A lot of owners of the companies, especially the trading ones, have certainly considered purchasing Chinese products directly from that market. Many people successfully import products from the China market, but according to our observations, a bigger part of individuals who had planned to do that, did not decide to make the first steps eventually.
In the following article, we decided to focus on some most common problems that make importing from the Chinese market unsuccessful. Moreover, we will try to propose a solution for every obstacle mentioned in the text. The problems are described based on our experience, i.e. opinions we heard from our clients and people who used to plan to start importing from China but gave up that idea finally.
The most common obstacles while importing goods from the China market are:
- Thinking that such an activity is only available for big companies and concerns.
- Lack of knowledge about importing rules and procedures.
- Unreliable suppliers.
The first and the most common problem which destroys importing from the Chinese market is an entrepreneur’s mental block
A lot of company owners think that only few of them are able to start being engaged in importing goods from China. They claim that it is possible only to the companies with high share capital. Such individuals do not even familiarize with the further details connected with importing goods, and they give up at the beginning. In fact, the capital may be an obstacle, because most of producers from the China market set the Minimum Order Quantity (MOQ). It happens, because:
- Suppliers that provide the factory with units necessary to produce the final products often require to order the particular quantity of such units. It needs to be remembered that only few workshops keep the products in stock. In addition, the importers have their own requirements connected with different aspects, e.g. packages. They want to put their own logo and name of the company on the product, instead of the name and logo of the producer, that’s why the Chinese company starts production when it is paid an advance.
- Producers do not want to be engaged in production of the small number of products, because it is not affordable to them.
If you are going to buy from the China market you can solve this problem in several different ways:
- We can find a supplier that has lower requirements connected with MOQ. It is the simplest method. It takes some time that is spent in front of the computer. It is possible that we manage to do that considering how big the business competition on the Chinese market is.
- We can establish cooperation with another company that imports the same products from China and place an order together.
- We can talk with the supplier and explain to them that we want to place a trial order, and in the future we are going to order more products. This way we sometimes may negotiate some concession with the supplier from the China market . On the other hand, such an action often makes them give up cooperation, because they are afraid of investing much money into materials that may be kept in a warehouse for a long time if the client does not place further orders. As we mentioned above, most suppliers of raw materials also require the MOQ from factories.
- Another way is to buy the goods on websites where you can buy single items, e.g. AliExpress.com. The obvious thing is that the price is higher in comparison with the one offered by manufacturer, however it is still much better than the price proposed by the distributor from the country. We encourage you to read our article with the comprehensive list of Chinese importers.
Except for the capital, the obstacle is also the character of our business. There are a lot of enterprises which have even thousands of products in their offer. In such a situation, ordering every product from China is impossible.
Another reason of giving up importing from the Chinese market is lack of knowledge about importing rules and procedures
Unfortunately, trading with China is not simple due to a great number of legal regulations. The person who has never imported products from China has to become familiarized with such procedures in detail. Finding the supplier of the product is just the first step of the whole process. A big problem is lack of knowledge connected with the steps that are needed to be taken at the beginning, what documents should be submitted to the customs agency or what kind of agreement should be signed. In order to secure the procedure of importing from the China market, it is often necessary to engage the third party who speaks Chinese, because the agreement signed with the supplier should be written in Chinese. This way, in case of dispute, we can vindicate our rights. In addition, the supplier often does not provide an entire set of documents necessary for the customs agency, what could result in the situation when our products are not allowed to be sold. A good way to solve such a problem is to look for the information on the Internet in order to get the basic knowledge about importing from the Chinese market. Nevertheless, we need to remember that there are different authors of such information and not all of them is reliable. You should check and compare information from different places.
The third aforementioned reason is choosing an unreliable supplier from the China market
It is obvious that the special attention needs to be put while establishing cooperation with a new company. In order to do that, a detailed external audit needs to be performed. It is difficult to do it on your own if you do not know Chinese and do not have knowledge about legal regulations of the Chinese market. However, there are certain things that can be done on your own. Firstly, it is worth to check the supplier on the business forums. Cheated entrepreneurs often post some comments about their unsuccessful experience with certain suppliers. Secondly, we may check the company’s profiles on trade portals in order to find some additional information about it. Another step is to check the most important documents that every exporter from China should have. The range of basic documents includes:
- Business license. It is the most important document which every Chinese company should have. It is a proof that the company from the Chinese market is legally registered. It includes such information as: Official Company Name, Registration Number, Registered Address, Business Type, Established Date, License Expiry Date, Legal Representative, Registered Capital, Business Scope, Registration Bureau. A lot of people check this document in order to make sure that the company from the China market exists. It needs to be remembered that it also provides other very useful information. For example, thanks to the information about Registered Capital, we are able to assess if the company is thriving or not. Based on the Business Scope, we can decide if the company is capable of producing goods that we are looking for. Knowing who is the legal representative of the company, we are sure who we can sign the documents with.
- Permit for Opening Bank Account. This document includes information about a bank account of our Chinese supplier. It is very important to deposit money only to the bank account specified in this document.
- ISO Certifications. Every supplier from the Chinese market should have the ISO 9001 Certification. In addition, it should have the ISO 14001 Certification (connected with protection of the environment) and the OHSAS 18001 Certification (related to OSH). Depending on the industry the particular company represents, it is sometimes worth to check also other ISO Certifications. The requirements connected with such documents are quite restrictive, so if the company has them, we can consider it as a reliable one.
- Product certificates/test reports. These are very important documents, because we need to know if the particular product has the certificates that are required in a destination country while importing from China. We can have some problems with marketing authorisation otherwise.
Every problem can be solved. Nowadays, most of products come from China, that’s why it is worth to consider purchasing them from an agent in your own country (with higher prices) or directly from the Chinese producer. We think that every trader should at least once introduce to the offer of the companies from the China market.