.
  • A few days after the email contact, you’ll want to follow up with a phone call. Request a meeting with the supplier. Be prepared to both sell your product in order to get a signed contract. Then, you can begin ordering product.
  • You can sell your goods online with your own web store (we show you how at our bootcamps for under $250)
  • Brick and mortar business (not recommended for newbie’s)
  • Selling via eBay is a good option to attract brand awareness and sell old models and last season stock – however there are so many BETTER ways than this.
  • Become a wholesaler! This is an awesome and fast way to sell a lot of product to only a few customers! (we show you how at our events)
  • Coupon sites like spreets groupon and scoopon and all the other sites ending with “on” (there seems to be one popping up every hour!) these sites get TONS of traffic.
  • Many more ways! I cover how to sell your goods in much more details at the bootcamps.

6. Begin the Ordering Process
Shipping arrangements vary from supplier to supplier. Each one will have a basic shipping agreement and a minimum order amount. There are several common types of shipping from China to the Australia.

  • EMS–Express Mail Service—This is a worldwide shipping service that works with the United States Postal Service to deliver goods from other countries to the United States.
  • DHL– International DHL—This is a global shipping company which provides shipping services commonly used for shipping from China to the AUSTRALIA.
  • FOB–Free On Board—This is used for freight shipping, with a port of loading. This means that the seller has to pay both transportation costs of the goods to the indicated port of loading or shipment and the loading costs. The buyer must pay the costs of transport, insurance, unloading, and transportation from the port of arrival. The buyer takes ownership of the goods as soon as they leave the port of shipping.

7. Customs, Border Protection, and Duties
A service port of entry near you can help you with this. Simply ask for the CBP import specialists for your port of import. They can give you specific product requirements, duty rates, filing entries, preparing and filing all required paperwork. We have good customs agents and shipping agents we can connect you with who have done work for many of our clients, at our live events we connect you with them.

8. Pick-Up and Transport
You will need to have your shipment picked up at the port of entry. It will then have to be shipped to your warehouse or to local resellers. A commercial cargo company should be contacted and all arrangements made prior to shipment. You can find one in your local yellow pages or online, shipping agents and logistic companies handle this for you – learn more at this at our events.
The import/export business to China is not an easy one for beginners to learn. You’re dealing with another culture on the other side of the world. If you follow the above steps, however, you can learn how to do it and turn your questions like, “China, how?” into “China, Wow!”

 

Negotiating With Chinese

Negotiating With ChineseThe Chinese way of life is very different from that of Western countries. A different lifestyle also has an effect on negotiations. You need to consider Chinese customs when negotiating with them. No matter what you hear, there are no experts on how to do business there. There are truly no experts on Chinese negotiations. If you want to enter the world of import/export to China, there is a book, “When No Means Yes,” that you may want to consider reading.

It may give you a better understanding of what it’s like to negotiate with the Chinese.To the Chinese, culture is extremely important. For the Chinese, culture is both a way of life and the foundation used in all business negotiations. Study the Chinese culture in whatever method works best for you. Read, watch videos, or even go to China if you need to, but learning it will greatly help you in negotiations.

Here are a few tips about Chinese culture that will help you in import/export negotiations:

  • Appear Clever—If you want to appear clever to the Chinese, learn a few Chinese idioms, and always listen more than you talk. One of the worst things you can do to hinder a negotiation is to go into a negotiation in China being an “American.” Some practices that are acceptable to you may be offensive to the Chinese. It is best to find a Chinese person you trust, and let them handle the Chinese during the negotiation.
  • Gift Giving—Giving a small gift is customary when you go to a Chinese negotiation. It will help to show that you know a little about Chinese culture. It doesn’t need to be an extravagant gift. Something small, but special from your hometown or the surrounding area is perfect, especially if it isn’t easily found somewhere else. This helps you to start to build a relationship, which is important in Chinese business. Once the relationship is established, gifts of wine or expensive whisky are expected for the “big” guys.
  • Build a Relationship First—Once you’ve enjoyed Chinese hospitality in a negotiation, wait. Don’t make an immediate commitment. Relationships are imperative to the Chinese, and they take time to build. You may want your product in a hurry, and you may get it in a hurry, but don’t negotiate it quickly. In fact, you can expect to be there a LONG time. Chinese negotiations are never short.
  • Expect the “Tag Team” Approach—During a negotiation, always expect the “tag team” approach. The first team will entertain you and make sure you’re happy, well fed, and sometimes even a bit drunk. Everyone wants to nap a bit when they’re full. When you want to hibernate like a bear, the second team comes in. They come in all fresh and ready for the real negotiations to begin. You’re not in the best conditions to negotiate properly.
  • Invite Them Outside Their Hometown—In order to win in a negotiation, once you’ve established a relationship, you should invite them outside of their hometown. This means you’ll have to host them, but if you get them away from their comfort zone to a neutral area, you can have your own “tag team.” This will give you better luck with your team.

The world of Chinese negotiation is definitely not like negotiating in the Western world. It will take some getting used to. Negotiation is necessary, however, if you want to be in the import/export business with China. If you pay attention to the above information, however, you should do just fine.

 

Drop Shipping Advantages and Disadvantages

Drop Shipping Advantages and DisadvantagesWhen sourcing products, using a wholesale drop shipper is a commonly-used form. You don’t have storage fees, and you pay for only the goods you sell. “Long-tail” is a new marketing buzz word. It means the “long-tail” targeting the far corners of niche markets. Go after areas that are normally untapped. Then, sell a lot of low-demand products. Research has shown that when combined, sales of low-demand products actually exceed those of high-demand single products. Drop shipping allows you to use this strategy. To effectively select a drop shipper, however, you must be aware of how the process works.

DROP SHIPPING—HOW IT WORKS Drop shipping can be profitable for the new import/export dealer if you understand the ropes. Here are the steps to take to insure using a drop shipper is a success.

  • Research and find a supplier which provides drop shipping services and adequately meets your needs. Make a short list, then thoroughly examine each supplier on your short list to make sure they are a legal business.
  • Contact the supplier by email regarding what you want to sell.
  • Create an account or pay for each item as you sell them, whichever the drop shippers you select requires.
  • After set up, you just grab the drop shipper’s posted photos and product descriptions of the items you plan to sell.
  • List the items on eBay or your own business website.
  • Access your supplier’s site when you make a sale and receive payment.
  • Click on the products and proceed to the checkout process.
  • Input buyer’s details.
  • The supplier will pack and ship the products for you.

Drop shipping can help small businesses to be successful. It has both advantages and disadvantages: ADVANTAGES

  • SAVE TIME—The drop shippers handle and manage the stocks for you. This leaves you time to work on other aspects of your business.
  • NO STORAGE FEES—With drop shipping, you don’t have to store stocks on site, so there are no storage fees.
  • PAY FOR WHAT YOU SELL—You only have to pay for the stock you sell, and aren’t stuck with products that don’t.
  • NO MINIMUM ORDER REQUIREMENT—No minimum order requirement means start-up costs will be low.
  • CHOICES—First-time and experienced sellers both think drop shipping is excellent because it allows you to offer a greater number of choices.

DISADVANTAGES

  • STOCK SHORTAGES—You may experience an unexpected shortage of stocks. This will leave you to face unsatisfied customers on your own.
  • NO INVENTORY CONTROL—You don’t have any control over the inventory, therefore, you might not be able to meet your customer needs the way you want to.
  • YOU ARE RESPONSIBLE—If things go wrong, you alone hold the responsibility.

You must realize that drop shippers are not perfect. Things may happen that you have no control over. Still, all-in-all, drop shipping is a good way for new sellers to get their start.

 

Choosing What To Import From China

Choosing What To Import From ChinaSometimes, when you want to begin importing/exporting from China, you know what you want to import, but other times, you’re not sure. If you know, that’s great, but if not, there are ways to figure out what works best for you and will bring you the greatest profit. THINGS TO LOOK FOR

  • Look for a gap in the market.
  • Find an extra value you could offer to differentiate your product or service from the current offerings.
  • Research potential products before you make your final decision. You want to be able to sell the product out when it arrives.China is usually thought to be “the world’s factory,” so plenty of products are available choose from. A few things you want may want to consider are:
    • Steel Products
    • Housing Products
    • Furnishings
    • Equipment
    • Textiles
    • Plastic Products
    • Chemicals
    • Other non related products
  • Don’t simply restrict yourself to what you can buy “off-the-shelf.” There are excellent manufacturers in China, and they can customize just about anything to your specifications.
  • To keep it simple and low risk to start your business, go with only one product category which can be obtained from a single supplier in China. It can be complex and complicated when you buy different products from more than one supplier in the same container. If you’re a new entrepreneur, this can increase your risk of failure.

THINGS YOU NEED TO DO FIRST

  • Check with your potential customers. Ask what they want and how much they’re prepared to pay for it.
  • Check manufacturing companies to see if the capability to manufacture your product exists in China.
  • Develop a sales, marketing, and distribution strategy.
  • Identify your product and have a business plan.

PRODUCTS YOU SHOULD AVOID Some products are better than others when deciding which to import from China. Some are difficult and should probably be avoided by newcomers. These items include:

  • High value products which require a great deal of capital to buy a small amount of stock
  • Those which show a consistency of going go down in price. This could mean your stock will become worth less than you paid for it.
  • That materials which are quickly superseded
  • Items competitive to resell
  • Low margin items

Remember that the products you import must comply with your country’s standards and regulations. If you’re looking for a brand-name product, be sure to check for an existing exclusive distribution agreement. If one exists, you can’t distribute the product.

With a little work and time, you can become an importer. You can learn how to deal with the Chinese, what products to purchase. Take caution when making your initial investment and you increase your chance of success.

 

Licensing, Business and Product Approvals

Licensing, Business and Product ApprovalsAdministrative licensing covers a number of issues.  These include:  Business operation, product approval, investment review, and related issues. These issues challenge companies on a daily basis.  They can slow investment and expansion.  Sometimes, companies have difficulties in obtaining required licenses for doing business.  They can wait months for business license approvals even though regulations require decisions in a matter of weeks.  Regulator disagreements often result in confusion and delay when applying for permits.   If regulations or approval procedures are unclear, they can cause companies to believe that the licensing system may be biased against them. 

If you want to get a license from the China Certification and Accreditation Administration, there are several steps you need to take:

  1. Make the application to one of the CNCA-accredited certification bodies. When making the application, you must use the standard form or do it online with a Declaration of Conformity to Chinese standards. You MUST submit the application in Chinese.
  2. You must do sample testing at an accredited CNCA test laboratories.  The lab will usually be assigned by the certification body to which the application was submitted.  The manufacturer cannot normally choose which lab performs the CCC testing unless a strong argument is presented to justify choosing a specific lab other than the assigned one.

    The sample testing includes both safety and EMC testing. For safety testing, China will accept a CB Test Report with China deviations. If the CB report does not cover China deviations, additional safety testing must be performed in accordance with Chinese standards.

  3.  Engineers will be assigned by the certification body to perform factory inspections.  The factory inspection will usually lasts two days.  A technical engineer and a quality assurance engineer are assigned by the certification body to inspect the facility.   There are ten aspects that have to be inspected, including:
    • Documents and records
    • Purchasing and receiving inspection
    • Process control and inspection
    • Routine tests and verification tests
    • Inspection and test equipment
    • Control of nonconforming products
    • Internal audit
    • Changes to certified product
    • Packing, handling, and storage

    The official publication of CCC Implementation Rules gives the definition for each category of products.  You must include the following documents with the application for a CCC Mark:   

    • If the factory has been inspected for the same product types, include the application for factory inspection or factory inspection report.  
    • If you have them, include the business licenses of the manufacturer, factories, and local distributors.
    • Brief introduction of the manufacturer and factories
    • Product description, user manual, and any other related material should be included.
    • Chinese labeling
    • List of critical components
    • Manufacturer’s Declaration of Conformity
    • Electrical diagrams, block diagrams, circuit diagrams, and assembly diagrams.
    • Include any CB report and CB certificate.
    • If applicable, submit the Power of attorney.

Don’t worry, it’s actually easier than it looks.  It is mostly just time consuming.  It is easy to find people who can help you with the process online.  It is necessary, of course, to research to see they are legitimate.  You do need to spend a lot of time, but investing the time it takes to obtain the proper license, business and product approval can well be worth it.

 

The Process of Sampling in China

The Process of Sampling in ChinaOne of the most necessary, yet one of the trickiest aspects of importing, is making sure you get exactly what you want.  Miscommunications and other aspects of the trade can sometimes make this difficult.  In order to assure the product being made is what you want, before you waste a lot of money, is to request a sample from a supplier.  You need to be sure the product meets all of your specifications and is the quality you want.   This can be a difficult process especially for beginners in the import business.  Here are some things to consider that will help you get a good sample and find the best supplier for your needs.

  • Preparation:  Decide what you need a sample of.  If it is an original design, you should produce an exact prototype through a domestic source.  Domestic preparation of the prototype helps in these ways:
    • You will have greater control over the process and increase your chances of getting exactly what you want.
    • You avoid miscommunication problems for those reading your specifications.
    • It’s less expensive, because there are no freight or other added costs.
  • If you feel you should break the prototype down to its basic components, do it.  You can send the prototype directly to the manufacturer when you’re ready.

  • Selecting the manufacturer/supplier:  You’ll want to contact as many suppliers who do business in category and can meet your needs as possible.  An import sourcing company can help with this step.  A sourcing company can help you overcome language barriers and work with you while you are getting to know the manufacturers.

    After you’ve selected all those you feel can handle your needs, narrow the list to a short list of about six different suppliers.  Send a request for samples from the top three of them.  This will give you an idea of:

    • How quickly they respond to your request
    • The quality of the sample they send
    • How eager they are for your business
    • How well you can work with each other

    Since most suppliers charge a fee to prepare a sample, this stage can become costly.  This fee correlates to:

    • The uniqueness of your request T
    • Their costs in making the sample
    • The availability of materials needed to produce the sample including:  custom molds, requiring a certain Pantone Color code, the equipment the manufacture has, and the amount of time it takes to prepare the sample for you. 

    You’ll need to maintain good communication with each of the suppliers to get a high-quality comparison.

  • Sample making agreement:This document that consists of:
    • A comprehensive description of your product
    • The quantity of samples to be supplied to you
    • The cost of the sample-making
    • Shipping agreements or anything else relating to the manufacture of your product. 

    This document will aid in protecting both you and the possible manufacturers.  It does this by specifying the responsibilities each of the parties, and includes shipping, related costs, and the time frame.  It increases understanding between you and the manufacturer.

Choosing the right supplier is imperative!  You want to insure the end-product quality is exactly what you want.  That’s why good communication is needed with the supplier.  In the end, you’ll get the product you want at a price that will help you make a profit.  Since you need to find the right supplier, the sample product will give you an excellent idea of each supplier’s capabilities, and help you make the best decision for your business.

 

The Legalities of Customs and Importing Goods

The importation process requires you to be aware of the legal aspects of importing goods.  You must comply with the country’s rules and regulations.  If you’re a first-time importer, you should probably use a broker.  They will help things to go easier for you in the long run.

If your imports are lighter than 150 lbs or 68 kg—the maximum weight that the shipping companies can handle—you can pick these up at the post office.  Make sure Custom duties are paid.  If not, you may be notified that your goods are held up at a certain location and will only be released once the import duties are paid up.  They will tell you when and where the items can be picked up.  If you are importing heavier or larger goods in half containers, there are limitations placed by Customs.

Customs Limitations

Countries vary in regulations and restrictions.  Before ordering your products, you need to research the restrictions and license requirements for your product. There are some restrictions you may find common, like the banning of drugs or chemicals.  Others, you may find strange such as Italy disallowing the importation of shoes, and Australia disallowing the import of cultural and heritage goods.
If you are thinking of selling your goods to International buyers, you need to research the Customs regulations of other countries.
You can visit the Customs’ websites for both your country and the countries you plan to sell to.  If you can’t find the information you need, you can contact the Customs by phone or email.

Negotiating for a Contract

After researching regulations and finding a supplier, you begin contract negotiations. The contract should cover items such as:

  • Price Per Unit
  • Packaging
  • Number of items per case
  • Shipping terms

Knowing shipping terms will help make the process flow more smoothly.  Here are some of the most commonly-used shipping terms:

  • Ex-Works:  You are responsible for the costs once the product leaves the supplier. 
  • FOB:  The supplier pays out all expenses from the very beginning to the Port of departure including export fees.
  • CIF:  Cost, Insurance & Freight—The supplier pays the costs, insurance and freight charges up to the port of destination.
  • DDU:  Delivered Duty Unpaid—The supplier disburses an amount for all the costs incurred in delivering goods, excluding the duties.
  • DDP/CARRIAGE PAID:  Delivered Duty Paid—The supplier pays all the expenses including the duties. 
  • FOB:  Freight on Board—This pertains to the freight expenses to the point of loading.

Some terms may cause you some confusion, so take caution.  Two of them are:

  • FOB FACTORY:  Freight on Board Factory—This is usually seen if the company is located inland.  It pertains to the payment of onward costs to the local port or airport.  It can cause price increases.
  • CI&F:  Cost, Insurance and Freight—This differs from the FOB price.  In addition, you are given the insurance and freight costs. This helps you prepare a good budget.  You may be able to have the price paid up when it is delivered.

More information on importing and exporting can be found by visiting the Export 911 site at http://www.export911.com/e911/gateway/gateway.htm.  There, you can find valuable information on the stages of the import/export process.  You’ll also find the requirements and importing terms.  This site is geared to exporters instead of importers, but most of the terms and processes are the same.

Magnitude of Shipment

The volume of shipment determines the cost.  The standardized container sizes of full container loads come in 20 ft X 40 ft lengths, and can hold whatever products you plan to load.  The shipping costs will include the container.  If you are planning on making regular purchases, you may decide to purchase a container. When you purchase from one supplier only, the container will be brought to the supplier’s location, filled up on site, conserved and gathered to be shipped to your country.  If you purchase from more than one supplier, you can have all the goods delivered to your chosen freight agent who will load the products at their location.

Full-container loads are great for shipping, because they can save on labor and money.  Since full-size loads are considered as a single transaction, import/export processing, handling, and haulage costs lower as well.  If you are not importing products in a full container load, your shipment is combined those of other companies which will be delivered to the same destination.  Lesser Container Load costs are computed by using the volume your goods take up in cubic meters. Lesser Container Loads are not as practical.  It can be an exhausting process to pack, load and unload the products.

Documentation and Proof of Purchase

When negotiations are complete, a seller will send you a pro forma invoice.  The cost you pay will be what has been agreed upon during the negotiations.

Pro forma invoices are generally advance copies of the final invoice.  You will need these when you apply for a letter of credit (L/C) and/or foreign exchange (import) allocation.

When the items arrive, you will receive a commercial invoice.  These are similar to a sales invoice.  They are used to clear the goods through Customs.  Unlike the pro forma invoice, the commercial invoice contains details needed for import/export purposes.  You can see an example of these by visiting http://www.export911.com/e911/export/docCI.htm#docCI.

Be sure to double check everything to make sure everything is what you agreed to.  This helps minimize miscommunication.

You can choose to have your own shipper.  You can easily locate your own shipping company by searching on Google.  Make sure to receive quotes from the companies and compare them.  It takes a little extra work, but you can save anywhere from $100-$500.

 

Step by Step Importing from China

If you look for them, you can find new business opportunities every day.  Importing from China could be one of those opportunities for you.  If you know how to navigate through the process, it could be an effective part of your business plan.  It is a complicated process, but the internet and advanced technology in international trading is making it easier all the time.   There are several steps to the process:

  • Decide Which Product You Want to Market:  You can sell any item you want, but make sure you research to be sure it is a marketable product.  You want one that will give you a profit.  There are many web listing services on line to help you locate suppliers for the product you want to sell.  You will need to register with your username, and inform them which product you’re interested in.  They will match you up with several suppliers.  You will get a lot of product supply information and possibly a price list.
  • Contact the List of Suppliers:  Look for a supplier that you feel best fits your needs and start a business relationship.  The best suppliers will already have a lot of business.  When you provide them with your company’s information, sell yourself in a way that makes them want a business relationship with you.
  • Research Suppliers:  Take the time to thoroughly check the supplier and be sure they can meet your specific needs.  You’ll also want to verify that they are a legitimate business.  Ask questions to find out how long they’ve been in business, the trade shows they attend, how long they’ve attended them, and the other companies they manufacture for.  Confirm all the details you possibly can.
  • Begin Negotiations:  When you’ve selected the supplier you want to use, begin negotiating the price and the relationship of the trade business.  You’ll want to become familiar with the Chinese methods of doing business.  During the negotiation process, request product samples.  Examine the sample and the packaging it comes in.  Review all the instructions that come with the samples.  Sometimes there is a fee for the sample, but you definitely want to inspect the product before contract agreements are finalized.
  • Determine Shipping and Terms of Payment:  Once the product meets your satisfaction, you need to discuss shipping and terms of payment.  Obtain all necessary information, and place a trial order.  Be sure to include all details when placing a purchase order.  You don’t want to leave any room for errors or misunderstandings.
  • Learn Trade Terms:  You’ll want to become familiar with various trade terms are and use them appropriately.  A few common ones are:
    • FOB – Free On Board or Freight On Board
    • CIF – Cost, Insurance, and Freight
    • Landing Cost Calculation – This is the total cost of a shipment that has landed.  It includes the purchase price, freight costs, insurance, and any cost the port of destination charges.  This may also include customs duties and/or other taxes placed on the shipment.
  • The terms of Payment must be agreed upon and understood between you, the importer, the supplier, and the exporter.  You may wish to complete a risk assessment.  This helps you clearly look at all levels of risk involved.  For assistance with the assessment, you can consult an import management company and a freight forwarder. Import management companies can also assist you in the negotiation of trade terms with your supplier.

  • Determine and Understand the Terms of Payment:  When you are making a purchase for import, it’s not uncommon to be requested to pay 30% up front and the remaining 70% when the product is shipped.  This provides your supplier the money that he needs to cover the cost of producing your product.  It is important that you understand the terms of payment when negotiating them.
    1. Legally speaking, you are the Importer.  You bear the responsibility of making sure the goods you receive meet the regulatory requirements for the country of destination.  Anything product which does not meet the requirements can be stopped at the border.  They can possibly result in law suits against you or your company.  Requirements vary from country to country, so make sure you know what the requirements of the nation of destination.  Make sure they are being met by the supplier.  In the United States, these regulators include US Customs and Border Protection, FDA, DOT, ATF, and USDA.  Each agency has a website to inform you of what you need to know and where to register.  They also have forms you can download.  

      Compliance regulations can be complicated for some products, like textiles.  Consulting a good customs house broker before you place any orders is a good idea.
       

    2. A forwarder organizes the shipment.  Sometimes, they act as a carrier.
       
    3. A Customs house broker is a person whose profession clears goods through the many Customs barriers.  The brokers prepare documents or electronic submissions.  They handle calculations of the taxes, duties and excises for you.  They can also assist in communications with importer, exporter, and governmental authorities.

      Listings for both services can be found at a local international trade organization or association in your area or at the customs office.  First-time importers should probably look for a service that is more individualized.    If you think you can save money by not using these services, you’re probably wrong.  You will need more assistance with the process than you think.  Once you learn the process, you can use an online service, such as AsiaCalculator.

  • Place a Trial Order:  Once you’ve completed the above steps, you’re ready to place a trial order.   In the purchase order, be sure to type out the description of the product in detail.  Include product requirements, packaging requirements, trade terms, required shipping documents, and any other necessary information to ensure the supplier completely understands and meets your needs.
  • Find an Inspection Company:  You’ll need to have someone check the product on site in the factory for you if you’re not able to be there.  They will provide you with a detailed report of their findings.  Provide them with clear details of what to check.  If vital components are assembled early in the manufacturing of your product, have the inspections begin early in the process.  This will avoid quality control issues.  Inspection companies will help you to avoid receiving defective goods, or receiving products that don’t conform to your standards.

    Even though your forwarder and customs broker will take care of the transport and clearance of customs, it is necessary for you to track them yourself.  You will need to provide your forwarder and customs broker any additional product information and the endorsed bill of landing.  A power of attorney will need to be issued to your broker.  You’ll also have to purchase bonds for your imported shipment.  

  • Receive Your Product:  When the process is complete, you will receive your product.  You’ll need to be sure to post and file your records.

    Now you’re ready to begin the process and import from China. Knowing the process will help you avoid intimidation and be ready to join the world of international trade.

 

Importing from China: Organizing Logistics and Storage

LogisticsIn the shipping process, for terms like Delivered Duty Paid or Cost, insurance and freight, there’s nothing you need to do but wait on their arrival.  For some shipping where you use terms like “Freight on Board,” an effort has to be made to keep things organized. Remember, even if you’re lucky enough to take on DDP or CIF at this time, it is not a guarantee.

Like any new task, organizing logistics can be complicated in the beginning.  If you do them well, however, you can save money, so they are worth the extra amount of work.

You must make sure that teach partaker in the process is one upon whom you can rely.   Remember that costs tend to add up as each phase takes place, so it is up to you to make sure that each phase is as easy on the budget as possible.  Do some research to determine the most excellent freight company, shipping and storage alternatives.  In the beginning, it may take you a little time, and appear difficult.  Once you learn the process, augmenting profits will be a breeze.  Here’s how whole process for the importer process goes:

  • Manufacture/Wholesaler/SupplierManufacturers receive payment for the cost of their goods and its packaging.  All documentation required for exporting is prepared by the manufacturer.  Shipping terms like Delivered Duty Paid (DDP) and Cost, Insurance & Freight (CIF) are preferred to Freight on Board (FOB).  The supplier undertakes the inbound risks and have the delivered products paid off.  Whichever shipping term you have, always verify insurance terms.  You need to insure the container for 110% of the FOB cost.
  • Road Haulage CompanyThe collecting from suppliers and delivering these to the docks/airport, is the responsibility of the road haulage company.
  • Sea Freight CompanyYou, or the supplier if CIF, DDU or DDP, will have to negotiate with the sea freight company to determine a rate for the process of having your goods transported.  If less than a container load is necessary, then you only have to contact a freight forwarder. The Sea Freight Company is responsible for verifying the goods, documentation, and loading them into the vessels. Usually, costs range between $1500 and $4500 depending on the volume of the shipment.   Freight associated charges are computed per kilo on the volume weight of your goods and small lightweight consignments are issued with the least charges.  Professional freight agents will advise you of these charges when the quote for shipping of your products is given.
  • Discharging of GoodsWhen you merchandise arrives, it is unloaded.  If your documentation is organized, the merchandise is usually quickly cleared as soon as you verify payment of the necessary duty and tariffs. If you have not established credit facilities with your selected shipping line and Customs ahead of time, you are responsible for paying everything before the goods are discharged.  If there is a delay, you must pay for additional storage fees.

    If you pay the shipping charges by check, it will take working days to clear.  While it is clearing, fees for storing the merchandise are added at approximately $0.14 per kilo per day. It doesn’t sound like a lot, but a delivery of 1000 kilos of merchandise that has to be stocked for four days can have additional storage fees of up to $560.00 of store charges, but the rates vary.

  • Payment Methods: You can choose from the following methods of payment:
    • Cash
    • Deferred payment— Importers with deferred accounts can avail of this payment.
    • Broker deferred — Agents with broker deferred accounts can avail of this payment.
  • Transportation to Warehouse and Warehouse Storage Once the merchandise reaches the docks or the airport, you must have the merchandise picked up and delivered by a freight company to a warehouse.

    For warehouse storage, yet another stage of the import process, you will need a few more hundred dollars, because you will have charges for:

    • Receiving the product
    • Cost of labor
    • Long-term storage costs
    • Broker and/or freight forwarder fees

    Bargaining about the cost of this step in the storage process is usually possible.  If you look and compare, you can probably save money.   You can’t just have your merchandise stored in a warehouse without considering its location.  There are a lot of areas in the USA that offer less expensive warehousing than others.
    You can obtain a breakdown of the sea freight costs, importing procedures, etc., by visiting  http://www.skymartworldwide.com/t_help_simpleguideimporting.htm.

  • Customs Duties and Taxes Duties and taxes of goods you import will vary from one country to another.  While importing from China, Hong Kong, India and others, you are likely have to pay import duties.  Of course, there are exceptions.  If the goods are items you can’t avail in your own country, usually the tariffs and duties are minimal.  For other goods which are subjected to FDA jurisdiction, you will need to have special licenses.  The process involved is complicated.

    To determine the charges, visit your country’s customs website for information.  Information such as phone and other contact information can be found at these sites: 

    Once you’ve been through the process a few times successfully, you probably can handle the process of importing on your own.  First-time importers, however, should obtain a broker to help with the process.  Classification is necessary, and if your products are not classified properly, you may end up paying inaccurate duties and tariffs.  Through the help of a broker, you can avoid paying the inaccurate charges. Your documentation must also be accurate.  A broker can help with that as well.  If it is inaccurate, it can cause delays and higher charges.  When this happens, you aren’t able to transport the products while obtaining correct documentation.  Items will need to be stored longer than the original agreement, so you are then responsible for paying demurrage.

 

Avoiding Fraudulent Wholesalers

Avoiding Fraudulent WholesalersSometimes intelligent businessmen who have worked hard and earned their own money lose it to deceptive, fraudulent wholesalers.  It leaves them feeling frustrated, cheated, and betrayed.  Like it or not, there are a lot of merciless people who present themselves as up-right businessmen.  You need to know what to look for, so you won’t fall prey to them.

Here are six signs to help you determine whether or not you’re dealing with a fraudulent wholesaler:

  1. Talk to the wholesaler on the phone.  If the wholesaler sounds unprofessional or doesn’t carry on business-like conversations they may not be what they claim.  Also, look for only simple answers like “Hello” without mentioning the business name or other simple answers like “Yes/No.”  These are indicators that you may be dealing with a fraud.
  2. During the initial contacts, request to see a business license or sales tax ID. Legitimate wholesalers will usually supply these. US sellers desiring to buy from US wholesalers need a tax ID.  If you’re living outside of the US, you no longer need one.
  3. Request product samples.  Sometimes, wholesalers may be suspicious. Usually, however, wholesalers don’t see anything wrong with offering a product sample.  Of course, it is at your expense, and the price is higher.  If your prospective wholesaler doesn’t offer one, be sure to ask for the reasons why.
  4. Be careful about unsecured payment methods.  At first, wholesalers say they only adhere to secured forms of payments like credit cards, Paypal and others.  At a later period, however, they may declare that only wire transfers or western union are accepted.  Not all wholesalers resorting to unsecured payment methods will be deceitful, however, many deceptive people operate in this manner.
  5. Look on the website for their physical addresses and contact details.  If their website doesn’t one, you should be cautious.  Request their contact details.  Ask if you can come in and check on their offices.  If they are a legitimate business, this shouldn’t be a problem. 
  6. Ask for photographic evidence of the supplier’s stock.  Some wholesalers will say that they don’t have stocks in hand, but continue to ask for upfront payments.  This could indicate a problem.

When looking for a wholesaler, it is wise to always keep these rules in mind. Be extra careful when you’re applying with a new wholesaler.  Research them thoroughly, and you should be able to tell if they are fraudulent, and avoid suffering for it later.

 

 
 
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