China sourcing agent

Six Tips on Importing from China

When importing there are a number of things you will have to consider. This may range from managing long-distance relationships to organizing international transport and customs clearance. If you are considering importing from China, read our top six tips to help you get started.

1) Plan your import objectives

Before you start importing, it's a good idea to be clear about what you are trying to achieve. You might be looking at China to find a cheaper source of supplies, or to import products that aren't yet available in your country to sell to your customers. At the same time importing should fit in with your overall business strategy.

2) Identify a good, legitimate and reliable supplier

Check the supplier is creditworthy and can meet your quality standards. You should assess product quality and check that the goods you buy are suitable. You need to know whether the supplier outsources any work to subcontractors.

You will also need to understand the culture of the Chinese market to establish a successful relationship with your suppliers. Mandarin is becoming an increasingly important language. It is spoken by over one billion people worldwide, outnumbering any other language. Making an effort to learn a few short phrases can help to establish mutual confidence.

3) Negotiate the right deal

Understanding your own strengths and weaknesses, and what your supplier's priorities are, helps you negotiate the best deal. For example, if you have a healthy cash position, you could offer to pay more promptly in return for a good price.

The Chinese believe that prospective business partners should build a relationship and, if successful, commercial transactions will follow. The objective of developing close relationships is to build what the Chinese call “guanxi”, which are essentially social or business connections based on mutual interest and benefit.

4) Reduce risk by having a clear contract

It is important to have a clear contract setting out exactly what payment and delivery terms you have agreed. Using internationally agreed Incoterms (International Commercial Terms) helps reduce the risk of delivery problems or misunderstandings. The contract should also cover what payment is required, when and in what currency, and what payment method will be used.

5) Choose which method of transportation you are going to use

When making your choice as to how you are going to import, you will need to decide whether to handle logistics by yourself, or outsource the work to a freight forwarder.

When importing from China your main options are air and sea. If your business needs to transport large quantities but there is no pressure to deliver quickly, shipping by sea may be suitable. However, if you require your items quickly and with higher levels of security, shipping by air might be more appropriate.

6) Taxes and duties on imports

When trading with China, you will need to find the correct commodity code for your goods so you can fill out customs paperwork accurately. The code is a ten-digit number for imports from outside the EU. Once you know the commodity code, you can look up other important information such as duty rates and any import or export restrictions.

It is important that as a trader you know whether you have to pay import VAT and duty on your goods before they can be cleared for entry into the UK. Imports may be liable to import duty, depending on the classification of the goods and where they come from. VAT is charged on goods imported from outside the European Union at the same rate as if you bought the goods in the UK (currently 20%).