Since China's opening to world commerce in the 1980s and subsequent rise to economic powerhouse status in the 2000s, exporting from China has been a problem for many businesses and governments.
The Chinese economy has risen dramatically in the previous 30 years, making it one of the world's most powerful financial and economic forces. Many firms are interested in directly buy from China factories due to the wide popularity of Chinese goods worldwide. However, the most difficult challenge for many is the international freight cost and how to export from China correctly. This may be a challenging endeavour for a beginner or even a professional.
No one wants to be snared by unwarranted delays, exorbitant delivery fees, or untrustworthy vendors, as many others have been.
1. Use a freight forwarder in your area
Finding a Chinese forwarder is a challenge in and of itself. Some international freight forwarders are excellent, just as in any other industry. To acquire the best price, you will need to speak with many freight forwarders and arrange for modest test shipments. All of this must be done before choosing which provider to utilize for most of your deliveries.
Having a local forwarder who understands the area gives you many options. Your importing procedure will become simpler if you choose a forwarder you are comfortable working with.
Operating expenses might be cheaper in Asia. As a result, Chinese international freight forwarders can maintain their lean and agile operations. This allows consumers to choose the best pricing, carrier, and route for their trip.
Most of the paperwork involved in exporting products is completed in the nation of origin. The freight forwarder may do it directly rather than relying on a third-party agent to make changes or follow up with a supplier.
Since Chinese labour and real estate expenses are still lower than in Europe and the USA, Chinese forwarders can provide customized services, including consolidation, re-labelling, and repackaging at a lower cost than what would cost at the final destination. For example, when you try to import from China to the UK, your local forwarder may quote you $50.00/kg, while a Chinese forwarder can offer a much better price around $25.00/kg.
When it comes to customer service, smaller, more localized forwarders are more willing to go the additional mile for fresh or smaller clients since they are motivated by a desire for more business. Your company is highly regarded, and the services you get are tailored to meet your specific needs.
When you engage with a forwarder over an extended period, they get to know your working style and your specific needs. This leads to more personalized service for returning consumers as the connection grows. Extended payment periods may often be negotiated after a few shipments.
Many freight forwarders in China operate primarily with manufacturers and deliver for their clients. They highly value the western companies who use their services. As a result, they can better empathize with and promptly identify solutions for their direct clientele when problems develop.
When you have products to import from China, it is always cheaper to use a forwarder situated in China. To obtain the best price for a client's unique logistical requirements, local forwarders have the advantage of being on the ground. They can optimize your China supply chain and save you money and time by thoroughly understanding the local network.
2. Reduce the volume by repackaging
In most cases, freight prices are dependent on the weight or volume of the package. You need to choose a suitable carton to pack your merchandise. If you don't, you'll pay more than you need to.
There is a price to pay for overusing packing materials. It will also add to your shipping costs because of the additional volume.
LCL shipment (Less than Container Load) and FCL shipment (Full Container Load) are options worth considering if your deliveries tend to be larger. You could save a lot of money on shipping by using a Chinese provider in this area.
If you wish to transport a whole container's worth of goods in a single shipment, the method is FCL, and the entire container is yours to keep. Shipment by weight and volume or full container load is more expensive than shipping via FCL.
When comes to buy bulk items from China, shipping via FCL is a good option. The unit cost will be much reduced as a result of this. The cost of FCL shipping is, on average, 30% to 40% less than that of LCL shipping. As long as you move a substantial amount of items at once, this approach is viable.
There's a possibility that you don't generally order enough for FCL. However, this alternative is one worth looking into. The extra inventory might be kept in a storage facility at the final destination. Each company has its own unique set of criteria. Consider cash flow, storage expenses, and stock turnover before deciding on this choice.
Consolidating the things that you transport might be another option to consider. You may mix lesser amounts of various items purchased from several Chinese vendors to generate a larger quantity before delivery. Instead of sending each purchase individually, you may use this method. This will lead to a lower delivery cost in the long run. This is possible via the Chinese warehouses of your suppliers.
3. Plan for shipment ahead of time
Planning is essential in business if you want to achieve things correctly the first time. Shipping and importing from China are also affected by this. The scope of the company, the numbers, weights, and volumes involved, and the regularity of shipments must all be clearly defined in a shipping strategy to be successful.
With a thorough strategy, freight forwarders will be able to provide you with the best potential deal. When sending your items, keep in mind the final destination, shipment lead times, probable routes, shipping type, order size, and the contract terms before making final decisions on the packaging. Incoterms are standardized shipping instructions that are accepted over the world.
The relationship between the shipper (the consignor) and the purchaser is defined (consignee). Shipping may be booked even before things are entirely created if sufficient planning is done. Your company's bottom line will gain from a well-thought-out logistics strategy in the long run. Create a long-term shipping strategy by integrating it into all aspects of your organization.
4. Negotiate payment conditions to improve cash flow
"Revenue is vanity, profitability is rationality, but working capital is reality," states a business hypothesis. Even if your company generates a lot of revenue and produces a lot of money, cash flow issues might cause complications. You have to record how much money you've spent and when you have received and paid cash as a company.
The quantity of money you have on hand is often a problem in this situation. In addition, inventory may be a significant drain on a company's available funds. When your firm begins to develop, you'll want to scale it by making larger orders to meet the increasing demand for your products. Creating a long-term connection with your supplier may increase your cash flow by negotiating more favourable payment arrangements. This is a great approach to making the most of your company's available funds.
Reduce the risk of quality issue
Constant issues with poor quality may be infuriating and costly. Finding difficulties with quality after your items have been delivered is the worst-case scenario.
The shipping costs to China are typically prohibitive. You may be forced to have the entire cargo destroyed or trashed in such cases. This is the biggest nightmare for any business! It's very tough and costly to correct any issues in this situation.
So, it is very important for you and your supplier enjoy a cordial working relationship. And if you're lucky, they'll replace the cargo at no cost to you. There is a lot of time and effort required to produce and transport fresh products. As a result, you may run out of goods at your shop, resulting in decreased sales.
To avoid the situation mentioned above, it is important to use adequate quality control and inspection early on in the manufacturing process. At the very least, companies selling manufactured-and-shipped goods should take the following methods:
It's simple to keep an eye on the quality of the products throughout the process of manufacturing, even if you're not physically there. Requesting that images be taken at various stages of the manufacturing process is one simple method to do this.
You'll then be able to spot if there are any issues before the final product gets shipped and exported to be in your hands. Quality checks at various stages are important; if you are unable to receive the photos of production process, you should try a different way of keeping up with quality control during manufacturing.
You can also appoint/hire a specialty (project manager) who can work closely with your manufacturing company at various levels and keep a check on the products and production quality.
5. Checks before shipping
Products that fail at the goal pose a significant concern for importers and exporters. When a cargo leaves the manufacturer, it makes sense to examine it before reaching its final destination. Suppliers prefer to address faults on-site rather than sending them offshore for repair.
There are methods around the supplier's unwillingness to remedy a defect following an inspection. Pay only after the order is inspected by negotiating payment conditions that stipulate this. As a result, you have more clout, and the provider has an incentive to correct the situation.
As a rule, a third-party inspection agency is used to conduct pre-shipment inspections for $310 per day. Most small to medium-sized shipments may be thoroughly inspected in a single day of labour. Think of it as a kind of insurance or perhaps a necessary evil. As long as it prevents a larger issue from occurring, the expenditure is justified.
Alternatively, you might ask the supplier to do their pre-shipment inspection and deliver a report to you if you can't afford a third-party inspection firm. All of the above should be included in your report, and any other relevant information you feel is necessary.
6. Cargo insurance
Cargo insurance is essential for the protection of your merchandise. As long as you have a comprehensive policy covering the whole shipment, you can rest easy knowing that your items will arrive in one piece. This will provide you peace of mind in any mishaps, such as the merchandise being stolen or damaged.
The shipments may be insured via a variety of third-party providers. The freight owner must ensure that the items are insured, regardless of whether you are purchasers or sellers. Make sure to stay in contact with your freight forwarder and provide them with detailed instructions so that they can adequately cover the value of your unique cargo. Your freight forwarders may not know how much your shipment is worth, so never assume this.
Keep in mind that the freight is your responsibility and that it might result in substantial losses if you fail to insure it properly. It would help if you insured your cargo for its full value so that you can receive your whole package back in the case of an emergency. Ensure that the insurance provider fully explains the types of liabilities it covers.