You have a brilliant business idea and know that the right manufacturer should be in China or possibly another country in Asia. There’s only one problem: you have no import experience. Calm down, we give you an overview of the most important things – for example how to choose the right manufacturer and ensure quality.
Imports from China – something for you?
ZhengSourcing.com is suitable for you who want to develop new products even on a small scale or sell under your own brand. Common products to import from China are textiles, accessories, car products, kitchen equipment, ceramics and electronics.
China and Asia are generally best where manual handling is required during the manufacturing process. If production is highly automated, as for plastics and glassware, the EU may be a better alternative.
Expect it to take at least six months to start an import. Company research takes a couple of weeks, product development anywhere from two weeks to six months, production one to two months and shipping about 50 days if you choose shipping.
CE, REACH & EN standards
The products you import from China must comply with applicable laws and regulations in the market in which you sell them. This is perhaps one of the most important things to keep in mind when importing China. Many problems can be avoided with a good, technical product specification. Do not leave anything open for interpretation, then the supplier will choose a practical or cheap alternative and you will not get the item you want. The product may not even be legal in the market you plan to market it on.
Read about which EU standards are relevant for your particular product. Is CE marking required? And should the product pass a so-called REACH test? Warranty times? Also keep in mind that some product types have stricter regulations than others. One such example is toys and other products aimed at children .
Be prepared that if you are going to sell your imported products through retailers, the retailer may in turn require that your products be tested one last time before they go up on store shelves. Usually by an independent, European test institute.
But even for a seemingly simple product such as a t-shirt with print, you need a design draft, material specification, color codes, complete dimensions per size, all markings, what the patch on the neck should look like and files for all embroidery and printing.
Even if you only want a standard product under your own brand, you must have detailed product specifications . Often you must also have attached test certificates proving that the product complies with current directives and regulations.
If you know what you want and know your product in depth, it will be easier to choose the right manufacturer and write a good agreement. The purpose of the agreement is to communicate quality requirements and specifications and thereby avoid cheating and misunderstandings. It is also faster to produce samples and prototypes.
The implementation phase
Customs and freight from China
All goods have an international HS code and to be able to calculate the cost, you must classify the goods correctly. Customs duties normally vary from zero to 12 percent. You register as an importer by applying for an EORI number.
Regarding shipping, it is recommended that you contact some freight forwarders and find out as much as possible. You can be responsible for the shipping yourself via your own forwarder, let the supplier be responsible, or share the responsibility.
Important! Remember that your goods must be insured all the way. There are many different solutions here, consult with the freight forwarders and your insurance company.
Regarding shipping, international codes, the so-called incoter terms , regulate who is responsible for the goods:
Cost, Insurance and Freight, CIF Here the supplier is responsible via its forwarder for the goods being delivered to a destination in Sweden. Export clearance in Chinese port and freight insurance included. As soon as the goods are on Swedish soil, you must take over the responsibility yourself via your own forwarder.
Delivered at Place, DAP
Same as CIF but the goods are delivered all the way home to your door. Everything is included except the customs fee and VAT.
Free on Board, FOB The
supplier is responsible for the goods being transported to the port of loading and on board the aircraft or vessel in, for example, Shanghai. Export clearance included. As soon as the goods are on board, you are responsible.
Ex Works, EXW Ex Works suits the do-it-yourselfer. Via your freight forwarder, you handle the shipping all the way from start to finish. You can rebook yourself if needed.
They are written, for example, CIF Gothenburg or FOB Shanghai in the agreement, depending on what you choose.
Finding products & suppliers
Scan the market
The lowest hanging fruit is to scan the supplier market online. Alibaba.com is the world’s largest e-commerce site for importers and exporters. Other meeting places are Globalsources.com and HKTDC.com. If you are ready to travel, a visit to the major trade fairs can be a good alternative, for example Canton Fair and HKTDC & China Sourcing Fairs.
Good to keep in mind when looking for goods, manufacturers and suppliers:
- Avoid the lowest prices because you usually get what you pay for.
- Find out what is included in the price.
- If you find a supplier in a region where many manufacture the same thing, the probability is greater that you get quality at the right price.
- Ensure that the supplier is aware of EU standards. Most factories do not have it.
- Gold status on Alibaba.com means that the owner has purchased a membership, there is no guarantee.
Make the first selection
The next step is to sift through 15-30 possible suppliers. Once you have your list, ask these 3 questions:
- Do you have experience of exporting to Europe or Sweden?
- Do you mainly manufacture the product I trade with?
- Do you have documents proving that you have manufactured in accordance with EU directives and standards?
Make a second selection
Once you have made your first selection, it is time to do a deeper research on each supplier. You can, for example, research companies on China’s equivalent to the Swedish Companies Registration Office. The documents are in Chinese so you need to hire an agent. You can, among other things, receive information about the operating license, business area, legal status and the size of the share capital.
Order product samples and appoint your supplier
- Send the product specification so that you can discuss it in detail in all details.
- Present 1-3 suppliers based on whether they have the right focus and product certificates as well as test reports from previous production. It is good if they can show that they have a history of manufacturing goods in accordance with the requirements you set.
- Order a product sample or a prototype. That the first test is perfect is very rare. Usually two or three tests are required before everything is as it should be.
- Before you decide, make sure you have the total price picture ready for you based on production cost, shipping fees, customs fee and VAT. What is included in the supplier’s price? Can there be port fees? Local transport? And what about the insurance?
- Also get confirmation that the supplier can produce to the extent you need, within the set time.
Write an agreement
You write the agreement yourself based on your product specification. The function of the agreement is not primarily to win a lawsuit but to communicate: This is what the product should look like. This is not how it should look. What is a defective product?
It must be clear that if the product is not as stated, it will not be paid for by you. Usually 30% is paid in advance and the remaining 70% when the entire delivery is tested, approved and ready. Returns do not occur, however, you can get a new delivery.
The agreement must also include:
- Payment terms
- Bank account
- Shipping terms
- Export packaging conditions
- Text that describes the process for how the deal should go.
- All attachments, such as licenses, drawings and photocopies, are listed.
Also enter that the contract language is English but that the agreement is based on Chinese law and that any disputes will be resolved in China.
Partial payment, production start and delivery
Feel free to keep in constant contact with the supplier during the production period, ask for a status update every week. If you have a small import, you may need to monitor so that it is not “forgotten” if the factory receives a larger order.
Any quality checks are made on site. You can not take for granted that the second delivery is of the same quality as the first. A good agreement and a good relationship with the factory management is crucial if, or when, you encounter problems. Make sure you have contact information for several people.
When production is complete, it’s time for shipping. Shipping takes about 50 days from factory to your door, flight about a week.
Hopefully you get home flawless goods that you can pay off immediately. If the goods are defective, request a new delivery. All documents are available digitally from the freight forwarder and form the basis for the customs fee. The invoice for the customs fee is sent to the freight forwarder or to you. You can ask your freight forwarder to pay directly upon entry for a few percent fee or apply for customs credit.
Documents that can be good to know:
Invoice from the supplier.
Produced by the supplier and lists the contents of your delivery.
Bill of Lading
The shipping document for deliveries by sea.
Airway Bill, AWB
Freight Document for Deliveries by Air.
There you go! We hope you have gained some insight into how to choose the right manufacturer? If you have comments or questions, feel free to contact us at the editorial office.