Import form China
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Both in the world and in our country, there are thousands of companies that import from China and make large and sustainable profits. In theory it seems easy and profitable. Choose a product, buy it cheap in China, bring it to your local market, perfect your marketing and branding and your money just drips or better still trickles!

But as many of you who have tried it know, it's easier said than done.

In addition to the challenges of marketing and branding - which is no easy task - importers have to overcome countless challenges. Below is a guide that explains in detail how to successfully import from China.

The information shown is a summary of what we have learned from helping hundreds of importers over the years improve their business. During that time, we not only perfected our own methods for finding, controlling and shipping goods from China, but also gained insight into what worked and what didn't, from our customers' perspective.

Contents of the Import from China guide

since the topic is very extensive, we have divided it into several separate pages, all of which are located in the main shopping menu.

Contents of this page:

By following the steps described below, you will get the basics about importing from China. You will find out how to:

  1.  Choose the right product to build a responsive business around.
  2.  Define and detail product specifications so that suppliers understand your product requirements.
  3.  Source qualified manufacturers with a clear price and quality advantage.
  4. Submit a quality RFQ (Request for a quote) that gets a high response rate from suppliers.
  5.  Shortlist suppliers to narrow down the best options in terms of price, quality, lead time, factory size and willingness to work together.
  6.  You negotiate a favorable price and contract terms.
  7.  Create lead times and purchase orders to ensure both parties understand the rules of the business.
  8.  Minimize product defects through sampling and strict quality control.
  9.  Ship your product from China to your destination.

1. Why import from China?

Why import from China when it is certainly easier to buy products from local suppliers and distributors? Here are three reasons why China is still the best option for most products.

Price

Even when factoring in shipping, quality control and import duties, the savings when buying from a Chinese manufacturer is 30% to 150% (for most products) - figures are before the increase in transport costs Dec, 2020 compared with manufacturing outside of China or purchasing from your local distributor.

Flexibility

Chinese factories are generally more cooperative, have lower minimum order requirements, have greater tooling and mold expertise, and are able and willing to produce both large and small quantities.

China's competitive advantage

China's labor costs are more expensive than low- and middle-income countries income in Southeast Asia, but other Chinese advantages (developed infrastructure, established supply chains for components and raw materials, skilled labor) compensate for this.

Apple CEO Tim Cook explains it best:

“There is confusion about China. The popular conception is that companies come to China because of low labor costs. I'm not sure which part of China they go to, but the truth is that China stopped being a low labor cost country many years ago. And that's not a reason to come to China from a supply point of view. The reason is because of the skill and the amount of skill in one place and the type of skill.”

2. Choose the right product to import from China

Good product selection is certainly important for success when importing from China, but it's less important than you might think. Of course, you should consider your budget and the overall market conditions for your chosen product. But other than that, you can enter any market and succeed if you have the right strategy and enough capital to invest. We highlight 10 key principles for product selection that we've learned by helping hundreds of businesses import products from China.

Businesses that have succeeded have followed many of the principles listed below:

Principle no. 1: The best thing you can do is build a brand around the product

People connect with brands. They are not associated with commodity products that only compete on price. By building a brand, you build longevity into your business.

Principle no. 2: Avoid new and popular products

Fashion / hyper products have a short life cycle which makes it difficult to build a brand around the product. The news fades. As mentioned above, focus on building a brand that you can customize and that delivers sustainable profit margins. Another note to note when importing from China is that fashion products are by nature new to the market and quality issues are usually not fully resolved. For example, hoverboards are on the decline due to dangerous batteries.

Principle no. 3: Have at least one unique selling point

You need a point of difference (POD) to make your product imported from China sell better, but that difference doesn't have to be huge. It can be as simple as a logo that separates your brand from the crowd, a unique color scheme, better marketing photos, or the fantastic unboxing experience that YouTube is full of. Simply focus on one or two PODs to begin with. As you grow, you can start planning and implementing additional improvements that will set your product/brand apart from the competition.

Principle no. 4: Don't sell products you hate

Are you interested in the product? You don't need to be passionate about a product to be successful. But for example, if you hate yoga, you probably won't be able to sell yoga equipment.

Principle no. 5: Avoid "experts" who claim about ten times the profit margin

The average net profit margin for e-commerce companies importing from China is around 20-30%. Don't pay attention to the "experts" who claim that you should have a margin of ten times the factory purchase price. That way you can miss out on some great sales ideas.

Principle no. 6: Cost per click (CPC) and monthly search volume are important when researching products

Focus less on current profit margins and more on cost per click (CPC) for product keyword marketing. High-value, high-converting keywords cost more. Ideally, the product you choose will have a relatively low cost per click on Google compared to other product ideas and high monthly search volume.

Principle no. 7: Please note that bulky products are expensive to store and ship

Take storage and shipping costs into account. If you are considering furniture for example, you need to consider the cost of storing the product and shipping it to the customer. We disagree with the common advice that you should not import any product larger than a shoebox. It all depends on your capacity, and if you have the storage space and the capital to invest in the business, then bulky products might be your best option!

Principle no. 8: Avoid products that retail for under $15

In the early stages, avoid cheap products that retail for under $15. There are several reasons for this.

First, it's easier to get your margin and net profit estimates wrong when calculating your domestic costs (total costs) for products that retail under $15. Second, the cost of running pay-per-click ads on Google (which you'll need to do if you're running an e-commerce business) For a low-cost product, PPC ads make up a significant percentage of your total costs, which isn't ideal!

Principle no. 9: Pay attention on product safety

Avoid importing unsafe products. Product recalls and product liability can ruin your business. As mentioned above, over 5,000,000 hoverboards have been recalled across the US due to dangerous batteries, which have ruined many importers.

Principle no. 10: Don't let perfection get in the way of what is good

Many businesses seem to bite off more than they can chew in the early stages of their business and end up getting nowhere. You need a guiding idea for design improvements, customizations and adding product features, but you don't have to give away all of this on your first order. I would also suggest that you stick to one or two products to start with and make them quality and good! You can develop your product lines as your business grows. Don't try and do everything at once.

3. Product selection and finding the right supplier in China

Step 1. Create product specifications

Before you start procuring the product, you need to determine the product specifications.

Getting into procurement without defining product specifications is the biggest mistake of amateur importers and causes a number of problems. Your spec list should contain at least:

  • Product description
  • Product Specific Materials
  • Product Dimensions
  • Palette (product colors)
  • Testing requirements for your market (ECE etc.)
  • Label specifications and requirements
  • Packaging specifications

Why should you define product specifications?

If you don't know the product specifications, packaging and labeling requirements, compliance requirements in order to sell in your country, along with the quality requirements for your market, then it is very difficult to determine which manufacturer is right for you, and your entire business becomes extremely complex for import from China. The decision to source and buy from China solely at the discretion of the factory and its seller is a recipe for disaster. Keep in mind that whenever you're verifying suppliers and analyzing bids, you need to compare very similar bids in terms of specifications. Small differences in materials, color type, dimensions and packaging can have a huge impact on the price.

How to sort product specifications?

Research your product online. Understand what will be your POD (point of difference) your target selling point that will set your product apart from the crowd of similar ones as well as the basic quality of the product. Buy and familiarize yourself with competitors' products that sell at a target price, then take their product apart to know what components and raw materials they use.

Example: if you want to sell camera bags, go online and buy camera bags at your target price from your target retailer. Be sure to buy bags that get 5-star reviews. What you'll notice when importing from China is that the specifications can be very extensive for each product: expensive camera bags, for example, will use ykk zippers/buckles (the world's largest zipper manufacturer, the YKK Group), 600 denier Helik with a durable water-repellent coating, safety belt straps, waterproof bottom tarpaulin panels, etc. Cheap camera bags will use no-name Chinese zippers and cheaper fabrics for the inner and outer surface of the bags.

Learn from industry leaders, competitors, and leading vendors in your product category regarding specifications, components, product certifications (CE, RoHS, FCC, GS, etc.), as well as packaging and labeling standards . Read online reviews and see if there are any problems with existing products that you can correct to offer a better quality product. Don't forget about product compliance and labeling requirements. It's a lot of work to define the specifications, but it's a crucial first step when buying from a Chinese supplier.

Step 2. Finding the right supplier

There are two ways to reach products and suppliers.

  • The first is independent search and finding of suppliers.
  • The second is with the help of a procurement company (agent).

Imports from China directly from Chinese suppliers.

The three main platforms for sourcing products in China are Alibaba, Global Sources and Made in China. You can also try AliExpress. However, this location is best suited for those importing in smaller quantities. Although Alibaba and Made in China have thousands of suppliers for each product, many of the best suppliers in terms of price, quality, export experience and delivery times do not advertise their business on these platforms.

Trade fairs in China

A large percentage of the best suppliers acha that we found for our clients importing from China was found at industrial fairs held in mainland China. The best suppliers love trade shows because they attract serious importers who buy in bulk and understand international trade. The most popular and largest Chinese fair is certainly the Canton Fair, which is held every year in the city of Guangzhou. But if, for example, you deal with furniture, you can visit The China International Furniture Expo in September in Shanghai. In addition, we also find suppliers on Baidu (Chinese Google).

You can find a list of all trade fairs in all areas on the page Trade Fairs and Accommodation

Alibaba: How to find the best supplier to import from China?

Like all search platforms, Alibaba relies on keyword combinations to display search results. When searching for products, we suggest trying multiple variations of keywords. Take for example the heart rate monitor on the chest strap. Potential keyword combinations must be typed in English: chest strap heart rate monitor, heart rate monitor belt, chest strap fitness tracker.

Alibaba Supplier Tips:

Council no. 1 - How many years has the supplier been in business? For products that require a high level of expertise, such as heart monitors, you'll likely want a supplier with at least 3 years of experience.
Tip # 2- Understanding the product specification requirements and any certificates of conformity you need for your sales market. This will help you narrow down the list of suitable suppliers.
Tip no. 3- Make sure they are not a trading company. There are two ways to check this. First, click on the company profile tab on Alibaba. In the basic company information column, it will be stated that they are either a trading company or a manufacturer. Be aware that some trading companies will falsify this information and misrepresent it as the manufacturer. Another way to verify is to look at the factory's website and see what products they sell. Trading companies sell many goods in different product categories. Factories will specialize and sell a narrow range of products.
Tip no. 4 - Check the level of transactions
Tip no. 5- Pay attention to the factory location. For example, you don't want to buy electronics from Yivu suppliers.
Tip # 6 - Use Alibaba's image search feature to find hard-to-find products and designs.
Tip no. 7 - Use the supplier evaluation filters as well as the Alibaba (Gold supplier) filters to narrow down the list if it is too long.
Tip no. 8- Don't forget other platforms when purchasing. Madeinchina.com and Google can detect non-Alibaba factories.
Tip no. 9- Fairs are often the place where you will find what you need. Many of the suppliers will not advertise on Alibaba because they consider it a waste of time and money.

Use an agent to import from China

Using the professional services of an agent is by far the safest way to import from China. A good sourcing company can find manufacturers that you and your competitors can't. If they are based in China, they have the advantage of searching in Chinese, using local links and using an existing database of suppliers. At Gabriel Group, we find many of our best suppliers through trade shows and other connections. Likewise, we also find factories the old way. We travel to the areas where the product is made to find a manufacturer that is not listed on Alibaba and other platforms. This is possible because cities in China tend to specialize in the production of a narrow type of product. We further narrow down potential manufacturers by looking at the specific expertise required to produce the product and the raw materials used in production. There are usually one or two places that will house all the best product manufacturers for our client. Once we find that place, we'll go there and visit the vendors we've already found. Then we will ask around the city which factories produce exclusively for the domestic market and which are the best export factories for this product in that city. The quality of the same product can vary significantly.

Step 3. Ask Chinese suppliers for quotes

The correct wording of your first email to the factory and the initial request (request for quotation) is crucial. It greatly increases the response rate of factories and will simplify the process of subsequent selection and evaluation of suppliers.

Your first the email should prove that you are a professional, that you know what you are talking about and that you are a potential long-term customer of the factory.

  • Your email should be short and clear with calls to action
  • Your letter should use the correct terms for components, raw materials, and product testing and testing requirements
  • Your request should include a simple product specification
  • as an attachment

Step 4. Creating a list of potential suppliers

We usually start with a selection of 10-15 suitable suppliers. We then narrow that list down to the top 3-5 suppliers based on price, sample quality, lead time, factory size, and communication speed and method. I suggest focusing your attention on the top 3-5 suppliers, as more than that makes it difficult and expensive to collect samples and inspect factories.

Step 5. How to verify Chinese suppliers?

Before choosing which factory will produce the goods you will import from China, it is crucial to check the quality of the best suppliers. When checking whether a supplier is right for you, consider the following questions:

Question # 1 - Can the factory manufacture my product?

Do they have experience in this product area? Chinese factories generally say yes to most things. So when you ask a Chinese factory if they can manufacture a product to your specifications, you will rarely get a no! If in doubt, ask for evidence to back up all the factory

's claims
Question no. 2 - Determine if they are a trading company or a manufacturer?

Trading companies are easy to spot. If they sell a lot of goods in different product categories, they are probably a trading company.

Question no. 3 - Can you communicate effectively with the manufacturer?

If a factory is bad at communicating, you probably don't want to do business with them. Imagine when something goes wrong with an order and you wait weeks for an explanation!

Question no. 4 - Where is the factory located?

How will this affect product timelines and costs? China is a huge country. If, for example, you are buying furniture from Chongqing, you should consider the additional time and cost required to deliver the product to the nearest port. Also see to it that you buy your product from the right regions. If you are buying electronics, the factory should almost always be near Shenzhen.

Question no. 5 - How big is the factory?

Can they satisfy my quantities? Are there other bigger and bigger customers that I have to wait for if I order the goods? There's no point working with a factory that can't handle your quantities. Eventually, they will shift production to another factory (often a worse factory). Likewise, if you're buying in small quantities, don't try to buy from a huge Chinese factory because you won't be an important customer to them. Expect your order to be pushed to the back of the queue when a large order and a large customer arrive.

Question no. 6 - Does the factory have the appropriate certificates for my product?

Unless you want to pay to have the test performed on your product, always work with a factory that has the necessary test certifications. You have to be really careful here because many factories will fake these documents.

Question no. 7 - To which markets does the factory sell its products?

Factories producing products for the domestic and Middle East and African markets tend to produce lower levels of quality.

Question no. 8 - Do they exist as a legal factory? Do they have an export permit?

You should avoid suppliers who do not have an export license.

Question no. 9 - Is the factory interested in my products?

If they are not interested in your business, cross them off the list. Simple.

Question no. 10 - Are their prices competitive?

If their price is nowhere near your target price, cross them off the list unless you can negotiate a price that is acceptable to you.

Question no. 11 - What time does the factory need for mass production?

There are often large differences in production times between manufacturers. If fast delivery times are important to your business, then consider this in your product sourcing decisions.

You can read more about steps 3, 4 and 5 on the page trust network .

Step 6: Visit the top 3 suppliers

If you are able the best way to check if a supplier is suitable for importing from China is to visit their factory. By visiting the factory, you can observe the equipment, the factory capacity, the quality of the factory workers, the sample room and the internal quality control systems. It also allows you to negotiate directlye about prices with the head of the factory. For large businesses looking to import from China, this step is crucial and should not be skipped! If you cannot afford the time to travel to China, you should arrange for an independent party (an agent like us) to review your list of potential suppliers.

Step 7: Request a sample before importing from China

We suggest that before importing from China, you arrange to send samples to at least two of the best suppliers on your short list. Be careful when checking vendor samples. Most people do not pay enough attention to the process of checking samples. Pay attention to the look, feel, dimensions, function, performance and packaging of the product. We also suggest having multiple people review the samples in case you missed a detail. If your product requires packaging that will be mailed, request that the sample sent to you be shipped with the appropriate packaging that will be used in your order later. You should then perform drop tests on the product to ensure that the packaging is strong enough to be transported to your customers. Droptests are a great way for e-commerce sellers importing from China to simulate shipping packages and identify future potential problems. If the factory cannot meet your requirements, and if you are not willing to compromise on your requirements, the factory is probably not a good company to work with.

Small guidelines

It is common for samples to be modified and reworked to achieve the desired product outcome. Don't write off the factory too quickly if the first sample isn't perfect. If you are developing a new product, making a mold and sample is often expensive, and it may be impractical to request samples from two or more suppliers. Instead, focus on the best supplier and arrange to make a sample with them.

4. The best ways to import from China

When importing from China, there are two main ways.

  • Using a professional sourcing company where a whole team of experienced staff 'on the ground' can communicate and negotiate face-to-face with suppliers, monitor every stage of importation and carry out quality control checks.
  • Import directly from suppliers, usually using websites like Alibaba to talk to factories and mostly all through internet communication.

Each of these ways of importing from China has its advantages and disadvantages.

As a professional company, Gabriel Group emphasizes a clear, defined process from start to finish with experienced staff to handle any procurement request.

Import with a professional sourcing company

Supply agents in China can speak Chinese with potential suppliers, which means easier communication and negotiation.
As the Chinese sourcing agent is usually based in China, they can attend all trade shows and have access to native language sourcing websites.
There is a clearly defined work process here which together with a team of experienced staff ensures quality supply to each importer.
The team follows a clearly defined procedure, so that all steps are properly done in the correct order, reducing the importer's risk.
From factory audit to sample production, a professional sourcing company has a "Quality Team" to evaluate factories and products.
As part of the import process, staff must obtain a minimum number of bids from potential suppliers and provide a procurement report to demonstrate why the shortlisted suppliers were selected.
These suppliers should be found from a variety of sources, including an existing database of trusted suppliers.
Due to the volume of manufacturers we have worked with, many revisions have already been done, so there may be no additional costs.
The quality team follows the prescribed sample reporting procedure by checking the product itself, product assembly, user manual and packaging.
In addition to the in-house quality team, there should be a full-time professional quality control team available to perform quality controls at all stages of production.
So only acceptable quality levels of goods are allowed to be supplied to the importer.
Agents, if they have one, can export under their own license (we have licenses for ready-made all kinds of products), which means they can negotiate and buy in Chinese local currency (RMB), so manufacturers don't have to consider additional costs due to exchange rate fluctuations, which often lead to price disturbances.

Importing from China without the help of an agent

Importing from China without an agent, if done right, can be a profitable way to do business.
Ordering products on Alibaba, where this platform provides insightto a number of suppliers in one place, it can be fast and efficient.
Conversations are usually quick and you can get answers from companies on the same day.
However, Alibaba is huge.
There are thousands and thousands of suppliers you can find all selling similar (if not the same) products at different prices, so how do you know which ones are the best?
Sometimes importers get lucky and find a great supplier for their product.
However, the following can also happen. For example, you are looking to import sportswear and you will find a supplier who can produce 5000 tracksuits.
When the order arrives, everything seems fine and you place another order from the same seller.
This time, since things went well and easily, you want to double the order.
However, when 10,000 tracksuits arrive, you find that they look completely different than the first time, the seams are separating from the seams and the color of the garment does not match the previous order.
You then have 10,000 trainers that cannot be sold.

Why is this happening? When selecting suppliers on Alibaba, they can be a factory, a trading company, or both.
Often these companies are trading companies (of which there are many more on Alibaba than actual manufacturers), so they will outsource production to other suppliers; hence the difference in products each time an order is placed.


As an importer from China, you may not have experience with China and encounter cultural and language barriers.
Failure to talk in detail with Chinese manufacturers and discuss any challenges in detail can put the importer at risk of receiving low quality goods.

5. Price and contract negotiation

Chinese factories are VERY tricky in negotiations. If you don't prepare well, expect to pay extra for your product. To achieve the best results when negotiating with Chinese suppliers, follow these 8 steps:

Step 1 Negotiate only with shortlisted suppliers. It is a waste of time to negotiate with suppliers who cannot meet your quality requirements.

Step 2 Do your research. You need to know product and material specifications; you need to know the factory and where they are based in China; you need this data from several factories so you can compare them. You also need to understand the manufacturing methods for your product. Without this information, you cannot negotiate effectively and you will lose credibility.

Step 3 Form a clear negotiation strategy based on desired outcomes for price, time constraints and level of quality. For example, is price the most important thing to you? Or is it crucial that your factory uses materials and components that comply with the standard? Are you ready to pay a slightly higher product price to a factory that has faster production times?

Step 4 Get to know your factory. Is it a relatively new factory that is willing to offer better prices and delivery times because you will be one of their first customers? Or, is it an established supplier that has a high MOQ (minimum order requirement), a strong base of existing customers and little interest in your business? Need help? Ask us!

Step 5 Negotiate with the right person in the factory. For small and medium-sized factories, it is best to negotiate with the boss because he/she is the main decision maker and has the final say on whether prices can be reduced below standard values.

Step 6 Introduce your company and your business intentions. Gone are the days when every factory in China accepted business with anyone regardless of the size of the purchase order. By presenting a clear business plan, the factory will understand what you are trying to achieve and how they can help.

Step 7 Don't forget the payment terms when negotiating with the supplier. The standard payment terms are 30% deposit, and the balance 70% is paid when the goods are mass-produced and have successfully passed inspection before shipment.

Step 8 Stick with your gut. If you are visiting a supplier to negotiate prices, don't be fooled by expensive lunches and their potential emotional outbursts.

6. Costs and profitability

Your fixed prices, or costs, are the total costs that include manufacturing your product and importing the product from China to your warehouse in your sales market. Those online sellers who import from China may need to add courier charges to deliver the products to customers.

Why is it important to calculate your costs when importing from China?

Working out your cost allows you to determine whether the profit margins from importing your product are sufficient and sustainable. Threeinvoices also act as a basis for price negotiations with suppliers. If your costs allow a profit margin of, say, 5% compared to the lowest selling price in your market, you've probably done a poor job of sourcing and negotiating the price.

How to calculate costs in the country?

Calculating your costs accurately when importing from China can be complex. But as mentioned above, it's a step you can't skip!

It is best to base costs on anticipated order quantities, not on the factory's MOQ (minimum order requirement). If you base your decision on whether the product is viable at the MOQ trial order charge, you may be rejecting a product idea that would work for a larger order.

Note that freight and quality control costs per unit are significantly lower when spread over a larger quantity of products. You also have more leverage in negotiating prices when you buy in bulk.

To calculate your in-country costs, you will need the following information:

  • An accurate quotation from your Chinese supplier that includes: incoterm, port of loading, product details and pricing, total package size, total order cubic capacity, price currency and shipment type (full container FCL or less than full container LCL).
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  • The current quotation from your freight forwarder and customs clearance agent which includes: freight charges from port of loading to port of discharge, local taxes in the country of import, local customs rates, freight charges and VAT.
  • Your actual costs due to the exchange rate difference (which differs from the trading price)

For simplicity, as we go through the destination price formula and examples, let's assume you are buying at FOB parity from a supplier. FOB is the standard adverse offer used by most importers from China. To learn more about FOB and incoterms, click here .

A simple formula to calculate the cost would be: Purchase Price + Ocean Shipping Costs + Local Shipping Taxes + Customs Duty + Taxes

Purchase price

It would be your factory product cost + quality control inspection cost + product conformity lab test cost (if required)

Transportation costs

Shipping costs within China if the price is at EXW parity + Sea / Air freight costs. Please note that these rates will vary significantly depending on the date of your shipment as well as the shipping method (ship/air)

Local fees

Port charges, documentation, customs clearance, quarantine, sea transit insurance, domestic truck transport, etc. Your freight forwarders can give you estimates of these costs.

Duty

If you provide your HS code to a freight forwarder or customs broker, they will provide you with the duty applicable to the importation of your product. You can get the HS code for your product from your supplier or through government websites.

The Harmonized System (HS) was developed by the World Customs Organization as a multipurpose international product classification that describes all products traded on the international market. In order for goods to successfully cross international borders, the correct HS code (also known as HTS code) must be provided. This code determines the appropriate duty and tax rate applicable to the item.

Tax

You need to know the relevant local taxes in your country and how they apply to imported goods. You should also factor in postage charges if you are sending goods by express mail and storage fees as well as allow for a 1-3% write-off for defective products.

7. Actions before placing an order for imports from China

Before ordering goods from China, you should go through some simple quality assurance steps to minimize the risks of something going wrong.

Never decide to start mass production unless you have gone through sample development and have a perfect sample from your chosen factory. Factories will often say they will work out the final details/improvements before mass production. They'll say something like "don't worry dear customer, we know what changes we need to make and we'll make sure it's improved before we go into production"

DO NOT agree to this.

Instead, you should have a sample in your hands that exactly matches the requirements listed in the specifications you provided to the supplier.

This perfect pattern is known as the "golden pattern".

The best practice is to contract the production of two gold samples from your Chinese supplier. One to keep with you for future comparison. And the other to be signed with your name and returned to the factory so that they have an internal reference for quality.

If applicable, define tolerance limits for your product

When importing products from China, not all products require absolute precision, but many products must be produced within a certain dimensional tolerance range. You should spend time thinking about whether small differences in dimensions will affect the usability of your product.

Pillows, for example, do not require absolute precision. The customer will not complain about the pillow if the dimensions are 0.5 cm larger or smaller than the intended dimension. They probably won't even notice.

Assuming your product requires dimensional tolerance limits, make sure to get feedback from the supplier as to whether they can meet these requirements. If the Chinese supplier can accommodate your request, add the approved tolerances to your specification and require it to be included in the product contract.

By defining your tolerances, you set the appropriate quality standards with the factory. You have also done much of the work required to form a quality control checklist.

Define the terms of cooperation with your factory

As I mentioned earlier, factories in China tend to say "YES", to everything even things they have no intention of doing.

To avoid this, it is important to form your requirements into a single term list and confirm that list with (ideally) the manager at your factory. Note that this agreement will not hold up in a Chinese court, but it is important that your Chinese manufacturer understands your expectations.

What to include:

  • Price per unit
  • Order size
  • Terms of payment. The standard in China is a 30% deposit, with payment tied to passing/failing quality control inspections
  • Product specifications and labeling requirements
  • Packaging Requirements
  • Cost and Tool/Die Ownership (if applicable)
  • Tolerance limits (if applicable)
  • Mass production times
  • Penalty clauses for delayed delivery time
  • Quality criteria, including defect classification ('critical', 'major' and 'minor'), AQL (acceptable quality level) level and testing requirements. Read more about setting quality control criteria in the text about our services.
  • No unauthorized outsourcing
  • Product warranty provisions (if applicable)
  • Your rights to random factory and production inspections
  • Exclusivity agreement with the factory for your product (this is only possible if you buy in very large quantities or it is your own invention-intellectual property)

All of these terms can and should be included in your purchase order with the Chinese factory.

Define the contract in the PO-purchase order

The next step is the formalization of the agreement with the manufacturer.

For most importers, the least you will need is a purchase order that you have drawn up yourself and that includes the terms agreed upon in the purchase order. It should contain the following:

  • Full contact details, including company name and logo,
  • Complete information about the supplier,
  • Unique order number
  • Date of order,
  • List of products according to ordered quantity, unit price and total price.

Once you have created the purchase order, review it and send it to the supplier.

As previously mentioned, it is crucial that the Chinese supplier understands all the requirements listed in the purchase order and terms sheet. You should receive confirmation of this before proceeding. After you place your order, you will receive a pro forma invoice (PI) from your supplier. You must confirm that all information on the PI matches your PO. For these documents to be valid, all pages (including attachments) must be signed by the legal representatives of both parties. The factory should also stamp each page of the PO and PI (including attachments) with its official red seal.

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Contract and do you need it?

It is a myth that contracts have no value in China. The legal system in China has come a long way in the last 3 decades and is more developed than most imagine. Unfortunately, if you draft the contract yourself or a lawyer who does not specialize in Chinese business law - ie. Your lawyer in your country - will render that contract useless in a Chinese court.

8. Supplier contracts for imports from China

In this section, we would like to highlight several aspects that must not be omitted in the supplier contract when importing from China.

The contract between the importer and the Chinese supplier should cover product specifications, payment terms, quality standards, delivery times, warranty agreements, and penalties for non-compliance.

When buying from a supplier, in this case from a direct Chinese manufacturer, conversations can take a long time. More products are likely to be discussed and detailed specifications must be shared and confirmed.

When the specifications are not detailed enough or there is room for different interpretations, you may end up with a different product than you expected. Similar products may also have slightly different specifications.

When it comes to quality control, you want to have everything in writing and leave no room for interpretation. This information will often be discussed with one of your representatives, either an agent or a factory person. Without all of this information clear, there is a high risk that one of the producers will not properly translate the details to the production manager. Then your product would not begin to be produced according to your needs.

The contract doesn't have to be 100 pages long, but it should cover all the key details with your desired specifications. Having this on paper allows you to always refer back to it and highlight things that don't match the contract.

The manufacturer could hardly deny the differences between the actual product and what was specified in the product contract.

Also, the manufacturer wants to have repeat orders from its customer. Therefore, the supplier would like to receive precise instructions and information about the customer's needs in order to prevent trouble after production.

However, if certain information is missing from the contract, and the end products are not what the importer intended to buy, the supplier is not responsible for product defects. The supplier does not want to be stuck with the products and will shift the responsibility to the importer.

How to avoid snags in the contract when importing from China?

If you use a China based import supply company such as ours, then the contract for you can be made and represented by a domestic company (such as ours) and then bound by a contract with the supplier. Your agent in China is in a much better position to take legal action against the supplier in the event of any deviation from the terms of the contract.

The importer reduces his risks by having the support of the legal system so that he can apply pressure to resolve any issues. Being able to hold face-to-face meetings and inspections at any time, the manufacturer will feel constant pressure and take your business more seriously. The supplier is not able to hide from his responsibilities.

What is the point of the contract?

In addition to legal protection, contracts have a couple of added values.

Basically and most importantly, they act as a strong communication tool to prevent misunderstandings between you (the buyer) and the Chinese supplier.

These "misunderstandings" usually take the form of incorrect specifications, packaging design, etc., which lead to the delivery of quality products. Another added value is that it stimulates the factory to take your requirements seriously. Whether it's related to your product's compliance requirements, the level of quality control you'll use, penalty clauses for production delays, and when you will/won't pay per order.

What type of contract do you need?

For most startup importers, a contract is probably unnecessary. Instead of hiring a specialized lawyer, it is best to invest those funds in purchasing products or marketing. There are two exceptions when a contract is necessary.

  1. When you buy in significant amounts (when the value of the purchase is really high)
  2. When it comes to intellectual property that needs to be protected

If you find yourself in any of the above points, you should absolutely work with a lawyer specializing in Chinese business law to draft an appropriate contract.

9. Quality control in China

It is important that importers importing from China understand that production issues need to be addressed before products are shipped. You should also know that product quality management is an ongoing process, not a one-time practice, because even large factories will eventually try to save on production costs. Regular independent auditing and quality control also encourage your factory to maintain high standards. Simply put, if a Chinese supplier knows you're keeping an eye on them, they're less likely to try to "scam" you to make a quick buck. Quality control is really there to protect the importer from sending unqualified goods. A pre-shipment inspection is the most common inspection an importer will perform when importing from China. If problems are found, this gives the importer the ability to 'oppose' payment until the problems are resolved. If you hire us to check your goods, you will receive a report from us with a "satisfactory" or "failed" result, and the goods will not be shipped until you confirm and approve the report. Maybe they willanother review may be required if your supplier has failed to supply you with products that meet the standards in the quality control report.

What level of quality control do you need?

The level of quality control required to import from China will vary depending on your business, your product and your market requirements. For most businesses, however, all you need is a pre-shipment inspection.

Types of quality control

There are different types of quality control that we will discuss. In general, all forms of quality control should reduce risk as an importer and ensure that you are importing the right product with the right specifications.

Types of inspections we perform:

  • Pre-production inspection
  • Inspection during production
  • Inspection before shipment
  • Container loading inspection
  • Testing and examination of products, certificates
  • Laboratory tests

Read more about the types of control and inspection on the page inspection-and-control-of-quality -product

Tips for quality control when importing from China

Quality control is different from quality assurance

Quality assurance and quality control are very different. Quality control will only identify defects, deviations and misspecifications of manufactured goods. Basic design issues will not be made or corrected and incorrect specifications agreed upon in the purchase order will not be corrected.

Combine quality control and quality assurance

Quality assurance goes into effect immediately before the purchase order is issued. The quality assurance report will present all the details of the product sample that will go into production, after the report and purchase order have been confirmed. It is essential that every detail is correct before going into mass production. Quality assurance and quality control have different functions and should be used together in the purchasing process. It's like having checkpoints in pre-production to confirm that everything is set up correctly, followed by a post-production control to know everything was produced correctly.

Quality control starts with finding the right manufacturer

Quality control really starts from the beginning of finding a supplier. The reason is very simple, if you find the cheapest factory, the manufacturer will produce the lowest quality goods. A manufacturer will use cheaper, lower quality materials to meet margins. Also, the manufacturer may not invest in the factory (machinery), so the quality can never be high and consistent. In reality, no amount of quality control can improve a manufacturer's production standards.

Manufacturer may not even be able to improve quality after production when you reject a shipment that has not passed quality control inspection.

To sum it all up, you can get quality the right way: sourcing from the right manufacturer + quality assurance reports + quality control inspection.

It would be a mistake to assume that you can choose any manufacturer and apply only post-production quality control and believe that you will have quality goods!

This is a common misconception among people starting to import from China. Quality control itself does not improve quality, but can only identify misspecifications, deviations, and defects.

10. Transport of goods

Logistics play a significant role when importing from China. Shipment of goods by shipping container is an ideal and economical way of importing products. But if the quantities are small and the goods are small in size and light in weight, it might be unsuitable for shipping.

You can import a 'full container' known as FCL or a 'less than full container' known as LCL of goods.

If you have a small order or even just a sample, air or LCL shipments may be the only option.

LCL(Less than Container Load)

Your goods will travel from the Chinese factory to the port and then be loaded into a "common (collective) container". When the goods arrive in your country, they will need to be unpacked at the port in order for the product shipment to be delivered to you. In reality, this means that your products will be handled by an awful lot of people who don't always need to handle your goods carefully. As a result, LCL shipments are notorious for often being damaged in transit. When using an LCL shipment, it is very important to ensure that your supplier has packed the goods extremely well. We recommend importers importing from China to invest a little more in packaging when shipping goods via LCL.

FCL (Full Container Loads)

When you order a full container of goods from the manufacturer, the container will be delivered to the factory, and then the factory will loadyour goods into the container. After your goods are loaded into the container and the door is closed, the container is sealed. The seal will not be touched until the container reaches its destination. Then the importer is the only party allowed to unseal the container if the shipment has been cleared by customs. This means that between the manufacturer and the importer, no one else handled the goods! If the container is properly filled and carefully stacked, the chance of receiving damaged products will be very small. We offer and recommend container loading inspections to all importers.

This ensures the following:

  • That the correct quantity has been loaded and recorded
  • Workers will handle the loading of containers with the utmost care.
  • That the cartons are stacked in the right way, taking care that while loading the cargo into the upper part of the container, they do not step on other units of the load in order not to potentially damage the lower boxes by stepping on them at the bottom of the container.

Which container size is preferable to import from China?

If you are able it is always best to use standard size 20ft, 40ft or 40ft HK containers. The bigger the container, the lower the shipping cost "per cubic meter", which means your final price for your goods imported from China will be the cheapest if you use a 40ft container. This is an important aspect to consider as this greatly affects your margins or selling prices. Globally, most ports would charge similar handling fees for a 40ft container as for a 20ft container.

When comparing a 40ft container and a 20ft container, the volume of a 40ft container is more than double.

You also have transportation costs; this cost is similar for a 40ft HK container as a 40ft container. This again means greater value and overall lower cost per cubic meter by importing in a 40ft container.

Most importers use a combination of a sourcing agent and a shipping company to process your shipment. We offer you both at the same time and at the best prices for the Balkan region.

If you hire us, we will take care of everything related to your goods in China. In cooperation with the publishing house, we will deliver all relevant documentation for import; bill of lading, commercial invoice, packing list, etc.

Once the container arrives at your local port or local shipping point, our forwarder will then confirm and arrange customs clearance and coordinate delivery with the importer.

 A final note to new importers is that while importing, the import-export process may seem complex and challenging, however, this is a fairly easy part of the process.

Read more about transport, Incoterms, container sizes at purchase-from-china/transport-of-goods< /a>

11. Customs duty when importing from China

After deciding which products they want to import from China and finding suitable manufacturers, importers often wonder about customs clearance. What are the import duties? How much import duty should I pay upon receipt of the goods?

  • Customs clearance is an extremely important part of the process to achieve the correct determination of the final price of the product. If you do not have the correct documentation, you risk that the goods will be stopped and checked at customs, for which you will be charged extra, and in the worst case, if you do not have the correct documentation, the customs will seize/take the goods.
  • Even if you are a new importer, you should know that it is your sole responsibility to ensure that you meet the customs requirements in your country.
  • Who will perform customs clearance? - Generally, either you or the exporter will appoint the forwarding company. By default, the shipping company will clear customs when your goods arrive at your local destination or customs.
  • We would advise if you are a new importer, find out who the forwarding company is in your area and check with them if there are any legal requirements before the goods are shipped.
  • Paperwork - generally, once your shipment arrives in the country, you will need to obtain the following documentation from your Chinese exporter (agent / factory)
a) Bill of Lading
b) Packing List
c) Invoice (Commercial invoice)

All companies and individuals importing from China must present these documents to your shipping company/broker for customs clearance. With the help of these documents, customs clearance is carried out. Here is a short version of what each of these documents is and what is important about it from a customs point of view.

Bill of Lading

Also known as B/L or BOL - traditionally this is a document provided by the shipping company. The confirmation refers to the fact that this shipment is on board.

This document was signed by the captain of the ship as band confirmed that your goods are on board!

The bill of lading acts as a "title" of who is the legal owner of the goods. The bill of lading has 'sender' and 'recipient'.

For example, let's say your company is called Petar Perić DOO and you buy goods from Aoluola International Trade Limited in China, the bill of lading would say the following:

  • From: Aoluola International Trade Limited, [Address]
  • Recipient: Petar Perić DOO, [Address]

In the bill of lading, data on the goods imported from China, such as weight, volume in cubic meters, as well as the export and import ports, are also specified.

Finally, a bill of lading in simple terms has two "statuses", the bill of lading is either "released/delivered" or "unreleased/not delivered"

After the shipper has collected all the money from the consignee, at that point they will contact the shipping line and release/release the bill of lading. If the bill of lading is not submitted, the goods cannot be cleared. The reason for this is that the consignee can pay a deposit for the goods, but does not have to pay the rest of the goods until the ship confirms that they are on board!

Packing List

The waybill basically tells customs what you have imported: what products, what quantities, how many boxes. Customs has the right to compare this information with the data on the bill of lading and invoice. If there are any discrepancies between any of these documents, it will show that something is wrong!

Invoice

The commercial invoice is very important from a customs and tax perspective. This is because you are importing goods into your country, and they will be subject to tax (VAT) as well as customs duties.

As such, your imported goods will be taxed based on the invoice value you declare/present to the customs broker, who in turn uses this value to declare the value to customs.

For example,

your import goods are valued at USD 10,000 (FOB value), you paid USD 1000 for transportation, the VAT tax is 20% and the customs duty on your product is 5%, usually the calculation will look like this: 

  • -Value of goods $10,000 (FOB value)
  • - Shipping value USD 1,000
  • - CIF Duty Value ($10,000 + $1000) x 0.05 = $550
  • - VAT tax value (CIF + duty) x 20% = (11,000 USD + 550 USD) = in this case 11,550 USD x 20% = 2,310 USD

Total Costs = FOB Value of Goods + Shipping Costs + Customs Duty + VAT (in this case $10,000 + $1,000 + $550 + $2,310 = $13,860)

12. How can Gabriel Group help you import from China?

Gabriel Group is a company based in China. It was founded in 2011 by Josip Glušac, who has been living and working in China since 2009. His company helps foreign companies import from China. Its solution allows importers to outsource the entire import process to associates in China managed by a team of professionals. If you need help importing from China contact us!

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