Importing goods from China can be a cost-effective way to source products for your business. However, there are some common mistakes that importers make that can lead to delays, extra costs, and other issues. Here are 21 common mistakes to avoid when importing from China:
#1. Poor Supplier Selection
Choosing the right supplier is critical. Research potential suppliers thoroughly, verify their business licenses and certifications, and ask for references from previous clients. Avoid suppliers who are hesitant to provide this information, as they may have something to hide.
#2. Not Understanding Import Regulations
Each country has its own regulations regarding imports, and so does China. It’s important to understand them before starting the importing process. Failing to comply with these regulations can result in delays, fines, or even the seizure of your goods.
#3. Not Having A Product Inspection
Quality control is essential to ensure you receive products that meet your specifications. Establish a clear quality control process with your supplier and consider hiring a third-party inspection company to conduct inspections during production and before shipment.
#4. Underestimating Lead Times
Manufacturing and shipping lead times can vary significantly depending on the product, supplier, and shipping method. Allow for ample time (we suggest planning 3 months in advance) to receive your goods, and plan for possible delays due to unforeseen circumstances, such as customs inspections or shipping disruptions.
#5. Inadequate Communication with Suppliers
Clear communication with your supplier is vital to avoid misunderstandings and ensure a smooth importing process. Be specific about your requirements, ask questions, and follow up regularly. It’s also helpful to have a native Chinese speaker on your team to facilitate communication.
#6. Neglecting to Protect Your Intellectual Property
Protecting your intellectual property (IP) is essential when working with suppliers in any country. Register your trademarks, patents, and copyrights in China, as well as in your home country, and include IP protection clauses in your contracts.
#7. Not Considering Shipping & Logistics
Shipping and logistics can have a significant impact on your overall importing costs. Compare different shipping methods (air, sea, courier) and consider factors such as transit time, costs, and reliability. Also, ensure you understand the Incoterms used in your agreement, such as FOB, CIF, EXW, DDU and DDP, which define the responsibilities of the buyer and seller in international trade.
#8. Failing to Plan for Unexpected Costs
Importing from China can involve various additional costs, such as taxes, duties, inspection fees, and insurance. Budget for these costs and have a contingency plan in case of unexpected expenses.
#9: Assuming You Can Do Without a Freight Forwarder
For those new to the import business, the world of logistics can seem like a foreign language. Terms like FCL shipping, LCL shipping, drayage, consignees, detention and demurrage, transshipments, waybills, bills of lading, and the eleven Incoterms can quickly become overwhelming.
However, a China freight forwarder can help you navigate this complex terrain and the logistics involved in shipping from another country. For instance, if you’ve agreed to EXW shipping terms, how confident are you about arranging for a local carrier in China to transport the shipment from the seller’s warehouse to the port? Hiring the right freight forwarder can make the process a breeze for both you and them.
Therefore, before you dismiss the idea of using a freight forwarder, consider requesting a complimentary quote for your next project. A good freight forwarder can not only save you time but also utilize their expertise to find the most cost-effective way to transport your goods.
Another common mistake made by new importers is failing to understand the actual timelines involved, which a freight forwarder can also assist with.
#10: Failing to Specify Material & Quality Standards
Before a supplier can be chosen and a product can be manufactured, a detailed product specification must exist on paper. It is crucial to avoid assuming that a Chinese supplier selected independently will produce a product that complies with the quality standards of your country.
It’s your responsibility to ensure that the products meet all EU directives. A product specification typically includes dimensions, materials, treatments, product certification requirements, product packaging, design, and other unique product features. However, each product is unique, and there is no universal template that can be applied to all products.
Without a clear product specification, suppliers may use cheap and substandard materials, resulting in a poor-quality product. Therefore, it is essential to develop a clear product specification and include it in the agreement. If there are no product requirements and specifications specified in the signed agreement, the supplier cannot be held responsible for any quality deviations. Referring to “good quality” is meaningless as there is no international standard for what constitutes “good quality.”
#11. Not Hiring a China Sourcing Agent
Securing a favorable agreement with Chinese suppliers requires a certain level of expertise and proficiency. For individuals new to the industry, this can be a daunting task. A China sourcing agent is a professional who can act as an intermediary between a retailer and suppliers. They possess a vast network of supplier contacts that they can leverage to obtain the best possible deals for their clients. Failing to engage a product sourcing agent can make the process of sourcing products more stressful and risky.
#12: Ignoring the Possibility of Customs Delays
If U.S. customs chooses to inspect your container, your shipment could be delayed for a few days or even a few weeks. Furthermore, inaccurate paperwork could also result in the holdup of your shipment until the errors are resolved.
Working with a China customs broker or China freight forwarder can reduce the likelihood of incorrect or incomplete documentation. Although they may also be able to minimize the probability of customs inspections, sometimes it’s just a matter of luck.
To minimize delays, ensure that you provide your China Freight Forwarder or broker with all of the necessary information for your shipment. Additionally, if possible, incorporate some flexibility into your supply chain, either by incorporating a time buffer or by keeping extra inventory as a backup, so you don’t run out of goods when you need them.
#13: Unawareness of U.S. and EU Directives
In essence, all goods are subject to one or more EU and U.S. directives, which set requirements for everything from the permissible levels of substances, heavy metals, and chemicals in clothing to the regulations for electrical safety in electronic products. It is not uncommon for a Chinese supplier to produce goods that do not meet these standards. In some instances, as an importer, you may be required to pay substantial customs penalties. If the goods fail to meet EU standards, they may also be prohibited from being sold in the market.
A common mistake is assuming that it is the supplier’s responsibility to ensure that the goods comply with the applicable EU and U.S. directives, but this is not the case. As an importer, you bear individual responsibility for ensuring that the products are manufactured in compliance with the current directives.
Hint: Research and identify the EU and U.S. directives that apply to the products you intend to import from China. Inquire with the supplier if they can provide documentation and information about the product to verify whether it complies with the relevant directives.
#14: Failing to Insure Your Shipment
It is crucial to request that your freight forwarder insures your shipment. This process is simple, and any freight forwarder or courier service provider (such as DHL) should be capable of doing so. The best aspect of this service is that it only costs a small fraction of your order value (China Freight Insurance often only costs 0.3% or 0.4% of your product value).
#15: Overestimating Profit Margin
Calculating your actual profit margin can be more complex than most first-time importers expect, and overestimating profit is a common mistake. There are various factors to consider besides the product cost and import expenses. Even if you have accounted for all the anticipated costs, such as shipping, storage, import taxes, packaging, fees, courier expenses, professional services, marketing, labor, and quality control, unforeseen expenses like random customs inspections can still occur.
#16: Ordering Insufficient Quantities
Understanding how economies of scale work is critical when starting to import from China. The general rule is that the larger the order, the better the deal. The order quantity can affect the supplier’s quote and service level, as well as the logistics cost per unit.
However, ordering more than you can realistically use or sell wastes money, so it’s a delicate balancing act. Calculating your optimal quantity before placing an order can help maximize your profit margins.
#17: Solely Focusing on Pricing
Although Chinese manufacturers can offer substantial profit margins, price should not be the sole consideration when selecting a supplier. Focusing exclusively on price and undercutting suppliers is not an ideal approach for retailers seeking to maintain a positive relationship with manufacturing partners. Furthermore, an excessive emphasis on costs can detract from product development. Ultimately, if a price seems too good to be true, it may well be.
#18: Not Getting Samples from Suppliers
There is no need to feel embarrassed about requesting product samples, as it is a common practice for most suppliers. It is advisable to request at least 3-4 samples, preferably 5-10 pieces, from a supplier. This way, you can assess the percentage of defects in production and examine the quality of the product series as a whole. Ordering only one sample can be deceptive, as it may be executed perfectly due to being the first and only one. However, when a series of products is launched, some defects may occur, and ten units may not be as flawless as a single product sample.
Obtaining samples provides an excellent opportunity to examine the specifications, features, and other aspects of a particular product. You can also conduct independent lab testing to determine the quality level and compare it to other products.
#19: Choosing the Wrong Product
Choosing the wrong product can be a significant mistake, which can be avoided by considering the following factors:
- Complexity: Opt for products that are easy to manufacture and that your customers can understand. Avoid products that are difficult to produce or understand.
- Seasonal Products: Products that are only in demand during specific seasons should be avoided, unless you cover all seasons. For example, choose sports items that can be sold year-round, such as winter, spring, summer, and fall.
- Anti-Dumping Rates: Avoid products that are subject to anti-dumping rates.
- Fake Products: Do not attempt to sell counterfeit products, as it can jeopardize your eCommerce journey.
- Low-Value Products: Although low-value products may seem attractive due to their low purchasing cost, they often come with fierce competition, low added value, and thin margins. Consider products with higher values and better margins instead.
#20: Choosing the Wrong Shipping Method
When importing from China, it is crucial to select the appropriate mode of shipping. Different logistics methods can affect freight charges and transit time.
- Express Courier may be the best option for starting a business, as it is reliable and fast, with a delivery time of up to 5 business days. However, the shipping price is higher than other modes.
- Air Freight is suitable for shipments, small or big, but there is tighter control on security and deadlines. Customs clearance and documentation are the importer’s responsibility, but outsourcing to a China shipping agent can help.
- Sea Freight is a widely used mode in logistics, capable of carrying large amounts of items at a lower cost. However, the transport time can take up to 50 days, and customs clearance and documentation are also the importer’s responsibility.
#21: Document Mistakes Causing Delays
Delays in shipping can be caused by various factors, such as pandemic restrictions or holiday shipping. However, incorrect customs declaration and inaccurate paperwork and documents are common mistakes that can cause delays.
Failing to declare the correct value of goods may raise suspicions of tax evasion, while incorrect product descriptions can lead to categorization errors and the inability to issue licenses. Even minor inaccuracies or errors in paperwork can result in significant delays, adding up to late charges, additional warehousing costs, and demurrage fees.
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Have you ever encountered any problems while importing from China that we didn’t mention here?? If so, please feel free to reach out to us. We are committed to resolving problems related to importing from China and ensuring a smooth and successful importation process for you.
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