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Thinking of Importing for the First Time?

Discussion in 'Import & Export' started by Import Expert, Jan 6, 2012.

  1. Import Expert

    Import Expert

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    If you are looking for great profit margins it can be hard to beat importing your goods from China. Wholesalers and retailers generally are aware of the benefits of sourcing products from overseas and understand that with a Chinese product there is more potential for both marking up the sales price and also finding products that cannot be easily sourced in the UK, but the idea of importing seems a daunting, risky process so few will take things further.

    The best advice I can give is don’t be scared to try it. Start slowly, learn the ropes and soon you will realise that as long as you have a good supplier (which can be the hardest bit), the process is no more painful than ordering goods from Joe Bloggs from the local industrial estate.

    Finding a Supplier

    As mentioned finding a supplier is probably the hardest part. There are various online B2B websites available such as Alibaba (Or even TWF) which offer a simple, straight-forward channel for locating overseas suppliers, but not all online directories are vetted equally. You need to put work into qualifying suppliers to ensure that they're legitimate companies and can supply the products they claim.

    A more costly, but safer alternative is attending a Hong Kong or Chinese trade fair, where thousands of suppliers display their product lines. This obviously is more daunting and time consuming but by meeting potential suppliers face-to-face you can as a rule be satisfied that they are genuine suppliers who are not looking to scam you. One should add that this more personal way of doing business up close and personal is very significant in developing business relationships, particularly within Chinese culture. As products will more than often be on show at such events you get the chance to see the range and quality of the product, and you never know, you may stumble across something new that could turn out to be a huge seller in the UK.

    If you buy in small quantities, you'll most likely have to begin importing through a trading company or distributor as it can be costly to an overseas manufacturer to deal with small orders. To get a good manufacturer on board with a high MOQ you will have to sell yourself to them to a certain extent. You may need to demonstrate a track record of selling high volumes and show potential as a long-term business partner if you wish to move up a level.

    Ordering Samples

    The best starting point once you have found the supplier you wish to use is to explain your business and then request samples of the products you’re interested in. You will generally have to pay for the samples but this is quite normal and you must check what kind of product quality and service a supplier can deliver before you commit to working with them on a bigger investment with more capital.

    As well as checking the quality of the samples, you should consider whether the product meets EU regulations, if the packaging is what you are after and what instructions may need to come with the product to ensure they will suit your own buyers. Of course you have the choice of doing some of this yourself in the UK but rather than costly reworking why not try and get the finished product exactly as you wish. Be careful to be very specific – dot every ‘i’ and cross every ‘T’. Things can easily be confused in translation.

    Final Checks

    You should ask your supplier if they have exported to the UK or Europe before, and you can see if they are willing to give you references so that you can make contact with people who have bought from them in the past. It is not unknown to be given samples of a high quality and then find that that ‘big’ order you receive looks like it’s been made by a five year old out of lollypop sticks.

    Look for similar products in your local shops and see what certifications and small print they carry to see if there is anything you may not have considered. Ensure you have everything covered.

    Communication

    Once you have selected your supplier and placed your order you should frequently communicate with the supplier about all details of the transaction. You will be again checking that they have a customer service that matches that you were given before an order was placed and gain useful information on things like lead times and any manufacturing issues there might be.

    Payment Terms

    The most common payment terms in China from my experience are 30-70, meaning 30% is due upfront and the remaining 70% is due when the goods ship. The 30% acts as a deposit and can also allow the supplier to purchase raw materials and tooling. It is possible to negotiate agreements when a final sum is paid once the order is received but you will have to be established with them before you even consider this. How you make the payment should be negotiated to make it as risk free for you as is possible. Some Chinese suppliers are starting to accept paypal which gives you as the buyer an element of protection, but the supplier gets charged a fee for this so more than often they will suggest other methods.

    Quality Control

    You have various options for checking product quality of your first order. You can take the suppliers word for it that the product is as per the sample, plan another trip to China to see for yourself, or hire a Chinese inspection company to do this for you. The latter two mean more cost so for a first small order you may decide to bite the bullet and put some trust into the supplier.

    Shipping

    For small quantities or very high value products you might choose to ship by airfreight or use a parcel carrier. The advantage of this is low risk of damage in transit and a fast transit time. However for anything from 200 Kgs / 1 cbm or so upwards you should consider shipping by sea. The transit times are longer (it can take around 35-40 days from Port to Door), but it will be far more cost effective.

    As mentioned before on TWF, if shipping by Sea your supplier will often try and sell to you on C&F / CIF terms, which includes the shipping cost. However you will get stung by hefty charges in the UK that you were not expecting. I would generally advise to buy on FOB terms, which means that the supplier will pay for the goods to be transported to the local Port. Appoint a freight forwarder in the UK (I hear Woodland Global offer a great service) ;-), get a quote to your door and they will take it from there for you.

    Once you have received your first shipment, you can make a larger order with the peace of mind that the importation process was not quite as daunting as you first thought.
    JaKeReED, jm6689, luttee and 25 others like this.
  2. Anthony

    Anthony

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    Wow!

    That's some piece there, Darren. Thanks very much for the share.

    You've given some great general advice for first time importers, a lot of the basics are covered in this piece, especially the tips on finding a supplier. Might I suggest some paragraph titles if only to make each section a little easier to navigate at a glance?

    One recurring theme for folks going to China to import is the branded goods issue. Those unaware that branded products that are so common here in the West do not exist in many cases in China, especially not in wholesale quantities. If you spend any amount of time around any of the major trade portals you will soon realise there is no shortage of offers for these products, as fraudsters prey on the inexperienced. The fraud is multi-million dollar industry and shows no sign of getting any better which is why platforms like ours exist in the hope that we educate and try to prevent the inexperienced from being caught up in these scams. Remember, you cannot source wholesale branded goods from China.
  3. Gary

    Gary

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    Should help a lot of newer importers, great post!

    Great to see the quality and safety issue raised too as too many people look to places like china so they can be the 'cheapest on ebay', etc. and just go looking for the cheapest prices which even if they achieve they will probably be extremely poor quality and not even be safety tested, when looking at sourcing from china it is very important to not look for 'cheap' but to instead look for 'value'.
  4. Import Expert

    Import Expert

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    Thanks for the feedback guys. I've tried to keep it as simple/general as possible to give a good overview of the process. There are many more specific/detailed guides on here that people can then view for specific issues that may be mentioned in my post. Anthony I've added some paragraph titles now - Looks much better.
  5. Import Expert

    Import Expert

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    Pleased to say that my Boss liked it and we are getting a few thousand flyers made up to hand out at the Spring Fair at the NEC :)
  6. Import Expert

    Import Expert

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    Hi Johny J - Any information provided on here will be useful to someone. Thanks for the input ! :)
  7. MSFB

    MSFB

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    Great stuff guys
  8. rza

    rza

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    I like this one very well :)

    Thumbs up Johny. Push me a PM with your contact details. I represent an East-European trading coorperation.
  9. sguptaet

    sguptaet

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    Excellent info.

    I'd also like to add that you should learn to manage your expectations. I always dealt with China and I would get very upset if things didn't go perfectly when I first started out. But I learned as I went that perfect execution on an order was very rare. Especially since I was not dealing high end products and relatively a small customer. I eventually learned to increase my tolerance levels and simply be more detailed about checking at various stages of the order. And I completely stopped negotiating prices and terms. It never helped for our business, we just weren't that big.

    I guess what I'm trying to say is manage your expectations based on how much power you have over the supplier and how reasonable you are being. How much business do you give them? Volume and dollar amount per order? Orders per year? Price paid? Do you ask them to drop their pants on the price? How many detailed requirements you give them? Etc.
    0754ben84 and Stream Imports like this.
  10. clothingsupplier

    clothingsupplier

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    About business, i believe strongly that responsibility is the most important. To judge if the supplier is responsible is to see the detail, if he replies in time, if he always promise "yes", but always disappoint you, if he can check quality first and save your time, if he can communicate with you in time, if he can honestly inform you the production progress, if he take responsibility or give you compensation if something is wrong for his part...
  11. Frank Lin

    Frank Lin

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    Only if you cooperate with a professional sales of the vendors, or you will meet the status you mentioned.
    Every professional sales will not make a mistake of what you meant, What do you think?
  12. Arvin

    Arvin

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    It is very good for the new importers. Thanks for your share.

    What i want to say is that the samples have some problems sometimes, especially the samples are not the conventional products. So the importers should keep patient in the looking for the good suppliers. Also facetoface communication is better than other communication and it is necessary for you to visit the suppliers' factory.
  13. TorFX

    TorFX

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    Lots of great advice!
    I would also add that getting a good exchange rate and protecting yourself against negative rate movements is important when paying your suppliers. A fluctuation in the wrong direction can very easily wipe out your profit margins.
    For more information on this, see my articles in Money, Accounts & Finance and in this section.
    Clearance UK likes this.
  14. NewImporter

    NewImporter

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    Hi Guys and thank you for the very helpfull informations .
    As i am planning to start the importation business from a Non EU Country ,i foud it a bit complicated to understand the process that the marchandise goes through from the supplier factory to the buyer door and especially when i think about (VAT and UK Customes) .
    Can anyone please explain that in details for me and all the new importers to better understand it.
    Clearance UK likes this.
  15. Import Expert

    Import Expert

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    Hi NewImporter,

    Please feel free to email or PM me with any specific questions you have (or put here on the forum). The process is actually fairly similar wherever in the world you are shipping from/to provided there is no free trade agreement such as within the EU.

    Goods can be shipped by a number of methods depending on size, cost, type of cargo and urgency, but as a very general guide:

    • Seafreight is suitable for anything from around 100 kgs upwards. It usually has a minimum cost for anything up to 1000 Kgs so the larger the shipment the more cost effective it gets. The term LCL cargo is used when you have a shipment that will not take up a whole shipping container (LCL = Lesser Container Load). With this scenario the freight forwarder will consolidate the goods from various shippers to load in one container. On arrival at destination they will usually unpack this at a customs authorised warehouse, and deliver your part to you. They will normally arrange customs clearance on your behalf at which point Duty/VAT becomes liable.
    • If you are shipping full containers (FCL = Full Container Load), the container will usally be loaded at shippers premises and on arrival in UK or destination Port it will be customs cleared and delivered to final delivery point in that container. You will usually be given 2-4 hours to unload the goods after which point additional costs may be incurred. If you are unable to take container deliveries your freight forwarder will usally be able to unpack goods at their warehouse and deliver to you on a trailer, but there will be a cost to this. Container sizes are generally 20', 40' and 40'HC (HC = High Cube so you can fit slightly more in). There are also other types such as refridgerated containers, open top containers, etc.

    • Airfreight is much more expensive, but quicker (For example from China to UK you woudl have a transit of a couple of days as opposed to a month), so more suitable for goods that are urgent or possible very high value tech goods.

    • Couriers such as the likes of DHL/TNT are more suitable for smaller packages.

    Kind regards,
    Darren.
    Stream Imports likes this.
  16. NewImporter

    NewImporter

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    Thank you for the reply,
    The question is how to go through the clearing process of the marchandise from the Uk Customs (I mean the paper works).
    and if i can go my self to pick up my shipment.
    Thanks
  17. Import Expert

    Import Expert

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    That would be handled by your freight forwarder. If goods are coming from a non-EU country and you are shipping by sea or air you should appoint a UK forwarder such as oursleves to arrange the shipping and you should also buy from your supplier on FOB terms (which means they pay to get goods to local port/depot). They will offer to do shipping for you but this will work out much more expensive as you will usually end up paying additional costs in the UK that you were not expecting.

    So, essentially once you have an order that is ready or close to being ready, ask for a quote to UK door from a UK forwarder and if acceptable provide them with contact information for the Supplier. Using China as an example, we would then get our offices out there to make contact with them and provide the information necessariry to get goods shipped to the UK. You can pick up your own shipment from them once its cleared customs but I wouldn't really recommend it - firstly they will not usually unpack goods at the Port but at an inland depot, so although your Bill of Lading may state Felixstowe as arrival port, goods could in theory be 'unpacking' anywhere. (For example our shipments from China will arrive Felixstowe or Southampton, but will unpack in Chelmsford, Essex. You will also find that if you have an all in, to door rate it will work out cheaper than collecting goods yourself.

    Once goods have arrived UK the forwarder will request any information they need from you and arrange customs clearance, and issue you with an invoice for Duty/VAT. Once you have paid this and the freight costs to door they will deliver goods to you at a covenient time.

    Shipping a pallet load from China Port to UK Door can cost close to £200 + Duty/VAT, so its not as expensive as it may be perceived. The larger quantities you ship, the cheaper it becomes with economies of scale.
  18. Nick Robinson

    Nick Robinson

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    Thank you so much for that post! Although I am considering importation from Thailand, I think you bring up some very good advice. By any chance, does anyone have experience with importing Thai silk products?
    laura901110 likes this.
  19. Jenilee

    Jenilee

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    Hello,

    I had to delete the posts from non-advertisers as well as posts with reference to them. Please note that only members with advertising membership are allowed to offer their products and services. We strongly discourage trading with non-advertisers for the protection of our members.
  20. GProud UK&GLOBAL

    GProud UK&GLOBAL

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