How to Import from China
As part of my business at www.dhgate.com, I make it a point to constantly keep in touch with my customers and clients, whether they are Chinese suppliers and manufacturers, or foreign importers and sourcing companies particularly new market entrants and established SME’s. This enables me to continually refine my website to improve the customer service and add new innovations.
As part of this process, I hear many success stories of overseas customers, more than often from the US, who have successfully started a new business through importing product from China or have significantly reduced their costs or increased their product range via this method. I am also often asked about the best ways of starting to import from China and what pitfalls to look out for.
Some of the emails I receive from DHgate customers in the US give me examples of their initial experience in importing from China, and often it was not initially that successful. Usually this is as a result of choosing the wrong supplier, not doing your homework and rushing into product order and underestimating the nature of international trade. I want to share it with you over the next couple of posts some of my thoughts and tips to make sure your experience is successful.
Choose Your Supplier Well
One of the most fundamental errors is to pick a supplier without a thorough review process. Check whether they are the actual manufacturer or merely a wholesaler as you always want to deal directly with the source. Check the supplier’s website to see whether it’s in English which is always a sign that they do business with foreign companies. Ask the supplier for testimonials and references, and then check them up. Use a China-based verification company if the size of the order warrants it, or read customer reviews. For example on dhgate.com, we have a number of verification methods like a 3 tier rating system and a Feedback scores from other buyers.
Don’t Rush; There’s Plenty of Time
Next, don’t rush into anything. Although there is pressure from both sides to get it done as soon as possible, it’s best to give yourself a long lead time to do proper research, complete perfect product specifications and shop around. The product will always be there, and it maybe cheaper next month or with a different supplier.
Don’t Underestimate Time and Costs
Although international delivery these days is very efficient even for smaller product orders, it’s probably wise to always work on the basis that the delivery will be late, so factor it into your plans. Also, it is probable that the landed costs will be higher than quoted or you have estimated. Eager buyers have a tendency to underestimate the time and costs of importing from China.
Don’t Pay Purchase Price Upfront
Never pay the purchase price or a substantial part of it upfront. If you do this, then it will be highly unlikely you will get your money back if there’s a problem with the quality of the products or there’s a severe delay in the shipping. If a supplier demands you do this, it’s probably best to find a new supplier. At Dhgate.com, we use an escrow payment system where you don’t pay the supplier until you’ve received your shipment and are fully satisfied with it.
In my next post, I will give some more tips on how to deal with Chinese suppliers and basics on how to import from China especially in relation to understanding cultural differences, maintain product quality and dispute resolution.
Hi Diane. Very good article. I own a small business, have been importing off and on from India and China. We either use L/C - but this can be costly especially for smaller shipments - or 50% upfront and 50% at time of shipment.
We do send a form email to buyer references - we don't ask anything confidential - it has more to do with history, materials and reliability.
At least 50% of Indian suppliers won't furnish references - and probably 80%+ of Chinese suppliers won't. They usually site confidentiality - we always tell them to get permission - and we'll even send the exporter a copy of our form so they can see we won't ask anything the buyer would think would be confidential. In a small percentage of cases those exporters will then supply references. We usually walk away if they balk at references - is that what you do?
I like your idea of keeping the payment in escrow until after you examine the shipment. We did get an agreement a few times that our payment would be due 30 days after the shipment was received - but those suppliers never ended up supplying samples that were acceptable.
Could you tell me more about your escrow system, what it costs, what percent of your new suppliers agree to it, and how does it protect both parties. Is it up to the reject release if the goods don't match specs and/or samples? And is that all that is necessary to not release payment?
Thanks for your help.
You made some very good points. Your escrow is a great idea. Not only does it safe guard devious practices by your supplier, but it also improves your cash flow. Cash is king for the small importer.
Good article .
I am working for international business for many years in China, There are so many buyer from US or other country are very blind. they do not know how to source the chinese products. Some of them just concern the price and ignore the quality. Also there are so many enterprise in China, maybe sometime we will get a weak one. Learn how to find the right supplier and check them is very nessary. In China, there are so many good maunfacturers who can not contact with foreign buyers directly.
The fact make me start to offer sourcing service. Make the business safe and easy.
Just read your article again, i can not agree with some of your point. Just like Don’t Pay Purchase Price Upfront... The reality is that if you do not pay , some supplier will not start the production. Because they need the money for operation. I think the first point should find the best way to keep the payment safe,
The company I work for has been buying wood-related goods for years from a supplier in Singapore. We have this agreement to pay upfront by TT and then they arrange the shipment and the goods arrive in harbor between one to three month max.
To be honest, I'm still new in the import division so I have a lot to learn. I have not heard about these so called fake companies demanding paying upfront, but our relationship with this supplier is just fine and nothing happens until now.
We're dealing a lot with suppliers who requested us to pay TT before shipment. Even so, there's also a small amount of suppliers who agree to ship their goods before receiving payment from us. I think, this probably due to our prior agreement with them (in time I don't know when).
In common sense, it is understandable to receive the goods first before making full payment. I don't know about supplier's deceiving tricks whatsoever and their insecurity (of their goods not being paid), but us, the buyers need to protect ourself from fraud and unfair practice.
I don't think it is easy to change our agreement with the majority of our supplier. They can be stubborn and insisting to protect the status quo with so many years under their belt dealing with us. Furthermore, according to the note logs, my company have never buy more than a small to medium amount at a time. So in our major suppliers' eyes, we are not their big buyers; just a frequent one though.
I work for the fastest growing company ever according to Forbes magazine. I am interested in potentially partnering with your company, and learning more about DHgate. I sent your customer service and email, and I wanted to make sure you came across it. Please let me know if you are available to chat sometime.
Really enjoyed your article! I have been experimenting with importing from China and am new to the process. Besides the tips you recommended such as checking whether the website is in English I would also recommend looking at their phone number and seeing where it is registered (I got this tip from http://www.howtoimportkit.com). If the factory claims to be in one Chinese province but has a Hong Kong number for example, you can tell there is a problem.