A Step by Step Guide for Buying from China
Buying from China has proven a successful tactic for many businesses. However, it is not an easy task, especially for the newbies. The importing process can be extremely complex, confusing, and costly. Expected gains can often be erased by long transit time, fluctuating shipping cost, unexpected delays, and quality issues.
1). Make sure you can legally import your chosen item
Most items will be allowed, but there are certain guidelines that must be followed for some types of items. The United States imposes stricter guidelines on agricultural products, for example. Additionally, Chinese laws may prohibit the export of certain items, like animal by-products or fake designer clothes and accessories. Check with the laws and regulations of both countries before making an order.
2. Identify the goods you want to import
You make money by selling products. Choosing the wrong products means you are losing time and money. If you’re going to be a successful importer, you need to choose the correct products for resell.
You’d better gather as much information as possible about the goods you intend to import. Obtain descriptive literature, product composition information and, whenever possible, product samples.
This information will be crucial when it comes time to determine the tariff classification. The tariff clarification number (HS Code) will be used to determine the rate of duty that will be applied to your goods.
3. Calculate the landed cost
The 10-digit tariff classification number and the Certificate of Origin are used to determine the rate of duty you must pay when importing. Then you can do the calculation for landed cost.
Pay attention to the Incoterms and calculate the total landed cost before you place your order. For example, FOB means adding the following three costs together:
Customs clearance, duty & tax, land transport to your premises.
4. Find right suppliers in China
You need to find the right supplier in China. Mostly commonly, you can visit B2B websites such as Alibaba, Global Sources to search the suppliers. Be aware that many traders pretend themselves as “manufacturers”, do background check and due diligence as much as possible. A reputable supplier should be able to provide you with client testimonials and references.
You can also visit trade fairs such as Canton Fair and HKTDC show. The good thing is you can personally feel the samples and have first impression about the supplier by face to face talk; negative things are travelling cost & time, also you have big chance to find trading companies than direct manufacturers.
If you don't have much experience dealing directly with Chinese suppliers, another option is to seek the help of a commission-based China sourcing agent. The agent fee can range from 3 to 10% of the order amount.
5. Place an order
Request information regarding the experience of each factory in producing your particular product. You should also ask for samples of the product. Unless you will be manufacturing your own new product, the supplier should be able to provide you with samples of the product so that you can get a better idea of the quality and know ahead of time exactly what you are paying for.
Cost is not the only the consideration when choosing a supplier; quality may be just as important, and the manufacturer’s experience can be a good indication of the quality of work.
Place your order with the vendor and identify incoterms and shipping terms that will be used.
6. Do quality inspection
Quality is very important to your success; however, this is neglected by many importers, they assume product quality is assured by the manufacturer, but it usually is not the case. Most Chinese manufacturers are too busy in daily production, they are not available to do thorough quality inspections as the salesman claimed to. Also, they do not have incentive to do strict quality inspection as it increases cost to rework all issues – they usually classify them as “minor” issues.
So, it’s highly recommended to using a professional inspection company to do pre-shipment inspection for you. If the order is large or of high value, it’s also necessary to arrange an online inspection, so as to catch any issues before production is 100% completed, which means it’s too late to rectify.
7. Arrange cargo transportation
Once you have selected your supplier, request a packing list and a commercial invoice for your prospective purchases to include HS code, description, QTY, weights & CBM, and value per item.
There are many costs associated with shipping goods, including container fees, packaging, terminal handling, and broker fees. In order to get a complete picture of shipping costs, each of these factors should be considered.
8. Obtain your shipment
Shipping goods internationally takes time. For example, goods shipped from China, on average, take around 20 days to reach the West Coast of United States or 30 days to reach the East Coast.
During the time, check your commercial invoice, packing list, the bill of lading, and other related freight documents. If problems arise that you need to troubleshoot, you should know the steps your goods go through when being cleared by customs of your country.
When the goods arrive, you should arrange for your customs broker to clear them through customs. If everything goes well, you will get your shipment, and hopefully do a successful selling.