When it comes to importing goods, particularly from China or any other country, newcomers often stumble upon several common mistakes. In this blog post, I delve into the most prevalent errors encountered when importing from China.
Below, I provide a concise overview of the 10most common mistakes made during this process:
This list doesn’t encompass all potential mistakes, so I highly recommend checking out my beginner’s guide to importing from China for a more comprehensive overview. Without further delay, let’s dive into the content.
COMMON MISTAKE NO. 1 – LACK OF AWARENESS REGARDING REGULATIONS
When you place an order for a specific product, it’s highly probable that your product falls under certain regulations and compliance laws.
For instance, products like Bluetooth or MP3/4 speakers require a Bluetooth license and a Sisvel license, which typically must be arranged and paid for by the customer (you). Moreover, there are regulations and laws stipulating the product compliance standards that your product must meet.
However, many suppliers may not include these costs in the product pricing and might not even remind you about them.
It’s advisable to consult with your inspection company to understand the requirements and certifications your products need to comply with the law.
If you’re already collaborating with an inspection company, they usually offer this information free of charge.
In any case, it’s crucial to verify this information, as failure to do so could result in your products being held up at customs.
At that stage, it may be too late to rectify, as obtaining a new product certification could take weeks, leading to storage costs incurred by customs.
In many instances, if you’re unable to provide the relevant certificate within a few days, customs may seize or even destroy your shipment.
For further guidance on import regulations, you can refer to the complete guide I’ve created on the subject.
COMMON MISTAKE NO. 2 – LACK OF CLEAR INSTRUCTIONS TO YOUR SUPPLIER
Reflecting on my past experiences, I often found myself regretting the lack of thoroughness in my orders. In the early stages of my career, I encountered numerous instances where mistakes or incomplete processes led to unfavorable outcomes.
To avoid such setbacks, it’s imperative to clearly communicate your specifications and requirements to the supplier via emails and order instructions. Request confirmation from the supplier to ensure they understand your needs accurately.
These specifications may include:
1. Proper labeling on the master carton.
2. Clear instructions regarding product specifications such as color, weight, features, certifications, etc.
3. If you’re selling on various sales channels like Amazon FBA, you’ll require product/carton/pallet labels for correct identification by platforms such as Amazon.
4. Shipping instructions, including destination details and preferred shipping methods.
5. Inspection instructions (detailed further below).
6. And any other pertinent details specific to your product or order.
By providing clear and comprehensive instructions, you minimize the likelihood of misunderstandings or errors, ultimately contributing to smoother transactions and improved outcomes.
COMMON MISTAKE NO. 3 – FAILURE TO MONITOR YOUR ORDER
Monitoring your order is absolutely crucial. You can’t simply place the order and assume everything will proceed smoothly without your oversight.
It’s essential to maintain communication with the supplier throughout the process.
While daily communication might not be necessary, checking the status at least once a week is advisable, particularly when coordinating inspection or shipment dates with your inspection company or logistics provider.
Suppliers often handle numerous orders, and smaller orders may sometimes receive lower priority.
Therefore, it’s important to remind the supplier of the deadlines you’ve set. Additionally, certain details of the order, such as shipping marks on export cartons and packaging, may be discussed after order placement.
This doesn’t mean you shouldn’t prepare everything on your end before placing the order. Having instructions ready for the supplier beforehand can save time.
While it might not be practical to inundate the supplier with all information at once during order placement, essential details should be covered. These essentials should be outlined beforehand.
Creating a checklist for order follow-up is highly recommended. This checklist should include tasks to mark as complete and reminders to chase the supplier for any outstanding information or actions.
By staying proactive and organized in your order management, you can mitigate risks and ensure a smoother import process.
COMMON MISTAKE NO. 4 – LACK OF AGREEMENTS
It’s common for newcomers to overlook the potential for delays or problems during production, especially when there are planned promotions or promised delivery dates to clients.
To safeguard your interests, I strongly advise having a purchase order term or a separate buying agreement in place. This can prove invaluable if you encounter delays and need to air-ship goods to meet deadlines. It’s imperative that your supplier signs this agreement; otherwise, you may have no recourse in case of a dispute. In general, there are four key components I include in my agreements or contracts:
Payment Terms:
I typically use a 30/70% payment term, meaning I pay a 30% deposit upfront, and the remaining 70% is paid only after inspection passes. If the inspection fails, the supplier must rework the production until all agreed-upon standards are met.
Inspection Clause:
I inform the supplier at the outset that there will be an inspection, which I will cover the cost of. If the inspection fails, the supplier is obligated to rework the goods until I am satisfied. However, it’s worth noting that the majority of inspections result in failures due to minor issues. In such cases, instead of requesting a re-inspection, I have the supplier sign a Letter of Guarantee confirming that the order has been reworked, and they are responsible for any future claims.
Penalty Fees for Delays:
I establish penalty fees for delays, typically giving a 14-day “good will” period. If the supplier exceeds this period for any reason, I charge a percentage of the total order amount as a penalty. While I may not enforce these penalties strictly to preserve the relationship, I may negotiate for additional free units as compensation for the delay.
Letter of Guarantee for Refunds:
I also have the supplier sign a Letter of Guarantee that includes provisions for refunds. If there are any issues with the products later on, I require the supplier to provide replacements on my next order for free, based on the number of returned items due to defects.
By having these agreements in place, you establish clear expectations and protections for both parties, minimizing the risk of disputes and ensuring smoother transactions.
COMMON MISTAKE NO. 5 – NEGLECTING TO CONDUCT AN INSPECTION
Although listed as number 5, I believe this is the most common and potentially costly mistake when it comes to importing from China. I cannot emphasize this enough.
Despite what some may claim, relying solely on the supplier to provide photos or videos of the goods before shipment is risky. It’s highly unlikely that the supplier will highlight any defects in these materials.
Therefore, it’s imperative to engage a third-party inspection company to inspect your goods during the final production phase. This is known as a PSI or Pre-Shipment Inspection. Ideally, inform the supplier when placing the order that you’ll be sending an inspection team at your expense.
The supplier will then provide a date for inspection. Booking inspections is now conveniently available online, with services like QIMA being a popular choice.
Inspections are essential. While they do incur costs, consider the potential consequences of not having one. Imagine the goods arriving at your warehouse only to discover significant issues. At that point, it’s too late to rectify the situation by returning the goods, and the supplier may not offer any assistance.
By conducting inspections, you mitigate the risk of receiving defective or substandard goods, ultimately safeguarding your investment and reputation.
COMMON MISTAKE NO. 6 – SELECTING THE WRONG SUPPLIER
It all begins with choosing the right supplier. What does that entail? It means finding a supplier who:
- Understands your needs and requirements.
- Is communicative and responsive to your inquiries, issues, and questions in a timely manner.
- Possesses knowledge about their products and industry.
- Demonstrates proactivity by identifying potential issues or offering suggestions to enhance the product or process.
I’ve written an in-depth post on how to verify a supplier, which you can find [here](provide the link to your post).
Choosing the wrong supplier can lead to a host of problems, including delays, quality issues, and communication breakdowns.
Therefore, it’s crucial to thoroughly vet potential suppliers to ensure they align with your business needs and standards.
COMMON MISTAKE NO. 7– SELECTING THE WRONG PRODUCT
When it comes to choosing a product to import, it’s crucial to avoid selecting the wrong one. This involves considering factors such as:
Complexity:
Avoid products that are overly complex to manufacture or that may be difficult for you or your customers to understand. Opt for products with manageable production processes and clear value propositions.
Seasonality:
Be cautious of products that are highly seasonal and may only sell well during specific times of the year, such as Easter-themed items. While seasonal products can be lucrative, ensure that you diversify your product range to cover all seasons. For example, consider offering sports items that are suitable for sale year-round, regardless of the season.
Anti-dumping Rates:
Take care to avoid products that are subject to anti-dumping duties. These additional tariffs can significantly increase costs and affect the profitability of your import business.
Counterfeit Products:
Steer clear of counterfeit or infringing products. Engaging in the sale of fake products can lead to legal consequences and damage your reputation. It’s essential to conduct thorough research and due diligence to ensure the products you import are genuine and legally compliant.
By carefully evaluating potential products based on these criteria, you can mitigate risks and increase the likelihood of success in your import business.
COMMON MISTAKE NO. 8– UNREALISTIC EXPECTATIONS
Many first-time buyers in China often have unrealistic expectations, assuming it’s akin to walking into a tailor shop where all demands are easily met. However, the reality is quite different.
One common unrealistic expectation is placing very small order quantities (e.g., 100-200 pieces) with specific customization requirements such as color, packaging, custom logos, etc. Most suppliers are unable to accommodate such small orders, as their production processes are optimized for larger quantities. Typically, suppliers require minimum order quantities of around 1000 units per item to justify purchasing raw materials from their sub-suppliers.
Another misconception is expecting significant price discounts when increasing order quantities. For example, assuming that doubling the order quantity from 500 to 1000 pieces will result in a 50% reduction in the buying price. In reality, the discounts offered by suppliers for larger quantities are often minimal. Even larger companies ordering tens of thousands of units may only receive marginal discounts. Therefore, don’t expect a substantial decrease in price when scaling up orders. Factors such as raw material prices and labor costs can fluctuate, affecting the final pricing.
Understanding these limitations and managing expectations accordingly is crucial for a successful importing experience from China.
COMMON MISTAKE NO. 9 – FAILURE TO VERIFY THE SUPPLIER
Avoid the common mistake of blindly trusting a supplier solely based on their “Gold Supplier” badge on Alibaba or other platforms. Conduct thorough research to verify the reliability and credibility of the supplier. While this process may take some time, it is crucial for ensuring a successful business relationship.
I have outlined the pitfalls and best practices for verifying a supplier in detail in this blog post [provide the link to your blog post]. By following these guidelines, you can effectively assess the legitimacy of potential suppliers and mitigate the risks associated with partnering with unreliable or fraudulent entities.
Remember, investing time in supplier verification upfront can save you from costly mistakes and headaches down the line. Therefore, prioritize this step in your import process to secure reliable and trustworthy suppliers for your business.
COMMON MISTAKE NO. 10 – FAILURE TO INSURE YOUR SHIPMENT
Always ensure that your shipment is insured. Request your freight forwarder or courier service, such as DHL, to arrange insurance for your shipment. This process is straightforward and should be a standard offering from any reputable freight forwarder or courier.
The cost of insuring your shipment is relatively low, typically amounting to less than 1% of the total value of your order. For instance, if your order is valued at $1000, the insurance cost is likely to be less than $10. Considering the potential risks involved in international shipping, such as damage, loss, or theft of goods, investing in insurance provides peace of mind and financial protection.
Insuring your shipment ensures that you are adequately covered in case of unforeseen events during transit. It’s a small investment that can save you significant financial losses and stress in the long run. Therefore, it’s highly advisable to include insurance for your shipments as part of your import process.
CONCLUSION
In summary, successful importing requires careful planning, thorough research, and attention to detail.
Avoid common mistakes such as neglecting regulations, failing to communicate clearly with suppliers, and underestimating the importance of inspections and insurance.
By learning from others’ experiences and implementing best practices, you can minimize risks and build a profitable import business.