Perhaps you are willing to start your import business with China. But the question arises: how to start an import business with China? Well, that is what this blog is for.
There are numerous opportunities for you to start your import business as a buyer, but the process is quite complex, confusing, and costly. It is extremely difficult for newbies to start their business due to various reasons. But once you understand the process it is very easy and gives you the chance to make high profits.
We have provided information about everything you need to start importing from China. Keep on scrolling to read our mega guide and find out the countless advantages of importing, types of businesses you can start, common difficulties faced while doing business, and more. So, without any further ado, let us get your business started with China.
Table of Content
Chapter 1. Why to start import business with China?
Chapter 2. Guide on how to start import business with China
Chapter 3. Ensuring that You Receive Top-Quality Goods
Chapter 4. Risks involved in importing from China and how to avoid them
Chapter 5. Other Costs in Importing from China
Chapter 6: FAQs about starting a business with China
Table of Contents
Chapter 1. Why to start import business with China?
1. Availability of Products when Importing from China
There are certain things and goods which you cannot get or manufacture in your country. But you need those products to fulfill the demand of your business and customers’ requirements.
So, to meet your needs, you can import those products and services from China. In China, you can find almost any product or service you wish to purchase.
2. Cachet
There are specific products that are considered better if they have the label “made in China” on them. Machinery and electrical products are the best examples of this factor.
If they are labeled as “made in USA”, they might not sell much because the price will be very high. Whereas same products having the label “made in China” will enable you to make more profit.
3. Economical Pricing when Importing from China
Lower the price, more the profit. And we all know Chinese products are cheaper than products made in the home countries. Your products will sell like hotcakes when its price is cheap along with good quality.
4. High Profit Margin in Import Business from China
As discussed above, lower price tags will make you earn high profits as your product will sell quickly. So, you should learn how to start an import business with China to make some good cash in no time.
5. Versatility
The products found in Chinese markets are very versatile and vary dramatically from one another. That means you can find any kind of product and service you want. There is something for every buyer and customer. Versatility in markets and manufacturers also means you can cover a wide range of target market.
6. Uniqueness in China Import Products
Uniqueness in your products is the factor that will let you stand out from the competitors. And Chinese products are unique due to awesome features and innovative functionality.
Imported unique products will sell readily in the market as they will be different from the ordinary, common, and already available products to the customers.
Chapter 2. Guide on how to start import business with China
Most people find it difficult to start an import business with China. But having the right and extensive information can make the process easy for you. So, we have made a complete guide that will help you to start your import business with China right away.
1. Know your import rights when importing from China
While buying your desired goods from China, whether you are an individual or a full-fledged business organization, you should identify and know your import rights. If you belong to the US, your company Internal Revenue Service Number, or as an individual, your Social Security Number will be more than enough.
If you are from Europe, you will need to have an EORI number or registering as an Economic Operator. For those who are from Japan and want to import products, they should declare themselves to the Director-General of Customs and get an import permit.
An Import permit is given after a complete examination of the goods being imported. For Canadians, they need to get a Business Number first which is issued by CRA or the Canada REVENUE Agency. People of Australia don’t need any import license or permit to import goods from China.
2. Startup Costs in Import Business with China
With only little upfront costs, you can easily start your import business with China. You at least require a reliable internet connection and a latest smart phone. You also need to spend some money on a, business cards and a website.
And yes, you can always hire someone for your branding purposes such as designing an impressive business logo. Once your business is set up you can start by importing small quantities of products from China, selling them online.
3. What’s your market?
After making your mind on the kind of products you want to import and calculating your initial costs, the next step is to identify and narrow your target market. By narrowing down the market, you can focus your attention much better on a single market that you can serve the best. To give you an idea, consider the following:
- Kinds of goods you will provide
- Customers you are looking to target
- Places of the world you are looking to serve
You can take your time and conduct in-depth research before making up your decision. The more time you invest in identifying profitable niches, the more it will return you in the long run.
4. Finding Goods to Import from China
An import company makes a profit by selling goods in the market. Selecting inappropriate goods will result in loss of money as well as time. In order to become a successful import businessman, the most basic thing you should do is to select the right product for reselling.
Try to go for a product that will stand out as you are definitely going to place your brand’s name behind it. Therefore, you should go for a product which you will be proud of selling it.
Your business depends on your products or we can say that your goods are your business. So, you need to focus a lot on selecting a product that you can easily sell or feel comfortable selling.
In general, it is better to go for those products of whom you have great knowledge or you would love to buy for yourself. You should have in-depth knowledge of the products you are importing from China to sell.
Products will affect the design you use, affect your marketing and profit margins. Legal restrictions and logistics also come into the picture. Just ensure that you have conducted a detailed research, and you are aware that there is a niche or dedicated market for the product you have chosen to import. Plus, you must have a rough idea about the product’s cost to make a good profit.
You should collect the maximum details of the chosen products. Get product samples (if possible), descriptive literature and product composition details. These details are very important when we talk about the time to identify the tariff classification. HS Code or the tariff classification number is needed to identify the duty rate that is applied to your products.
It is recommended to choose a product which you like and are passionate to work with. Try to find a unique product so that you can sell it at a good price and make a high profit. Last tip-go for products that you can import in bulk as it will cost you less shipping per unit.
- Good and Bad Products to Import
Good products are those which you are familiar with, as mentioned earlier. You will know everything about the product which will help you identify the quality as well as faults in it. You will know how to sell it and where to sell it.
Try not to go for counterfeit products. For example, consider there are some products with brand names such as Apple, Armani, LG, Rolex, etc. You will realize that these products are fake. Plus, if you notice symbols such as TM or ® on a product label, you can assure that the product is trademarked and hence certified product.
5. Ensuring Goods are allowed in your country
Another thing to note is that whether your chosen products are allowed in your country or not. There are certain products which are restricted in some countries. The prohibited products vary from country to country. Furthermore, ensure that your imported goods are subject to any regulations, permits or restrictions by the government.
As an importer, it is your responsibility to assure that your selected goods comply with several rules and regulations. If you will import restricted goods, whether they fail to meet health code needs, or are unsafe, you may have to face heavy penalties and fines. In worst-case scenarios, these goods will be detained and completely ruined.
6. Finding reliable supplier in China for Import Business
Once you have chosen a product, the next thing you need to do is search for a reliable supplier in China. For most buyers, Alibaba is the go-to supplier marketplace. But that doesn’t mean you also should go there. You can find various substitutes with just a Google search.
7. Calculate the landed cost of your goods
After deciding on a product you tend to import and identifying that importing it is profitable, a crucial part of your import business is done. Next up is to calculate the landed cost. It will decide whether your products are worthy of being imported or not.
The calculation used to identify the business’s bottom line is the landed cost. It decides the overall cost of the product from its journey from the factory to the importer’s doorstep, including customs, shipping, insurance, and the manufacturing costs of products.
It is important to get landed cost as early as possible because you don’t want to lose customers because of highly estimated costs.
If the cost is more than your estimated cost, you should find methods to minimize the cost elements. If the estimated cost is according to your decided budget, you are good to go and start your business. But the problem is it is very difficult to know the exact costs of things until your shipment has arrived. But try to estimate as accurately as you can.
Also read on: China Cosmetics Wholesale Market Complete Guide
8. Trading Companies or Manufacturers
There are two standard kinds of suppliers in China, these suppliers are trading companies and factories. Trading companies source different goods from various factories. On the other hand, factories manufacture the goods and products.
Commonly, Trading companies have higher prices than factories. But factories have less product selection and higher MOQs. Normally the supplier will tell you whether they are a trading company or manufacturer so that you can easily differentiate between them.
You can also ask them if you are confused or not sure what type of supplier they are. In general, neither factories nor companies are inherently good or bad. Factories have low prices in most cases whereas trading companies have improved quality controls and lower MOQs in general.
9. Ordering Some Samples before Giving Your First Order
Always ask for a sample from your supplier before buying products on a large scale. Even if you have a short time, you should consider late delivery of large-scale products and of top-notch quality instead of early disaster that will result in a waste of your investments. This will also prove a supplier’s competency and professionalism.
10. Negotiating Low MOQs and Rock Bottom Prices
Before you begin to negotiate any pricing, you should get numerous quotes and it is best to get from more than three suppliers. In this way, you can have an idea of what the typical cost of your selected product is. You need to order some samples and sell them in the market before making a large order.
There is a golden rule in China: the price is directly proportional to quality. Low priced products mean low-quality product. Another reason for a product’s low price can be:
- The product’s quality is extremely lower than other products
- Noticeably higher MOQ
- Various shipping terms
After determining the typical cost of your products, you can begin negotiating the prices. However, In China, costs are turning out to be more and more fixed and negotiations are becoming very challenging. A maximum discount of 10 percent off of quoted costs is commonly significant. You can negotiate confidently in MOQs (minimum order quantities). Normally, you can negotiate your supplier quoted MOQ down by more than 50 percent.
11. Arrange your Goods transportation in Import Business with China
There are three ways to ship your items from China: air courier, air freight, and sea freight.
- Air Courier
Most people are aware of air couriers. It is referred to as the door-to-door service. Some of the air courier services include DHL, UPS and FedEx. The wholesale supplier will ship the goods and they will reach your dedicated place, such as Amazon warehouse, your house, etc. You don’t need to hire a customs broker as the air courier contains a customs brokerage service.
- Sea freight
Sea freight is very much different from air courier. There isn’t anything called sea courier. A freight forwarder arranges sea freight services for you.
You can either ask your freight forwarder to ship your goods to your dedicated place with some charges or you can go by yourself to pick your goods up. They may provide you customs brokerage but for some charges.
Sea freight is more complex than air courier. But it is cheaper than air courier, as sea freight is 10 percent the charges of air courier. Sea freight is quoted only by volume whereas air shipments are quoted by weight.
- Air freight
Air freight also differs dramatically from air courier. This service is also arranged through a freight forwarder, and most commonly quoted from China to a specific airport, such as Los Angeles International Airport.
In air freight, just like sea freight, you will either arrange the shipped goods picked up by yourself or ask the freight forwarder to arrange them for you to the dedicated location. They can also provide you customs brokerage at some charges. Air freight is also more complex, but it is cheaper than air courier. It is half the charges of an air courier.
12. Shipment Terms to Know when Importing from China
There are also some shipment terms that you should know, as they will help you out during the whole shipment process. These terms are as follows:
B/L: Bill of landing is the document issued by the carrier or its agent to the shipper. It acts as a contract of carriage of products. It also stands as a receipt for a cargo that is valid for being transported and it requires to be presented before the products can be transported to the designated destination.
B/L has the following components:
- Cost, weight and volume of freight
- Consignee’s and consignor’s names
- Packaging information
- Ports of arrival/departure
- List of imported products
- Dates of arrival/departure
- Vessel name
EXW: EXW or Ex Works is the international trade contract whereby the supplier is responsible to make products ready for pickup at the designated area. The importer is expected to pay all liabilities and charges of the shipment once it is sent from the manufacturer’s factory.
When using this shipping term, the risk and charges of shipping products lie with only the importer. This implies that EXW lets the importer have a clear understanding of the charges of the shipment well before time. The importer is also in control of the shipment process and hence prevents the supplier from adding any extra charges or increasing their local prices.
FOB: Free on Board or FOB is the contract that shows whether the manufacturer or the importer has liability for products that are damaged in transit. “FOB shipping point” demonstrates the importer is responsible for the risk if the products are shipped. While “FOB destination” demonstrates that the exporter is responsible for the risk of any kind of loss until the importer receives the products.
C&F: Cost and Freight or C&F is the legal recourse term that is used in the international trade. This term means the manufacturer doesn’t require procuring marine insurance for the risk of damage or loss to the products being shipped. Under this shipping term, the manufacturer is responsible to cater for the carriage of products by sea to the destination port and provide the importer the essential documents.
CIF: Cost, Insurance and Freight or CIF is the trade shipping term that needs the manufacturer to make the transportation of the products by sea to the destination port. And the manufacturer offers the importer the essential documents. EU states use this term as the CIF value to calculate the import duty paid on every import.
13. Tracking Cargo
A lot of time is consumed in shipping products internationally. For instance, products shipped from China take about 30 days to reach the East Coast of the US and 14 days to reach the West Coast, on average. Generally, the consignee is notified through an arrival notice in less than 5 days of port arrival by the destination agent listed on B/L.
After the shipment has reached the United States, the buyer of record (licensed customs broker, the owner or buyer designed by the consignee, owner or buyer) files entry documents of the products with the port director at the products’ port of entry. These entry documents are as follows:
- A packing list that has the details of the imported products
- A bill of lading listing the products that will be imported
- An arrival notice given by the freight agent
- An official invoice that has the country of origin, tariff classification and the purchase cost of the imported products
14. Customs and Tariffs for China Imports
You should be well aware of the duties you need to pay to clear the customs in your destination. The duty structure of each country can change from time to time. So having complete information about this is very important to calculate the right landed cost of the product.
15. Obtain your shipment after Importing from China
Once you have got your products and have ascertained the packaging, quality, labels, and instructions, you should send an email to the supplier and tell them that you have received your order but haven’t reviewed them. Inform your supplier that you will contact him/her once you review your products and will make the next order very soon.
Chapter 3. Ensuring that You Receive Top-Quality Goods
1. Define “Quality Product” from China
You need to understand and define each and every critical specification of your product. Consider bags as an example. If you are importing bags, you need to define its:
- Strap size and type
- Zipper type
- Important dimensions
- Fabric weight and type
- Button type
If the sample you receive is of good quality, contact your manufacturer and ask for the exact same product for mass production. Then make sure that they add the exact same materials used for every component of the product. You should add these specifications in your order.
2. Inspect your shipments when Importing from China
A company sends an individual to your factory for one day, and a third-party inspection will cost about 300 dollars to inspect your goods. You need to do inspection for your shipments as it will assure the quality of goods is top-notch.
3. Avoid Quality Fade
The quality of your goods will fade with the passage of time if you are not vigilant enough.
The imported products will become awful, and their quality over time will begin to skim here and there, till you reach the point where you start receiving extremely awful goods.
Tell your wholesale supplier that quality is the most crucial factor to be taken care of. If you observe a fault in your products, contact your suppliers and tell them to fix them on your future orders.
Chapter 4. Risks involved in importing from China and how to avoid them
Following are some of the risks involved in importing. Read on to find out their details and how you can avoid them:
1. Unpredictable shipping logistics
Although most of the businessmen know this thing, still to refresh your memory, always remember that the success of the businessman hinges on whether you can ship products efficiently, on-time and safely.
Consider you are exporting products. You are accountable to ensure your goods leave your local port and reach at the right destination well on time.
The new businessman should also ask questions for anything else that could possibly deviate from the plan, e.g. damage done to the cargo. By constantly staying organized and partnering with a leading freight forwarder who will assist you to ship products without a hitch in no time.
2. Not having good knowledge of markets
Before stepping into the import business, you should have a good idea of the market by researching it thoroughly. You can also hire professionals who can easily understand the cultures and tastes of your target markets.
3. Facing issues at the border
Different countries have different customs rules according to the needs. However, you will face a gigantic mass of numerous regulations whenever you will transport products. You can save yourself from drowning in a huge swamp of border regulations by hiring experts in customs law and trade compliance.
Chapter 5: Other Costs in Importing from China
We know that domestic goods are more costly than imported goods. Still there exist some extra charges related to importing products from China. Some of the importing charges are as follows:
1. Transportation costs
Transportation costs are applicable when you import goods from China via truck, rail, sea or air.
This will include domestic transportation within China as well as shipping products from China to your destination.
2. Warehouse, Inspection and Port of Entry Fees
Goods are thoroughly inspected when they are crossing the borders. On some occasions, you have to pay for the inspection costs. These charges can add up to high costs depending on the imported goods. Plus, sometimes you might have to pay the port fees at the inspection time.
3. Customs Broker Fees
The import process is made easy by working with a Licensed Customs Broker. These professionals make sure all permits are obtained, fees are paid and your goods are perfectly cleared for import. A licensed customs broker demands some fees for his/her services.
4. Import Duties
Import duties are a prime part of the whole import process.You cannot overlook it as it requires some consideration. The value of imported goods decides the import duty.
5. Agent Fees
Custom agents also inspect your products before importing them from China. They will also charge you some amount. You can give these charges at the port of arrival to get your products to your specific location or decided warehouse.
Chapter 6: FAQs about starting a business with China
1. What are the factors to consider while choosing a niche?
Consider where your expertise lies and see your work history is. Like if you are attached to the electronics industry for a long time, you should start your import/export business in that industry.
Most likely, you will have a nice start on understanding the market, and you will have the ability to speak confidently and knowledgeably with potential buyers.
2. Which type of import-export business is the best?
There is no simple type of import-export business; any sort of business can be profitable. But the condition is that it should be managed in the proper way. See your interests, choose the one that matches your interests, and then research it completely before launching a business around it.
3. Is a Permit required to Import goods from China?
Yes, as an importer you do need to acquire an import permit to import products. You must have a registered company in your country who will act as an importer, before you start import business with China.
4. Is it profitable to import products from China?
We can clearly see that the import industry is quite huge and profitable. Yes, importing products from China as profitable if you are able to find the right product, at the right price and by the right delivery.
Conclusion
The only way to make your business successful is by implementing what you have learned. We have tried our best to help you answer your question “how to start an import business with China”. Go through our given information, do your research and then decide on starting a business. Just see what you feel is right and take the step.
We hope you will enjoy great success in your international trade. The business is also a key to make strong relationships with China. If you have an organized mind and can handle risk, you can establish a successful import business from China.
