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Starting an Import Export Business

If you’re looking to get started in the import export business then congratulations and welcome to the game! We are delighted to be a part of your journey and looking forward to seeing you at one of our live events in the future.

Okay so let’s get started.

There are a few steps involved if you’re starting an import from china business, the first is finding a suitable product to import, finding Chinese manufacturers,negotiating the best price from the factories, conducting sample testing procedures and much more!

Yes there is a bit of work involved but it’s worth it! The import export business is fun, profitable and enables you to travel all around the world doing something you love.

Okay so here are the steps involved when importing from china…

  1. Finding hot products to sell- what should I import form china?

    Okay good question and this is an important step because you can import dud products for very cheap however no one is going to buy dud or out of date products… For example” the slinky”, if you tried to import this now (which you can quite easily) you would have a hard time trying to sell it that’s for sure!

    So I would recommend using sites like alibaba (it has a page on there showing hot products to import).

    Also try eBay pulse, amazon best sellers list, google keyword selector tool.

    These are just a few ways of finding hot product sphere and many more however this is a good starting point.

  2. Find Chinese Factories

    This step is critical. There are many factories out there that either claim to be factories but are either middlemen or scammers and if they are not one of those then they are a factory that produces shoddy products.

    In saying that there are many factories that want to do business with you and produce high quality products for you and build a long term relationship, these factories account for 90% of total factories with 10% being the “bad apples”.

    So avoid the “scammer factories”. You can do that by:

    1. Arranging an inspection team
    2. Calling the factory
    3. Attaining the factories address and google searching the address
    4. Sample testing
    5. Calling the factories previous customers
    6. Searching for the factory online
    7. Asking forums and sites like aliexpress or alibaba and other online wholesale and importing forums and ask “has anyone ever dealt with XYZ factory- what was your experience?”

    This is a good starting point- there are many other ways of weeding out the bad suppliers that we reveal in our live workshops.

  3. Negotiating with the factory

    The idea of negotiating with Chinese factories is not only to get the best price but also to get the best quality.

    There are 3 elements involved here. You need to get the cheapest price, best quality in the least amount of time. You can have two of these elements but not all three…

    When negotiating here are some tips:

    • *ask for the price as though you are based in the USA
    • *ask for the price in USD dollars and then in Chinese Yuan
    • *don’t be shy and ask for a break down of the individual costs that make up their quote so you can see the material and labour break downs
    • *build a relationship with them (this ensures they look after you and gets you priority service in the future over their other customers)

    Again there are many other ways of negotiating with the suppliers however this is a good place to start if you’re a beginner starting your own import export business from scratch.

    I will be covering the other steps involved to import from china in another post.

    By the way if you’re invested in learning more then please check out our range of products and seminars as a way of furthering your education on the importing business.

Finding the Right Supplier

Is buying directly from a manufacturer instead of brand wholesaler a good choice?

What are the disadvantages and potential pitfalls of buying from a distributor?

Suppliers for products in each industry will have many different ways of delivering the product to the consumer. You must fully understand each supplier’s distribution channels before you can find suppliers. When you visit the SaleHoo directory, you will see that the suppliers are separated into four sections – Drop Shippers, Wholesalers, Liquidators, and Manufacturers – to make sure that you can find the source of supplier that you need. Drop Shippers Drop shipping is an arrangement between a wholesaler and their customer where the company agrees to ship their products direct to the reseller’s customer. It is definitely the business opportunity available in the internet commerce space and is gaining great momentum as well.

Nowadays, most people are aware that internet sales are increasing and shoppers are now starting to favor shopping online rather than visiting the high street. Dropshipping allows almost anyone to start their own company without needing to buy large amounts of stock upfront. Thousands of people all over the world are using dropshipping as a source of income. So chances are you or someone you know have bought something from a website like ebay who uses dropshipping. Wholesalers Buying wholesale products to sell is the one that gets to buy in bulk and by buying in bulk one gets huge discounts on the products and saves tons of cash on shipping, handling and many other expenses and costs which one may incur .The benefits of buying wholesale products to sell are so many and serious businessmen should take up the initiative and start buying wholesale products to sell.

Are you looking for cheap quality wholesale goods that you can resell on eBay? Finding reliable cheap suppliers that also provide quality brand name products are difficult. But there are lots of great wholesalers in the Salehoo directory and they are willing to work with eBay and ecommerce sellers as well. Liquidation Suppliers Sales/Clearance Suppliers Liquidation sales are privately negotiated sales between a willing buyer and a willing seller over a defined time period.

Retailers that are trying to get rid of old products from the shelves will generally sell a product at a discounted or clearance price. Similarly, a store that is going out of business will generally sell a product at a discounted or liquidation price. These terms are pretty much interchangeable as they just mean that the product is being priced to get it out of inventory. This could be because they want the space for newer products or need to pay off creditors when they go out of business.

The main difference between the Liquidation Sales is the process by which a company is brought to an end, and assets and property of the company redistributed. While Clearance is just items that they want to get rid of so they lower the price substantially. Manufacturers It’s sometimes hard if the manufacturer is not local, or is overseas. But most are meant for consumers, so the best way is to find a contact link on the website, or phone number. Email or call, and ask how and where to go. Moreover, there are some Salehoo members use the forum to group together to buy a container load of merchandise, sharing the shipping costs across the group.

Price is important, but it shouldn’t be the only reason for choosing a supplier. Lower prices may reflect poorer quality goods and services which, in the long run, may not be the most cost-effective option. Be confident that your supplier can make a sufficient margin at the price quoted for the business to be commercially viable.

Wherever possible, meet potential suppliers face to face and see how their businesses operate.

Remember the saying, if the deal sounds too good to be true…it is too good to be true!

Buying Wholesale

Buying WholesaleAs your business expands, you will need to make sure you have a consistent re-stock system. Sometimes, this may require two suppliers. When purchasing large quantities, you need a whole supplier.

The two types of suppliers are:

  • Bulk Lots: This means purchasing large quantities at regular intervals from the supplier. The goods are sent to you so you can store, package and post for selling.
  • Drop Shipping: This means that you pay for goods which you’ve seen or touched. Then, the goods are packaged and posted straight to the customer for you.

There are directories you can go to find wholesalers. Legitimate wholesalers, however, do not go out of their way to find business from low-volume sellers such as eBay sellers. They may not even have their websites optimized for generic keywords like "wholesale supplier." Be careful, and make sure you do the research when selecting a supplier. Sometimes, sites that may come up in a Google search for “wholesale suppliers” may not be legitimate wholesalers. If you find a good, legitimate wholesaler, you can get very good deals.

When you contact a wholesaler, there are a few other things you need consider.

  • If it is a bulk order, make sure you have a good storage for your stock. If you don’t, is using drop shipping possible?
  • Think about the quantities you need to purchase to insure that you have the proper supply to meet your demands.
  • Smaller wholesalers will probably do business with you easily, because they need you as well. If you use one, however, as your business grows you might have a difficult time to keeping up with peak sales seasons.
  • What will the duration of product re-stocking be?
  • Know the weight or volume of your items. If you’re business involves large items, or you require large volumes, it might be hard to handle things without a drop shipper.
  • Test the quality of the product yourself, by purchasing a few items.

If you’re a new customer, wholesalers may be hesitant to open an account with you. There are a few questions that are easy to answer if your business has been around for some time already. Try to confidently answer the following questions:

  • Are you selling other products, and if so, what are you selling?
  • Who are your customers?
  • What are your expected monthly sales?
  • How long have you been in this business?

Answer these questions as confidently and honestly as possible. You don’t want to over-estimate and end up with an abundance of stock you can’t use, but you don’t want to be under-stocked either. You should research carefully to answer the questions, and thoroughly check out your wholesaler. This way, you can increase a good, reliable business relationship with your wholesaler.

Business Plans And Home Import/Export Businesses

p>Business Plans And Home Import/Export BusinessesPlanning is important for any project you undertake. The home import/export business is a big project, so it is even more important to have a plan. The plan doesn’t have to be complicated. All a business plan is really is just a basic roadmap to follow. After all, if you don’t know where you’re going, it’s hard to tell where you’ll end up. Often times, beginning entrepreneurs fail to realize the importance of a business plan until it’s too late. When they do realize it, they’ve miscalculated funds, time, and effort they should have allowed for start-up. This causes them to struggle, and sometimes even fail.

You may think putting together a business plan is difficult, time consuming and/or expensive. It doesn’t have to be. Any cost and time it may take is worth it, because a plan can prevent a multitude of start-up disasters.  There are several reasons to complete a business plan for your import/export business.

  • To apply for a loan or obtain financing— Unless you have your own funding, the initial product purchase from Chinese sellers can be costly.
  • Build a roadmap for the direction for the business to follow— Show where you’re starting, where you want your business to be, and how you plan to get there.
  • Define a new start-up— Show what your business is, what you plan to buy from your Chinese sellers, and how you plan to sell it.
  • Have a written agreement for partners to refer to— If you have partners in your business, this will help in case conflict arises.
  • Establish a value on a business you want to sell— This will be necessary for legal purposes should you want to sell.
  • Evaluation of a new product line new marketing promotion— If your product is an original one, this will help to show that the product is yours. It will show the timeline of the products creation, and help to establish your legal rights should it be necessary.

If you need investors, financing, or want other business people to listen to you, a business plan is important. A plan is basically a step-by-step guideline for you to use as you grow your business. A plan shows:

  • Start-up Costs
  • What you operating costs
  • Costs of tasks you need to accomplish in order to reach your income goals

It helps you establish a budget for your business. This will help you be less likely to overspend and run out of money. One of the greatest reasons businesses fail is due to lack of funds. This is something you don’t want to happen to your business. While it is not required, and some companies do not start with a plan, traditionally, companies with plans do better and reach successful levels faster. Plans can help beginning businesses save money and avoid common disasters that many businesses encounter.
Many banks won’t even talk to you without a business plan, so it is an important step if funding is required.  If you’re not willing to take the time or make the effort to prepare a business plan, why should bankers take time to listen to you?

When you write a business plan, focus on convincing investors and partners that your business idea is a profitable one. If you have enough data and research, a lender will feel comfortable putting his or her money into your business. Just stick to the point, and keep it as brief as possible. Don’t, however, leave out important details. There are seven parts to a business plan

  • Executive Summary—This is a summary of the plan for your business.
  • Company Summary—This section is the description and history of the business.
  • Products and/or Services—In this section, you give a description of your company’s products/services and how they are unique in the marketplace.
  • Market Analysis—Here is where you show your market data research and your market growth forecast.
  • Implementation and Strategy—This area shows your plan of action, how products will be sold, and a timeline for task completion.
  • Management Summary—Here you list your staff and give key information about them.
  • Financial Plan includes information on sales, cash flow and company profits
    While writing a plan is relatively easy, beginners often need help guiding them through the process. Here are a few ways you can get help with your plan:
  • Hire Professional Services—There are professionals who have experience as business plan writers. You can hire them to handle the writing task for you. You still need to provide the writer with the information you want in the plan.
  • Buy a Book—There are books you can purchase that will help you learn how to write a business plan from scratch.  If you’re looking for a step-by-step guide in language you can understand, you may want to go to Amazon and purchase “Hurdle: The Book on Business Planning,” by Timothy Berry.
  • Use Business Planning Software—If you’re looking for a quality business plan, you can also use templates or software. They can give you a professional outline to follow which provide basic plan structure so that you don’t have to start from scratch.

All-in-all, a good thing to remember when considering whether or not to write a plan is: “If you don’t have a plan, you may be planning to fail.”

Avoiding Fraudulent Wholesalers

Avoiding Fraudulent WholesalersSometimes intelligent businessmen who have worked hard and earned their own money lose it to deceptive, fraudulent wholesalers. It leaves them feeling frustrated, cheated, and betrayed. Like it or not, there are a lot of merciless people who present themselves as up-right businessmen. You need to know what to look for, so you won’t fall prey to them.

Here are six signs to help you determine whether or not you’re dealing with a fraudulent wholesaler:

  1. Talk to the wholesaler on the phone. If the wholesaler sounds unprofessional or doesn’t carry on business-like conversations they may not be what they claim. Also, look for only simple answers like “Hello” without mentioning the business name or other simple answers like “Yes/No.” These are indicators that you may be dealing with a fraud.
  2. During the initial contacts, request to see a business license or sales tax ID. Legitimate wholesalers will usually supply these. US sellers desiring to buy from US wholesalers need a tax ID. If you’re living outside of the US, you no longer need one.
  3. Request product samples. Sometimes, wholesalers may be suspicious. Usually, however, wholesalers don’t see anything wrong with offering a product sample. Of course, it is at your expense, and the price is higher. If your prospective wholesaler doesn’t offer one, be sure to ask for the reasons why.
  4. Be careful about unsecured payment methods. At first, wholesalers say they only adhere to secured forms of payments like credit cards, Paypal and others. At a later period, however, they may declare that only wire transfers or western union are accepted. Not all wholesalers resorting to unsecured payment methods will be deceitful, however, many deceptive people operate in this manner.
  5. Look on the website for their physical addresses and contact details. If their website doesn’t one, you should be cautious. Request their contact details. Ask if you can come in and check on their offices. If they are a legitimate business, this shouldn’t be a problem.
  6. Ask for photographic evidence of the supplier’s stock. Some wholesalers will say that they don’t have stocks in hand, but continue to ask for upfront payments. This could indicate a problem.

When looking for a wholesaler, it is wise to always keep these rules in mind. Be extra careful when you’re applying with a new wholesaler. Research them thoroughly, and you should be able to tell if they are fraudulent, and avoid suffering for it later.

Importing from China: Organizing Logistics and Storage

LogisticsIn the shipping process, for terms like Delivered Duty Paid or Cost, insurance and freight, there’s nothing you need to do but wait on their arrival. For some shipping where you use terms like “Freight on Board,” an effort has to be made to keep things organized. Remember, even if you’re lucky enough to take on DDP or CIF at this time, it is not a guarantee.

Like any new task, organizing logistics can be complicated in the beginning. If you do them well, however, you can save money, so they are worth the extra amount of work.

You must make sure that teach partaker in the process is one upon whom you can rely.  Remember that costs tend to add up as each phase takes place, so it is up to you to make sure that each phase is as easy on the budget as possible. Do some research to determine the most excellent freight company, shipping and storage alternatives. In the beginning, it may take you a little time, and appear difficult. Once you learn the process, augmenting profits will be a breeze. Here’s how whole process for the importer process goes:

  • Manufacture/Wholesaler/SupplierManufacturers receive payment for the cost of their goods and its packaging. All documentation required for exporting is prepared by the manufacturer. Shipping terms like Delivered Duty Paid (DDP) and Cost, Insurance & Freight (CIF) are preferred to Freight on Board (FOB). The supplier undertakes the inbound risks and have the delivered products paid off. Whichever shipping term you have, always verify insurance terms. You need to insure the container for 110% of the FOB cost.
  • Road Haulage CompanyThe collecting from suppliers and delivering these to the docks/airport, is the responsibility of the road haulage company.
  • Sea Freight CompanyYou, or the supplier if CIF, DDU or DDP, will have to negotiate with the sea freight company to determine a rate for the process of having your goods transported. If less than a container load is necessary, then you only have to contact a freight forwarder. The Sea Freight Company is responsible for verifying the goods, documentation, and loading them into the vessels. Usually, costs range between $1500 and $4500 depending on the volume of the shipment.  Freight associated charges are computed per kilo on the volume weight of your goods and small lightweight consignments are issued with the least charges. Professional freight agents will advise you of these charges when the quote for shipping of your products is given.
  • Discharging of GoodsWhen you merchandise arrives, it is unloaded. If your documentation is organized, the merchandise is usually quickly cleared as soon as you verify payment of the necessary duty and tariffs. If you have not established credit facilities with your selected shipping line and Customs ahead of time, you are responsible for paying everything before the goods are discharged. If there is a delay, you must pay for additional storage fees.

    If you pay the shipping charges by check, it will take working days to clear. While it is clearing, fees for storing the merchandise are added at approximately $0.14 per kilo per day. It doesn’t sound like a lot, but a delivery of 1000 kilos of merchandise that has to be stocked for four days can have additional storage fees of up to $560.00 of store charges, but the rates vary.

  • Payment Methods: You can choose from the following methods of payment:
    • Cash
    • Deferred payment— Importers with deferred accounts can avail of this payment.
    • Broker deferred — Agents with broker deferred accounts can avail of this payment.
  • Transportation to Warehouse and Warehouse Storage Once the merchandise reaches the docks or the airport, you must have the merchandise picked up and delivered by a freight company to a warehouse.

    For warehouse storage, yet another stage of the import process, you will need a few more hundred dollars, because you will have charges for:

    • Receiving the product
    • Cost of labor
    • Long-term storage costs
    • Broker and/or freight forwarder fees

    Bargaining about the cost of this step in the storage process is usually possible. If you look and compare, you can probably save money. You can’t just have your merchandise stored in a warehouse without considering its location. There are a lot of areas in the USA that offer less expensive warehousing than others.
    You can obtain a breakdown of the sea freight costs, importing procedures, etc., by visiting http://www.skymartworldwide.com/t_help_simpleguideimporting.htm.

  • Customs Duties and Taxes Duties and taxes of goods you import will vary from one country to another. While importing from China, Hong Kong, India and others, you are likely have to pay import duties. Of course, there are exceptions. If the goods are items you can’t avail in your own country, usually the tariffs and duties are minimal. For other goods which are subjected to FDA jurisdiction, you will need to have special licenses. The process involved is complicated.

    To determine the charges, visit your country’s customs website for information. Information such as phone and other contact information can be found at these sites: 

    Once you’ve been through the process a few times successfully, you probably can handle the process of importing on your own. First-time importers, however, should obtain a broker to help with the process. Classification is necessary, and if your products are not classified properly, you may end up paying inaccurate duties and tariffs. Through the help of a broker, you can avoid paying the inaccurate charges. Your documentation must also be accurate. A broker can help with that as well. If it is inaccurate, it can cause delays and higher charges. When this happens, you aren’t able to transport the products while obtaining correct documentation. Items will need to be stored longer than the original agreement, so you are then responsible for paying demurrage.

Step by Step Importing from China

If you look for them, you can find new business opportunities every day. Importing from China could be one of those opportunities for you. If you know how to navigate through the process, it could be an effective part of your business plan. It is a complicated process, but the internet and advanced technology in international trading is making it easier all the time. There are several steps to the process:

  • Decide Which Product You Want to Market: You can sell any item you want, but make sure you research to be sure it is a marketable product. You want one that will give you a profit. There are many web listing services on line to help you locate suppliers for the product you want to sell. You will need to register with your username, and inform them which product you’re interested in. They will match you up with several suppliers. You will get a lot of product supply information and possibly a price list.
  • Contact the List of Suppliers: Look for a supplier that you feel best fits your needs and start a business relationship. The best suppliers will already have a lot of business. When you provide them with your company’s information, sell yourself in a way that makes them want a business relationship with you.
  • Research Suppliers: Take the time to thoroughly check the supplier and be sure they can meet your specific needs. You’ll also want to verify that they are a legitimate business. Ask questions to find out how long they’ve been in business, the trade shows they attend, how long they’ve attended them, and the other companies they manufacture for. Confirm all the details you possibly can.
  • Begin Negotiations: When you’ve selected the supplier you want to use, begin negotiating the price and the relationship of the trade business. You’ll want to become familiar with the Chinese methods of doing business. During the negotiation process, request product samples. Examine the sample and the packaging it comes in. Review all the instructions that come with the samples. Sometimes there is a fee for the sample, but you definitely want to inspect the product before contract agreements are finalized.
  • Determine Shipping and Terms of Payment: Once the product meets your satisfaction, you need to discuss shipping and terms of payment. Obtain all necessary information, and place a trial order. Be sure to include all details when placing a purchase order. You don’t want to leave any room for errors or misunderstandings.
  • Learn Trade Terms: You’ll want to become familiar with various trade terms are and use them appropriately. A few common ones are:
    • FOB – Free On Board or Freight On Board
    • CIF – Cost, Insurance, and Freight
    • Landing Cost Calculation – This is the total cost of a shipment that has landed. It includes the purchase price, freight costs, insurance, and any cost the port of destination charges. This may also include customs duties and/or other taxes placed on the shipment.
  • The terms of Payment must be agreed upon and understood between you, the importer, the supplier, and the exporter. You may wish to complete a risk assessment. This helps you clearly look at all levels of risk involved. For assistance with the assessment, you can consult an import management company and a freight forwarder. Import management companies can also assist you in the negotiation of trade terms with your supplier.

  • Determine and Understand the Terms of Payment: When you are making a purchase for import, it’s not uncommon to be requested to pay 30% up front and the remaining 70% when the product is shipped. This provides your supplier the money that he needs to cover the cost of producing your product. It is important that you understand the terms of payment when negotiating them.
    1. Legally speaking, you are the Importer. You bear the responsibility of making sure the goods you receive meet the regulatory requirements for the country of destination. Anything product which does not meet the requirements can be stopped at the border. They can possibly result in law suits against you or your company.  Requirements vary from country to country, so make sure you know what the requirements of the nation of destination. Make sure they are being met by the supplier. In the United States, these regulators include US Customs and Border Protection, FDA, DOT, ATF, and USDA. Each agency has a website to inform you of what you need to know and where to register. They also have forms you can download.  

      Compliance regulations can be complicated for some products, like textiles. Consulting a good customs house broker before you place any orders is a good idea.
       

    2. A forwarder organizes the shipment. Sometimes, they act as a carrier.
       
    3. A Customs house broker is a person whose profession clears goods through the many Customs barriers. The brokers prepare documents or electronic submissions. They handle calculations of the taxes, duties and excises for you. They can also assist in communications with importer, exporter, and governmental authorities.

      Listings for both services can be found at a local international trade organization or association in your area or at the customs office. First-time importers should probably look for a service that is more individualized. If you think you can save money by not using these services, you’re probably wrong. You will need more assistance with the process than you think. Once you learn the process, you can use an online service, such as AsiaCalculator.

  • Place a Trial Order: Once you’ve completed the above steps, you’re ready to place a trial order.  In the purchase order, be sure to type out the description of the product in detail. Include product requirements, packaging requirements, trade terms, required shipping documents, and any other necessary information to ensure the supplier completely understands and meets your needs.
  • Find an Inspection Company: You’ll need to have someone check the product on site in the factory for you if you’re not able to be there. They will provide you with a detailed report of their findings. Provide them with clear details of what to check. If vital components are assembled early in the manufacturing of your product, have the inspections begin early in the process. This will avoid quality control issues. Inspection companies will help you to avoid receiving defective goods, or receiving products that don’t conform to your standards.

    Even though your forwarder and customs broker will take care of the transport and clearance of customs, it is necessary for you to track them yourself. You will need to provide your forwarder and customs broker any additional product information and the endorsed bill of landing. A power of attorney will need to be issued to your broker. You’ll also have to purchase bonds for your imported shipment.

  • Receive Your Product: When the process is complete, you will receive your product. You’ll need to be sure to post and file your records.

    Now you’re ready to begin the process and import from China. Knowing the process will help you avoid intimidation and be ready to join the world of international trade.

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