How to import from China

You may be able to find new business chance or new profit growing point by being able to directly import from China. It can be complicated, but it pays to take the effort for immediate profit and long run success.

Steps

1. Find the products of your interest

There are many sources to find your products. Internet is the easiest one to start with. There are many web listing services. In my view, www.alibaba.com is the best. Register your username on www.alibaba.com website, post the products of your interest, and you will receive tons of products supply information and perhaps price list.

2. Establish relationship with potential suppliers

Select a few potential suppliers to communicate with. Narrow down the ones that you really want to work with. Discuss the price and trade relationship. Obtain product samples. Discuss shipping and payment terms. Gather all necessary information to prepare for placing a trial order.

3. Understand trade terms and use them

Before placing any order, you need to understand and confirm with your suppliers about shipment terms. Most popular are FOB and CIF, as well as payment terms. These are closely related to your landing cost calculation and risk assessment. You can consult an import management company and a freight forwarder for detail break-down on the costs and risks. You can also use an import management company to negotiate the trade terms.

4. Do your homework on compliance issues

You need to understand the relevant import compliance regulations before hand. Besides US Customs and Border Protection, other government authorities like USDA, FDA, DOT, and ATF also regulate the importation. Pay particular attention when you import textile products from China. Go to the websites of these agencies to understand, register or download the forms. Compliance issues can be very complicated for some products. It is highly recommended to consult a good Customs House Broker before placing any order.

5. Select a forwarder and Customs House broker

Go to your local international trade organization/association and Customs office to find the list. Visit them, and select the one you like. For the first time importer, I would suggest you to use more individualized services, because you need more attention than you would expect.

6. Place a trial order

If everything goes fine. Please a trial order with a written Purchase Order. In the purchase order, besides type out the detail description of the products and trade terms, list all needed shipping documents.

7. Transportation and Customs clearance

Your forwarder and Customs broker are take care of your transportation and Customs clearance. However, you also need to track the process and assistance, such as providing additional products information and endorsing bill of lading. You need to issue a power of attorney to your broker and purchase Customs bond for your importation.

8. Receive the products and keep the records

Now you can go to your next step to sell your products and make profit. Now you are on the track.

Tips

Pay attention to the kind of business of your supplier, are they manufacturers, or 3rd party suppliers? Compare the advantage and disadvantage. Manufacturers may have faster response in the process of product development, while 3rd-party suppliers has a broader channels that can satisfy your other needs in the future. Some are 4th-party suppliers that I do not recommend to work with.

Establish healthy personal relationship with the key employees of your supplier is very important in doing business with Chinese people.

You need to have a realistic consideration of the landing cost. There may be many hidden costs. The best way is to consult an import management company.

Letter of Credit is commonly used in trade with China. Go to your bank to get detail formality and cost.

Export agents in China are very commonly hired by China exporters. Some of these export agents are also 3rd-party suppliers, others just provide export services.

Neglecting compliance can be very costly. Not only you may need to pay unexpected and very high Customs duty such as anti-dumping duty, but also you may risk delay the Customs clearance and pay the expensive storage fee at the railway station or container yard.

If solid wood packaging material is used, talk to your broker. Sometimes pallet packing is necessary to reduce the transportation cost during the process of loading and unloading. Talk to your forwarder for detail.

Composed by Cathy Huang, March 8, 2006

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