Buy from China: How and Which Products to Import

One of the biggest challenges new eCommerce sellers face is sourcing products. Luckily, technology has made it easier than ever to find overseas suppliers, negotiate a deal, and get your products shipped to you.

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There are many places you can source products from (the US, India, Japan, etc.), but most sellers buy from China. In this article, we’ll explain why that is and how to do it yourself.

Keep reading to learn everything you need to know about how to import from China.

Why is it a Good Idea to Buy China Products?

Before we begin, you’re probably wondering why you should buy your products from China. If you live in North America or Europe wouldn’t it be easier to deal with a local supplier?

Well maybe, but you’d miss out on several key benefits. Here are a few reasons to import items from China:

• Prices are Low: The number one reason most sellers deal with Chinese suppliers is that it’s cheaper. Wages in China are lower and materials are more accessible. These two factors reduce costs for manufacturers, and those savings are passed on to you.

• Better Production Lines: China specializes in mass-producing products. Because of this, their production lines are more sophisticated and they can produce a large number of items faster.

• High Quality: There’s a common misconception that made-in-China products are low quality. Does China produce some sub-standard merchandise? Sure, in some cases. But if you do your research you can find a supplier that provides you with extremely high-quality products.

Basically, if you’re looking to get amazing products quickly for an affordable price China is the best place to source from.

Import Regulations

Importing items from China isn’t difficult, but there are some regulations you’ll need to follow. Every country has its own rules, so make sure you’re familiar with your local import laws before getting anything shipped to you.

No matter where you live you’ll likely deal with the following regulations:

• You or your supplier will have to file entry documents for the goods.

• You’ll have to pay duties on your products.

• Your goods will be examined upon entry to ensure they don’t pose a safety risk.

The following types of products are banned from being imported in most countries:

1. Agricultural commodities

2. Weapons

3. Food

4. Drugs

5. Toxic chemicals and hazardous substances

6. Counterfeit products

7. Some electronics

Here’s a quick rundown of some specific regulations for the USA, Canada, and Europe:

1. USA

To import products into the US, you’ll either need an Employer’s Identification Number (EIN) or a social insurance number. If you’re importing goods under a business then you should have an EIN for tax purposes. You can apply for one here. If you’re operating as an individual and don’t have a business you can just use your social insurance number.

2. Canada

If you plan to import into Canada you’ll need an import/export business license. This will be used to process your customs documents. To avoid any delays in receiving your goods make sure to have this number before you import any products. You can get an import/export business number from the Canada Revenue Agency.

3. Europe

If you’re importing goods into Europe you need to be established in the EU and have an EORI number. One EORI number will allow you to import into any country in the EU. While you don’t need to be established in the UK to import into the country, you do need an EORI number. You can request an EORI number from your local customs website.

How to Import Products from China

Now that you know why you should import from China and the rules you need to follow, it’s time to go over how to actually do it. While it may seem intimidating at first the process is surprisingly easy.

Here are the steps you need to take:

1. Choose a Product

Before you find a supplier you need to decide what you’re going to sell. Make sure to take your time and choose the right product. Not every item is profitable to sell so you’ll want to do a fair bit of research before making your decision.

Below is the Amazon product criteria. If you sell on other platforms, the criteria may differ slightly, because there is usually less competition, but also less traffic.

• At least 300 monthly sales. This tells you there’s demand for the product.

• Less than 100 reviews. This means competition is low.

• A sales price of $35 - $75. This is high enough for you to make a good profit but still low enough so people don’t have to think too much before buying it.

• Small and light. Shipping and Amazon FBA costs are based on size and weight, so items that are small and light are cheaper to sell.

There are a number of product research tools that will tell you this information. For example, if you’re selling on Amazon you can use AMZScout.

If you’re selling on another platform just make sure whatever you’re using provides you with the data you need to make an informed decision.

Some examples of good products to import from China include:

• Kitchen utensils

• Yoga mats

• Resistance bands

• LED lights

• Any small products that can be given as gifts

Make sure to do your own research and find a product that works for your business.

2. Look for Suppliers

Once you’ve chosen a product it’s time to start shopping around for a supplier. There are a few different places you can look:

• Trade Shows: If you want to speak to suppliers in person, trade shows are the best way to do that. However, this method is time-consuming and expensive, since you need to actually travel to the shows.

• Google Search: If you’re comfortable speaking to suppliers online then you might be able to find one through a Google search. Just keep in mind that a lot of factories don’t have a large online presence and can be difficult to find through this method.

• Alibaba: This is by far the easiest way to find suppliers. Alibaba features thousands of suppliers and wholesale companies in many different niches. They also have certifications and a rating system to help you identify the best ones.

If you’re selling on Amazon using AMZScout’s PRO Extension to search for products, just click the “Local and global suppliers” button within the tool. You’ll get a list of all the suppliers for that product on Alibaba and can sort them based on price and rating.

Take some time and find three or four suppliers that you think will suit your needs.

3. Vet Your Suppliers

After you have a few you’re interested in you’ll need to do your due diligence to ensure you choose one that will meet your expectations.

Here are a few steps you should take:

• Ask Them Questions: Because of the language barrier many suppliers prefer to communicate over email. But if possible it’s always good to get on a phone call with them. Ask them questions about their products, factory, and anything else you feel is relevant.

• Get a Sample: Any good supplier will be happy to send you a sample of their items. The sample is usually free but you’ll have to pay for the shipping. This gives you the chance to inspect the quality of their products to ensure they’re up to your standards.

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• Do Your Homework: It’s a good idea to do some digging to make sure you’re dealing with an upstanding company. You can go to China Trial Process Information Disclosure Website or China Judgments Online to see if there are any outstanding lawsuits against them. If you’re looking on Alibaba check to see what their rating is and what certifications they have.

If you take these three steps you should stay safe and find a trustworthy supplier you can count on.

4. Get a Quote

After you choose a supplier you like it’s time to get a quote. The company may be great, and their product might be top-notch, but if they can’t offer you a price that works with your budget then you’ll need to look elsewhere.

An important thing to remember is that any quote you receive is negotiable, so don’t just accept the first number you get. If a supplier wants your business bad enough they’ll usually lower their price for you.

There are two quotes you need to get:

• The Cost of the Products: This is the total you’ll pay for all the goods you’re ordering from them. Keep in mind that the higher quantity you order the better price per item you get. 

• Shipping Costs: When you get a quote make sure to ask if it includes shipping. Most suppliers will arrange this for you but sometimes you might have to coordinate it yourself. Shipping can be expensive, so be sure you know how much it will cost before you place your order. You can either ship by air, which is faster but more expensive, or ship by sea, which is slower but more cost-effective.

If you’re happy with the quote then tell them to start production. Depending on the product and the quantity this can take a few weeks to a month.

5. Pay Your Supplier

The most common payment terms are 30% of the total cost upfront and then the other 70% once the order is completed. Don’t ever agree to pay 100% upfront, especially if you’ve never worked with a supplier before.

Verified payment methods like PayPal or credit card are ideal. However, for orders larger than $5,000 you’ll almost always have to pay by wire transfer. Most suppliers will only accept USD, so if you’re outside of the US you’ll need to factor in currency exchange charges as well.

6. Coordinate Local Shipping

As we mentioned earlier, in most cases your supplier will take care of shipping for you. If you’re fulfilling orders yourself then simply have your inventory shipped to your home and that’s the end of the process.

However, if you’re fulfilling your orders through a fulfillment service (like Amazon FBA) you’ll need to take some extra steps to ensure your inventory gets there.

If it’s your first time dealing with a supplier it’s a good idea to get the shipment sent to you first. That way you can inspect your items to ensure everything is in order. Once you trust your supplier you can have them direct your products straight to the distribution center.

Before sending anything to a fulfillment service make sure you read the instructions they provide. You often need to include special labels in order for your shipment to be accepted.

If you want to simplify things you can hire a logistics provider. They’ll manage your shipping from China all the way to its final destination. They can also help you deal with customs, duties, and other steps that come with importing goods.

Tips

Before you start searching for suppliers here are a few more tips to consider:

1. Get Quotes from Multiple Suppliers

If you’ve never ordered a certain product before you might not have a good idea how much it should cost. That’s why it’s always a good idea to get more than one quote. Ideally three or four. This allows you to identify products that are overpriced or suspiciously underpriced.

2. Don’t Always Go for the Lowest Price

Just because something is the cheapest doesn’t mean it’s the best. Remember, you usually get what you pay for. It’s better to sell a product that costs a little but is good quality, rather than one that’s super cheap but disappoints your customers.

3. Avoid Duties

Orders with a value of under $800 aren’t subject to duties. Depending on your product and quantity size it might not be possible to get the cost this low. But if you can it’s a great way to save some extra money.

Conclusion

Finding suppliers and sourcing products are two of the biggest steps involved in running a successful eCommerce business. If you can master this process you’ll be making sales in no time.

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If you want to import goods from China, figuring out the best way to pay can save your business time and money.

You’ve heard terms like wire transfers, and letters of credit. How do they differ from just paying by credit card or PayPal, and how do you choose?

This simple guide takes you through 9 possibilities. For each, we’ll look at how many suppliers accept these payment options, the risks of each, and the costs involved. Read on for more.

Pay international suppliers
with Wise Business

Top 9 ways to pay your suppliers in China

1. Wise Business

If you’re looking to make frequent transfers to your Chinese suppliers, consider using the Wise Business account.

International payments with Wise are often far less complex than other payment methods. You sign up, pay in your local currency, enter your supplier’s bank information, and then your supplier gets paid in US dollars or Chinese yuan.

If you’re sending payments to Hong Kong, you can pay in Hong Kong Dollars or US dollars - without having to open an account in Hong Kong.

The supplier doesn’t have to sign up anywhere. For them, it’s just like receiving into their bank account. Both you and your supplier may also be able to manage the balance of risk by combining Wise payments with escrow, local agencies, or deposits.

Transfers are made at the mid-market rate – the one you see on Google. That makes Wise quite different from other forms of international payments, that often charge a markup.

2. International wire transfer / Telegraphic Transfer (T/T)

International wire transfer is a common payment method and is widely accepted by Chinese companies.

There are risks on both sides. Suppliers will often insist on a deposit to lower their risk which subsequently then increases yours. The more customized or hard-to-sell the goods are, the higher the deposits will normally be. As such, it’s best if you have a good relationship with your supplier.

Just like with cash, you’ll bear the cost of the foreign exchange transaction. That cost includes the published fee, probably several fixed SWIFT fees from intermediary banks, and the spread — the poorer exchange rate than you can find with a currency converter online.

So although wire transfers may be a common method of payment, they cost the buyer much more than most realize.

3. Escrow

Escrow protects both parties. It means that you pay an initial deposit before dispatch, but the funds are held by a third-party. The third-party won’t release the funds to the supplier until you’ve received your goods.

Although popular within China, acceptance for international transactions is still low. However, if you’re buying through Alibaba, you might be offered payment using Alipay Escrow.

The idea of escrow is to reduce risk due to the long wait between order and receipt. There are still disputes, though, and it can be hard to get the dispute resolution team working on your behalf.

Fees are around 3.25% of the transaction.¹ With a provider such as Escrow.com, transactions with a buyer outside the United States will be charged an additional $25.00 to cover any intermediary bank fees.¹

Escrow can be convenient for low-value transactions. Though you might want to skip them on larger transactions due to both the added expense and the reality that it can tie up your money for some time.

4. Letters of Credit (LCs)

Larger suppliers and international trading companies are normally happy to accept LCs. Some may even insist on them. However, due to the complexity and additional language barriers, it’s not uncommon for small and medium-sized factories to be reluctant to accept this form of payment.

LCs reduce the supplier’s risk that the buyer doesn’t pay. As a buyer, LCs also give you some comfort that the supplier will conform to whatever terms you agree.

On the flip side, though, the fees are very high and the paperwork is quite complex. As such, it’s essential to get professional advice with your first transactions.

In essence, Letters of Credit are quite an expensive option. They are often only for very large transactions, or when suppliers make it a condition of business.

5. Sourcing agencies

As mentioned, acceptance of escrow for international transactions is low. However, if you buy through a local Chinese office, acceptance is much higher. That’s why some importers use a local sourcing agent to buy their order, using an escrow arrangement.

The risks are much lower, as long as the communication is crystal clear. However, the agency can reject the goods and keep the escrow payment.

Using an agency also adds another layer of expense to the deal.

Sourcing agencies may be suitable for small transactions if you want to pay extra to avoid risk.

6. PayPal

Not a lot of Chinese suppliers accept PayPal yet, but the number is growing. It’s becoming more popular for small transactions, especially electronics sales.

Although PayPal has focused on buyer protection, there are still some risks. Their protection policies are complex, particularly for international transactions. If a dispute arises, it can take time to make your claim and, of course, you might not win.

Fees are charged as a percentage and there are also substantial exchange rate costs. If you’re buying small quantities or samples, PayPal can be a convenient way to pay. However, the fees increase quickly as the size of the transaction grows.

The bottom line is that PayPal may be convenient for low-value transactions if it’s an option. But may be too expensive for serious importers making large orders.

7. Western Union

Western Union (WU) is widely accepted for small or medium-sized transactions. It’s popular with suppliers because it’s fast, easy to use, and cheap — for them.

WU can be convenient for small to medium transactions.

However, there are risks. You have little protection once you send your money. You shouldn’t consider WU unless you know and trust your supplier.

Although published fees are low, you’ll end up paying more for your goods. This is because WU makes money through currency exchange.²

If you do a quick search for the currency pairs on Google, you’ll find quite a difference. But you won’t see the mark-up in their online price calculator — you’ll have to create an account and sign in to find out the rate they’ll offer.

By contrast, Wise has no mark-up. All deals are made at the mid-market exchange rate - the same one you'll find on Google.

8. International credit or debit cards

A few technology suppliers accept card payments these days. The risks are low for you as the buyer, but high for the supplier. Fraudulent buyers can lead to high losses for the seller. Which makes cards an unpopular way of doing business among Chinese suppliers.

Fees are also high — and suppliers will pass them on to you wherever they can.

As a whole, card payments are not only unpopular with suppliers, but they’re also quite cost-prohibitive for many buyers.

9. Cash

Many suppliers prefer cash payments, and Chinese suppliers are no different. Paying by cash is common in China, and cash discounts are sometimes available.

For you, however, it’s the riskiest way of paying. There’s little protection if you’re unhappy with your goods.

You still face costs, particularly the expense associated with any foreign exchange transaction. You’ll need to check what exchange rate mark-ups you’ll face in addition to the stated fee.

If you boil it down, though cash is popular in China, it’s quite risky for you. Not only that, but you’ll need to beware of hidden charges in the exchange rate.

Sources:

Sources checked March 23, 2022.

*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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