The Ins and Outs of Importing from China

Although most big retailers have entered the Chinese market, smaller wholesalers and retailers are still hesitant to engage the Red Giant. They fear the complexities of working with foreign suppliers, the favoritism characteristic of the Chinese government, and the implications the procurement process will have on their supply chain. They even fear that outsourcing their competitive advantages will eventually put them out of business.  But there are significant businesses benefits to learning how to import. Gaining import knowledge and knowhow gives you access to a broader range of products at better prices than your competitors, making your product options more competitive in the marketplace. By understanding and managing the risks of doing business in China, you can minimize liabilities, delays, quality defects, and most importantly costs. The following are some tips to help you get on your way.

Do your homework. Learning about the Chinese export market for your chosen product, as well as the demand for that product in your local market is the first step to successfully importing a good. Sourcing publications are a good place to start as there are many online websites and journals that detail industry trends and verified supplier information. For in-depth studies on specific industries, pricing and forecasting it may be worth investing in a “China Sourcing Report.” Obtaining first-hand opinions from procurement experts is also a valuable source of information.

Find a trustworthy supplier. Developing a relationship with a communicative and dependable supplier is perhaps the most important aspect of sourcing. There are many directories where you can find “verified suppliers” that are pre-screened, registered, and export-ready. A good sourcing portal will allow you to contact potential suppliers directly regarding product warranty, price, key specifications and minimum order quantity.  State your requirements and logistics to suppliers clearly and ask if they provide product samples. There are sourcing fairs that you can attend to test samples in your industry free of charge.

Visit a factory. You would be surprised how easily you can visit a factory. Many suppliers arrange for transport and may even take you to competitors factories. This way you can meet the management and gauge their competence and level of technical sophistication, ensure compliance with regulations and labor laws, check production capacity, and see if they subcontract any parts of production. You can also pay a local agent or third-party quality (3PQ) firm to inspect the factory on your behalf. Agents should speak the local language and be familiar with local conditions to make a judgement on your behalf. Most charge a commission from the amount of goods you import and will also inspect the goods before they are shipped. If you cannot observe the loading yourself, this is a good option, as issues can arise such as wrong count, SKUs, improper handling, inadequate dunnage or damage to the container.

Understand compliance regulations. Research the different regulatory bodies as compliance can be complex. Even with the help of a customs house broker, tracking progress, providing addition information, and endorsing the bill of landing will be necessary to ensure that you abide by all laws and pay additional fees. Neglecting compliance can result in costly customs duties or clearance delays. Finally, having a good estimate of the landing costs is important to ensuring timely and cost effective delivery.

Understanding all the risks costs involved in your import arrangement (hidden and overt) will help you avoid bottom line losses and determine if importing from China is right for your business.

Photo Credit: Exfordy