China is a very popular direction for importers. In 2022, goods with a value of 3.59 trillion dollars were exported from China to the rest of the world. Importing from China has many advantages, and you should get to know the process before you decide to start doing it. This way, you will avoid complications and stress as you will know how everything is supposed to go. This step-by-step guide will lead you through the process of sourcing from China.
How to start sourcing from China?
First, if you know what product you want to import, you should familiarize yourself with what duties and laws are there for importers in your country. You also need to check if your country has any particular requirements for your chosen product and if there are any necessary certificates or other documents. Each country may have different formal requirements that you will need to fulfill before you can start importing. Start by checking what they are and make sure that you comply with all of them.
Sourcing from China step by step
Now, if you know the requirements your product has to fulfill and what obligations you have, we can lead you through the rest of the process.
1. Register your company
It should be the first step that you take. In most cases, it does not matter what type of business activity you register as – you can source from China under many business forms.
2. Find your supplier
There are a few ways to find a Chinese supplier:
- Search B2B (business-to-business) platforms such as Made-in-China, Alibaba, Global Sources, or DHgate, where you can contact manufacturers directly.
Keep in mind that many suppliers on such platforms are trading companies that do not have their own factories and are selling products that they bought from other companies. If you buy from them, the price of the products will be higher than if you purchased directly from the manufacturer. If you source directly from the manufacturer, you also have more customization options. Therefore, it is both cheaper and more convenient.
We don’t recommend sourcing from websites like AliExpress or Temu, which are directed more towards retail.
- Attend trade fairs. That way, you can personally meet and negotiate with potential suppliers. Face-to-face negotiations are also preferred options for Chinese entrepreneurs, and the business relations started this way are stronger than online-based ones. By attending trade shows, you may have a chance to sample the products they offer personally and also receive a better deal than you would via online channels.
- Visit production centers in China. There are specific regions in China that are focused on producing within a particular industry. If you travel there, you can get to know potential business partners by yourself, and you can also sample the product, compare many manufacturers, and inspect their factories.
3. Verify your supplier
If you have chosen one supplier, you should check whether or not it is a real company. After the supplier’s verification, you will receive information such as: if the company exists, if they have a factory, if they have any certificates, and if they do actually manufacture your chosen product. Thus, you will know if doing business with your chosen company is safe.
If supplier verification comes with positive results, you should also sign a commercial contract with them for an extra layer of protection.
4. Order product samples
Before the production starts for good, you should order samples from your supplier to check the product’s quality. If you have any requests, there is a chance to inform the manufacturer what changes you want before you buy the product in bulk and ship it to your country. That way, you can not only save money but also time and unnecessary nerves that would occur if imported products turned out to be faulty.
The sample does not have to comply with your local law, but the final product you will import based on them has to be compliant. So, make sure you are familiar with your country’s requirements for your chosen products and best inform your supplier about them before the production process starts.
5. Product quality inspection
Remember that if you import and introduce the products to the local market, you are responsible for their quality. Therefore, you should conduct a product quality inspection before it leaves the country of production. You can carry it out at various stages of the production: either before it starts, during the production process, or during the container loading.
- Factory audit takes place before production starts so that you can check the state and equipment of the factory, its production capabilities and process, and if it is prepared to start production. By conducting a factory audit, you can find problems that may occur ahead of time.
- Quality inspection during production takes place when a certain part of an order has been produced, but the production process is still happening. During it, a quality inspector randomly picks produced items and checks if they are made in compliance with the importer’s requirements.
- Quality inspection after production takes place when the production process has been finished. During it, a quality inspector randomly picks samples from all produced batches and checks if they were produced properly or if there are any faults.
- Quality inspection during container loading takes place a little before the order leaves the country of production. During it, a quality inspector checks if the products are properly prepared for shipment and if they have all the necessary labels, markings, and documents.
Conducting quality inspection allows you to make sure that the product being shipped to you is manufactured according to your requirements, does not have faults, and can enter your local market after it reaches its destination.
You have a few options to choose from when transferring money to your supplier:
- Western Union and similar services. It is a globally operating company that offers money transfers. However, the safety levels of transactions are relatively low, and it is quite easy to get scammed if you pay by such companies. Anyone can open an account in Western Union and withdraw the money if they show the right documents. Any legal company in China should have a business bank account.
- PayPal is a quite new payment method; a PayPal account is linked to a bank account – as it is verified by PayPal, this option is rather safe. However, we do not recommend it for the big orders. It is a convenient option for smaller orders whose value is not very high.
- Letter of Credit involves three parties: importer, supplier, and bank. It is the safest option for international payment, but it is also a very expensive one. Your order should have a value of at least 30,000 USD to use it.
- T/T (telegraphic transfer) is a bank transfer. It is the most recommended option, but additional fees like currency conversion fees exist. Before the payment, remember to confirm the supplier’s bank account and make transfers only to official company accounts.
When you are making a payment to your Chinese supplier, pay attention if they have a bank account in mainland China. Tax havens are the perfect opportunity for scammers that may disappear with your money.
7. Transporting goods from China
When you import from China, you can choose from a few options what mode of transportation to use. When choosing a method, you should consider aspects such as the size of the shipment, how much time you have, how high your budget is, and geographic restrictions.
Methods of transportation:
- By air – it is the fastest option, but it is also the most expensive one. It is usually chosen for high-value, precious goods.
- By sea – this option takes the longest to deliver to the final destination, but it is usually the cheapest one. With sea freight, there is also a matter of inland transportation, which takes more time and money.
- By railway – this option falls in the middle regarding both time and price. As the Belt and Road Initiative develops, more railways are being built; new connections are set in place, making this method more convenient.
- By road – this option is the most flexible one, and it is preferable for door-to-door service. However, there is a risk of traffic that may cause delays, and it is not the most environmentally friendly way.
When you start looking for freight forwarders, you will probably find some very attractive offers. However, if the price is a little too good, there is a risk that it may be a scam. You can find reliable freight forwarders at ShipHub.co.
In terms of transportation, as an importer, you also need to make yourself familiar with the rules of Incoterms 2020. You can read more about Incoterms 2020 in our ebook. We recommend using FOB or, if you are a more experienced importer, EXW rules.
8. Customs clearance
Before your product enters the local market, it has to go through customs clearance. The documentation required during this procedure may differ depending on the country and imported product, so you should check what documents or certificates are necessary in your country.
Below are listed commonly needed documents:
- Commercial invoice, supplemented by Packing List
- Waybill, depending on the mode of transportation, it will be either a Bill of Lading, Air Waybill, or Rail/Road Waybill
Other needed documents may also include transport insurance, origin certificate, various certificates or permits, and test reports.
Make sure you have all the necessary documents ready in time. Otherwise, your shipment may get held back, delaying the delivery.
When you import from China, you will need to pay duty and taxes. Their rates are different for different countries, so make sure to check how high they will be for the product you want to import.
Sourcing from China step-by-step – conclusion
And this is the end! We led you through the general framework for sourcing from China. Importing from Chinese suppliers has many advantages and can be profitable if done properly. So, learn about the procedures, check what certificates or documents are required, and prepare well before you start the process.
There are many ways in which we may help you through the importing process, from answering your questions and searching for Chinese suppliers for you to verifying your chosen Chinese company, conducting quality control in your name, or preparing a commercial contract in English and Chinese. If you want to use our services, please check our partner website, ExamineChina, and contact us!