Importing From China: An Introduction (Updated 2018)

John Edmonds, Freightos

Importing from China can be an extremely lucrative undertaking.

Just ask the 115,000 companies that imported from China to the US in 2016.

But if you’re new to the game, where do you begin?

Right here.

We asked 18 experts from some of the top eCommerce, product sourcing, and fulfillment companies in the world about each step of the importing process and crammed their answers into 130 pages of The Experts Guide To Importing From China.

The guide gives you the confidence to get started with highly-actionable information, tips, and advice.

So what are you waiting for?

Read on!


  1. Identify goods for import.

  2. Ensure that there are no barriers to importing.

  3. Find a supplier in China.

  4. Calculate the landed cost of your goods.

  5. Book your shipment.

  6. Conclusion


Identify goods for import.

When it comes to imports, the world is your oyster. That makes it both easy and difficult to identify what goods to import. There are several ways you can go about it, however.

  1. Travel abroad and do the groundwork on your own.
  2. Pursue products online.
  3. Attend trade shows.

You can also opt to produce your own amazing and unique products.

Expert Tip The ideal good to import is small and light. This enables you to save money on importing, storage, and then shipping to your customers further down the line.

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Ensure that there are no barriers to importing.

When considering a product for import, make sure that it avoids barriers such as failing to comply with US safety standards, high customs duties, or carrier restrictions.

Every day, a surprising number of shipments of seemingly innocuous products being imported from China to the US are prevented entry by US Customs.

Ensure that your product complies with US safety standards and labeling requirements early on.

Technical Compliance/Chemical Regulations

  • Look into the regulations of agencies like CPSC, ASTM, and UL.
  • Conceptualize how your product might be able to injure a consumer, even with improper use.
  • Check whether the product design is compliant by purchasing an ASTM standard file that lists technical requirements.
  • Add a clause to your purchase contract that your product must comply with certain standards.

Labels

You can easily ensure that your labels comply by creating the label file in .ai or .eps format and sending it to your supplier before production.

Documents

You can purchase CPC, GCC, and other agency test report templates online. Print, sign, scan, and archive them for at least ten years.

Lab Testing

If relevant, submit samples for testing to a CPSC accredited compliance testing company. Within a week you’ll have proof of compliance.

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Find a supplier in China.

After deciding on your product, your next step is to find a supplier. For most importers, the go-to supplier marketplace is Alibaba, but there are many alternatives that can be found with a simple Google search.


It’s important to note, however, that the supplier you find on Alibaba probably isn’t the manufacturer who owns the factory. More likely, they are a wholesaler or trading company.

Expert Tip A quick and easy way to find out if your sales rep has direct access to the factory is through the aptly named “paper trick.” Say that you want to see what the production facilities look like. Ask your prospective supplier to take photos of the factory, including a piece of paper that has your name and data written down in each picture.

When you’re importing from China to the US, and importing from anywhere else for that matter, you should protect yourself by drafting a formal legal contract. Commonly known as a purchase agreement, manufacturing contract, purchase contract, sales contract, or supplier agreement they are usually valid for several years. Work with a lawyer specializing in China business law on this.

Unfortunately, most small importers don’t bother. In fact, many don’t even issue a purchase order, solely relying on the supplier’s purchase invoice

You may get away without having either a purchase agreement or purchase order because most Chinese suppliers will want to resolve issues and protect their reputation. But, it’s not at all recommended and you absolutely must get a formal legal contract if you are planning on buying a substantial amount from the supplier over time.

There are even more legal formalities involved if you want IP protection.

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Calculate the landed cost of your goods.

You know what you want to import and determined that doing so is feasible. Good job! Now you can calculate landed cost.

Landed cost is a calculation used to determine your company’s bottom line. It factors the total cost of a product on its journey from the factory floor to your buyer’s door, including the cost of goods, shipping, insurance, and customs.

It’s an invaluable measurement of whether your goods are worth importing.

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Prepare your shipment.

You should start arranging your freight about two weeks before the order is ready for shipment. Your first step is to find a freight forwarder.

A freight forwarder can get your goods to where they need to go whether you’re shipping via air or ocean. Even if you already have a forwarder who you trust, it’s worth getting more than one freight quote to ensure that you’re getting the best deal.

Expert Tip Cargo insurance is super cheap compared to the costs involved if your shipment is lost or damaged some point along the way importing from China to the US. Forwarder’s rates are quite comparable to buying directly from an insurer, and it’s less hassle for you.

Once you accept a quote, ask the forwarder to send you a copy of the policy. You will need it, of course, should you have to make a claim (although many forwarders will do this on your behalf). By doing this, you will also ensure that your forwarder doesn’t forget to book insurance.

Incoterms

Incoterms are (eleven) standardized freight terms that must be agreed in writing between the supplier and buyer, or no air or ocean carrier will accept the shipment.

They are a trap for beginners and choosing the wrong one can have catastrophic consequences.

When starting out with Incoterms, stick to:

  • Ex Works (EXW): You take full responsibility (arranging and paying) and liability following up with problems) from factory pickup. Make sure to add a clause to your purchase agreement that the supplier must help load the truck.
  • Free To Carrier (FCA): You take responsibility and liability once the shipment is handed over to the carrier, typically near the port.
  • Free On Board (FOB): You take responsibility and liability once the shipment crosses the ship’s rail. Expect to pay the local charges between delivery to the carrier and loading on the vessel.

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Conclusion

Importing from China may seem intimidating, but it can be easy if you have the right tools. We should know, we wrote a book about it! Scroll down to download it for free!

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Summary

The Experts Guide To Importing From China features 18 experts who explain everything you need to know and do at each step of the shipment process.

Freightos makes global trade frictionless with the world’s online marketplace for the trillion dollar international shipping industry, helping importers and exporters reduce logistics spend and save time with instant comparison, booking, and management of air, ocean, and land shipments from top logistics providers.

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