Do you want to import from China? Since most big retailers are now sourced from China, smaller businesses and eBay sellers typically wonder whether they should do the same, but are often put off by the complexities of getting started. Like all business processes, the process of importing from China has a lot of steps, each of which has its own complexities. For persons that are totally novice in importing, these steps can seem overwhelming. But there are real business benefits in learning how to import – building import knowledge and expertise gives you access to a broader range of products at a broader range of prices than your competitors, giving you more product choices to compete with.
If you’re new to importing, start slowly with the intent to learn the process. Find suppliers and select one to order from. Place a small order and go through the process of working with the supplier, logistics service provider and getting the product shipped to your warehouse. Think of your first order as an investment in learning about importing. With knowledge and experience of the importing process, you can work with China suppliers to put your own brand on the products you order to really super-charge your business.
There are several major areas a new prospective buyer needs to learn to import from China. These include identifying suppliers, selecting suppliers, paying suppliers, managing quality control and the logistics getting goods shipped from overseas to your warehouse. While complicated, once you learn how to put the steps together and what to watch out for, importing itself is not that difficult a process.
First step: Identifying suppliers
There are many resources that could help you find suppliers. Some may be found in certain websites you may search through the internet. When using online directories, check what steps the directory owner had taken to ensure suppliers are real.
Trade shows provide another opportunity to meet suppliers face to face while looking at and touching their products.
Second step: Selecting Suppliers
Like working with a manufacturer in your own country, the overseas manufacturers want to understand your business. If you’re only going to buy ten pieces, you’re unlikely to get either domestic or overseas manufacturers’ attention. You’ll have to go through trading companies or distributors. If you have an established business that sells large amounts of goods through your existing sales channels, and have the potential to become a good long term business partner for the manufacturer, you’ll be able to get their attention.
When contacting the supplier, start by explaining your business and then try to ask for samples of the products you’re interested in. You’ll likely have to pay for shipping and the product, typically via a wire transfer. In reviewing the samples, don’t forget to review the packaging and instructions in addition to the product itself. And remember, as the importer you are responsible for ensuring the product you are importing meets all relevant regulations. Learn what these are, in part by asking suppliers that manufacture these products whether they’ve previously exported to the U.S. and what certifications are required for that market. You can also go to your local big box retailer and see what certifications are on similar products. Finally, communicate frequently with the supplier about all details of the transaction – not just the product, but also lead times and manufacturing completion dates. If you’re new to importing, think of your first order as a small initial order that helps you learn how to import from China, rather than an order that will make a big profit. After you’ve learned how to import from China, start placing bigger orders that will generate more profit.
Third step: Paying Suppliers
You’ll need to determine the terms of trade. While everything is negotiable, common payment terms are 30% at time of order and 70% when goods are shipped. The 30% payment at time of placing the order gives the manufacturer the money he needs to purchase the raw materials necessary for your order. Some buyers have negotiated other terms, like 30% at time of placing the order, 55% at time the goods ship, and 15% when the goods are received. The payment before shipping mitigates a certain risk that the buyer won’t pay, but then puts financial risk on you as the buyer. Understand and mitigate this risk through communications with the supplier and by starting with a small order. Typical payment method is via wire transfer. Shop around – international wire transfer fees vary quite a bit from bank to bank.
When you write your purchase order or contract, make sure you have clear options including outs and specific penalties if problems (such as delays) arise.
Fourth step: Quality Control
Having selected a supplier, placed an order, and made an initial payment, you now have to decide what you’re going to do to manage quality control. Quality control generally begins before manufacturing starts, so after having seen the sample, ask the supplier what preliminary steps he takes to ensure quality control. This can includes both the raw materials he’s using in the product, and also any continuous improvement to the manufacturing process. Once your order is ready, you have three choices for managing the quality of products.
(a) Rely on the supplier’s quality control,
(b) Have someone in your company do it,
(c) Hire a third party to do it.
If you’re placing a small order, you may choose to rely on the supplier’s quality control; for large orders, this probably isn’t your best choice. If you have in-country resources, you may use those resources to inspect products on your behalf, including not just the end products, but also intermediate products during the production process and even raw materials.
Regardless of who does the inspection, companies that are successfully working with China suppliers on large dollar volume orders seem to share one characteristic in common. They invest quite a bit of time in quality assurance and quality control. This means talking to the factory in order to assess whether they have quality assurance practices in place that result in continuous improvement, and also developing extremely specific product inspection criteria.
Fifth step: Shipping and Logistics
You have two main choices for having your products shipped – air shipping and ocean shipping.
Air shipping makes sense if you need product fast, if product is small volume/high value, or if your order is relatively small (less than 2 cubic meters). DHL, TNT, UPS and FEDEX all provide this service.
Ocean shipping is your other option. You’ll want to find a third party logistics service provider (3PL), with customs broker capabilities, that has experience with the origin port and destination you’re working with. Shipping across the ocean can take several weeks depending on which port you’re coming into; add customs clearance, inland distribution to your warehouse and you can easily be looking at over 30 days just for shipping. As the importer, you are responsible for import duties. Contact your local customs agency for details about duties for various product categories.
