how-to-import-from-china--product-sourcing

How To Import From China: The Best Guide

Learn everything about how can you import from China

Import from China has become a widespread trend for all kinds of businesses. Importing a new and unique products can increase business sales and satisfy buyer’s needs for any new business. You can source product from China at Wholesale or retail prices.

China is the fastest-growing economy with lots of opportunities. The primary reason most of the businesses worldwide choose to source products, manufacture, and import from China is because of the low cost, great profit margins, and fast delivery.

We tried our best in writing this guide to give you the best knowledge on how you can import from china, How to properly Source Products, what risks or scams to avoid and why you should choose JoinChinaTrade so that you can focus more on your increasing your sales and have a stress free business.

We have categorized topics for better understanding and quick access in the below section

1. What Terms are used in Import from China?

Let discuss some Terms that are used when you are importing from China

There are a certain set of Import items that will be used in documentation when you will import from China. It is better to have an understanding of the terms which will ease up your reading in the later part. The terms are described as follows:

It is an international trade term when a buyer or a seller uses this term for product sourcing. Complete paperwork or export license expenses will payed by the buyer. That’s why we can say that it is useful for sellers but not for buyers because it causes risk for buyers. But the benefit of this term is that the buyer has complete control over the production cost because if the buyer chooses this EXW term to import from china, then the seller cannot increase the local value of their goods.

It is a term that is used to import products from China by ship or by air in the plane. This term agrees to the buyer and seller that both will be responsible for the shipment cost and risk. FOB term abbreviation is Free on Board that means the supplier has responsibility and risk involved until the products reached on the port. The buyer has the burden of product cost and any damage risk until it arrived at the buyer warehouse.

C&F is similar to FOB (Free on Board), but both terms are different from each other just with one point. C&F term has the responsibility of the buyer and as well as the seller. The seller must be responsible for the cost and product damage until it reaches the port. But the seller does not pay the insurance cost of damage or loss of goods. The buyer is responsible for product and price and also pays the insurance cost. If there is any damage to the product.

It is the most expensive method of product sourcing because the complete responsibility of cost and risk is on the buyer and the seller. For-example Germany along with other European countries used CIF values to calculate import duties.

It is the most expensive method of product sourcing because the complete responsibility of cost and risk is on the buyer and the seller. For-example Germany along with other European countries used CIF values to calculate import duties.

Bill of Landing is also a method or a term that issues the three documents to the shipper. These three documents used for international trading one are used to ensure that the seller receives their payment and the buyer gets their goods or not. The other two receipts used for policy insurance and an invoice.
It is a kind of receipt which ensures that the goods had taken to the destination.
Bill of landing has three main functions:

  • It ensures that the goods are loaded or not.
  • It used as evidence of the goods.
  • It provides the title to the goods.

It is the most expensive method of product sourcing because the complete responsibility of cost and risk is on the buyer and the seller. For-example Germany along with other European countries used CIF values to calculate import duties.

Airway bills are like a receipt that used as an agreement between carrier and shipper. It becomes a contract between carrier and shipper when they both sign on that receipt. It is a legal agreement that enforces to follow the law. This AWB contact describes the description, destination, and claims, liability limits.

AWB (Airway bill) enables cargo tracking, and it is a type of landing.

ETA (Estimated Time of Arrival) is a prediction on how many days your item can arrive at the destination. The method of shipping can be domestic or via board or by the ocean. And (Estimated Time of Delivery) refers to a delivery date of a product that will receive at the destination. It is an excellent method to know the estimated delivery date that will enable you to determine how long you will get your product.

AWB (Airway bill) enables cargo tracking, and it is a type of landing.

 FCL (full container load) when you have more items that can fully load into the one container, then you can choose the FCL method. But if you have ordered fewer things that cannot be fully settled in one box, then you can use LCL(less container load) method. LCL is a carrier method that different importers used to import their items in the same container.

POD stands for “port of destination” means where the ship unloaded from elements. And POL stands for “port of loading” from where the boat loaded with items.

When you import from china, this invoice sent to the buyer in advance of the delivery of items. This proforma invoice has details about the product quantity, weight, and other transaction charges. The proforma invoice is used to satisfy their customers that the seller confirms their orders. But this is not the invoice that will confirm that your item will be reached to the destination or not.

 FCL (full container load) when you have more items that can fully load into the one container, then you can choose the FCL method. But if you have ordered fewer things that cannot be fully settled in one box, then you can use LCL(less container load) method. LCL is a carrier method that different importers used to import their items in the same container.

Now you are one step less to your goal of importing from China. we have also written a complete guide on Sea Freight China Shipping meaning “how to ship your products from China to your warehouse? where we explain these terms in detail along with the process of shipping.

Let’s jump into the next step which is determining what product to source and sell. 

2. How to Identify and Define Your Product?

Understanding the scope and value of your product in the market

There are a few questions that you should answer before importing anything from China.

  • Have you done your homework/enough knowledge of the product? 
  • Have you identified your market /scope for your product and target group?
  • Have you able to identify and analyze your competitors?.
  • What is it in your product that solves customer’s problems better than your competitors?
  • Do you have a strategy for selling, sales channels?

Product Sourcing from China has become a wonderland. Once you go down the lane of looking for a product online to sell, you will find an unlimited list of products. The companies will give you free samples and the next thing you know that you have fished meaning that you ordered the product that you never wanted or has no value in your country. You can start with the following steps to identify your niche products.

  1. Understand your Niche Product
  2. Go with a Less Competitive Niche
  3. Pick a Product with High-Profit Margins
  4. Buy Products which are small in size
  5. Choose Products with Low Risk of Damage

2.1 Understand your Niche Product

If you are starting a new business then we highly recommend focussing on the niche products that you have good knowledge instead of going in flex store-direction. Therefore, before product sourcing from China, you need to understand and select your Niche for your business.

If you have not decided on the Niche, it will be stressful for you to choose and deal with the supplier. You will have problems defining your specifications. You can select a Niche by your hobby or perform market research in your area to understand the demand.

2.2 Go with a Less Competitive Niche

When you want to open up a new business and want your business successful, then choose a less competitive niche that no bigger brand is selling it. The niche that has more demand and fewer competition results in a high Return on Investment (ROI). For example, after doing market research in your neighborhood, you realize that there are no cosmetic stores then you can choose cosmetics as your Niche if import duties are less and sale prices are higher in your country. 

2.3 Pick a Product with High-Profit Margins

You should order fewer products in the beginning and choose for products with higher profit margins which give you some to recovery if you make errors.

2.4 Buy Products which are small in size

In case if you have a small budget then buy products that have small packaging sizes. Because of this, shipping costs will be less and the products will have high-profit margins.

2.5 Products with Low Risk of Damage

Avoid goods that can be damaged during import. You should go for that kind of product that has a low risk of damage or break. e.g., don’t import Products which consist of Glass Material because it has a high chance of getting damaged during shipping. 

3. What/How to Sell Online Amazon/eBay?

If you have decided to import from china and sell it on amazon then there are few questions that need to be answered which re as follows.

  1. How to perform research on Amazon/eBay to find out about the best selling products?
  2. What products you should avoid?

3.1 How to perform research on Amazon/eBay to find out about the best selling products?

Making a decision about what to sell on Amazon can be a big headache for beginners. Experienced sellers still come across difficulty in finding the best Niche for their business. Amazon or eBay are the best platforms to find out about the best sellers. 

Let’s assume that you chose your business to be Baby’s related products because you have knowledge about it. the best thing is to select it from your interests because it will be more interesting when your hobby becomes your business. After selecting Baby as your niche, there are subcategories such as Diapering- Feeding- Car Seats-Travel Gear, etc. 

And from those subcategories, you find travel gear to be your main interest. The goal here is to go as deep as possible and find the products where the competition is less. 

gear-baby-amazon-best-sellers-bropshipping

3.2 What products you should avoid?

A mistake that people make which you should avoid when planning to import from China, they look for copied/fake/counterfeited products of brands because it’s easier to sell than an unknown brand. So make sure that your product is 100% original and not counterfeited. As any counterfeited products of yours will be confiscated during customs clearance besides other legal actions. So whenever you see a Chinese supplier selling products of famous brands like Louis Vuitton, Nike, Rolex, etc. avoid them.

products-to-avoid-product-sourcing

4. How to perform product validation?

How to find the best market to sell your products?

To validate your product ideas, you can use Google Trends without wasting any money. With Google Trends, you can search for products by enabling your location to see the popularity of the product. Google Trends will provide you with the complete scope of the product from the last few years. You can find previous terms of merchandise and in how many years a product becomes accessible. 

  1. Google Trends: Find Popularity of the Product
  2. In which regions your product is most popular
  3. The lifespan of Product Popularity 
  4. How to sneak your competitors

Let discuss briefly some points that you can use to validate your product by Google Trends.

4.1 Google Trends: Find Popularity of the Product.

gt-product-popularity

Google Trends will allow you to see how many peoples have searched for that particular product. And you will able to know the product directions in the graph if sales are tending or not. 

4.2 In which regions your product is most popular

In Google trends, you can also find information about which countries you should target your sales and observe the popularity of the product. Google Trends will provide a complete insight into your product’s popularity.

4.3 Previous Sales of the Product

With Google Trends, you will know about the previous sales or searches of a product, what is the scope of the product in recent years. Whether there were any variations in the products.

4.4 The Lifespan of Product 

overtime-product-sourcing

New products can be examined with Google Trends. For example, in the image above, the Shapewear trend is moving across the year. But there is a significant surge for June leading to the next couple of months. These highlights will impact on your advertisement and publicity.

The above insights are showing you the best months of the year, when you should put offers, and when your business will be in trouble

4.5 How to sneak your competitors

Using Google Trends, you can easily search for your competitor’s history. What sales they have achieved and how they have developed, how they increased their sales for a product and when they started their business.

5. What are the Steps of Product Sourcing to Safely Import from Alibaba China?

How to avoid risks on Alibaba?

It is the largest platform from where you can order products in bulk at wholesale prices for your business. You can find lots of made in china products on Alibaba. You can buy bulk products at wholesale rates, and also make a request for sample (for testing purposes).

Let discuss some points about how you can safely import from China.

  1. How to search for your product?
  2. Important Things to consider when searching for the product

5.1 How to search for your product?

On Alibaba website, you can search for the product in the search bar you will find thousands of results. For example: If you search for eyewear in the search bar, it will show you a list of eyewear. You can make search from categories to find your product.

eyewear-alibaba-china-import

5.2 Important Things to consider when searching for the product

You should note some points before placing an order on Alibaba to avoid scams.

  1. Unit Price
  2. Minimal Order Quantity (MOQ)
  3. Supplier Verification
unitprice-alibaba-made-in-china

5.2.1 Unit Price

For searching for eyewear, we got $1.8 to USD 2.0 FOB.  As we discussed above, the FOB means the seller will pay the expense until the product not reach on the port. And On another hand, the buyer will pay the costs and take responsibility until the product reaches its warehouse.eyewear

5.2.2 Minimal Order Quantity (MOQ)

In the above example, the MoQ is different for different suppliers. There are “2 pieces(Min. Ord)” showing the MOQ of the product. If you are a beginner, you should try to buy minimum quantity at first because, in a startup, you do not have any experience with the product quality and export. You can sum up the cost of the product.  

6. How to verify Suppliers?

How to perform verification on your suppliers?

You can choose between wholesalers or suppliers from the drop-down menu.

supplier-alibaba-china

It is very important to verify supplier before placing an order with a new supplier for protecting yourself from scams or buying low-quality products. For example: if we search dog collar, we see results of eyewear. In order to shortlist the best suppliers, use Alibaba’s supplier’s filters. Alibaba China has set suppliers into few categories and you can narrow down to a few best suppliers applying filters.

  • Gold Suppliers
  • Assessed Suppliers
  • Trade Assurance Suppliers
alibaba-china-supplier-verification
  • Gold Suppliers

Gold Suppliers are big factories because they pay approx RMB 30,000 per annum to maintain their status on Alibaba. However, this does not conclude they are best sellers. 

  • Assessed Suppliers

These suppliers are the best suppliers on Alibaba because they have been checked by a third party inspection company.  Selection of accessed Supplier, you will be able to gain access to your supplier’s company insights including, Product/service, employees, building capacity and size and also contains the company worksite images.

supplier-report
  • Trade Assurance Suppliers

Selecting this supplier is the best way to avoid scams as you are assured by Alibaba. If your delivered goods are not received on time or if the quality of the products is not good. Then Trade assurance by Alibaba will refund your products.

If you want more details about this, you can check this link for Alibaba trade assurance for further information. 

trade-assurance-payment

It is advised to choose a supplier who has more experience and has been a member of  Alibaba for a few years. Also, there is also a response rate information but do communicate with the supplier and make sure that your supplier has a good response rate. Of course, you don’t want to waste your time on that supplier who doesn’t reply to you.

If you are planning a big order then you can use third party service in china to check your supplier and quality of goods to double-check everything on your behalf.

Let discuss how you can verify your suppliers in a stepwise manner.

  • Keep Questioning until satisfied

The first step before working with anyone is to check the integrity and legal authority of the business. You can all kinds of questions about company business license, photos of the workplace, product details and samples once your trust level reaches a certain level of satisfaction to be able to place an order. 

  • Product Samples

We would advise to always check the sample of the products before placing any big order no matter you already worked with the supplier or not. Test them through another email with product details and prices. 

7. How to properly Contact Suppliers?

What is the best way for contacting suppliers?

There are many communication gateways to contact supplier but the best way would be by email address. Make your conversation clear so that your supplier can be clear about you and reply to you. Some suppliers may not have good English language skills. They probably are using some tools like google translator to translate your email message and correctly respond to you. But most of the suppliers know English and can reply to you in English. so write clear and concise emails and in an organized way that the supplier can easily understand and respond to you. You can call them on their phone numbers as well.

  1. Requesting For Quote
  2. Minimal Order Quantity (MOQ)
  3. Sample Prices
  4. Unit Price (Price per Product)
  5. Manufacturing Duration
  6. Email template for Product Sourcing

7.1 Requesting For Quote

 You should make a better email which helps you to get better email replies. You can add some questions to your email that we will discuss below.

7.2 Minimal Order Quantity (MOQ)

You should ask about MOQ the “minimum order quantity” in your email because MOQ is not the same on every product. It varies from product to product according to its rate. If the MOQ value is high for you then you can also negotiate and maybe they make some relaxation for you.  

7.3 Sample Prices

When you want to check the quality of the product, you need to import the samples of the products from china, to ensure the quality of the product quickly. Samples are delivered free of cost most of the time but sometimes the supplier will ask you to pay for the samples so they can observe that you are a professional and serious buyer.

7.4 Unit Price (Price per product)

Once you are done with checking the sample and you te next thing to ask is the price per piece of a product as prices they have mentioned on Alibaba could be outdated or they have given a range between two numbers. 

7.5 Manufacturing Duration

 How much time your order will take to manufacture your products? is the next question you need to ask. There are times that price, sample, supplier everything is good but because the supplier has a limitation on the assembly line and has a queue of orders so your order will be delayed. so do not forget to ask this question. 

For example, let’s assume that you are found a product for Christmas or Halloween but if you forget to ask the above question then you know the resulted outcome.

7.6 Email template for product sourcing

You can also write your own email or use the below template to edit it easily when you contact any supplier on Alibaba.

Hi,

My name is Sarah and I am the owner of RocketX Company.

I would like to order  __________. But I have a few questions before I go proceed further:

1- What is the product MOQ minimum order quantity?

2- What’s the unit price, At what quantity number you provide concession in the price?

3- What are your payment gateways/ terms you offer?

4- If you send me the price of a sample, including shipping costs, that will be great for me to determine the MOQ. 

Your Address:   (Your address)

Thank you

Best Regards,

Sarah

Your company website: www.sarahwebsite.com

Suppliers also want to check your website to understand if you have really a business. so having an online presence is very important as it creates value. In case you do not have a website then we do offer web development services. If you just starting out then a one-pager website is the best option.  

8. What Payment Gateways are used for Shipping?

You have already decided your product and supplier at this point. Now lets talk about some of the possible payment gateways.

  1. Advance Payment (Credit Card/Bank Transfer)
  2. Letter of Credit
  3. Wire Transfer (Western Union)
  4. Paypal
  5. Escrow (Alibaba or  through banks)
  6. Sample Shipping 

8.1 Advance Payment (Credit Card/Bank Transfer)

This payment method will be risky for new buyers. Some suppliers demand buyers to pay a percentage of the total amount of the order in advance before the production begins and the remaining amount to be transferred after delivery of goods to your mentioned warehouse. You should only opt for this option if you already trust or have a working relationship with the supplier.

8.2 Letter of credit

If you have a very big order then a letter of credit would be a better option. The banks of both parties issue guarantee in the form of a letter and it is somewhat safe for both the supplier and the buyer. However, it is difficult to achieve in some developing countries because of liability reasons.

8.3 Western Union

It can be a risky method for the buyer. If your agreement with the supplier is not ensured or protected by a third party then you are responsible for the outcomes. You should only use this method if you know and have worked with the supplier before.

8.4 PayPal

This method is safe and secure for the buyer. It is very easy and protects the buyer. But Alibaba does not accept the Paypal method for payment because some scrupulous buyers can cashback their payments. 

8.5 Alibaba Escrow

This service is 100% secure for the buyer and the seller. When you transferred the payment, It goes to 3rd party escrow (Alibaba). The amount will be automatically transferred to your supplier once you received the delivery of the goods. This is a safe method for both buyers and suppliers on Alibaba. However, It only applies to Wholesale/ Big Orders.

8.6 Sample Shipping 

Once the supplier has agreed to the sample then ask the supplier to specify it as sample on the package and a invoice stating no price and terms as sample because we personally have experiences with e clients from Europe where they had to pay duty and tax on the sample because in most countries there are no duties on Samples. 

If your product is related to machinery or heavy in weight then its best to use sea shipping, You can information about Sea Shipping through our detailed article on Sea Freight Shipping in China.

9. What are theTaxes and Import duties?

It is very important to have some understanding of taxes and import duties. Let’s discuss the import duties and Taxes.

9.1 How to calculate Import duties

The calculation methods vary in many countries. some use FOB values while most choose CIF but in general terms, import duty is the percentage of the customs value of the imported goods and that customs value is a variable based on the country but the duty rate depends on product details.

Calculations of custom values on FOB
Custom = custom % x product price

Calculations of custom values on CIF
Custom duty = custom duty % x (product price + cost of shipping + cost of insurance)

9.2 Sale Tax calculation

These taxes calculated as the rate of duty paid and custom values:

Sales tax = sales tax % x (CIF value + duty)

Many countries have static sales tax rates, but on some items sales tax varies. Generally, Basic products have lower sales tax for example jewelry, food, bakery items, etc as compared to alcoholic drinks. 

There are many websites offering duty calculators. You can test a couple of them to get an estimate of the total landed code of the product. The example below was done on https://www.simplyduty.com/import-calculator/

 

eyewear-fill

10. How to test your Product Samples? Testing/Durability

Many companies provide product samples free of cost so that you can build trust and place an order. It would take approaximately 4-5 days by air frieght and 15-30 days by sea. 

Here we are going to discuss some steps that will help you to test the quality of the product.

1- Check the quality of the product: To find out the quality of product you can perform different test cases by using it by yourself to find its durability and value. You can also send samples to your top customers as gifts and get reviews in return.

2- Check the packaging of the product: Check the packaging of the product that it is good enough for shipping. If the packaging is bad then the risk of damage is high during shipping.

3- You should check instructions: It is essential to check if the product includes instructions and its is easy to understand and follow because a product with no instructions means customer displeasure. 

For=example: if you are sellinn office stair and it does not contains assemblimg instructions. the customer will have difficulty and rate the product as bad experience.

4- Product labeling: Product labeling is a must on the product to build your brand. 

 

11. What are 5 things you should consider before placing an order?

5 Things You Should Know Before Placing an Order

  • Why product Labelling is a Must
  • Technical Certification
  • Document Requirements 
  • Why product Labelling is a Must

labelling of the packagaing is a piece of written information about the product. Labelling is necessary because it makes builds trust in the customer and for your brand. If you order your products from china, then it should be labelled as Made in China.

Product Labelling provide information about:

⦁    The brand name,

⦁    Company logo,

⦁    Product Instructions(how to use a product)

⦁    Product details and other information

Example: A product like face wash has written product instructions, ingredients and country of origin(e.g. Made in the USA). Each product like beauty, kitchen, textile has its unique labelling requirements.

  • Technical Certification: T If your product is related to technical domain then it be manufactured by following the international standards so that it can pass your tests required in your country. 
  • Document Requirements 

As an importer, you need to prepare documents related to your products when you import from china. The documents can include the circuit diagrams, design drawings, reports or any details that are required.

12. What is the process of delivery and payment when placing a final order?

  • Bank Transfer/Telegraphic Transfer 
  • Letter of Credit
  • Documents against Payments
  • Documents against Acceptance
  • Open Account
  • Bank Transfer/Telegraphic Transfer method

This method is not secure for new buyers because, in this method, you have to pay advance money before receiving your order. This method is like a bank transfer method and very fast. You can use this method if you know your supplier very well.

  • Letter of Credit 

It is a letter which guarantees that  supplier will receive the payment n time on time,  it acts like a facility for a buyer (like insurance). If the buyer is unable to make payments then all the payments will covered by the bank.

  • Documents upon payments

It is a arrangement of documents, when goods are shipped then exporter(supplier) sends the document to the bank and the importer(buyer). And then importer(buyer) sends money from bank to exporter bank account.

  • Documents upon Acceptance

It is a arrangement of documents, when the shipment is released then the supplier sends the document to the bank and importer(buyer) Only if the importer(buyer) accept the accompanied bills of exchange. (by signing the document).

  • Open Account

It is a good option for the buyer because the flow of cash and cost, in this process buyer receive their products before payment reached to the supplier. This process is risky for the supplier.

13. Why Third-Party Inspection is a must and how to solve final shipment issues?

The most important step of import from China during and after manufacturing of your products is to inspect the quality of the prodyucts and if its mactches the your requirments. 

 Product Requirementts and expectation

You should state your requirements clearly and upfront and have them documented and if the order is really big then get a local lawyer to have the terms and conditions written so in any case of mishap or damage, you will have a  chance of refund. However, it is advice not to be careless and then regret in the later so state your requirements very clear and get a written agreeement from supplier stating facts about delivery, manufacturing date, material used and delivery time so you can hire a third party company to do followup on all steps. 

Conduct Product Inspection

Why choose a third party company?

Hiring a third party company bring neutrality. You will get un-biased reports and unannounced visits to the production facilities. 

Discuss your Issues with Your Supplier

When you or the third party company performs inspection and find defected products then you  should talk with your supplier to replace or repair  those goods. 

In injection moulding, if there is any defects remain in the product, then the factory sets that defect by trimming. Then the factory can trim that defect, and you will get your product as new. And if the supplier does not agree with you, then you can charge the supplier for those products that are shipped but not received yet.

The supplier rating and your value will decide when you force a supplier to pay for the defected products. Most Supplier do comply as It is a their mistake who are sending you defected products so not to ruin the their credibility. 

14. What actions to perform after you receive your goods?

When you received your goods at your destination, first re-check their quality, instruction manual, packaging, results, labels, etc. If you are fully satisfied with product sourcing packaging and all the stuff, send them an email that you have recieved your shipment but don’t give them any review early because it is better to get customers review first and dpepending on the reviews, write the supplier detailed email.   

15. Conclusion

Though the internet has made things simpler but human errors cannot be ignored. We hope that you like this depth article of How to Import from China. Of course, there is a learning curve to the whole process but with time and with this guide you will understand the process and become an expert in Importing from China. 

If you like this article then do share us some love by referring it to your friends. Feel like to share your thoughts with us.

Need Someone for Product Sourcing?