China is the default supplier to the world. It can produce some fantastic products to import, at margins which deliver the importer a very healthy profit so they, in turn, can build a very successful business. The key is how to navigate the process, profitably.
How to import from China
- Validate your product idea– is it profitable to import?
There are three things you need to think about. These critical areas will break your profit margin very quickly:
- risks and compliance
- product development costs, and
- Minimum Order Quantities (MOQ).
- Prove your supplier is up to task
It is too easy to find suppliers these days. That’s the problem you are mostly overwhelmed with — a whole range of traders, agents and wholesalers, with everyone claiming to be the manufacturer. Here are the recommended ways to find, then shortlist a great supplier:
- sourcing shows in South Africa, and
- online supplier directories.
- Now protect your import business, ideas and customers
There are three important risk areas:
- You have almost no legal recourse in China.
- Depending on shipping terms, the product is your responsibility from the factory/port to your front doorstep.
- A patent or trademark is up to you to enforce.
- Now commit to an import order
Let us point out two critical points here:
- Your negotiation with the supplier started at ‘Hi, my name is…’
Every email and communication since then has been posturing towards the final negotiated agreement, and there is much to get right in your agreement.
- Using buyer leverage is very different in China, than it is in South Africa for instance. Here you might demand, detail and withhold until a supplier agrees to your terms (referring to our culture rather here than generalising about different industries). In China you might do the same, but you must exercise your buying leverage in a more subtle and clever way.
- Ship and launch your products to market
In relation to shipping and launching your products imported from China, let’s look at a few important details and issues to overcome.
- Product quality and recalls – you must get quality inspections done in China.
- Shipping from China – obviously air is fastest but most costly, perfect for small regular orders. However for the majority of us that have bulk orders or even just bulky products, you must ship and decide if you will do a LCL (Less than Container Load) or FCL (Full Container Load). An LCL can be costly but for many small businesses it is the only option they have, if a 20 foot container is not needed.
Now you have learned the very bare bones of how to import from China. You can now implement some practical steps right away and get your business idea up and running!