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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.

 

 
 
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