Importing from China for the first time ? This might help.

Discussion in 'New to import/export? Read these before posting' started by Import Expert, Sep 20, 2012.

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  1. Import Expert

    Import Expert UKBF Regular Free Member

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    Dear All,

    As I deal with a lot of clients importing for the first time, I often see the same questions asked. These are things that perhaps we within the industry take for granted so I thought I would summarise the process from A to B to make it as clear as possible.

    Lets assume that your order is ready at the factory and for arguments sake it is of a size suitable for shipping by seafreight - say a part load shipment (LCL) which is perhaps the most common.

    1) Ask your supplier for an FOB price - This means they will arrange to get goods to the port of export and will almost certainly be the cheapest option in the long run.

    2) Get a quote from a UK based freight forwarder such as ourselves at Woodland Global from FOB Port to delivered door UK. This will ensure no unexpected costs.

    3) Should price be acceptable, confirm the booking with the freight forwader. You need to advise them that you accept the quote, provide confirmation of weight, cube and number of packages, type of goods. Give them contact details for your supplier including name and address, contact number/email and contact name along with any references required.

    4) Ask the forwarder for details of their agent/office at the relevant place of origin.

    5) You also need to decide at this point whether you want the goods insured - Ask for a price for this and again confirm in writing that you require this if acceptable.

    6) Provide the supplier with the forwarders agents details and tell them that they will be in touch.

    7) At this point behind the scenes the UK forwarder will get in touch with their overseas office, who in turn will make contact with the supplier. Once you have paid your supplier they will deliver goods in to the forwarders warehouse at the port of origin.

    8) Goods will be loaded into a container, put on a Vessel and will be on their way.

    9) A bill of lading is issued by the overseas agent, which shows the confirmed shipping details. This is a very important document as the 'holder' of the original bill of lading has legal title to the goods. There are two choices here that you and the supplier have that you need to agree between yourselves.

    a) Have the original bill of lading sent to you in the UK. The overseas agent will issue the originals - (usually three of them) to the supplier. The supplier (once all costs have been paid to them) will post these to you. You will need to present one of the originals to the UK forwarder for them to release/deliver goods to you.

    b) Ask your supplier for a telex release/express release. This simply means that the supplier will inform the agent that they do not require the originals as they have been paid. In this case you will not need to present the originals to the UK forwarder but you should still ask for a copy as it shows the shipment information.

    10) So now the goods are on the water you need to consider getting them to you. Whether you are VAT registered or not, you will need to apply for an EORI number form HMRC, which effectively allows you to import. You need to complete a fairly simple application form that can be downloaded from HMRC website. It will ask for you and your trading details and details of the shipment n question. The form can be emailed to the EORI team at HMRC and they will process and issue this within 48-72 hours. I would recommend doing this a week or two before goods due into the UK. Please note you can only reclaim import VAT as input tax if you are VAT registered - An EORI alone will not allow you to do this.

    11) You may receive a notice of arrival from the freight forwarder a week or so before the goods due into the UK, confirming the arrival details and often asking for your information for customs clearance. Please note that it is not a legal obligation to send out notice of arrivals so you should not rely on this alone - if you know goods are due in imminently call your forwarder and ask for an update.

    12) Provide them with your EORI number, the commercial invoice, the original bill of lading (if required) and the customs tariff code for the goods. The tariff code is a ten digit number that refers to the exact product you are importing and will show what Duty rate you are to pay on the goods. The forwarder will often be able to suggest the right one for you but it is your legal responsibility to ensure this is correct - I would always recommend ringing the HMRC classification department who will provide this over the phone - 01702 366077.

    13) Back to 'behind the scenes' now. The Vessel has arrived, the container has been unloaded and more than often the forwarder will move this to their customs warehouse to unload and carry out customs clearance.

    14) The forwarder should then issue you with a sales invoice covering the shipping costs as quoted (Check it matches the quote - if it doesn't, ask why). You will also get a Duty/VAT invoice for those costs which the forwarder will have paid to HMRC. Here you might see a cost you were not expecting called a 'Deferment Fee'. This will usually be something like £15 minimum or 1.5% of total Duty/VAT. The reason you might not have been quoted this is that you do have the option of paying HMRC direct, although its usually easier to let the forwarder handle it and given the time constraints often a CHAPS is required which can cost more than the deferment fee.

    15) Pay the forwarder. Credit arrangements are rare nowadays unless you are a very established importer so you will need to pay the invoices before they will book delivery. Payment methods vary but usually BACS/CHAPS or internet bank transfer are the most common methods.

    16) Rent charges - This is something you need not worry about as long as you do everything in time. You will usually be given seven days free of charge from the date the container was unloaded (called the devan date) to get goods delivered to you. After this date you will incur daily rent costs, hence the need to be slightly on the ball and not delaying payment, etc.

    17) Confirm delivery. Check payment has been received (don't wait for them to contact you if you know payment has been sent and received as they may handle thousands of transactions a day and they can get lost in the system) and ask when you can have delivery. Depending on location this might be next day or 2/3 days afterwards. The forwarder will usually only be able to give you a rough indication of when it might arrive (i.e. late AM) but you can usually request an AM/PM or timed delivery for a small additional cost.

    18) Unloading. You will need to unload goods from the vehicle as the drivers are not insured to do this for you. Bear in mind factors such as restricted access and restricted parking and be sure to warn the forwarder of these in advance. If it is a large/heavy load, you may need to consider the need for a forklift.

    I hope this guide covers most points you might encounter.

    Please PM me directly or post a reply if you would like free advice related to this

    Kind regards,

    Darren.
     
    Last edited by a moderator: Sep 20, 2012
    Posted: Sep 20, 2012 By: Import Expert Member since: Feb 1, 2012
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  2. tomkelly25

    tomkelly25 UKBF Newcomer Free Member

    Posts: 5 Likes: 2
    Thanks for the advice really needed somebody to explain the process from a to b, been trying to work it out all day. Do shipping forwarding companies quote you an amount based on the following information free of charge?

    So type of good, size of package, weight of package, final destination within the UK. Is there anything else?

    Also is there an import duty as well as a VAT charge to pay?

    I am trying to work out if some goods are going to be viable to import into the UK and so need an accurate idea of costs. Im sure many other people are trying to do the same.

    Thanks, Tom
     
    Posted: Sep 20, 2012 By: tomkelly25 Member since: Sep 20, 2012
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  3. Import Expert

    Import Expert UKBF Regular Free Member

    Posts: 232 Likes: 112
    Hi Tom,

    Thanks for the message - Glad its of some use.

    If you are shipping a quantity suited for sea freight (as apposed to small consingments that would be more suited for a courier) You should ask your supplier for an FOB price. This means that they pay to get goods to local Port, e.g. FOB Shanghai.

    You should then get a quote from a UK forwarder from FOB Port to final UK delivery point.

    This is based on the weight or cube, depending which works out higher. Normally 1 CBM = 1000 Kg, so you will need to know what this is or at least have an idea.

    So now you have all your costs from A to B except Duty/VAT and Insurance.

    Some forwarders can offer insurance, others will not be registered to do but might be able to point you in the direction of a broker who can.

    Duty/VAT is the final cost. Duty is a percentage based on the product, e.g. 'widgets' might have a duty rate of 3.7%. Duty is worked out on the CIF price, so Cost of goods + Insurance + Freight to UK. VAT (at 20% at time of writing) is then charged on the same CIF price + Duty + any additional UK costs.

    A useful website to get Duty rates is www.dutycalculator.com. (Note I am not affiliated with this website in any way but it can be very useful).

    So if you plan carefully you then have all the costs involved from A to B, and from that can work out your base cost per unit to see what potential profit per item might be based on the sales price you decide on.

    Kind regards,
    Darren.
     
    Last edited: Sep 20, 2012
    Posted: Sep 20, 2012 By: Import Expert Member since: Feb 1, 2012
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  4. GraemeL

    GraemeL Pain in the neck? Full Member - Verified Business

    Posts: 4,796 Likes: 1,014
    Good post Darren. It goes a long way to creating the sticky that I think should be on this forum.

    G
     
    Posted: Sep 21, 2012 By: GraemeL Member since: Sep 7, 2011
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  5. tomkelly25

    tomkelly25 UKBF Newcomer Free Member

    Posts: 5 Likes: 2
    Thanks for the added information. Just one more question about the quality level and credibility of suppliers out in China. I have found a supplier and he has 2 years experience level on Alibaba and has also had an on site check from Alibaba. So I guess this is enough to suggest that its a legitimate operating business right?

    He has sent me a quote with a MOQ of 10 which is fine, but I would like him to send me a sample first. I was thinking that he could send me one item via airmail and I then once I receive it and ok it on the quality front go ahead with an order of 10. The item weighs 60kg. Clearly I will pay him 100% upfront for the sample to be made and expect it to be a higher price than he has quoted as its a one off.

    Do you think this is viable giving its quite heavy and Airmail is expensive? Also if he says that the MOQ is 10 with no samples what should I do? Do I just have to risk it? Also he is asking for 100% upfront, I know that the normal deposit amount is 30%?
     
    Last edited: Sep 21, 2012
    Posted: Sep 21, 2012 By: tomkelly25 Member since: Sep 20, 2012
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  6. Import Expert

    Import Expert UKBF Regular Free Member

    Posts: 232 Likes: 112
    Hi Tom,

    With regards to the suppliers credibility, two years on Alibaba sounds like a good start. Do your normal due diligence, perhaps google the supplier see if you can find any complaints that have popped up on forums such as this. One question i always suggest asking is if they have shipped to a client in the Uk before. If they have, ask them if they would be willing to give you their contact details so you can ask them for a reference of sorts.

    With 60 Kg per item getting a sample shipped over is going to seem quote expensive as its above the norm for a courier but below what is ideal for standard seafreight/airfreight as there are ' minimum' costs involved with these.

    Couriers will usually charge per kilo - This might be way out but you might be looking at $800+ by courier. Seafreight, if you can get them to ship FOB might be £300 ish to door UK, but again the 'minimum' FOB costs might be expensive for teh size of the order and therefore prohibitive. Shipping price for 600 Kg by sea might not be far off shipping 60 Kg.

    I guess much depends on value as to how much risk you take.
     
    Last edited: Sep 21, 2012
    Posted: Sep 21, 2012 By: Import Expert Member since: Feb 1, 2012
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  7. tomkelly25

    tomkelly25 UKBF Newcomer Free Member

    Posts: 5 Likes: 2
    ok thanks for that,

    It sounds like im going to have to carry out as much research as possible on the product quality without getting a sample made. If it all stands up go for the MOQ of 10. Going back to estimating the freight forwarding costs with insurance, duty etc rather than just use the website that you posted I have just asked for some quotes from freight forwarding companies (incl woodland). Should this give me an accurate figure as duty calculator.com requires a monthly subscription.

    Thanks, Tom
     
    Posted: Sep 21, 2012 By: tomkelly25 Member since: Sep 20, 2012
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  8. Import Expert

    Import Expert UKBF Regular Free Member

    Posts: 232 Likes: 112
    Hi Tom,

    Any good freight forwarder will be able to give you a good estimate of all the costs involved inc Duty/VAT.

    Kind regards,
    Darren.
     
    Posted: Sep 21, 2012 By: Import Expert Member since: Feb 1, 2012
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  9. GraemeL

    GraemeL Pain in the neck? Full Member - Verified Business

    Posts: 4,796 Likes: 1,014
    Anyone who can use the tariff volume 2 to work out duty is almost a genius!

    G
     
    Posted: Sep 21, 2012 By: GraemeL Member since: Sep 7, 2011
    #9
  10. Joe 28

    Joe 28 UKBF Newcomer Free Member

    Posts: 1 Likes: 3
    Hi Darren

    Thanks for the great post, it's really usefully.

    I been doing some research on importing on the Gov.uk website. On there it mentions about something called the CHIEF system as well as the NES, SAD and few other abbreviations. All of them seem to have really complicated explanations of what they do and when they are relevant.

    Should I be trying to get my head round these or is this something a freight forwarder would take care of?

    Also my shipments are coming from China and are quite small, I've spoke to a few freight services and they said my shipments are too small to use there service and suggested using a parcel courier service.

    In this case should I be registering my imports on CHIEF or any of the other customs systems?

    Many Thanks

    -Joe
     
    Posted: Feb 24, 2013 By: Joe 28 Member since: Feb 20, 2013
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  11. Import Expert

    Import Expert UKBF Regular Free Member

    Posts: 232 Likes: 112
    Hi Joe,

    Personally I would not worry about these names/codes - They are something that your freight forwarder or courier will deal with.

    The only thing you as an importer would need to register for in your postion, if you do not have one already, ins an EORI number which gives you authority to import.

    Kind regards,
    Darren.
     
    Posted: Feb 25, 2013 By: Import Expert Member since: Feb 1, 2012
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  12. Directimport

    Directimport UKBF Regular Free Member

    Posts: 343 Likes: 52
    Hi Joe,

    Most of the buyers of my book are small importers and they generally use the courier service to do everything for them. Yes, you definitely need an EORI number.

    One thing to be sure of is that if your supplier arranges the courier, which is usual, they MUST quote you all charges including clearance your end. You don't want any nasty surprises.

    In my Importing/marketing business that I ran for 22 years, my franchisees did all their own importing and always used the suppliers' preferred courier. The main reason being cost, because the suppliers shipped such large volumes that they were able to get very favorable rates. The other big reason was that they were dispatching shipments daily with those couriers, so they were sent of quickly.
     
    Posted: Feb 25, 2013 By: Directimport Member since: Feb 24, 2013
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  13. James Wang

    James Wang UKBF Newcomer Free Member

    Posts: 22 Likes: 1
    this is great work and shall help many
     
    Posted: Feb 26, 2013 By: James Wang Member since: Jan 28, 2013
    #13
  14. 2.0drifter

    2.0drifter UKBF Newcomer Free Member

    Posts: 4 Likes: 1
    I'm involved in contract outsourcing and supplier approvals of engineering products from China.

    Some great information here. The key thing is limiting 'risk' in
    all the facets; commercial and technical as well as logists and
    have the right GuanXi locally.

    David quitintheoldnow
     
    Posted: Mar 11, 2013 By: 2.0drifter Member since: Mar 11, 2013
    #14
  15. Linesandlevel

    Linesandlevel UKBF Newcomer Free Member

    Posts: 2 Likes: 1
    Great sticky, been reading with interest as i'm currently considering importing some goods from china, i work in construction and would like to purchase some small plant for use onsite, MOQ means i'll have a surplus for resale, which i feel confident i can manage to do.

    I've read the thread with great interest, my supplier has given me a CIF price to liverpool port and optional insurance price too, all of which seems cheaper than i've managed to obtain from UK companies.

    I have the tarriff code from the supplier and as far as i can see is 0%.

    My question is, am i now ready to place an order?

    I know i'll need to register for an EORI number.

    Am i missing something or about to walk into something?

    Any help and assistance would be greatly appreciated
     
    Posted: Mar 12, 2013 By: Linesandlevel Member since: Mar 12, 2013
    #15
  16. Directimport

    Directimport UKBF Regular Free Member

    Posts: 343 Likes: 52
    You have done well to get this far, but there is still more to do. I teach the whole procedure from sourcing to landing the goods, but here are some important things to note.

    You need to negotiate payment terms. I would advise against any payment via Western Union.

    You will have to pay VAT even if the items are duty free. If you are not registered you will not be able to claim the VAT back.

    Also ensure that everything is in writing.

    Finally, at least for your first shipment I would use a Customs Broker.
     
    Posted: Mar 12, 2013 By: Directimport Member since: Feb 24, 2013
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  17. Linesandlevel

    Linesandlevel UKBF Newcomer Free Member

    Posts: 2 Likes: 1
    Payment are to be discussed when invoice raised, have been given idea of % deposit and balance etc already, yes i'll be avoiding Western union etc, i've read others have had problems etc.

    Customs Broker? i'm beginning to think FOB is the way forward and use a UK freight service as i'm concerened about charges unallowed for here in the UK
     
    Posted: Mar 12, 2013 By: Linesandlevel Member since: Mar 12, 2013
    #17
  18. Directimport

    Directimport UKBF Regular Free Member

    Posts: 343 Likes: 52
    It is good to see that you have done your homework.

    If the shipment is coming by sea, or by air freight, there could be some surprises this end, and in that case finding a UK freight forwarder might be a good idea.

    If on the other hand it is being sent via air courier you need not worry about costs this end provided the freight quoted is door to door. Remember all quotes must be in writing even when working with UK companies.
     
    Posted: Mar 12, 2013 By: Directimport Member since: Feb 24, 2013
    #18
  19. jhuang

    jhuang Banned

    Posts: 1 Likes: 0
    i have a question, which forum do you usually use?

     
    Posted: Mar 18, 2013 By: jhuang Member since: Mar 18, 2013
    #19
  20. Import Expert

    Import Expert UKBF Regular Free Member

    Posts: 232 Likes: 112
    Hi there,

    I'm glad my guide was of use. It's targeted at companies such as your selves who are looking to import for the first time and need a bit of a helping hand (We all do - or at least wish we did, with something new don't we!).

    My first comment which you have touched on since your first post is don't ship CIF/C&F. It will seem very cheap until goods get to the Uk and then you will get stung with unexpected and relatively high UK costs. These act as part of a kickback to the supplier.

    As your supplier for an FOB quote - so they pay for everything up to China Port. Then get a quote from a UK freight forwarder from China Port right through to UK door. That way you get no unexpected costs and only have Duty/VAT and Insurance to add on.

    Deposit/payment wise the 'norm' is 30% Deposit and then 70% before they will release the goods to you. There are variations of this.

    Payment modes - Paypal gives you a huge amount of protection but many suppliers won't accept it (for the very reason that they leave themselves open to getting scammed), in addition they get charged a fee for accepting this method of payment. There are alternatives such as Escrow or even credit card, but a bank transfer is probably the most common. Not a great deal of security but such is life, do your due diligence checks on the supplier, maybe even ask them if they have any other customers in the UK you could contact for a reference.

    If I can help in any way please don't hesitate to PM or message me via the forum.

    kind regards,
    Darren.
     
    Posted: Mar 19, 2013 By: Import Expert Member since: Feb 1, 2012
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