This article is for new importers. As a sourcing agent, trading company and manufacturing business in China, we would like to share our 2 cents during years of experience selling and exporting products to overseas buyers.
1. Feasibility Study
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.
2. Products Ideas
What products you will buy from China? If you don’t have any clue, you could check ecommerce websites like alibaba, ebay, see what products are highlighted on homepage. Every product from missile to toilet paper has its own market, so do something you are familiar with, do something you have resources to sell.
3. Know where to buy Chinese goods
Ecommerce make international trade easier. Search your products on alibaba, globalsources or made-in-china.com, you will find thousands of suppliers. If you are small fish, your quantity can not meet the MOQ set by factories, you could go to Chinese wholesale market such as Yiwu wholesale market, to buy small quantity and consolidate them into a container.
4. Screen and verify supplier
By comparison, a final list of suppliers meet your price target, how to select Chinese suppliers? Don’t pick the lowest price, otherwise you should worry about the quality. Don’t pick too big supplier, you won’t get VIP treatment, pick a supplier with reasonable price, good service attitude. Do the due diligence properly, send inspector to check their factory address.
5. Price negotiation
In today’s market, price is very transparent, so it is more of price comparison, then price negotiation. Read this article to know what factor affecting product price in China.
6. Contract negotiation
SIGN CONTRACT IS A MUST and DON’T USE PI AS CONTRACT. Read this article to know what a typical Chinese contract consists of. Chinalawblog.com is a great resource to know how to deal with Chinese supplier from legal point of view.
7. Collect Samples
Chinese suppliers often offer free samples, but it is good manner to offer to pay for the sample and sample shipping fee. China shipping agent gives as low as 20% DHL, UPS, TNT price than what you will pay by your collect account. Ask your supplier to recommend a shipping agent.
Chinese salesman normally don’t speak good English, for important matters, better to communicate by emailing. Try to explain the terminology. Use simple and basic English.
9. Make payment to China supplier
Send payment to company account only for large amount transfer. For sample fee payment, it is understandable if supplier ask you to pay their personal account. If the supplier has export agent, it is okay to send payment to their export agent, but include that information to the contract.
10. Payment terms
L/C is better than T/T. Many suppliers are not familiar with L/C(don’t have seasoned good English-speaking staff), so if they insist, T/T is acceptable after you verified that the supplier is trustable.
For T/T, 20% to 30% deposit is common, some supplier will ask 50% upfront payment, some supplier accept 10% advance payment if you push.
Don’t save money on quality control, send a third party reliable QC firm to inspect the quality before shipment. If your order is big, hire an in-house inspector.
There is flood of shipping forwarders out there that provide one stop shipping solution. You need to learn how to screen shipping agency. Ask supplier, industry experts to recommend, do online research about their background.
Compare the price to get a good offer. Shipping forwarder will take care of customs clearance, documents preparation.
13. Customs clearance and documentation
You don’t have to hire in-house staff to prepare shipping documents, customs declaratation and other import/export formality, shipping forwarder can handle those for you.
14. Dispute settlement
Hope you have a proper contract signed before you have to go through the dispute settlement stage. File the lawsuit in China, otherwise it will be hard to enforce the verdict in foreign countries. Lawsuit is the last solution, try to solve the dispute outside the court, get in a lawyer, send a lawyer’s letter, with lawyer chasing behind, many cases are solved outside the court. Arbitration is always easier than lawsuit, so it is advised to use arbitration as the dispute settlement method. If you can choose, choose an arbitration organization that is far away to supplier’s location so it will be harder for them to influence the arbitrators.