When we think of imports, the first country that comes to our mind is China. Most businesses have a background in importing things from China but still have some glitches in the business procedure.
This write-up will cover minimum order quantity, customs, tariff standards, finding the right supplier, and terms used in china for imports.
Minimum order quantity: this is also known as MOQ; most Chinese suppliers have a set minimum order quantity for products to get a certain margin of profit on the sales. Customized products will prove to have a higher price, and the more than the quantity of order, the cheaper it gets. To start with, one can place a small amount and test the product. Once you are satisfied with the product delivered you can place a bigger order.
Customs and tariff standards: Before you place an import order from China, you must check out the local custom and product regulations and get a customs clearance and selling certificate in advance. If the products you import violate the local norms, they might not get the customs clearance and face a loss. Also, while calculating your import costs, consider the import taxes levied on your product; you can consult your custom broker for the same. When ordering from sites like Sourcing Nova, the sourcing agent can also help you with the import taxes.
Finding a reliable supplier: Every business house will have contact of suppliers it needs to import from. The quality of the product must be up to the mark, or else it will bleed the business of time and money in the process of return n refund. This also involves custom clearances and compliance certificates for many products like electronics or toys; if the supplier does not meet the set norms, it will cause trouble for the business house.
There are three types of suppliers manufacturing firms, trading firms, and sourcing agents.
- Manufacturing units usually have higher minimum order quantities but lower prices as they manufacture the desired product.
- Trading firms acquire products from different manufacturers and sell them further; these firms may have a lower minimum order quantity but a slightly higher price. They would take a cut for getting the product from the manufacturer.
- Sourcing agents like Sourcing Nova,connect the manufacturer and the business house to get the desired product at competitive prices, help you with all the import procedures, and keep track from production to delivery to your door. Working with a sourcing agent eases out a lot of nitty-gritty for the business house.
The four most common ways to get in touch with the suppliers are.
Exhibitions: China organizes many trade shows that bring suppliers under one roof; one can visit such fairs to get an idea of the market scenario and also get in touch with prospective suppliers
Online mode: The current market scene has left many onus on the online markets, and it’s easy to find the desired suppliers online. Websites like Alibaba,aliexpress, Sourcing Nova,etc., offer a large range of products and their suppliers.
Social Media: Many suppliers use social media platforms for advertising their products and these platforms can be easily accessed to find the right supplier for your needs.
Visiting wholesale markets: China has the biggest wholesale market globally, and many more wholesale markets cater to small commodities and wholesale. One can visit one such wholesale market to get in touch with the supplier of choice.
INCO terms: When trading with China, we need to familiarize ourselves with the incoterms which play a vital part in chinas import and export. The most common terms being:
Ex Works: these terms come into play when the manufacturer is responsible for the product, but once the buyer picks it up, all the responsibility is shifted to the buyer, including the freight regulations, customs procedures, and delivery. This is not advisable for offshore buyers as it involves high risks.
Free on board: it’s the most commonly used practice in the trade. Here, the supplier is responsible for boarding the product and all the shipping and customs formalities. Once the product is shipped, the buyer becomes responsible for it until it reaches its destination.
Cost and freight: It’s similar to free on board, but the cost of freight are the responsibility of the supplier until the product reaches the destination; the risk after the products are on board is with
Cost and insurance (CIF), this term is just similar to CFR just that the suppliers also take an insurance cover for the goods, even though the buyer takes risks after the goods are on board.
Delivered duty paid: This term involves the seller taking all the risks and fees of the goods until they reach the final destination, and once they do, the fees and risks are transferred to the buyer.
In short, each method has its positives and negatives; we need to find the right one to suit our needs and affordability.