In this post, we’ll be discussing the top five mistakes that people often make when importing goods from China. These mistakes come from our clients’ experiences as well as those of our friends in the industry. In fact, one of our friends recently made mistake number three, which ended up costing him a lot of money in unexpected fees and eating into his profit margin. That’s why we wanted to share these mistakes with you to help you avoid making them yourself.
Disclaimer: USA-specific advice, potential for technical content
We should note that most of our readers here at HAI International Holding are looking to import products from China into the USA, so this post will contain a lot of USA-specific advice. However, we’ll do our best to provide a worldwide context as well. Additionally, some of the content in this post may be technical in nature, but we’ll do our best to explain it as simply as possible.
Without further ado, let’s dive into the first mistake: assuming that shipping by sea is always the cheapest option.
Mistake #1: Assuming shipping by sea is always the cheapest option
Now, this is a classic mistake that I see a lot of new sellers make. Those you nerves, they ship by sea and they will get a leg up on your competition and they’ll often tell this to me as though the crack some super secret code. “Oh, I’m going to be different. I’m going to be bitter. I’m going to ship by sea. I found the secret. I’m going to be really rich.” Yeah, it doesn’t work that way.
Explanation of shipping by container and the cost comparison to shipping by air
The truth is, unless you’re shipping in large quantities outside of China, it is usually cheaper to ship via no shipping. By sea is on the surface cheaper than shipping by air. You see, if you should proceed, it will normally cost you around 60 cents per kilogram, whereas shipping by air will normally cost you around seven dollars a kilogram. So that is a huge difference, and I can imagine that you’re sitting there behind your computer thinking, “Sarah, what are you talking about? You just said that shipping by sea is cheaper, so how can it either be cheaper to ship by air?”
The thing is, is that for you to be able to get at that loan price, you need to be shipping by container. And the containers are very large. This means that you’re going to be shipping hundreds of kilograms. And if you can’t fill a container by at least 60 to 70 percent, then again it will usually be cheaper to ship by air rather than by sea. Now, a lot of my subscribers here at wholesale kids that are interested in importing guys from China will be private label manufacturers for Amazon SDA. And for most of you guys out there, you are not going to be shipping in large enough quantities to make it worth while shipping by container.
Explanation of the difference between air freight and air carrier
Now, let’s talk about shipping by air. When it comes to shipping by air, you have two options: one, air freight; and two, air carrier. A lot of people hear this and they get confused. I mean, aren’t they the same thing? Well, they are not. Carriers are courier companies that you probably recognize, like FedEx, UPS, and DHL. These companies have their own fleet of cargo planes which ship items all around the world. Cargo carriers will pick up your items from your supplier and then drop them off at your location of choice. So again, for a lot of my subscribers here at also Ted, this is going to be an Amazon warehouse.
On the other hand, your freight is when you simply have your cargo flown from one airport to the other. You see, airlines like Air China storages carry cargo for their passengers. They also carry commercial cargo as well, and sometimes this can be almost half the price of having your items taken by cargo. But like with all things in life, there is a catch. You still need to pay someone to pick up your cargo from your Chinese supplier and then drop it off at the airport. And you will need to source an independent customs broker to handle the documentation at the border. And you will also need to organize freight forwarding so that your cargo can be picked up at the destination airport and delivered to your warehouse.
Mistake #2: Neglecting to factor in the cost of customs and duties
Now, this is a mistake that I made when I first started importing goods from China. I thought that I could just get a really cheap product and then mark it up and sell it and make a profit. But what I didn’t factor in was the cost of customs and duties. You see, when you import goods from China, you are going to be responsible for paying customs and duties on those goods. And these fees can add up quickly.
Now, I’m not saying that you should avoid importing from China because of the customs and duties. No, not at all. I’m just saying that you need to factor these costs into your pricing when you’re calculating your profit margin. Now, the good news is that most countries have a minimum value, which is the value below which no duties or taxes are applied. So for example, in the USA, the minimum value is $800. This means that if you’re importing goods from China and they are valued at less than $800, you will not be responsible for paying any duties or taxes on those goods.
Mistake #3: Not properly calculating the cost of the product
Now, this is a mistake that my friend made recently and it cost him a lot of money. You see, my friend was importing goods from China and he thought that he had a great deal on the product. He thought that he could buy it for $5 and then sell it for $20 and make a huge profit. But what he didn’t factor in was the cost of shipping, the cost of customs and duties, and the cost of Amazon fees. And when he added all of these costs up, he realized that he was actually losing money on each sale.
So, it’s really important that you take the time to properly calculate the cost of your product. And this includes the cost of the product itself, the cost of shipping, the cost of customs and duties, and any other fees that may be involved. And once you have all of these costs, you can then determine your profit margin and see if it is worth it to sell the product.
Mistake #4: Not properly communicating with the supplier
Now, this is a mistake that I see a lot of new sellers make. They think that they can just send an email to a supplier in China and then boom, they have a product. But it doesn’t work that way. You need to make sure that you are properly communicating with your supplier to ensure that you are getting the product that you want and that it meets your quality standards.
One way to do this is by having a clear and detailed contract in place with your supplier. This should include the quantity of the product, the price, the delivery date, and any other important details. You should also make sure that you are communicating with your supplier regularly, either through email or through phone calls, to ensure that everything is on track.
Another thing to keep in mind is to be cautious of scam suppliers. There are many fake suppliers out there who will try to take your money and then disappear. To avoid this, do your research and only work with reputable suppliers. This may take some time, but it will be worth it in the end to ensure that you are getting a quality product and a good experience.
Mistake #5: Not properly insuring the shipment
This is a mistake that I see a lot of new sellers make, and it can be a costly one. You see, when you are importing goods from China, there is always a risk of the goods being lost, damaged, or stolen. And if this happens, you could be out a lot of money. That’s why it’s important to properly insure your shipment to protect yourself against these risks.
There are several options for insuring your shipment, including cargo insurance, which covers the goods during transportation; product liability insurance, which covers any injuries or damages caused by the product; and general liability insurance, which covers any legal liabilities that may arise. It’s important to carefully consider which type of insurance is right for you and your business, and to get a quote from a trusted insurance provider before making a decision.
Conclusion and summary of the mistakes to avoid
In conclusion, these are the five big mistakes that people first make when they start importing goods from China. By avoiding these mistakes, you can save yourself time, money, and headaches, and set yourself up for success in your importing business. To summarize, the mistakes to avoid are: assuming that shipping by sea is always the cheapest option, neglecting to factor in the cost of customs and duties, not properly calculating the cost of the product, not properly communicating with the supplier, and not properly insuring the shipment. I hope this post has been helpful in giving you an idea of the common mistakes to avoid when importing goods from China. Remember to always do your research and due diligence before making any decisions, and to be sure to factor in all of the costs associated with importing. With careful planning and attention to detail, you can successfully import goods from China and grow your business. Good luck!
