Why You Need an Export Agent in China to Manufacture Quality Products?

2022-06-07

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China is the world’s largest manufacturer of consumer products. Many businesses partner with a reliable export agent in China to buy low-priced supplies and import them to their country. If you are a new entrepreneur and planning to import merchandise from China, then there are many things you will need to consider. 

The importing process is confusing, complex, and costly. The expected profit margins can be consumed by the fluctuating shipping costs, long transit times, unexpected delays, and regulatory fees. However, using the following tips, you can make the importing process from China smooth and efficient.

Identify import rights

Buying goods from foreign resources makes you an importer. Courier services handle the delivery of goods bought from foreign sources only if the package is small, value is not big, and is for personal use. If the imported goods are for commercial use, then you will have to recognize your import rights. 

For example, business owners from the US must have an IRS EIN, while those from Europe need to be registered as economic operators and have an EORI number. In Australia, there is no need for businesses to have an import license. Import regulations generally apply to goods imported for resale or business purposes. 

Customs will make the final decision of what is eligible for personal use because there is some gray area, for example, handbags can have a hard time getting approval as personal use items.

Determine the merchandise to import

Choice of the right product for resale is essential. The chosen product will define your business. They represent your brand. The chosen product will impact your marketing and profit margins. Even the legal and logistic limitations come into play. 

Do some extensive research on the product you plan to import. Obtain descriptive information, product composition details, and if possible product samples. It is crucial to determine the tariff classification number or the HS code to determine the applicable duty rate.

Recommendations:

• Choose a product you are passionate to work with.

• Choose something unique you can resell at a high margin.

• Choose a product that can be shipped in bulk to lessen the cost per unit shipping cost.

Never go after cheap or hot products. Many get stuck on perfect products and just linger around. Each product will have challenges but find the product that defines YOU and flourish from there. 

Is the chosen product allowable in your country?

Each country has prohibited the import of specific products. Ensure that the product you chose to import from China is legal in your country. The importer's responsibility is to ensure that the product complies with country rules and regulations. 

Dairy products, insects, livestock, poultry products, seeds, plant products, tobacco, flammable items, lighters, alcohol, etc. are items to be avoided. Importing unsafe products that fail in fulfilling the health code requirements can end you up paying huge penalties. The goods will be confiscated and destroyed. 

Calculate landed cost

For every imported item identify the 10-digit tariff taxonomy. These numbers along with the Certificate of Origin will help to determine the import duty rate to be paid. After this calculate the landed cost - Product price from manufacturer + shipping charges + custom clearance, tax & duty + land transport to your warehouse.

If the landed cost is higher than your anticipation, then it can dent your profit margins. If you charge high customers will not buy and if you go low this will be bad for your profits. Determining the landed cost gives a chance to find ways of reducing the cost. If it is in sync with what you expected, then move forward. It is not the exact cost, which you will know after the shipment arrives. Unexpected fees may come up and it can change your total landed cost. It is an estimation but helpful!

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Find an export agent in China

The export agent is also called a buying agent. They are a 3rd party that helps to find an appropriate manufacturer. They are experienced with the local culture and business practices. The internet search will throw up a list of the export agent in China. However, you will need to consider certain aspects.

• Check their location and well-staffed local office. The sourcing agent must have a proven track record.

• Check their business license. 

• Choose one with several years of exporting from China. It means they will have a vast network of credible contacts essential for your business.

• Check out their references to find the way they work.

• Check language proficiency because you will need to directly talk to them many times. 

• Check the necessary documentation related to importing and shipping. The documents are the bill of lading, certificate of origin, packing list, and commercial invoice. The language on these documents gives you how well-versed the sourcing agent is in the entire importing process.

• Imported product quality is also essential, so ask them what steps they have to handle quality issues. Discuss clearly that sub-standard products will never be accepted.

• Are they knowledgeable about the product you are planning to import? Have they imported the product you are interested in?

• Ensure that the sourcing agent has a good work ethic because he is the one who will find a supplier. Only say yes to a supplier that fulfills your certification and quality norms. 

• Ask for a detailed written quotation.

• Confirm the payment terms.

A credible export agent in China will save your time in finding a reliable supplier. He will be a communication medium between you and the manufacturer, thus eliminating the concerns about the language barrier that can cause confusion and misunderstanding. Verify manufacturer's credentials and help in negotiations. 

Negotiate…it is your right!

Understand your financial status and even your supplier’s priorities. It will help to negotiate a good deal. E.g. If your finances are good, then you can offer prompt payment to tap a good price. If you are handling the delivery & custom clearance it can help out in negotiations. Therefore, before finalizing the contract, handle every aspect involved. 

Whatever is negotiated, has it been mentioned in the contract clearly? Using Incoterms will help to lessen the delivery issues or misunderstanding risks. The contract must mention payment methods. Take help from a financial advisor with international trade experience. 

Some things to clear with suppliers

Never look for the cheapest rates because it means quality compromise. The lowest price invites high risks, which can be a threat to your reputation. Find a reliable supplier with the help of your export agent in China and nurture them. 

Discuss your product specifications clearly with the supplier. ‘Not clear’ means the factory will make a decision based on cost-savings. Double-check the raw materials and manufacturing process, so you are confident about the goods you are purchasing. The supplier must confirm every specification of the product including packaging. 

After choosing a product manufacturer, request a Proforma Invoice [P/I] or Quote Sheet for prospective purchases. You will need to include the harmonized system number, descriptions, and value per product. The P/I have to display the dimension and weight of the package as well as purchase terms. 

When the factory starts manufacturing the products in China, you need to hire a trustworthy QC company to conduct effective in-process quality inspection.

Make sure that the supplier agrees to ship from the nearest port under FOB terms. This will significantly reduce shipping costs. Besides, you gain control over shipment. For example, if the closest port to the manufacturer is Shenzhen then request the FOB Shenzhen terms. 

Bear in mind that water transportation is quite slow and needs long-term planning in comparison to inland product transportation. Moreover, the time needed to export products also includes inland travel, documentation, customs clearance, and terminal/port handling for goods containers. It can last up to 7 days. Therefore, place an order at least three months before you need its delivery. 

Never doubt your manufacturer in China because international trade is built on mutual trust. If you want respect, then learn to give respect. Or no one will help you sincerely when situations pop up suddenly.  

Cargo transport arrangement

Many costs are associated with shipping merchandise like packaging, container fees, packaging, port handling, and brokerage fees. After you are satisfied with the freight quotation from the shipping agent then send your manufacturer’s contact details. They will take over from there. They will stay in touch with the manufacturer and you to ensure that the shipping transportation is safe and on time. 

Always consider delays to happen because of manufacturing glitches, the ships may have been delayed, or goods may be held by customs. Therefore, be ready and plan accordingly. Never expect that your container will leave the port the moment manufacturing is completed. It will take a couple of days for the cargo to get transported from the factory to the shipping terminal. The Custom Declaration process requires your container to stay for a couple of days at the port. Sometimes missing route frequency can also cause delays.

Choose a reliable freight forwarder because logistics is a valuable aspect to consider. The shipping expenses include the direct & indirect costs of product transportation from point of origin to destination market. A good logistic provider guarantees smooth operations and manageable costs. If the choice of logistic provider is wrong, then it increases the shipping costs. Remember, the business model may keep losing money and eventually shut down with unmanaged logistics. 

Remember GRI

To keep your international shipping cost low, especially when importing goods from China consider GRI [General Rate Increase]. The shippers apply it at the start of every month and reduce it slowly by the end of the month to rise at the beginning of the next month. In case you overlooked this and planned the shipping date and confirmed GRI then there is a possibility that there will be no room for your goods box or container on the vessel that leaves on the specified date or you will need to pay extra freight fees already included in the GRI? Thus you can end up paying double. GRI fluctuations are inevitable, so you need to plan better. 

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Cargo tracking and preparation for delivery

Importing goods takes time, especially if the transportation mode is shipping. For example, from China, it takes 2 weeks on average for goods to reach the US West coast and 30 days to reach the US East Coast. 

The consignee is notified some days before the container arrives at the port to the destination agent mentioned in the Bill of Lading. As soon as the shipment arrives at the US port the main importer/purchaser or designated custom broker or consignee will need to file the entry documents with the port director at the entry port.

Entry documents list –

• B/L including the items that were imported from China.

• Official invoice including the Country of Origin, tariff classification, and purchase price.

• Packing list with imported goods details.

• Freight agent’s arrival notice.

The goods clearance at the border is speedy if the –

• Goods invoice is well-organized.

• Displays the precise quantity of every item in the case, box, bale, or another packaging.

• Each package has marks and numbers that match with the ones on your invoice besides the breakdown of the goods. 

The importer of records is responsible for goods inspection and release. In case there is an issue, you will need to resolve it. Get familiar with the customs clearance process in your country. 

Receive your shipment

When the export agent from China sends the goods then on arrival in your country make arrangements for custom clearance. Ensure to hire a reliable customs broker. If things go smoothly you are allowed to pick up the shipment.

If you choose a door-to-door service, then wait for the shipment to get delivered at the designated address. After receiving the imported products ensure that the packaging, labeling, quality, and labels are as you had specified then inform the manufacturer. 

Importing commercial goods from China accompanies cultural barriers. However, partnering with a reliable export agent in China can help. The above tips are helpful but implementing them will take plenty of work. Starting out will seem overwhelming but you will not get stuck in tiny details. With a good sourcing agent from China as your representative, you can soon connect with a large network of relevant suppliers. The sourcing agents work with many suppliers and can identify the right one for your project. As a new entrepreneur, you will make mistakes but they make you strong and better as you learn a lot from them!

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