Ask The Expert: Importing from China - ENDED
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Herts, England United Kingdom
Andy
Kudos: 11,631
Joined: Jan 1, 2001
Ask The Expert: Importing from China - ENDED
13 Jul 2014
I'm really excited to launch our first Ask The Expert discussion right here and now!

Our expert is Tim Brown, CEO at 360 Degree Supply Chain Solutions based in Guangdong, China.

A native of New Zealand, Tim has worked for Groupon in Australia and also ran his own ventures including fashion design and manufacturing from China, and product import and export. At 360 DSC Tim runs a complete supply chain service helping medium-sized sellers worldwide buy from Chinese manufacturers. You can read more about Tim's background here.

A few house rules before we get into it:

  • We're expecting a lot of posts so use @membername if you are directing a reply at a particular poster, or quote them and put your reply below the quote. It's a good idea to edit long quotes!
  • You can post about your experiences buying from China as well as direct questions - let's make it an open discussion about importing from China.
  • If a question is directed at you, please reply promptly. Our members come from a lot of different timezones and might miss your reply by a day if you delay.
  • As always, keep it constructive. Post in good faith, don't take offence, and most importantly - enjoy the discussion!

  • This thread will close on Friday 18th July at 12 noon (GMT). Get your questions in as soon as you can to give Tim time to respond and ask follow up questions if necessary. Don't leave it to the last moment to post - you might be disappointed!

    So here we go! Who's first?

    [Last edited: 18 Jul 2014]
    Andy Geldman, Web Retailer
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    Charlotte, NC United States
    wilfredtr
    Kudos: 42
    Joined: Apr 22, 2014
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    #1 How can I verify the legitimacy of the seller, and of the products?
    #2 Can I get "drop ship like" terms - consignment for small quantities ?
    #3 Unique, not commodity products usually have the best margins. How can you price protect yourself if your supplier gets greedy and jacks the price up?
    #4 What are some of the things that are unique to importing from China vs other countries?

    - Wilfred
    Shenzen China Australia
    Tim298
    Kudos: 446
    Joined: Jun 26, 2014
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    Hi All and thanks for first question wilfredtr
    At the outset it is important for me to note a couple of things:
    1. I have been doing business in China for more than 5 years, not a long time, but a very focussed time.
    2. I have lived in China for 2 years, and return now every 6 weeks for 1 or 2 weeks.
    3. I have worked with Alibaba, not in a formal role, but as an ambassador and presenter with them at various conferences. I will use their service to provide examples and highlight points I make, its not intended as an endorsement or to persuade you to use this service its just what I know.
    4. There are always risks and difficulties in cross border business, the assessment needs to be in risk and reward, and the time that needs to be invested in a relationship to really make it work, which is different for each business model – a multi-product seller vs a seller of a single large tailored item for example have very different requirements.
    5. I can only speak from my experience, certainly not claiming to know it all, just trying to share some thoughts and insights.

    Ill answer the questions in the next reply as I think I will need all the characters allowed now that I have shared this.
    Shenzen China Australia
    Tim298
    Kudos: 446
    Joined: Jun 26, 2014
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    To Your Questions
    #1 How can I verify the legitimacy of the seller, and of the products?

    If you are operating through a connection service like Alibaba (which acts a connection point for buyers looking for suppliers in China) then you can use the ranking systems such as “Gold Suppliers” and the like to give you an idea of the volume of business and success they have had in the past.
    The other thing is to communicate as much as possible, and take the time to verify all things – such as with the sample process, I advise to order samples, it is a cost, but the process for sampling, the time it takes, the ability that the supplier has to meet your needs, their approach in general to sampling, will all tell you a lot about the nature of the business.
    For the products – if you are sourcing from a link to another site, make sure you confirm the item is exactly the same, rather than “similar”. Sampling will go a long way, but also asking for the sales person to take photos of the product then and there while you are online, so you can see they have their hands on the item, and you can see all the details in these photos. I have ordered without samples in the past, but it really does pay to get samples, especially early in a relationship even though it costs more to get a sample than you will pay for the item later.

    #2 Can I get "drop ship like" terms - consignment for small quantities ?

    Consignment is really tough to get, not impossible, but you need a good relationship, most likely the company offering this would need to know you really well and you would need to build up to this with some preliminary orders. Drop ship terms are more widely available – using drop ship providers is great for many buyers – drop ship is where the seller holds the stock, and sends to you or to your customer in either small bulk with express shipping or postal methods after you have sold the product, meaning you don’t have to hold stock or pay for the item before it is sold.
    The key thing here is to really make sure you know the supplier, the stock levels and shipping times – but its very effective when done well, and is done well by many in China.

    #3 Unique, not commodity products usually have the best margins. How can you price protect yourself if your supplier gets greedy and jacks the price up?

    I have heard of this happening but not experienced it – easiest option is to buy more when the price is good - I have found that when prices go up there is usually a reason such as the MOQ for the parts has gone up for the supplier so lower order pricing needs to be adjusted to cover this. My advice is simply to discuss very calmly the reason for the price increase and try to find some middle ground – perhaps a slight increase on your order volume may bring the price back down.
    In general if your order volume is as you said it would be things should be fine, which is a reminder to be open about the business from the start, often the price is given based on promises of very large sales, then the sales don’t come through in the volume they were promised, this happens a lot, its not a major thing, but when I was a smaller buyer I was very honest about this, and I found suppliers that were happy to support this, I am still in touch with many of them to this day.

    #4 What are some of the things that are unique to importing from China vs other countries?

    One of the main things is the combination of the price in the market and logistics. Its very smooth these days to order and have things delivered (with the right partners of course), pricing is consistent and it really feels reasonably organised – while pricing for products still allows for really strong margins.
    Manchester United Kingdom
    bernard
    Kudos: 20
    Joined: Mar 24, 2014
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    I would like to understand what are the best general methods and pitfalls.

    Thank you, Bernard
    Leicestershire United Kingdom
    Crucial Music
    Kudos: 124
    Joined: May 25, 2011
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    How can you guarantee orders will be sent after payment is made? IS escrow a viable option? What about after sales service in that case?
    United Kingdom United Kingdom
    Maria Beard
    Kudos: 23
    Joined: Feb 10, 2014
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    One of my concerns with China is that I ‘see’ products advertised by manufacturers for sale for (e.g. on Alibaba) but I never know where I stand with regards to product infringement, etc.

    I ‘assume’ that those supplier/designers who have copyright, patents, trademarks prevent the manufacturers from supplying any-one else.

    My question is – how do I research the market so that when I ‘see ‘ a product I would like to have manufactured under our own name I don’t infringe on any product design, etc ?

    Do Chinese manufacturers behave themselves and abide by copyrights, etc or is it up to the buyer ’me’ to ensure we have not broken the law?
    Shenzen China Australia
    Tim298
    Kudos: 446
    Joined: Jun 26, 2014
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    HI Bernard

    General Methods and Pitfalls.

    A lot of these really depend on the nature of the business and volume of buying etc - but in general - Quality Control, Trust, Payment, and Shipping seem to be among the big areas (there are many others of course)...

    Quality Control and monitoring - You can find a lot of providers that do this, but I would only suggest using this for big orders as its not free of course…

    I worked with a drop ship provider that for a small fee would do extra QC for me (like 50c USD extra per unit on the order) this gave me more of a leg to argue about any issues that I had in the future as well as the protection against having these.

    For Trust in the process - At the supplier level we often say that you will be told “Yes” to everything – the supplier does not want to lose the chance with you. I suggest people ask specific questions, and use lists to highlight the key points to assist with clear communication rather than long running sentences. Inexperienced buyers can accept everything too quickly and try to go too fast which can lead to problems.

    If you visit you will be taken to KTV, I have fallen in this Pit....

    You want to understand each part of the buying process - and know the options within each area carefully and in detail:

  • Identifying the suppliers and contacting them
  • Making your shortlist and discussing further with your preferred ones
  • Agreeing on product detail and price
  • Agreeing on buying process, payment method and shipping details
  • Sampling
  • Sample review
  • Future order

  • Within this general outline there are details that need to be confirmed and you don’t want to skip any or assume anything, the more detailed and process focussed you can be in your approach, the more success you will have - and the more pitfalls can be avoided.

    For Payments, Alibaba and others provide payment services which protect payment until you receive your goods (Alipay) - like Escrow and this is also an option with some, and for approved buyers they are testing a credit line as well -
    Shenzen China Australia
    Tim298
    Kudos: 446
    Joined: Jun 26, 2014
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    Hello Crucial Music, thanks for the question

    Crucial Music wrote:

    How can you guarantee orders will be sent after payment is made? IS escrow a viable option? What about after sales service in that case?
    Escrow is an option supported by a number of suppliers, on many of the supplier advertising sites you can see this advertised as an advantage to working with particular suppliers, not all offer, but there are plenty that do.

    Some multi sku (multiple product holders) will offer short credit terms which allow you to order now and pay later, depending on your volume and sales model, - usually need to build into this as well, rather than expect from the outset - all depends on your sales volume really.

    Alibaba also offer Alipay, which means you pay to a third party (Alibaba), once you approve the release of the funds, they release (ie, once you get the products).
    I am sure there are others that provide the same thing.

    After sales service is something that suppliers are much better at these days – but, the more you can do before hand to ensure your products and make sure you are getting what you want, the better. Within trading companies, after sales is a big part where i have seen a lot of improvement (trading companies are like middle companies between the manufacturer and the buyers, can be good for lower order volume purchasing and if after sales service is really important for you).
    Shenzen China Australia
    Tim298
    Kudos: 446
    Joined: Jun 26, 2014
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    Hi Maria Beard - cheers for this, really interesting question

    Maria Beard wrote:

    One of my concerns with China is that I ‘see’ products advertised by manufacturers for sale for (e.g. on Alibaba) but I never know where I stand with regards to product infringement, etc.

    I ‘assume’ that those supplier/designers who have copyright, patents, trademarks prevent the manufacturers from supplying any-one else.

    My question is – how do I research the market so that when I ‘see ‘ a product I would like to have manufactured under our own name I don’t infringe on any product design, etc ?

    Do Chinese manufacturers behave themselves and abide by copyrights, etc or is it up to the buyer ’me’ to ensure we have not broken the law?
    This is an issue I face regularly as well - and it is well noted.

    There is a lot of fake products and copied products available widely in China. I have been to factories where I was not even allowed to visit certain parts due to brand products being made there, so there are suppliers that take the care, but equally, there are many that do not.

    Often products are registered and under different protections in different countries - but I agree with you that often you find a cool product and want to make it under your own brand and it can be very hard to find the info - knowing exactly what is protected and what you could potentially use if re-branded is information that is difficult to access - if anyone has any advice in this area I would be really interested too.

    The truth and reality is that the supplier can assist with this and having a detailed discussion with them can help - in terms of knowing if the design has a patent etc, I find that in most cases in my experience, the suppliers I work with are not trying to evade the law, but copyright and trademarks as well know are handled a little differently in china to outside...

    But in the end it does fall on us as brand developers and product sellers to ensure that we are not breaching someone else's existing IP rights...even if legally it does not, the owner of the brand comes after you as the seller and it can be really time consuming and costly from that point. I find it hard to understand at times exactly what is protected in certain markets and whether using new packaging will cross any lines or if I need to do more than that - in saying that, we seem to be able to find out enough and steer clear if there is a risk.

    Some other quick things:
    There are a lot of products on the market that are common and widely available and branding these is something that works really well adding value to a good product - with no risk of infringement - if you are working with a trading company they should be able to help with this aspect.

    If you are getting something made from scratch then the risk is of course removed.

    If the product is particularly unique and not many suppliers or trading companies advertise it, this would be a red flag - then I suggest looking for something similar or changing the design if you are going the manufacturing route.

    [Last edited: 13 Jul 2014]
    United States United States
    dkero08
    Kudos: 15
    Joined: May 31, 2014
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    I've ordered parts from China and shipments via DHL were pretty easy but whats the cheapest most efficient way to ship?

    My company has trouble with batteries being held up in customs. Any advice there?

    Any advantages to using runners from Hong Kong?

    Thanks
    Bangor, Co-Down United Kingdom
    roypat05
    Kudos: 96
    Joined: Mar 22, 2014
    Other Asian Markets
    13 Jul 2014
    I see that you have visited China in person what are the advantages in this approach? I am going to Bangkok myself in October to meet with some jewellery suppliers and I wondered what experience you had of other Asian wholesale markets.

    [Last edited by moderator: Fixed copy and paste — 13 Jul 2014]
    United States United States
    Wpsports55
    Kudos: 15
    Joined: Jun 28, 2014
    Verifying Manufacture
    13 Jul 2014
    We've done business previously in China on a couple of different items. We were dealing with factory direct so we thought Turned out that they were not doing the manufacturing at all they were brokering it out. How can one verify where items are actually being made without going to plant
    Leicestershire United Kingdom
    Crucial Music
    Kudos: 124
    Joined: May 25, 2011
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    How can you ensure that TOYS (and similar products) meet the EU requirements especially as I would want to sell these via Amazon who strictly enforce? Have absolutely no experience of importing in quantity so am very nervous!
    Australia Australia
    rabit
    Kudos: 21
    Joined: May 17, 2014
    Re: Ask The Expert: Importing from China
    13 Jul 2014
    Hi All

    Just a couple of questions..

    1. When just buying simple not re-engineered product (or off the shelf as advertised by the sellers on Allibaba) why are there ridiculous minimum order quantities?
    2. I recently I had a quote for some printing and the landed cost came in at just under what I could get the same product in Australia for. Why so much?
    Do they figure out what its worth in the destination country then decide the pricing?
    (Printing is something that I am very familiar with and what I had asked for was only a couple of hours work? for a real print shop.
    They are really dreaming with their pricing sometimes.)
    I seem to find that a lot of the prices quoted by the Chinese are too similar to the cost of the equivalent product in Australia.

    Thanks for answering these questions

    ChannelAdvisor
    XSellco
    Volo
    Selro