How to Import from China

Copyright © 2013 by Richard Tong.

ISBN:      Softcover      978-1-4836-1913-2

                Ebook           978-1-4836-1914-9

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

Rev. date: 04/09/2013

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CONTENTS

Part One—Preface

About the Author

How to Use this Book

Part Two—In Depth Study of Importing Procedure

Import from China Feasibility Check

Product Sourcing from China

Building Relationship with Chinese Suppliers

Sampling Process

Helpful Hints Before You Import

Begin the Ordering Process

Mass Production & Quality Control

Container Shipping Arrangement

Customs Clearance Documentation

Categorization of Goods & GST

Contract Dispute Settlement

Find Resellers for Your Product

Part Three—Case Study & Practical Strategies

International Trade Case Study

Electronic Data Interchange—EDI in International Trade

Import Toy Products from Top Toy Wholesale Markets in China

China Business Scams And How To Avoid Them

Who Should Own Your China IP? Maybe Not You.

Doing Business In China Safely. The Due Diligence Basics

China’s Detention Of Foreigner For Alleged Customs Violation Should Be A Strong Warning

Part Four—Appendix & References

About China

Public Holidays in China

Chinese Zodiac

Chinese & English Language Translation

Sea Freight Container Dimensions

International Trade Glossary of Terms

PART ONE

PREFACE

About the Author

As Business Director and Founder of Australia Jada International Trading Company, Mr. Richard Tong has rich experience in International Trade.

After completion of Bachelor degree of Business Administration from university, before settling in Australia, he had held important entrepreneurial role in China Technical Import & Export Corporation for 5 years.

Richard migrated from communist China to Australia more than 10 years ago. With knowing little about western culture when he arrives, his persistence, positive attitude and motivation to succeed have helped him to overcome obstacles and achieve many significant goals in his life.

Though Australian market is intensely competitive market, newly established Australia Jada International Trading Company is still the finalist of Australian Small Business Awards in 2010 by Australian Business & IT Expo.

Mr. Richard Tong has Chinese background. He understands Chinese culture very well and can speak fluent Mandarin and some Chinese dialects. His work can be the bridge between East and West. It can be the milestone for people in western countries, but also many other English speaking countries who are hoping for developing the business relation with China.

It will also help many westerners who are eager to know more about Chinese culture. This book has been dedicated to YOU—the reader.

People often complain about lack of time when the lack of direction is the real problem. It is easy to know what you want, but sometimes frustrating when you do not know how to get it.

Number One tip—Educate yourself.

Take the coins out of your purse and invest them in your mind. Your mind will fill your purse with coins.

—Benjamin Franklin

Achievement seems to be connected with action. Successful men and women keep moving. They make mistakes, but they don’t quit.

—Conrad Hilton

Never Never Give Up !

—Winston Churchill

Remember. The magnitude of your life is directly proportional to the magnitude of your thoughts.

—Dolinsky

The future belongs to those who believe in their dreams.

—Eleanor Roosevelt

I would like to thank people for their love, support, feedback, wisdom and ongoing encouragement. My wonderful parents for their love and belief in my abilities. With your encouragement, I feel that this book is a great foundation for many books to come.

Friends in Xlibris who have read the manuscript and have given me great opportunity, feedback and endorsements.

Last but not least,

Thank you, God, for the wisdom and strength you have given me.

This book is a gift to you!

Please bless it so it also becomes a gift to many other people.

"My potential is God’s gift to me.

What I am doing is my gift to God"

How to Use this Book

Thanks for joining me on this journey!

In order to create very clear venation for you as reader and international business learner, this book has been formatted into an easy to follow step by step system.

In this book, you will find the breakdown of a well planned system of importing from China. This detailed procedure has evolved over decades, utilising the practices from well experienced international trading partners.

There is no absolute typical method to use this book. You may choose to read the chapters in order or you may skip around, reading different chapters with certain contents of view points at different times.

To get the most value out of this book, you can keep it where you work and refer to it frequently throughout the whole importing process.

The sole purpose of this book is to help you and show you how to have competitively priced, high quality Chinese products delivered to your warehouse door under proper guidance with minimum efforts and costs.

After putting efforts on memorizing the ideas, terms and principles, you should apply them immediately. Instead of putting your business plan on the shelf, you should take actions.

The more action you take right now, the more you and your company can harvest the result and benefiting from importing from China.

When this book is nearly to be competed, I could hardly control my excitement and joy in knowing the collaboration of very best material and ideas which was going to be in this one book which would be the tools for personal business excellence at their fingertips.

Building an extraordinary business is the waging efforts of numerous people from across the globe. In the chapters that follow, you will be exposed to a wide variety of ideas, terms, techniques and experiences which have all been designed to help you make your business truly extraordinary.

Thank you for purchasing this book and good luck with your importing!

Enjoy the program!

PART TWO

IN DEPTH STUDY OF IMPORTING PROCEDURE

Import from China

Feasibility Check

Advantages of Importing Product from China

With China’s economy growing so fast, there are several changes in its infrastructures which have positive impact in its import and export business. Many economists and experts affirm that China has emerged as a true global power today. If we come to look at it, this country still has a growing market which is developing very rapidly. That’s why many entrepreneurs today invest and take the opportunity on how to import product from China. Such venture assures high profitability since there is a high demand for China products nowadays.

Acquiring Import Products at Competitive Prices

The main advantage of importing from China is that you get extremely competitive prices for a particular product. With this, you can get higher profit margins as compared when you import from other countries. China is well-known for its cheap labor and low-cost materials use in manufacturing. As a result, the overall cost of a specific product is also low.

If you want to get into the distribution industries, importing goods from this country might provide an attractive solution. Taxation is also low in China as their government encourages their manufacturing firms to expand. With those factors, the amount that you can save when you import from this country rather than simply buying in your local region can be huge. The overall cost of your imports will be kept to an absolute minimum even when you add up the shipping and the import duties. This is especially true if you are ordering in large amounts.

Wider Range of Import Products to Choose From

Many of the products that we see and use today are made in China. Almost any product you can imagine can be source from China. If you are an importer looking for a way to meet your consumer’s demand, importing from China is a great option. Today, China’s warehouses are loaded with too much activity. As a capitalist, you don’t have to worry about the quantity that you are going to import because their manufacturers are striving to consistently produce sufficient outputs to meet production quotas. In other words, they always strive to consistently fulfill the orders of their retailers abroad.

Source of Quality Import Products at Reasonable Prices

Before, China products are generally viewed as low quality products. However, there are already many foreign companies who are establishing their manufacturing sites in China. Such companies have high quality standards. Over time, Chinese factories have also improved in terms of their quality control measures. Now, they are employing stringent tests on the quality of their products in the same way that other foreign companies do. With their status as one of the largest exporters in the world, they are now more cautious about the quality of their products. Their reputation depends on the level of the products they manufacture and they understand that it will dwindle if standards slip.

Feasible To Import From China?

Before you start to import, you need to research the feasibility of your sourcing project. You need to set up a goal, decide the budget, make the plan, consult the import expert, research the market, learn the import process, calculate cost. In the end, you should come up with a enforceable plan, which should including the following: the products, the market, the process, the people, the cost, the margin, and the marketing.

Nowadays, a large number of people find that China is the best source for importing goods for starting an import business. However, before considering this idea, there are some things that you should consider. For instance, one should think about the feasibility of this business venture.

Among the things that you would have to consider are:

•   The Schedule for Your Project

•   Know The Goods That You Want

•   Will Importing from China Actually Save You Money?

•   Have You Considered The Quantity?

The Schedule for Your Project

Depending on the product that you are ordering or importing from China, you would have to carefully consider the schedule. For instance, you would like to order this customized item; however, it would still be produced by the manufacturers of the product. Make sure to give an allowance of as long as four months or more for importing this item.

Know The Goods That You Want

Have a relatively good knowledge about the item you are ordering. When ordering, always give a detailed description of your product such as the size, color, material, texture, etc. you can even send pictures or illustrations of the item to the manufacturers.

Will Importing from China Actually Save You Money?

Be knowledgeable about the whole process of importing from China. Compare costs and decide whether you can really get a significant profit from importing or not.

For instance, there are products that can be bought for lower prices in local markets. If you import this product from China, how much would be the difference in the costs?

Importing is only practical after you necessitate a definite volume, or value level. As a general rule, if your order is at least US$20,000 to buy from a supplier in a Western country, it should be viable for you to buy goods directly from the Chinese suppliers.

Do a research on the local prices of these items that you are considering. Knowing about local prices can also help you to get an idea about how the goods are produced.

If you have any knowledge about this, it can help you in getting accurate estimates for items that you’d like to import from China. It also gives you a better understanding of the product. You should also get estimates on the packaging.

It also helps to know about manufacturing terminologies. It can be quite useful especially when you start dealing with manufacturers. You should also research on the manufacturing process of your product in order to get a better understanding about it.

Have You Considered The Quantity?

You should know that when importing from China, there is a required minimum number of products for ordering. Most Chinese suppliers and manufacturers follow the MOQ or the minimal order qualities. This means that this is the minimal number that you can order. The MOQ is based on the products’ production, wastage, and cost.

Quotations Sheet from some Chinese companies are listed as follows.

Case (1)

Case (2)

Case (3)

Case (4)

Check For Feasibility

As a businessman, you should always do a feasibility check on your business venture. In a way, it can be your guide and your protection as a businessman.

Simple Formula Value Check of Imported Goods is as follows.

Cost of Goods = FOB Buying Price + Freight + Insurance + Custom Duty + Customs GST + other costs

Selling price agreement with customers should be higher than Cost of Goods. Their difference is the profit. Profit divided by Cost of Goods is profit margin.

How to Trim Your Total Costs?

Importing products from China to your desired destination is without a doubt more cost effective because of the country’s capability of producing massive volumes on a more affordable level. For businessmen, this would be a great business opportunity as China is the world’s largest exporter. But bear in mind that this type of business demands more cautiousness in the process as the risks are relatively higher. When in the importing business, the best thing to do when you aim to trim your expenses is to double check everything that’s on the process. You should also know the low interest rates on trade agreements between China and your country. Moreover, it would be a big advantage if you are able to calculate all your accounts properly and complete your important documents.

As an importer, your total costs are your most important business data. It is critical to understand what a product can actually be sold for. Knowing the total landed costs of the items on the other hand is very tricky. To have a reputable calculation, choose the price based on any possible factors to be considered in the business. Do not only look at product cost savings. Instead, try to look at the bigger picture. Some of the things that you need to calculate are the associated duties, taxes, and financial impact from other regulatory controls. Also, factor in the total shipping costs, and try to adjust for increased lead times, inventory variability, and customer service.

It is also a big help when you are aware of preferential trade deals as you trim the cost of your import items. Preferential trade agreement is a pact between countries that reduces tariffs for certain products to the countries who sign it. This does not really requires elimination of tariffs but it is one way of lowering tariffs compared to places not part to the said agreement. Leveraging trade deals can be crucial to your importing business as it can offer double-digit reductions on your import duties. Thus, try to actively monitor changes in low interest rate trade contracts to capture full duty savings as well as to know some things needed to qualify your imported goods. To lessen the risks of penalties and fines, you must take advantage of it.

As one of the most common landed cost setbacks, higher-than-expected shipping cost is being experienced. To also lessen the cost of import, check the calculation of the total cost shipments based on the contacted rates including rules and regulations governing tariffs. In addition to that, optimizing your carrier selection decision will allow you to reduce import costs.

Inaccurate and incomplete documents of import are one of the main reasons why shipments are delayed. Aside from the fact that due to this event an importer is subject to pay fines or audit due to the irresponsible classification and failure to value imported products, the importer will also experience the delay which will last for many days or even weeks. This is your main responsibility as an importer. Having a system of checks and balances can help you to make sure that your import documents are complete and effective.

Product Sourcing

from China

Where to Start? Select a Product to Import

What products you will buy