HOW TO IMPORT GOODS FROM CHINA, THE COMPLETE GUIDE

How to import goods from China - Importation is the bringing of goods/products and services from a country into another. Are you thinking of importing goods from china, this post is for you. It contains all the guides you need to make importation from China easy and understandable. Economic expansion of China rural areas and the rapid market changes and government reforms have transformed China from a low cost manufacturing country to a country that attract different people from different countries to carry out business transactions.

Read : How to write a well structured business plan for your business

As much as how lucrative and attractive importing goods from China is, there are some challenges that are encountered by individuals who import goods from China. Some of these challenges include corruption, competition, business etiquette, language and cultural barriers. Chinese people are well known for their respect for other people's culture. They are pragmatic in the sense that they do business with you if you have what they want.

To run a successfully importation business from China, you have to develop mutual trust and accord respect to your business partners.

How to Decide What Product to Import From China

Choosing a product to import from China is one of the hardest decision to make as an importer. To choose a product to import, pay attention to the product details and follow these steps.

1. Know Your Niche

Knowing your niche involves choosing a product you know very well. This is one of the major mistakes new importers make. When you know about a product, you can easily make inspection on its quality. And in case you don't have any knowledge about the product you want to import, choose a niche you are willing to learn about.

2. Choose a Niche That is Less Competitive 

In order to be successful importing from China, you need to choose a niche where major retailers do not focus on. You can identify a profitable niche if the product have a magazine devoted to it.

3. Choose a Low Risk Product

Product liability can ruin a business especially a new one. Choose a product with low risk and avoid importing products that may endanger it's users.

4. Choose a product with Small Size

Choose and import a product with small size that has value. This will reduce the shipping cost and improve your ROI.

 Read also : Basic tips on how to set up budget for your small business

Terms You Should Master When Importing From China 

1. EXW (Ex works)

EXW stands for Exworks. This refers to the international trade agreement where the supplier make goods ready for pickup at his/her business place. Here, the buyer will be responsible for all the costs and liabilities of the shipment once the product leaves the suppliers business address. When using this shipment term, the cost and risks of shipping products/goods lies with the buyer alone. It enables the buyer to have a clearer picture of the costs involved ahead of time and give him/her control of the whole shipment preventing the seller from increasing their local costs.

2. FOB (Free On Board)

FOB means Free On Board. It is an agreement that indicates whether the buyer or the seller has the liability for goods that are damaged in transit. FOB has two phases "FOB shipping point" indicates that the buyer will bear the risks of damage if the goods are shipped and "FOB Destination" implies that the seller/supplier will bear the risk of any damage until the buyer gets the goods. This term is commonly used in non containerised sea freight or inland waterway transport.

3. C&F (Costs and Freight)

C&F or costs and freight refers to a legal term used in international trade where the seller does not need to procure marine insurance against the risks of loss or damage of purchased goods during shipping. In this term, the seller/supplier is expected to cater for the goods /carriage by sea to a port of destination and give the buyer the necessary discount.

4. CIF( Cost, Insurance and Freight) 

This is a trade term that require the seller/supplier to arrange for the transportation of the goods by sea to a port of destination and also provide the buyer the necessary documents. This term is commonly used in EU countries who use it to calculate the value of duty that must be paid on an import.

5. B/L (Bill Of Landing) 

This is a document issued by a carrier or agent to a shipper. It stands as a contract of carriage of goods. It also act as a receipt for a cargo that is accepted for transportation and needs to be presented before the goods can be taken at the destination. A bill of landing contains a number of components and it includes Consignor and Consignee's names, port of departure and arrival, vessel name, date of departure/arrival, list of goods being transported, packaging details, weight, volume and cost of freight.

6. AWB (Airway Bill)

This is a type of bill of landing that enables tracking of the cargo. It serves as a receipt of goods by a carrier, contract of carriage between the shipper and the carrier. It provides information about the condition of carriage and the carrier's limit of liability and claims. AWB is a non negotiable instrument and does not state the flight that the shipment will arrive with and time of delivery.

7. ETA and ETD 

This stands for estimated time of arrival and estimated time of delivery. It refers to the time and date that the ship carrying the goods will arrive at the destination at a particular port. The estimated delivery date depends on the supplier handling time, the shipping service used and when the supplier received cleared payment. Knowing the estimated delivery time will help you determine how long it will take for your goods to arrive.

8. FCL and LCL

FCL Stands for "Full Container Load " and LCL stands for "Less Container Load" . FCL refers to full container load usually 20ft and 40fts that contain goods for one importer. It us the cheapest means of importing goods from China. LCL on the other hand refers to a cargo that is owned by different importers and grouped together in one container. This enables importers to ship small amount of goods /cargo that are not large enough to fit into FCL option.

9. POD and POL

POD stands for Port of destination and it refers to the intended final point of arrival of a shipment. POL means port of Loading and it refers to the place where the cargo is loaded by the carrier onto the ocean vessel.

10. RMB 

RMB stands for Renminbi which is the official currency of the People's Republic of China. It basically unit is the Yuan

11. P I 

This refers to proforma invoice and it signifies a sales contract or an estimated invoice that is being sent by a supplier to an importer in advance of a shipment or delivery of goods. It shows the quantity and nature of goods, their value and other relevant information like the transportation charges and weight. They are often used as preliminary invoices with a quotation or a customs purpose while importing goods.

12. MOQ 

This stands for Minimum Order Quantities. It refers to the minimum quantity of goods an importer needs. Chinese suppliers are utilised to around 10000 orders, but some also attend to small scale importers.

Products You Should Avoid When Importing From China

Be careful not to import counterfeit products. Products with brand names like Samsung, Rolex, Gucci, Apple and more. Also, products with signs like ® and ™ besides it are trademarked products and are therefore counterfeit.

How To Source For Products From Alibaba Safely 

Alibaba is well known as the largest business to business platform website in the world. It connects suppliers and buyers from all around the world. Alibaba has thousands of Chinese suppliers and millions of products from China. First you have to create an account in Alibaba website, login and search for the product you need.

You can either browse the products categories or it's description. You can also select "supplier from the drop down menu and then find suppliers that deal in the product you need.

You should also pay attention to the following when sourcing products from Alibaba. 

1. Unit Price : From my search on phone cases, i got US $0.58 - 1.15 /Piece FOB from the listing.
                      

This means that the supplier of the product will pay costs associated with getting the products to the Marine port while the buyer will pay the cost of transporting the goods to the ocean from where it will be sent to the final destination.

2. Minimum Order (MOQ)  : This refers to the smallest order a manufacturer/supplier is willing to accept, though it is negotiable sometimes. In the image above, the minimum order is 50pieces. And when you multiply the quantity (50)by the higher -end price of the product which is $1.15, we will have a minimum order 0f $57.50 without the shipping costs.

How To Verify And Select Suppliers From Alibaba

Verifying suppliers when importing from China is very important because with the increase in cyber crime and scam rate, it is paramount to protect yourself and money from scam and low quality products. Looking into the image below, the search for phone case provided 9438 suppliers.

We can narrow the search down by selecting the Gold suppliers who are registered members on Alibaba and pay 29800RMB per year to retain their status. This narrowed the search to 9430.

The second stage is to select "Assesed Supplier" and it gave 1612. Assessed suppliers will give you insights to the companies statuses like products and services, number of employees, total building size and image.
                  
The third step is to select "Trade Assurrance" which gave 1555 suppliers. This option will also protect you from the point of making payment till your product is delivered.

You can also verify supplier by the number of years they have been operating on Alibaba. Suppliers with higher number of years are more reliable. Note that the first word of the company's name is usually the name of the city in which the company is located. Make sure the supplier you choose is close to the area you want to ship your goods.

You should also consider response rate of the supplier because some take time to respond to orders.

Things To Consider When Placing An Order

Compliance

The product you order must be manufactured according to technical standards.

2. Label

You should pay good attention to the product label you want to order. Make sure that the label contain the manufacturing country, product materials, information and instructions

3. Document Requirement

Before importing goods, you need to create some documents like the circuit diagrams, design drawing, component lists and risks assessments.

How To Make Payment For Bulk Orders

1. Telegraphic Transfer

This is a form of transfer used for transferring money overseas through banks. This method is risky for the buyer because money transferred go directly into the supplier shipping account before the buyer receives the order.

2. Open Account

This form of payment usually come in the form of cash or credit card.  It is often posted against one or more outstanding invoices.

3. Document Against Acceptance

This is a type of payment where the supplier give bank instruction to release the title and shipping documents to the buyer only when the buyer accepts the bill of exchange and sign it.

4. Letter of Credit

This is usually a letter from a bank which gives guarantee that the buyer's payment to the supplier will be received on time and will be the actual amount. The bank have to cover the full or remaining amount if the buyer is unable to pay.

5. Document Against Payment

This is an arrangement where the supplier give the bank instruction to release the shipping and title documents to the buyer after the buyer has fully paid the accompanied bill of exchange.

Conclusion 

I hope you like the detailed explanation on how to import goods from China from anywhere in the world. A newbie in the importation niche will be fully guided following the steps listed.

Do you find this article useful? Kindly share it to friends and relatives. If you have any contribution and question, kindly reach on through the comments.

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