How to Import from China in 2019January 5, 2019 in Blog, Importing, Portal: Importing, Portal: Products
This article has been written largely with Amazon and ecommerce sellers, who are looking to build a private label brand, in mind.
- Why Import from China?
- What Do You Need to Import?
- 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 Negotiate Prices & MOQ with Suppliers
- How to Ensure You Receive High-Quality Products
- 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 you need to be importing from China to succeed. 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 and Amazon were also considerably smaller when I started.
Generally speaking, when I import products, I want to double my money within 6 months.
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.
Is it Too Late to Import and Sell on Amazon?
The short answer is no.
In 2017, I started a new brand that nearly hit a million dollars in revenue in under a year. Amazon continues to grow at 15%+ year and there’s continued growth and demand for new products.
To sell on Amazon today and be successful though you need to be making better products in some way (even if it’s a very small way). Importing undifferentiated me-too products no longer works.
I’ll cover product development below.
What You Need to Get Started Importing
The most important thing you need to import from China is money to buy inventory. Generally, I recommend having at least $500 to buy inventory and ideally $2000-5000.
What you need
- $2000-5000 for purchasing products
- An Amazon.com Sellers Central account
What you don’t need
- To be physically present in America or have an American EIN, SSN, or Business
- Have any Chinese language knowledge
Nice to have as you grow
- A customs broker
- A Third-Party Logistics company (3PL)
- A Freight Forwarder
- An Inspection company in China
You will also need an Amazon Seller Central account if you plan to sell on Amazon. This will cost you $39.99 a month.
You do not need a U.S. business.
The United States makes importing products and selling them VERY easy for both Americans and non-Americans. For shipment values greater than $2500 you need a personal SSIN, your business EIN, or for non-Americans, you can apply for what they call a non-resident importing number. However, for shipments under $800, you do not need any of these.
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.
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?
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 on Amazon.
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 the 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.
Good products to import from China
- No patents or other IP
Bad products to import from China
- Electronics and/or electricals
- Inherently dangerous products
- Products with a patent and other IP
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
China is an incredibly safe country (the 32nd safest in the world). It has a strong legal system and being scammed is very rare.
Your primary concern will be ensuring quality products. Chinese factories won’t steal your money but they may send your inferior quality products.
The most popular places to find suppliers are:
- Trade shows, including the Canton Fair
- Referrals and sourcing companies
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.
My preferred method (by far) for finding a supplier is by visiting trade shows. The best suppliers often do not advertise on Alibaba but do attend trade shows. The Canton Fair is the largest trade show in China and is good but it is even better to go to industry-specific trade shows.
Sourcing companies can be useful for finding difficult to locate products but normally are reserved for higher order volumes.
Trading Companies vs Factories – Which is Best for You?
In China, there are two basic types of suppliers: factories and trading companies.
Factories manufacture products. Trading companies do not manufacture products but source lots of different products from different factories.
In general factories have lower prices than Trading Companies but higher minimum order quantities and less product selection.
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.
Neither trading companies nor factories are inherently bad or good. Trading companies (normally) have lower MOQs and better quality controls. Factories (normally) have lower prices.
Ordering Samples and Making Your First Order
Once you find a great product to import, order a sample of that product from the supplier. 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 making 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
We’ve provided a free sample purchase order (Excel) you can download here.
How to Negotiate Price and MOQ with Suppliers
The first thing you must do before trying to negotiate any pricing is to get multiple quotes, ideally from three or more suppliers. This will tell you what the normal cost of your desired products is.
Order several samples and try selling them on Amazon before committing to a larger order.
In China, there is a golden rule: quality is inversely related to price. Abnormally low priced items normally mean low priced quality. Another reason for a low price can be:
- The quality is significantly lower than others
- Different shipping terms (i.e. EXW instead of FOB)
- Significantly higher minimum order quantity (MOQ)
Once you determine what a normal cost is for your items you can try to negotiate pricing. However, prices in China are becoming more and more fixed and negotiation is becoming more difficult. A 5-10% discount off of quoted prices is normally significant.
Where you can negotiate is minimum order quantities (MOQ). Often you can negotiate the suppliers quoted MOQ down by 50% or more.
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. Never accept an order requiring a 100% deposit unless the order is small (less than $2000).
Payment is almost always made by wire transfer or sometimes referred to as TT (telegraphic transfer). Payment by credit card or PayPal 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 then 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 Receive High-Quality Products
Your biggest concerns when importing from China will be to ensure that you’re getting quality products.
Quality standards are the biggest difference between Chinese manufacturing and Western manufacturing. Western countries (re: Amazon buyers) have much higher quality standards than in China.
If you do not define what exactly a Western quality product is, your supplier will send you Chinese quality products.
There are 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”: Define every important specification of your product. For example, if you’re importing bags, define the following:
- Zipper type
- Fabric type and weight
- Button type
- Critical Dimensions
- Strap type and size
If you received a sample and the quality is good, ask your supplier what exact materials were used for various components to prevent them from substituting for inferior materials later. Include these specifications in your Purchase Order.
Related reading: How to Avoid Crappy Quality Products when Importing from China
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: If you are not vigilant, the quality of your products will fade over time. 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.
Show your supplier that quality is important to you. Inform your supplier of every defect you receive on an order and ensure they fix it on the next order.
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 Products: 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. UPS, FedEx, and DHL are air courier services.
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).
- 150 lbs or less
- 2-5 Days
Normally quoted door to door. No custom broker needed (although courier will charge you if shipment is over $800).
- 200-500 lbs
- 2-10 Days + 1-5 Days for Custom clearance
Make sure shipment terms are FOB. Quoted port to port (not door to door). Expect $200-300 in documentation fees + $150-200 customs brokerage fees.
- 500+ lbs
- < $1/kg
- 14-35 Days + 1-5 Days for Custom clearance
Make sure shipment terms are FOB. Quoted port to port (not door to door). Expect $200-300 in documentation fees + $150-200 customs brokerage fees.
Air freight and sea freight are quite a bit more complicated than air courier the first time around. They are also 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. Popular incoterms include FOB and EXW.
With FOB shipping terms, your supplier will pay for all the costs (including overland transportation in China) to get your shipment to the port and export fees. With EXW, you will pay for all of this. There is no difference in complexity but EXW will always cost you more than FOB (normally $300-500+ more).
The easiest thing to do is to always ask your supplier to quote you FOB terms.
Related EcomCrew Reading
Customs, Tariffs, and the Magic $800 De Minimis Value
In America, orders under $800 do not have any duties applied to them. This is called the de minimis value. Orders above this amount will be charged applicable duties. For orders under $2500, you will not need what they call a formal entry to import the goods into the United States. This means your shipping company will clear customs for you but they may charge you a fee for this.
For orders above $2500, you will need to file a formal entry and get a customs broker. We recommend PCBUSA.com. Fees vary but normally are $100-300 depending on the order size.
Once your goods are shipped 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.
Getting Your Goods from China to Amazon FBA
Shipping goods from China to Amazon is relatively straight forward. However, a few things you need to be aware of:
- Ensure your products are labeled correctly, including UPCs/FNSKUs and Carton Labels
- Ensure all duties are paid before being delivered to Amazon
- Be aware of multiple warehouses
You must make sure your items are labeled correctly before being delivered to Amazon. Ask your supplier to do this for you.
Also, you must ensure all duties are paid before arriving at Amazon. If your order is below $800 this should not be an issue. If your order is above $800 then ensure your shipment is shipped DDP (Duty Delivered Paid).
Also, Amazon may request your products to be shipped to multiple warehouses. This can complicate shipping.
Related Reading: Shipping Your Goods from China to Amazon FBA.
Do you have any questions about sourcing products, importing, or shipping your products? Feel free to comment below.