Step by Step Guide for New Importers

[Directimport]

I am often asked why I don't provide details of the safe sourcing sites that I recommend.

There is a lot more to the sourcing and importing process than just searching a site for suppliers, so I have set out a brief step by step guide that you can use to make sure you have at least done the basic work before you get in too deep.

I see too many people on forums like this who jump in at the deep end without doing adequate research.

I could just give out the names of a couple of safe B2B sourcing platforms, but I know that some newbies, maybe even a lot of them, would go there, like the trustworthy suppliers they find, and start placing orders. That could still cost them a lot of money.

It is not uncommon for people to go off half-cocked knowing almost nothing about what is involved in buying overseas. In effect they treat the overseas buying process as though they were buying from the corner store. Some even turn to me for help after they have ordered goods without knowing what to do about actually getting the goods delivered to them.

I have on my files tales of woe that include one who ordered a large shipment of bulky goods. Great price! The problem was, this person discovered that freight was going to cost several times the value of the goods and by the time she came to me for help she had already paid for the goods. I find it hard to believe how careless some people can be with their own money.

If someone intends going it alone without obtaining expert guidance, they should at least think carefully about the project from start to finish. Here is a very brief step by step guide. Intending importers should at least complete the first two of the following steps before starting to even source products.

• Market research. What to sell, how to sell it, are you sure you will be able to sell it, and what prices can you confidently expect to sell it for at a profit. That confidence must be based on thorough research, not just checking sold prices on eBay.
• Determine what maximum landed cost is affordable in order to be profitable, making sure you take into account all selling costs. See first point.
• Search for suppliers using a safe sourcing site. Don't just go to any site casually suggested on forums, because on some of them everything is not what it appears. For example, “Verified” means the business actually exists. “Gold” or “Premium” Supplier means they paid out thousands of dollars to gain that status. One of the most popular sites has been discounting that fee by 90%, so that means a whole lot more suppliers will be buying status without scrutiny.
• Remember that Chinese businesses almost invariably trade under multiple different names, so bad reviews don't bother them and bad feedback never appears. They simply leave their bad record behind and trade under the next name on their list.
• Avoid suppliers falsely claiming to be manufacturers. Some popular B2B portals have big lists of suppliers claiming to be manufacturers, but they are not. They add their profit to the prices they pay real manufacturers. You lose that part of your potential profit.
• Avoid middle men falsely claiming to be wholesalers. They do not even carry inventory, but are opportunists who will offer for sale anything from paper clips to million pound machinery.
• Avoid dropshippers too because they take profit out of your pocket.
• Conduct due diligence on the chosen suppliers.
• Convince the supplier to allow you to order much less than their stated MOQ.
• Get quotes. Don’t forget freight.
• Beware of freight collect quotes. A common scam in this area could lead to your bankruptcy.
• Negotiate payment terms. Beware of W.U., and Telegraphic Transfers. Scammers love them.
• Ensure that all costs to your door are covered and that you have them in writing.
• Obtain sample/s. Beware of freight ripoffs in this part.
• If satisfied, place a small trial order crossing every “t” and dotting every “i”.
• Pay deposit.
• Pay balance as negotiated.
• Check the goods.
• If all is well to this point, you are in business. You can do your test marketing and be ready to place another order.

Now this is not an exhaustive list, but it may help those who prefer to risk their money rather than seek expert advice. There is much, much, more. It takes me 83 pages to set it all out in detail for those new to importing.

 

[Import Expert]

I would tend to disagree with these (In general):

• Avoid suppliers falsely claiming to be manufacturers. Some popular B2B portals have big lists of suppliers claiming to be manufacturers, but they are not. They add their profit to the prices they pay real manufacturers. You lose that part of your potential profit.

• Avoid middle men falsely claiming to be wholesalers. They do not even carry inventory, but are opportunists who will offer for sale anything from paper clips to million pound machinery.

Many perfectly legitimate Chinese business will claim to be manufacturers even if they are middle men/trading companies. This is simply a) that it's what you as the importer wants to hear, and b) it's what they as the trading company think you want to hear. They do not want you to lose face.

It would not be uncommon even to visit a factory yourself in China to meet your supplier and you might be none the wiser that they were not indeed working for the factory itself.

These companies will allow importers to buy MOQ's lower than the factories will handle, allowing them to get a foot on the ladder as they build up order sizes. Secondly, they can often buy the goods at discounted prices, so it's not simply a case that they are cutting into your profit.

Of course, there are scammers out that and you need to be wary and due whatever due diligence is practical, but importers should not be put off dealing with trading companies.

 

[MOIC]

Many trading customers offer a service and price which are not available from manufacturers directly, especially for low volumes.

The truth is you cannot generalise when offering advice to new importers as there are always different circumstances associated with each customer, product, sample requirement, proforma specifications, supplier, quantity, packaging requirement, payment method, minimum order quantity, shipping method etc etc......................the list goes on and on.

Use an agent and learn the process until you are aware of the possible pitfalls associated with your particular circumstances and you are competent in handling the situation from start to finish.

Many seasoned importers of large volumes use agents and buying offices...........................you have to ask your self why?

It's not a case of "One size fits all"

 

[Directimport]

It would not be uncommon even to visit a factory yourself in China to meet your supplier and you might be none the wiser that they were not indeed working for the factory itself.

The truth is you cannot generalise when offering advice to new importers as there are always different circumstances associated with each customer

Generalising can't be avoided when condensing 83 pages of instructions into a small list of bullet points.

On this forum I have have several times recommended using inspection services under appropriate circumstances. That advice is thoroughly dealt with in the 83 pages and so is the fact that even visiting a factory will not necessarily prove that you are dealing with the real manufacturer.

 

[MOIC]

Generalising can't be avoided when condensing 83 pages of instructions into a small list of bullet points.

On this forum I have have several times recommended using inspection services under appropriate circumstances. That advice is thoroughly dealt with in the 83 pages and so is the fact that even visiting a factory will not necessarily prove that you are dealing with the real manufacturer.

My comments were not referring to your pdf booklet.

A pdf sheet cannot possibly cater for the specific requirements of each and every customer.

Whilst, I am sure there is some good general information contained within any written pdf sheet, it cannot cater 100% for the needs of a new importer.

There are always circumstances and hurdles that pop up which need to be considered.

My point in the post was simply that each importer has a different set of requirements and its best to have a practical approach rather than a theoretical approach. An agent can specifically relate to each customer's situation. It cannot be done from reading a pdf sheet.

International purchasing is difficult enough, importing from China has many hurdles to cross, from start to finish. the most important being an after sales service to rectify any problems.

Please don't feel this is a personal attack, far from it.

I am just putting the practical side of the situation.

Giving advice is one thing, but this does not necessarily rectify any problems that may arise.

 

[Maple Sourcing]

In my real experiences, I got discounted prices from factories a lot better than who may get by approaching factories directly online.

When talk to a Chinese factory, the foreign buyer will worry if or not the factory is a real factory not a scammer; same thing, the factory will also worry if the foreigner buyer is a real & reliable businessman, not their competitor, not a middle-man who sends 1000 enquiries online, or not a scammer. As it happens so often that a buyer disappeared after asked dozens of questions and got quotations (sometimes even got samples), think about this, a factory may get dozens of enquiries per week, the factory boss has to be cautious to every enquiry. Therefore, they usually prepare a "standard" quotation for all enquires, and the prices are usually higher as you can understand.

As a trustworthy sourcing company, I always try to personally visit the factories and talk face to face to the boss, it's very important, as after the boss trusts me and believes there will be a potential good order, he/she will always quotes me the REAL bottom prices, as he/she understands I also needs to get a reasonable profit. Therefore, I can quote good prices to my clients.

So, the point is not a trading company or middle-man makes profit or not, the point is if the person adds value. I make some money of course, but I provide sourcing, inspection, communications, logistics and other services and keep everything transparent, and more importantly, most of time, my prices are actually lower than the buyer can get when directly talk to factories even the buyer tried very hard to negotiate.

It depends on products, if it's a complicated product, bespoke product, high-end product, or small QTY, it's better to use a middle-man; if it's a common product, it's fine to directly talk to some good factories and compare them, do background check, test the samples, buy small QTY to test quality/lead-time/reliability/communications, before place a big order.

 

[Directimport]

In my experience importing since 1987, I have always found that the prices paid, without haggling, have been low enough to provide me and my franchisees with huge profit margins.

What is also important is that by avoiding any insult to my suppliers by haggling and by treating them respectfully a great relationship has been built. This has resulted in warranty problems being almost non-existent.

When product faults have been found, product replacement, discounts if still salable, or refunds if appropriate, have been arranged swiftly and without disputes, Rarely has it been necessary to return faulty products because the suppliers have accepted my word or the word of my franchisees, knowing that we never try to take advantage of them.

It is important for newbie importers to appreciate that trust works two ways, and just as they may be wary of a new supplier the supplier will also be wary of new customers thousands of miles away.

 

[GraemeL]

In my experience importing since 1987, I have always found that the prices paid, without haggling, have been low enough to provide me and my franchisees with huge profit margins.

In my 40 years of importing experience I can say from direct experience that while this might work for small orders (Don't know if it does as I never place small orders) , it does not work for medium or large. Neither does it work if the products being imported are very price competitive in the UK market. We have always got better prices than the original quote.

What is also important is that by avoiding any insult to my suppliers by haggling and by treating them respectfully a great relationship has been built. This has resulted in warranty problems being almost non-existent.

To say that you are potentially insulting a supplier by haggling is a most odd comment. I have checked this with my Chinese suppliers and they say you are wrong. It could be you think this because you don't use an Agent in China who speaks Mandarin and understands the culture? I always use an Agent.

What is also important is that by avoiding any insult to my suppliers by haggling and by treating them respectfully a great relationship has been built. This has resulted in warranty problems being almost non-existent.

Come on, you don't really mean that? The quality of the factory workers output and the effectiveness of the QC in the factory is related to not haggling with them? I just don't accept that, unless the prices you are paying are much much higher than they get from anyone else.

 

[Directimport]

In my 40 years of importing experience I can say from direct experience that while this might work for small orders (Don't know if it does as I never place small orders) , it does not work for medium or large. Neither does it work if the products being imported are very price competitive in the UK market. We have always got better prices than the original quote.

To say that you are potentially insulting a supplier by haggling is a most odd comment. I have checked this with my Chinese suppliers and they say you are wrong. It could be you think this because you don't use an Agent in China who speaks Mandarin and understands the culture? I always use an Agent.

Come on, you don't really mean that? The quality of the factory workers output and the effectiveness of the QC in the factory is related to not haggling with them? I just don't accept that, unless the prices you are paying are much much higher than they get from anyone else.

The orders placed by myself and my franchisees ranged from very small to large and totalled millions of US$ per year, so in practice we found that it did work. The margins were excellent.

Although I only speak a few words of Mandarin picked up during my numerous visits to China beginning in 1978, I do understand Chinese culture as a result of spending so much time there. One of my franchisees was a Hong Kong born Chinese and he and I often chatted about the subject. He never haggled and he agreed that negotiating without it degenerating into haggling was a very effective policy. Haggling is often the cause of the sudden cessation of communication experienced by newbies.

You have misunderstood my comment about relationships. It is the relationship that resulted in the excellent QC and warranty attitude.

 

[GraemeL]

The margins were excellent.

Ahh, the good old days

Although I only speak a few words of Mandarin picked up during my numerous visits to China beginning in 1978, I do understand Chinese culture as a result of spending so much time there. One of my franchisees was a Hong Kong born Chinese and he and I often chatted about the subject.

Same here really. Since I started visiting in 1956 I have learned a few words of Chinese. I have had to forget some of them as over time they have different inferences, rather like 'gay' in the UK. The culture is very interesting and the people are great, I really do enjoy asking and learning about it. I would not claim to understand it though. Only when you can have a conversation at normal speed might anyone begin to understand it. Rather like a Chinese person living in the UK who can speak a few words of English saying they understand UK culture - which is quite different to USA culture.

(Doesn't surprise me that a Chinese speaker gets acceptable prices)