For years, China export market has been dominating and will continue to grow as it is arguably the best place to find quality supplier with the lowest price. Many businesses had started replaced their suppliers and import from China. However, the process of importing from China is an uneasy one. There are so many scammers and cases that we’ve heard of and it’s still unavoidable even it has been an issue for decades. With years of experiences in the trading industry, many experiences dealing with China’s businesses, I’ve concluded some of the aspects that you need to be aware of if you’re thinking of importing from China.
How you Understand the market
Before you decide what to import, the same old theory: RESEARCH RESEARCH RESEARCH. First, you need to understand your local market to make sure that the product is in demand and you also need to understand your competitors in local market. How could you do so? Check on the internet what are the top searched products, check on eBay what’s the top selling products, check on local market how many shops are selling the products and how they doing? Once you’ve decided what to import. find as much information as possible about the export market for that product in China. Be vigilant and ask every detail you need to know.
How to Find Trustworthy Suppliers
Finding a trustworthy suppliers who you can communicate with, is the most important aspect in your importing business. A serious and dependable supplier would minimize your concerns on quality, trust and disputes.
When you first started, you might depend on the internet and you can find a Zillion sites that offer sourcing assistance or sites that offer massive directories of suppliers. However, to find the right one can be a laborious task. There are so many scammers in China that is so professional and you won’t be ble to tell if they are scammers. If you can’t inspect the factory in person, you might need a local sourcing company that offer you the services to verify the suppliers (where the company has to take legal responsibility if things go wrong).
Once you found the suppliers, inquire them the price and minimum order quantity and you will get hints whether if they are the right suppliers to deal with. Some suppliers need huge minimum order quantity which is not feasible for new businesses, some give you higher price as you are not local buyers. Ask 3-5 suppliers for quotes and MOQ to find out which one is honest.
Once you’re in contact with prospective suppliers, address all your quality concerns with the right questions. State your requirements to suppliers clearly – like product warranty, key specifications and order terms. Alternatively, some suppliers will provide product samples if you ask, so you can first test them yourself. If you’re happy with the quality of this sample shipment, you can order in bulk. If possible, try and attend a sourcing fair to test samples free of charge.
How to Get Good Quotes
China export market is all about QUANTITY. The more you purchase, the more negotiation power you have. If you are not confidence to make bulk order for the first go, keep in mind that you need to speak “long term language”. You need to convince the supplier that your order will grow enormously in the future and that you will continuously to purchase from them.
Besides speaking “long term language”, you also need to speak “professional language”. First, you need to be familiar with the product you going to import. You need to ask professional questions to show you know. Secondly, you need to know the market price. You need to check on internet or ask at least 5 suppliers for quotes to get the idea of fair market price and this will definitely help you when you negotiate for a better price. You need to tell the supplier what price you can get from another supplier and this would normally give you 20-30% off the initial quotes from the suppliers.
How do you protect yourself?
You need to understand the relevant import compliance regulations before you place your order. There might be more than one regulating body may be involved both in China and your country, depending on what you import. Custom house broker might be needed for some complicated cases.
You would also need to track the process and provide additional products information and endorsing bill of landing. You may need to issue a power of attorney to your broker and purchase customs bonds – guarantees that you will abide by all laws and pay additional fees incurred and unexpected customs duties or clearance delays.
Besides, you need contract that govern both local country and China’s trade regulation so protect your rights.
List of common shipping Terms
Commercial invoice (CI) – Bill for goods delivered or about to be delivered. Specifies exactly the product, quantity, value, and a list of any special charges such as handling, packing, one-time set-up fees, etc.
Force majeure – A French legal term translated as “greater force”. This contract clause removes liability for natural and unexpected events that affect the transaction, like natural disasters, transport mishaps, or union strikes. Many buyers get insurance for such situations. The main types of insurance are marine cargo insurance, freight forwarding insurance and cargo insurance.
Free on board (FOB) – The price that includes all costs up to the shipment stage. This excludes the costs of shipping your goods through international borders, import duties, etc.
Letter of credit (LOC or L/C) – An agreement between your bank and your supplier’s bank to release payment only on certain delivery conditions, like successfully clearing customs or successful loading. Usually used for large transactions.
Pro-forma invoice (PFI) – A quote from a seller to a buyer. Shows you what the invoice will look like and sets out the seller’s terms. Often used to obtain financing for large quantity orders.
Purchase order (PO) – Document to purchase goods or services from a supplier. Contains the name and description of the goods you are buying, quantity, price, payment, and delivery terms.
Minimum opening order (MOO) – Some suppliers expect your first order to be of a certain minimum before allowing future orders in smaller amounts. A future order under this term is termed RO (reorder).