In today’s market scenario, there are hardly any business companies who do not consider importing from China, whether it is a small businessman or a large corporation. China can offer any kind of product, right from hardgoods, household items to sophisticated electronics products, at an unbelievably low price.
Despite trade tensions and rising labour costs, China remains the primary manufacturing hub for Amazon sellers. However, do not think it is a simple cakewalk if you want to import products from China. There can be several complex issues, most of which can even be unexpected. In this article, we will highlight a few common mistakes that most new businesses often encounter while importing products from China.
1. Not specifying materials and quality requirements clearly
Your product needs to be documented in a comprehensive product specification before you can select a manufacturer and proceed with the manufacturing process. It is never a given that the Chinese supplier you have independently selected will produce goods that meet European quality standards.
It is your responsibility to make sure that the products abide by all international regulations. Your product specification must include:
- Dimensions
- Bill of materials
- Surface treatments
- Product certification requirements
- Labels and marking
- Packaging
- Any special design.
However, since every product is different, there are only a few templates that work for everything. The lack of a precise product specification makes it very simple for suppliers to employ low-quality, inexpensive materials.
Thus, draft a precise product definition for your offering and incorporate it within the contract. Should the product standards and specifications not be included in a formal agreement, you will not be able to hold the supplier accountable for any variances in quality. Since there is no universal definition of "good quality," using the term "good quality" has no significance.
2. Poor communication and language barriers
Miscommunication is a significant risk when you are planning to conduct China direct sourcing, particularly due to language barriers and cultural differences. This can lead to misunderstandings about product specifications, order quantities, or delivery timelines.
Use clear and precise language when communicating your requirements. Consider employing a translator or a sourcing agent familiar with both English and Chinese to facilitate effective communication. Providing detailed written documentation and visual aids (such as diagrams and photos) can help ensure that your specifications are understood accurately.
3. Failing to establish clear terms
A common mistake made by first-timers when they import products from China is overlooking the possibility of a manufacturing delay or certain issue. Or maybe you have a promotion at work or assured your client of a certain delivery day.
Therefore, it is highly advised that you have a separate buying agreement or purchase order term, such as if there is a delay then the supplier must airship your items to meet your deadlines, this could be helpful. Also, not setting clear terms regarding payment, and quality inspections can lead to disputes and complications.
4. Neglecting legal and regulatory compliance
It is quite probable that the product you order will be subject to compliance laws and regulations. Most significantly, though, are the laws and regulations that outline the requirements for product compliance that your product must meet.
Typically, the supplier will not factor these expenses into the goods and is unlikely to notify you of them either. You may find out what qualifications and licenses your items require to be compliant with the law by speaking with your inspection company. If you already have an inspection company working for you, they will typically give you this information at no cost.
Ensure you verify this, otherwise, customs may hold up your products, and it may be too late as it could take weeks for a fresh product certification. Wherein customs will charge you for storage. However, customs may seize or destroy your shipment if you are unable to provide the necessary certificate within a few days.
5. Not protecting yourself from fraud
Payment scams are the most prevalent type of scams. It is predicated on the invoice being placed on a different business from the one that serves as your genuine provider. This "someone" may be anyone - from an outsider who obtained the email of your supplier to a dishonest employee looking to make quick buck.
Before making the payment, confirm the supplier's bank account and business license as a means of safeguarding yourself against payment fraud. Additionally, there are several tools available to you from banks and other participants to assist in defending against fraud.
But there is another kind of fraud that is more prevalent among Chinese vendors and is much harder to prevent. The foundation of fraud is the supplier's attempt to use inferior and inexpensive materials in an effort to boost his profit margin.
In the best scenario, this results in slightly lower-quality items in the worst scenario, it means that the products do not meet your criteria, which prevents them from being marketed in the EU or the USA.
A good rule of thumb when you are going to import products from China is to always thoroughly inspect items before making a purchase. Request product samples from the source, then conduct your own testing.
6. Have a tight schedule when importing from China companies
It takes time to import items from China, particularly if you want to avoid selecting the incorrect source and running the danger of being duped. It is common for preparatory work such as sourcing, pricing analysis, inspections, and contract negotiations to take longer than actual production and shipment from China to your country.
The reduced space available for supplier comparison, quality assurance, product maintenance, and contract negotiations, the higher the chance of future unforeseen expenses.
So, arrive early, participate actively in the process, and respond promptly to inquiries from the provider on agreements, samples, payment, and quality assurance.
7. Not understanding China's culture and way of doing business
China is a vast country that is home to many diverse civilizations, ethnic groups, and linguistic tongues. There are hundreds of distinct dialects and at least eight distinct linguistic groupings.
Although it makes things easier by speaking Mandarin, which is however, not a requirement to conduct business with Chinese investors, even though it is the official language.
Remember Chinese customs and business practices. A Chinese businessman may view something as courteous that you would deem rude, and vice versa.
So, do your homework, become familiar with Chinese customs and manners, and find out what is expected of you when interacting and communicating with a Chinese company.
8. Underestimating transit times
You may be told that the fastest transit period from China to LA, USA only takes around 12 days while you are setting up a shipment. That may give you the impression that the shipment will be delivered to you (in the west of USA) in 12 days. But it’s not true.
That 12-day estimate usually begins as soon as the boat with your cargo leaves port. The following is not considered:
- It may take a week or longer for your products to go to the Chinese port and be loaded aboard the ship.
- The duration required for your shipment to be unloaded, deconsolidated, and delivered to its intended location, which may require an additional week.
That means that, instead of 12 days, you should probably budget about 26 days to get from door-to-door supply from China to the west of USA. A competent forwarder can assist you in developing a precise estimate that guarantees you have the inventory required to maintain the smooth operation of your company.
9. Not having any clear instructions to your supplier
In emails and orders, make sure you clearly communicate your needs and specifications to the supplier. To be sure he understood exactly what you needed, ask him to confirm.
To be more precise, these could include:
- Having the master carton properly labelled.
- Guidelines for inspection.
- Detailed instructions on the features, weight, colour, certification, and other aspects of the product.
- Goods, cartons, and pallet labels are necessary if you sell through various sales channels, such as Amazon FBA, so that Amazon and other parties can accurately identify your cargo or goods.
- Shipping guidelines, such as where the items are going and how to ship them, etc.
10. Not monitoring your order
This is essential when you are going to import products from China. You cannot just put in your order, kick back, and unwind. Make sure you and the supplier stay in contact.
Although it is not necessary to check in every day, it would not hurt to do so once a week, particularly if you are still working with your logistics provider or inspection firm to schedule the inspection or shipment date.
Sadly, the suppliers receive a large volume of orders. Thus, certain smaller orders might not get as much attention as others. Remind him again and again of the deadlines you have set. Certain aspects of the order, including the packing, shipping mark on the export box, etc., are frequently discussed after the order is placed.
While you still need to thoroughly prepare on your end before placing an order, having the supplier instructions ready in advance will save you time. It is not practical to overwhelm the supplier with all the details at the time of order placement, but it is crucial to address the essential aspects beforehand.
Create a checklist for managing the order follow-up to ensure all important points are covered efficiently.
11. Forgetting about Chinese New Year
The Chinese New Year holidays are not well known to many first-time purchasers. Usually, the first week of February or the third or fourth week of January marks the Chinese New Year.
Why, then, is this significant? You should be aware that yearly leave is typically not granted to industry workers. Therefore, during that time, factories offer their employees three to four weeks of vacation time.
It implies that all production has stopped. Although the formal period is actually only four to five working days, factories once more take advantage of this to provide their employees with extended vacation time.
Thus, employees will be absent for three to four weeks. The office workers might come back in a few days, but the production is stopped. Even worse, a large number of workers take time off after the Chinese New Year. They might have stayed in their province or sought out a better opportunity elsewhere.
What is going on there, then? The factory closes for three to four weeks. In certain factories, as much as 80% of the workforce leaves. Old orders were unfulfilled, and new orders were piling up. It is necessary to hire and train new employees. At worst, a bottleneck.
So, what are your options in this circumstance? Not much—just make sure you plan far in advance. In other words, you need to order more by October at the latest so that it will last you until April or May. If you did not get your order in by October, April might be the earliest possible date for a new order to be shipped out to you.
12. Not having your cargo insurance
Request cargo insurance from your freight forwarder at all times. Any freight forwarder or courier (like DHL) should be able to accomplish this because it is relatively simple.
The best part is that it just costs a small portion of the total amount of your order. Less than 1% is the norm. You will surely not spend a lot by having insurance, but ignoring this mistake can cost you much more.
Conclusion
If you are someone, who is totally new in your business and trying to import products from China to take advantage of their lower cost, you must carefully take each step. There are several things that could be improved, which may take away all the profits that you anticipated before considering China as a sourcing destination.
We have highlighted a few of the common mistakes that may occur in this process. However, there is the possibility of committing many more mistakes, too. Therefore, it is important to take every step very carefully to succeed in your business.
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