In this guide I will walk you through how to import your first products from China. I’ll cover the entire process including identifying good and bad products to import to sell on Amazon and other channels, finding good suppliers and weeding through the bad suppliers, and how to get your shipments from China cheaply and quickly. I’ve written this article with Amazon and ecommerce sellers in mind but even if you’re a traditional wholesaler or retailer you should get a lot of value out of this article.
- Why Import from China?
- How to Find Products to Import from China and Sell on Amazon
- How to Find Suppliers to Purchase From and Placing Your First Order
- How to Ship Your Products from China Easily, Cheaply, and Quickly
Why Import from China?
If you plan to run your own ecommerce business then to succeed you need to be importing from China. The drop shipping model where you buy and resell somebody else’s products is more or less dead. Here are some other reasons to import from China:
- High profit margins (and much higher than drop shipping) means you can make a lot of money
- It’s easy to import into America (even for non-Americans)
- Developing real tangible products and selling them is exciting
- No need to travel to China to find products…
- But if you do travel to China it’s fun and adventurous
How Much Money Can You Make Importing from China?
In 2016 I sold my previous importing company and that year I made over a million dollars in profit basically from importing. It took me nearly 10 years to get to that point, but ecommerce (which is how we sold almost all of our products) was also considerably smaller when I started.
Very broadly speaking, when I place an order for a product, I want to double my money on it and I want to sell out of it in 6 months from the moment I place my deposit. So for example, in my previous company, I had about $100,000 invested in it and I made $200,000 profit off of that $100,000. In other words, I turned my $100,000 into $200,000, or a 200% return.
Importing from China is very much a cash dependent game. In many ways you’re turning nickles into dimes, but how many dimes you accumulate depends on how many nickles you start with.
What You Need to Get Started Importing
One of the things that attract people to start an importing or private label business is that it’s very easy to get started. The downside is that, opposed to some other internet based businesses, the upfront costs are a lot higher. This required investment, however, also means that your likelihood of achieving success is higher than other business models.
What You Need to Import from China?
- $2000-5000 for purchasing products
- An Amazon.com Seller Central account (assuming you’re selling in America)
I tend to tell people that the minimum you need to get started is $500. A more reasonable budget is $2000 and ideally $5000. Most suppliers have minimum order quantities that you must purchase. You also achieve significant economies of scale by shipping in bulk and by sea opposed to shipping a few items via air with UPS or FedEx.
If you are planning to sell your items on Amazon (as most people are) you will also need an Amazon Seller Central account. An Amazon Seller Central account will cost you $39.99 a month (plus referral fees, shipping fees, and miscellaneous other fees) but gives you both an incredible sales platform and fulfillment network thanks to Fulfilment by Amazon (FBA).
What You Don’t Need
- To be physically present in America or have an American EIN, SSN, or Business
- Any Chinese language knowledge
The United States makes importing products and selling them VERY easy for both Americans and non-Americans. In fact you do not need any SSIN or EIN (let alone U.S. business) to import products into America and sell them now. Imports valued at under $800 are under the so-called de minimis threshold, meaning that they require no formal paperwork or duties. For shipments above $800, you can clear customs using your own personal SSIN, your business EIN, or for non-Americans you can apply for what they call a non-resident importing number.
Needless to say, you do not need any Chinese language knowledge as well. Almost all Chinese suppliers who export have English language websites and sales catalogs and at least a couple of staff members with reasonable English.
Nice to Haves As Your Business Grows
- A Customs Broker to clear customs for larger orders (about $100-$300 per shipment + duties)
- A Third Party Logistics (3PL) company to receive larger shipments and deliver them to Amazon warehouses ($100-$500/shipment)
- A Freight Forwarder to help move your goods from China to your desired country (cost varies on size/speed of shipment)
- A Third Party Inspection company in China (about $300/inspection)
All of the above services we discuss in more depth in this article. None of these things are needed to get your business up and running immediately and I’m a huge advocate of starting your business as soon and cheaply as possible, proving it, and scaling it.
How to Find Products to Import from China
The big question you’re all probably asking now is: how do I find a product to import from China?
The good news is that there’s still a ton of meat on the Amazon and importing bones. I started a brand new brand in 2017 that nearly hit a million dollars in revenue in under a year.
When you’re importing from China you’re basically looking at private labeling products. This means you’re taking an existing product, putting your brand on it, and possibly making some light product improvements.
When I’m looking for products to import I’m looking for three basic things:
- Little or no “optimized competition” on Amazon
- Products that can be profitable to sell
- Products that I can easily improve
I cover how to find products a lot more in the post how to find the perfect product to import from China and sell online.
Good and Bad Products to Import from China
China is the factory of the world but there are certain products which are good for small importers and others which are bad. Identifying good and bad products basically comes down to understanding two critical differences between China and Western countries:
- China is a developing country with different quality standards from the West
- China has different norms around intellectual property and there are a lot of counterfeit products
Chinese factories make a lot of crappy products but also make a lot of excellent products. One of the ways to avoid crappy quality products is to import simple products. Example products would be mouse traps, garlic presses, and furniture. More complex products are more likely to have quality issues (remember the exploding hoverboards?).
On the contrary, the more complex a product is, the higher likelihood it will be produced of bad quality. The most obvious examples of these are electronics. China still produces enormous amounts of terrible quality electronics and it’s where I see new importers being burned most often.
You should also avoid importing any inherently dangerous products. The importer (re: you) is responsible for any personal or property damage your products may cause. Products to avoid include any electrical devices, baby products, digestible products, etc.
Finally, China is home to a lot of knock-offs. You will find a wide variety of counterfeit products to import including products that violate trademarks, copyrights, and/or patents. It’s a very bad idea to import counterfeit products – they may be seized at the border, Amazon may suspend your account, and even worse things can happen. Don’t do it.
How to Find Good Suppliers in China
OK so you’ve found a great product to import. Now how do you find a supplier for this product? Before we get into that, we need to understand some basics about Chinese suppliers.
Most new importers, when they import from China, fear that they’re going to wire transfer money to some factory in China and never receive their products. Thankfully China is an incredibly safe country, somewhere around the 32nd safest in the world, ahead of my home country of Canada and well ahead of the United States. I’ve wired millions of dollars to China and always received my products.
Your primary concern will be ensuring quality products. Chinese factories won’t steal your money but they may send your inferior quality products.
Where to Find Suppliers
The most common place to find suppliers is Alibaba and Aliexpress and we have an excellent guide on using Alibaba. With Alibaba you’re normally buying from the factory or at least a very specialized trading company and they have relatively high minimum order quantities (MOQ). With Aliexpress you are normally buying from a reseller and you can buy one or two items at a time but at a much higher price.
Although Alibaba is where I find most of my suppliers, my preferred method by far is finding suppliers from within China mainly by visiting trade shows, as often the best factories are not advertising online. There are a number of large trade shows in China, specifically the Canton Fair (see our guide) and even a year long wholesale market in Yiwu (see our guide). It is even better to go to industry specific trade shows. In EcomCrew Premium we go into some hacks you can use to find these factories without actually visiting China.
Trading Companies vs Factories – Which is Best for You?
In China there are two basic types of Suppliers: factories and trading companies. Often the supplier will say in their company name manufacturer or trading company so they are quite easy to distinguish. If in doubt, ask your supplier what type they are.
Factories are exactly as they sound. They are factories that produce the actual product you are purchasing. In general factories have lower prices than Trading Companies but higher minimum order quantities and less product selection.
The other type of supplier in China is trading companies. Trading companies purchase products from a bunch of different factories. They do not actually produce any products themselves. The advantage of trading companies is that they have greater product selection and lower minimum order quantities.
Neither trading companies nor factories are inherently bad or good. If you’re ordering a lot of one product though factories are generally best for you and if you want a lot of products but only a small quantity of each then trading companies are normally superior.
Ordering Samples and Making Your First Order
Once you find a great product to import, order a sample of that product from the supplier (even better: order several samples and try selling them on Amazon before commiting to a larger order). Your supplier will likely charge you a sample fee as well as the cost of air shipping that product to you (which can be anywhere from $50+)
Once you’ve reviewed the quality of the sample, you can proceed to place a larger order. I normally suggest to make your first order size as low as possible (the supplier’s minimum order quantity). You want to gradually build up the order size with your supplier over the course of two or three orders. When you place your order, submit an actual Purchase Order (aka an invoice) that consists of the following things:
- Order quantity
- Shipping terms, i.e FOB, CFR, EXW (More on this later)
- Date the order will be completed
There are thousands of free Purchase Orders online. It doesn’t need to be complicated but by submitting an actual Purchase Order (PO) you demonstrate more professionalism than most other importers.
Negotiating Price and MOQ with Suppliers
In China there is a golden rule: quality is inversely related to price. If you receive quotes from ten suppliers and nine of the suppliers quote you $20 but one supplier quotes you $15, you should be very nervous about the $15 quote–there is almost certainly a reason for the lower price which could include:
- The quality is significantly lower than others
- Different shipping terms (i.e. EXW instead of FOB)
- Significantly higher minimum order quantity (MOQ)
Your goal when purchasing is to determine what the fair market price of your product is. To know the fair market price of your product you need to get multiple quotes, ideally three or more. Once you determine the fair price of your product, do not expect to be able to negotiate a lot on that price unless you are ordering a large quantity (5-10x their MOQ size). Even then, a 5% discount is significant. If you manage to negotiate more than this, the supplier may start substituting inferior materials without telling you.
MOQs is where you will likely focus most of your negotiation. I like to order as small of a first shipment as possible, validate the product, and then proceed to place a larger second order. I do not want to order 5000 hot pink hunting gun bags only to find out no one wants to buy hot pink hunting gun bags. I’d much rather order 500 and ideally 50. Whereas negotiating price is often self-defeating, negotiating on MOQ is purely to your advantage. It’s normal to try and get your supplier to agree to half their initial stated MOQ. Most suppliers tend to have MOQs that are around $2500-$5000 so if you’re ordering a widget that costs $1 then an MOQ of 2500-5000 is normal. If you’re ordering a widget that costs $100, then an MOQ of 25-50 units is normal.
Payment Terms and Making Payments
When you are arranging payment terms with your supplier, the most common terms you will come across will be 30/70. That means you pay 30% when the order is placed and 70% upon completion. 50/50 is becoming more popular now, and more and more often I see 100/0 which means 100% deposit. I will never accept 100/0 payment terms. If you cannot negotiate it to 50/50 or better, reject the supplier. The only exception is for samples where you will always pay entirely up front or if an order size is below $500 or so.
Payment is almost always made by wire transfer or sometimes referred to as TT (telegraphic transfer). Your supplier should give you all of the information you need and you should expect to pay $10-$40 each time you make these payments. Payment by credit card, PayPal, or similar method is generally not accepted for orders larger than $5000 or so.
Payment is almost always in US dollars. The Chinese Renminbi is pegged to the U.S. dollar so there’ll never be any currency fluctuations unless the Chinese government decides to appreciate or depreciate their currency. If your source of revenue is not in US dollars than you’ll be subject to currency fluctuations between your home currency and the US Dollar. If you’re transferring currency often, I suggest using an exchange service like Transfer Wise that will have significantly better exchange rates than most banks.
How to Ensure You Get Quality Products
As I mentioned previously, one of your biggest concerns when importing from China will be to ensure quality products. Quality standards are the biggest difference between Chinese manufacturing and Western manufacturing. First, Western countries (re: Amazon buyers) have much higher quality standards. Second, your supplier will assume that every detail of your product that you do not define is negotiable and not important. Third, the quality of products will start high on initial orders and gradually decrease over time if you are not vigilant, something called quality fade.
There’s really just three things you need to do to ensure quality products:
- Define what a quality product looks like
- Inspect your shipments to ensure they meet the above definition
- Be continuously vigilant against quality fade
Define “Quality Product”: We have an in-depth guide on avoiding crappy products. In summary, if you received a sample or first shipment and every product is gloriously fantastic, you need to define what those Golden Products look like. If you do not, your supplier will slowly decrease the quality and an inspector will not know what to look for. For one of my brands we import bags. My specification sheet will include things such as: material type/weight/color, strap width, type of zippers, button type, critical dimensions, etc. You can even be ultra-lazy and ask your supplier to define all the critical details for you. Doing so eliminates the chance they will change any of those details down the road.
Inspect your Shipments: We have an in-depth guide on how to conduct a third party inspection. A third party inspection costs about $300 and a company like AsiaInspection will send a person out to your factory, for an entire day, to inspect your products. There’s no reason not to do it.
Avoid Quality Fade: As mentioned, if you are not vigilant, the quality of your products will fade over time. You need to guard against this. You will not all of a sudden receive products that are awful. Instead, over time quality will start to be skimped here and there until at one point you receive awful products. The heat will slowly be turned up and you’re the frog in the pot. Expect something to change on your products. Inform your supplier. Ask for some free products and inspect against it on the next order. If you do this, your supplier will stop turning up the heat on you.
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Shipping and Logistics
In my own personal experience and after helping other first-time importers, having your goods shipped to you and receiving them is one of the most stressful and most challenging aspects of importing.
Three Ways to Ship Your Stuff: Air Courier, Air Freight, and Sea Freight
There are three ways to ship your items from China: air courier, air freight, and sea freight. Air courier is simple for most people to understand as it basically means UPS, FedEx, DHL, etc. This is what they call a door-to-door service. Your supplier ships your products and they arrive wherever you want them to arrive, i.e. your home or Amazon warehouse. The courier also has customs brokerage service so you don’t need to worry about getting a customs broker.
Air Freight and Sea Freight differ vastly from air courier (FYI there is no such thing as sea courier). These services are arranged through a freight forwarder and typically are quoted from China to some airport or sea port, i.e. to the sea port of Long Beach (near Los Angeles) or Los Angeles International Airport (LAX). You will either have to arrange to have your goods picked up or ask your freight forwarder to arrange to have them shipped to your final destination (which will involve a significant surcharge). They will not provide customs brokerage (at least not for free). Is your head spinning yet? Then check out our in-depth international freight step by step guide.
Air freight and sea freight are quite a bit more complicated than air courier the first time around (but easy after that). There’s a big trade off though: they are much cheaper. Air freight is about half the cost of air courier and sea freight is about 10% the cost of air courier. Sea freight is always quoted by volume whereas air shipments are quoted by weight, but a good rule of thumb is that sea freight works out to less than $1 per kg.
Related EcomCrew Reading
In international trade there is something referred to as Incoterms. These are terms that have legal and liability consequences but, more importantly for new importers, they have cost consequences. You can read our guide, Shipment Terms, The Real Costs, and Be Aware of EXW
The important thing to know is that EXW is the most expensive as you will have to pay for all of the costs associated with picking up the goods from your supplier’s factory and delivering them to the port along with some other miscellaneous fees (any freight forwarder will do this without a problem–it just costs more money). For FOB, your supplier pays for all of those fees. A quote for EXW will add around $300-$500+ in fees to you. When comparing quotes, make sure the suppliers are quoting the same shipment terms. If they do not, ask the one quoting EXW to quote you their FOB price or add $300-$500 to the quote.
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Customs, Tariffs, and the Magic $800 De Minimis Value
Once your goods ship and have arrived in your country they need to clear customs into your country. If you shipped via air courier (UPS,DHL, etc.) then the shipping company will do this for you and give you a bill for it. All other shipments need a customs broker (you can technically do it yourself but it’s MUCH easier to pay a customs broker). A customs broker will charge you around $100-$300 in paperwork fees and also all of the applicable duties and tariffs. In the USA, these are normally around 0-20% but can be significantly more than this–always check the duty rate for your item before importing.
There is one exception, and that is importing into the USA when your goods are under $800. America has a ridiculously high de minimis value. This de minimis value is just a Latin way of saying that any shipment under this amount does not have to pay any duties (or a customs broker). Sounds too good to be true? It’s not. Many people strategically plan their shipments to be under this amount. If you’re fortunate to have lightweight items that can be air shipped and are low in value you can easily ship into Amazon FBA warehouses and use this to your advantage.
Getting Your Goods from China to Amazon FBA
When you’re shipping goods to Amazon FBA from China there’s a few quirks you need to be aware of when shipping from China.
The two annoying quirks are that Amazon will often have you ship your goods to multiple warehouses throughout the United States and Amazon will never pay a dime for any duties/brokerage fees when they receive them. We go into more detail on this topic in the free guide Shipping Your Goods from China to Amazon FBA and give some more advanced strategies in our paid course.
In regards to the first point about multiple warehouses, this means that is very difficult to ship sea freight from China directly to Amazon FBA without using a third party logistics company (3PL). Shipping via air courier is slightly easier but it will also cost you much more money.
In regards to the second point, Amazon not paying for any duties/brokerage, this means that you need to be careful that UPS, DHL, or other courier never requests a dime from Amazon. Otherwise they will be all too happy to ship the goods straight back to China. The easiest way to avoid this is shipping Duty Delivery Paid (DDP) but refer to either our free guide or paid guide for information.
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This guide should have given you everything you need to get started with your importing business. I’ve run multiple importing companies over nearly a decade of my life and while some of the effective strategies and tactics have changed over time, the overall business model is the same. Despite there being increased competition, ecommerce continues to grow at nearly 15% per year in the United States and 20% globally, meaning the size of the pie has also gotten much larger.
Do you have any questions about sourcing products, importing, or shipping your products? Feel free to comment below. For more in-depth questions, consider joining one of our paid courses where Michael Jackness and I give unlimited 1 on 1 email support for any of your questions.