Step 1. Identify if you can import from China with your budget.
It is well-known that China is the largest manufacturer of all kinds of products in the world. Almost every new or experienced businessman will choose to import products from China to get a higher profit margin. But the first thing you should consider is that how much budget you should prepare to import from China. However, the budget varies from your business model.
Only $100 for dropshipping business
You can spend $29 in building a website on Shopify, and then invest some money on social media advertisement.
$2,000+ budget for mature e-commerce sellers
As your business becomes mature, you had better not buy from dropshippers any more because of the high cost. A real manufacturer is your best choice. Usually, Chinese suppliers will set a minimum purchasing order of $1000 for daily products. Finally, it usually costs you $2000 including shipping fees.
$1,000-$10,000 +for brand new products
For those products that don’t need a mold, like clothes or shoes, you just need to prepare $1000-$2000 to customize products according to your need. But for some products, like stainless steel cups, plastics cosmetic bottles, manufacturers need to make a specific mold to produce items. You need $5000 or even $10,000 budget.
$10,000-$20,000 +for traditional wholesale/retail business
As an offline traditional businessman, you purchase products from your local suppliers currently. But you can try buying products from China to get a more competitive price. Moreover, you needn’t worry about the high MOQ standard in China. Generally, according to your business model, you can meet it easily. If you don’t have enough experience in importing from China, you can import items in small quantities in the beginning. Then you can choose a reliable and long-term supplier. Of course, there is another solution, you can let a reliable China sourcing agent help you, which is a popular collaborative model in the latest years.
Step 2. Choose right products according to different business models.
After analyzing the import budget you need, the next step is to choose the best suitable product to import from China. But there are many kinds of products for you to choose from, like trending products; daily-use consumer products; brand products, etc. As a new businessman, you must be confused about how to choose the best one from so many kinds of products. Here are some suggestions:
Don’t import trending products
Trending products like hoverboards, usually spread quickly, if you want to make quick money by selling such products, you need to have a strong market insight into grasping the opportunity. Moreover, an adequate distribution system and strong promotion ability are necessary, too. But new importers usually lack such abilities. So it is not a wise option for new businessmen.
Don’t import low-value but large-demand products.
A4 paper is a typical example of such kind of products. Many importers think it must be profitable to import them from China. But it is not the case. As the shipping fee for such products will be high, people usually choose to import more units to lower the shipping fees, which will bring a large inventory to you accordingly. Moreover, the whole cost from China is not far below your local wholesale price.
Try unique ordinary daily-use products
In most developed countries, ordinary daily-use products are usually dominated by big retailers, and people usually buy such products directly from them. Hence, such products are not suitable choices for new businessmen. But if you still want to sell ordinary products, you can try adjusting the product design to make it unique.
Try Niche products
The niche market means there are fewer competitors selling the same products as you. And people will be more willing to spend more money in buying them, accordingly, you will make more money. Take expandable garden hose as an example, several clients of ours have ever reached an annual revenue of over $300,000. But the ROI(return on investment)of the products is too low now, it is not worthwhile for them to sell any more.
Step 3. Discover profitable products. Analyze all the cost to import them
No matter what kind of products you want to import, the vital step is to do enough research about the product cost in advance.
It is important to learn the approximate unit price of the product in advance. The price of products with ready-to-ship on Alibaba can be a reference standard to grasp the price range.
The shipping fee is also a vital component of the whole product cost. For international express, if your package weight exceeds 20kgs, the shipping fee is about $6-$7 for 1kg.
Sea freight is $200-$300 for 1 m³ including the whole cost, but it usually has a minimum load of 2cbm. Take hand sanitizers or nail polish for example, you should fill 2,000 bottles of 250ml hand sanitizers or 10,000 bottles of nail polish to fill up with 2m³. Evidently, it is not a kind of good product to import for small businesses.
In a word, apart from the above aspects, there are also some other costs like sample cost, import tariff. So when you want to import a kind of product from China, you had better conduct a complete research about the whole cost. Then you decide whether it is profitable to import the products from China.
Step 4. Find Chinese suppliers via the internet or visiting China.
After you choose a kind of product, what you need to do is to find a supplier. But you may wonder where to find. Here are 6 online or offline ways to search for suppliers.
① Three online channels
B2B trade platforms
If your order is below $100, Aliexpress is a suitable choice for you. There are a wide range of products and suppliers for you to choose; If your order is between $100-$1000, you can consider Dhgate; If you have enough budget to develop your long-term business, Alibaba is better for you. You can find manufacturers directly on the platform;
There are also some other B2B platforms, like Made in China, Global Sources. But these platforms have their own area of expertise. For example, Made in China is more suitable for buying machinery products.
Search on Google directly
If you want to import toy suppliers in China, you can enter toy manufacturers on Google. Then it will show many suppliers in a list. You can choose a reliable supplier to cooperate with. I will tell you how to identify whether the supplier is reliable in the following section.
SNS
You can find suppliers by some social platforms, like Linkedin, Facebook. The way to search is similar to Google search. But unlike Alibaba or other B2B platforms，there are not many suppliers for you to choose.
② Three offline channels
Find suppliers at fairs
There are many kinds of Chinese fairs every year. Canton fair is my first recommendation to you, which has the most comprehensive range of products.
Visit Chinese wholesale market
There are many wholesale markets for different products in China. Yiwu International Trade City, which is my first recommendation market. It is divided into 5 districts. Each district has its own specific products to sell.
Visiting industrial clusters
For example, if you want to find cotton socks, you can search on Alibaba by entering product name and city name. Then from the contact page, you may find the real place these suppliers are located at.
Usually, they relatively focus on the same region, which is called the industrial cluster of the sock. You can visit the supplier in person, during the visit, you may find more suppliers that make the same products. It is beneficial for you to get the most competitive price.
Although the above 3 offline ways appear more time-consuming than online ways, it is still worthwhile for you to have a try. By doing so, you can touch the product directly and get the most competitive price, which is beneficial to your long-term business.
Step 5. Evaluate suppliers in 5 aspects. Place orders to whom is worthy of long term relationship.
There are many suppliers for you to choose, and you may be confused about how to identify the supplier is a reliable business partner to cooperate with. A good supplier is a vital element for a successful business. There are 5 aspects you should consider:
Business history
If you want to find a long-term supplier, the supplier’s business history is also an important aspect. As it is easy to register in a company in China, if a supplier focuses on the same product category for a relatively long time such as 3 years, their business would be stable to a large extent.
Countries exported
It is important to know which countries the supplier has ever exported to. For example, when you want to sell the products to America, and at the same time, you find a supplier that can provide you competitive price. But you learn that their main customer group focuses on the developing countries, which is evidently not a good choice for you. You may get bad reviews from customers because of quality problems.
Compliance certifications on products
Whether the supplier has relevant certificates about the product is also an important aspect. Especially for some specific products like electronic products, toys, many customs will have requirements for importing them. And some e-commerce platforms also will make some requirements for allowing you to sell on it.
For example, if you want to import toys to America, CPSC is needed. You can know needed certificates from your customs broker or the e-commerce platform staff in advance. Then when you choose suppliers, you had better cooperate with those who can provide you the certificates, which helps to make your importing process or sale more smooth.
Punctual lead time
For the stable supply chain, supplier’s punctual lead time is a vital factor you should consider. If the supplier can’t deliver the goods on time, which will influence your sales to a large extent later.
Especially for Amazon sellers, the lead time appears particularly crucial for your online stores. Once one of your popular products on your online store is out of stock, although you replenish products later, it will impact the product’s rank a lot. It means that you will spend a lot of time in marketing the product again.
Quality control(sample)
The most vital factor is the product quality. Only products with good quality can bring long-term profit to your business. And most good suppliers usually have a complete quality control system to ensure quality.
Step 6. Understand trade Incoterms. Get precise product quotations.
When you negotiate with suppliers, you will encounter the phrase, Incoterms. There are many different terms, which will influence the quotation accordingly. And the following 5 types are the most common.
EXW: Ex Works
Under this term, the seller just needs to be responsible for making the products. Once the goods are transferred to the buyer at the named place of delivery, the buyer should undertake full costs and risks of loading and moving the goods to the destination, including arranging for the export clearance. Hence, it is not advisable for international trade.
FOB: Free On Board
Under this term, the seller is responsible for delivering the goods to the port, then loaded on board of the named vessel. They also should be in charge of customs clearance of export. After that, the seller is free of all risks of the goods, and at the same time, all liability is transferred to the buyer.
CIF: Cost Insurance And Freight
The seller is responsible for delivering goods to the board on the named vessel, besides it, the seller will cover the insurance and freight on the shipment, and the customs clearance of export. But the buyer needs to undertake all risks of loss or damage on the shipment.
DDP (Delivery Duty Paid) and DDU(Delivery Duty Unpaid):
Under DDP, the seller will be responsible for all risks and fees generating in the whole process of delivering the goods to the named place in destination country. And the buyer needs to undertake risks and fees after completing the delivery at the named place without unloading the goods.
About DDU, the buyer should undertake the import taxes. Except for it, the requirements for the rest of clauses are the same as DDP.
In a word, the quotation will be different according to the agreed trade terms. Moreover, the liability between you and your supplier varies from different trade terms. You had better choose the best suitable way according to your own situation.
Step 7. Compare suppliers, choose best supplier to place order
Among the last few suppliers, how to choose the best one should be an important aspect.
There are mainly 5 points you should pay attention to for a good supplier.
Don’t focus on low price too much
Although the price is a key aspect you should consider when you select suppliers, you may be risky of buying bad quality products. Perhaps the production quality is not as good as others such as thinner material, smaller actual product size.
Ask for a sample evaluate production quality
Regardless of the suppliers’ business backgrounds, prices they quote, or their promises saying the product quality should be good, you always need to get a sample in hand to assess if they can produce good quality products. Of course, you need to pay for the sample and shipping.
Good communication
Good communication can promote the cooperative process better, which should have two features,
The supplier can always understand what you needThe supplier has professional industry knowledge, and can always give suggestions
Compare the lead time
Lead time means how long it takes to produce and get all products ready to ship after you place the order. And it depends on the product category, the production capacity of the manufacturer, and their production schedules. If you have several supplier’s options and their prices are similar, then it’s better to choose the one that has a shorter lead time. Maybe their production capacity is bigger, or their production schedule is not very full yet.
Consider shipping solution & shipping cost
If you don’t have a trusted freight forwarder, and you prefer suppliers to help you handle logistics, then you have to compare not only product prices, but also logistics costs and solutions. Some suppliers may offer very low product prices to attract buyers. That means they don’t aim to make profits from selling products, but charge more on shipping fees after you place an order. Or if a supplier has little experience in shipping goods to your country, they would get higher shipping quotes from freight forwarders, which also increases your total cost. So it’s very important for you to combine the product cost and shipping cost together, to compare the total cost among all suppliers.
Step 8. Confirm all details with suppliers before start manufacturing.
Before massive production, you should confirm the following details about the products again with suppliers.
Confirm quotation again
As there are many disputes between suppliers and customers arising from the price confirmation problems, it is necessary for you to make an ultimate confirmation with suppliers before placing orders.
Besides, the original quotation is usually based on the basic price of the product. What you need to confirm with suppliers again is whether the ultimate quotation is based on the agreement about the product between you both, such as the packaging, logo design, the material, etc.
Payment method & time of payment
Chinese suppliers usually adopt such a payment clause: 30% deposit before manufacturing, 70% balance before shipping out from China. But it varies from different suppliers and industry. For example, for product category usually with low profit but large-value order like steel, to obtain more orders, suppliers may accept 30% deposit, 70% balance before arrival at the port.
In most cases, Chinese suppliers just accept USD payment. The most common payment method is wire transfer(T/T). You can log in to your online bank or go to the offline bank to finish the payment.
In addition, if you want to pay via credit card, you only can pay via the following two ways: Paypal, Alibaba trade assurance. However, it will charge you a 3%-4% service fee.
Besides, most Chinese suppliers will not accept Paypal payment for orders with large value.
Lead time
For any business, abundant stock is very vital. Whether the supplier can finish the production before the agreed lead time appears significant for your terminal sales.
Most Chinese suppliers will not prepare inventory, and they will manufacture brand new products after receiving your order. Generally, it will take 20-30 days to produce goods for most items. But a longer time will be needed for some special goods, like clothing, it may be as long as 40-60 days because of the dyeing process.
Therefore, you must confirm the lead date with your supplier before massive production.
Pre-production sample confirmation
The pre-production sample is the standard for bulk production, so it is necessary for you to ask a sample for confirmation. Especially when you buy it on e-commerce platforms, the physical item may be a little different from the image on the online store. By asking a sample, you can touch the item directly and communicate with your supplier about the details better, which can help you get satisfactory products in the end.
In a word, no matter what kind of channel you place an order, online or offline, it is necessary for you to confirm the above 5 aspects with suppliers again before bulk production.
Step 9. Inspect Quality. Arrange shipping from China to your country
After completing the whole production, there are 2 aspects you should pay attention to:
- Quality inspection
- Shipping methods
Quality inspection:
The control over the defective rate of products is important. If the defective rate is too high, you may receive many bad reviews from customers, which is bad for your long-term business.
Hence, after manufacturers completing the production, it is vital to conduct quality inspection before arranging shipment. If you place the order on Alibaba, you can pay extra fees to choose their inspection service. Their inspection partners will help you inspect the products.
You also can hire 3rd party inspection companies by yourself on Google. The fees usually are $200-$300/person/day. But they will issue an inspection report to you without tackling the problem.
Shipping methods:
There are 4 main shipping methods: international express, air shipping, sea shipping, and railway shipping. As a new importer with small business, international express or sea shipping are suitable choices.
The shipping time from China to America is usually 7 days by international express. And the fees usually are calculated based on the bigger parameter between the actual weight or dimensional weight of the goods.
The shipping time from China to America is usually 30 days by sea. The whole cost is about $200-$300 for 1m³ including the sea shipping fees and the cost in the whole import and export. But it usually has a minimum shipping volume of about 2m³.
In a word, you should choose a suitable shipping method according to your products.
Step 10. Handle custom clearance, deliver products to doorstep.
The last important step is customs clearance. You should know what documents or certificates are needed in the process.
In the process of the export customs clearance in China, the following documents are necessary for all kinds of products:
- Contract
- Commercial invoice
- Packing list
- Bill of lading
- Certificate of origin
Of course, there are additional certificates needed according to different customs supervision requirements on products. But for the export process, you needn’t worry about it too much. Usually, the seller will help you tackle it.
In the process of import customs clearance in your country, there are also some standards or documents according to customs requirements in your country. But 5 documents are needed just the same as the export process, including commercial invoice, contract, packing list, bill of lading, certificate of origin. But some other certificates are different according to countries or products. You can consult the freight forwarder who can help you with logistics.
Apart from the certificates, you need to pay for customs duties. But the standard is different according to countries or products. For example, if you import shoes from China to America, you need to pay customs duties, MPF(merchandise processing fee), and HMF(harbor maintenance fee).
You can calculate the duty roughly by the following method: value*duty rate.
About duty rate: you can check it on USITC .
But the most convenient way is to consult freight forwarder or your custom broker.
Conclusion
No matter what kind of business models you are running, traditional business or e-commerce business, I hope you can benefit a lot from the guide. If you think it is beneficial to you, welcome to share it with your friends.
