Today, China is the world’s biggest exporter in the whole world and when it comes to the number of goods exported annually, China ranks on #1. This country is known for making almost any kind of products and anything that you can think of. It is due to the fact that importing or sourcing from China is extremely easy. Low custom duties, on-demand freight forwarder, and easy customs clearance make it easier to import than any other country. If your business is in its initial stage and your business requires sourcing some goods from a foreign country, then China is your best option. Ranging from high-scale to low-scale business, China is the best country for sourcing almost any kind of product you need.
However, if you’re just starting out importing from China, it might be a bit difficult for you. There is a high chance that you may get confused by custom fees, country tax, regulatory duties, air fees, and any other charges. If you don’t know about these terms and are planning to import from China, we highly recommend you to first read this article before doing anything. Many people book the container without knowing anything, they end up getting confused and selling their goods at a loss. That is why in this article, we’ve written an ultimate guide on everything you need to know about before importing from China. So let’s get into it!
Advantages of Importing from China
The reason why 90% of countries import their business products from China is due to multiple reasons. The first and most highlighted pro of sourcing from China is the availability of every industry. Below we’ve written some of the main advantages that you’ll get when you import from China.
Availability of Industries
In China, you can find almost any kind of product manufacturing supplier. Whereas, in other countries such as the USA, UK, and Germany, don’t offer many industries and are limited to industries in which they are specialized. If we talk about the hospitality industry such as restaurant furniture, cafe lighting, linens, bedsheets, and many other products like that, there is no shortage of suppliers in China who make such products.
Whereas, in other countries, it is very rare to find such suppliers who work in this industry. China is the only country where you find more than 180+ plus industries that are eligible to export into other countries. Ranging from computer accessories, vehicles, hospitality products, garments, electronics, smartphones, lighting, construction, aerospace, etc. Almost any kind of Industry can be seen in China eligible to export to other countries.
You Get For What You Paid For
The reason why 90% of countries import their business products from China is due to multiple reasons. The first and most highlighted pro of sourcing from China is the availability of every industry. Below we’ve written some of the main advantages that you’ll get when you import from China.
Ease of Import
The Chinese government highly appreciates and pushes their local businesses to export their goods to other countries. Did you know that in 2019, China earned about 2.5 trillion USD (18% of total GDP) only from exports, which is even higher than the USA and Germany? This figure makes it the # 1 exporting country in terms of annual revenue generated from exports.
Moreover, China is the only country that has the simplest and un-complex rules and laws for exports. It makes it ideal for investors to build their factories in China and start exporting to other countries. On the other hand, in the case of importing parts, due to the easy and simple exporting laws of China, importers can source their products to their home country at a cheaper cost, easily and faster.
Labour Cost and Cheap Manufacturing
Another big benefit of importing from China is the low labor cost and it’s cheaper to manufacture products in China than in any other country. It is because the Chinese currency Yuan (CNF) is a strong currency that makes the labor cost cheaper in China. In addition, about 70% of the world’s electronics and clothing are manufactured and exported from China. As a result, many investors are sourcing a lot of raw materials and supplying them to factories in China. This massive availability of raw material and currency of China makes the labor and manufacturing cost extremely cheaper than any other country.
Important things to understand before your import from China
Now here comes the main part of the article for which you’ve been waiting. If you’re just starting, then you might get confused by different taxes and service charges applied by your logistic partner, customs, and government. Without proper knowledge of charges and taxes, you may pay more than you expect so you may incur a loss. If you search on the internet, there is currently no article that will give you the information that we’re going to do. It is because they know nothing about importing from China. However, we’ve been in this business for x years, so we know the process of importing from China at our fingertips. So let’s get into it!
Price Quotation
At the very first stage, the supplier will quote you the price of your order. Depending on your supplier and the country in which you are going to import, there are usually 4 different shipping methods used in China. Depending on the seller, you will usually see 4 different prices and terms with each product. Below we have explained these terms to you.
DDP- Delivery Duty Paid
In this type of shipment, the seller will be responsible to ship your order and deliver it right next to your doorstep. The supplier must pay all the expenses of their own will, they’ll pay all the import duties, taxes, air fees, freight charges and handle all the logistics procedures. The receiver will have nothing to do with taxes, logistics nor any kind of additional fees. All the process of importing will be handled by the consignor. The DDP method is always expensive, as the supplier will not pay the import fee out of his pocket.
EXW – Ex Works
EXW is similar to DDP, but in this case, the receiver will be responsible to pay all the transportation fees and taxes. The consignor will just handle the import process to your doorstep, any kind of expense or charges will be paid by the receiver.
FOB – Free On Board
In this type of shipment, the seller or supplier will only deliver the goods to his local nearby port you specified. The receiver will be responsible to handle all the importing process, custom taxes, duties, and sales taxes. He’ll pay all the expenses on his will, the seller will just drop your order at his local port. From the seller’s port to your doorstep, the receiver will handle ever
FOB – Free On Board
In this type of shipment, the seller or supplier will only deliver the goods to his local nearby port you specified. The receiver will be responsible to handle all the importing process, custom taxes, duties, and sales taxes. He’ll pay all the expenses on his will, the seller will just drop your order at his local port. From the seller’s port to your doorstep, the receiver will handle ever
Import Charges
While importing from China there are many other charges and fee’s will be applied on your shipment that you’ll have to pay before letting it in your country. If you think just to pay the tax and your shipment will be cleared, you’re wrong! Many other hidden charges will be applied once your shipment arrives in your home country’s port. Depending on your country, the taxes, and charges might differ, but we’ve explained some of the hidden charges below that are the same in a majority of the countries.
Custom Duty – %
Customs duty is the fees that you’ll have to pay your local customs. The customs officers work 34/7 all the time to prevent any kind of illegal and smuggled products from entering the country. So they charge you a small percentage as a fee for their work. Usually, it ranges from about 5-8% depending on your country.
Sales tax – %
A sales tax is a tax that you pay to the government. Of course, you’ll have to pay some money to the government as they are working for your country all the time. Also known as MRP Tax and this tax is compulsory and you’ll pay this on any product that you purchase from the market. Usually, it ranges from 14-19% depending on your country.
FOB – Free On Board
In this type of shipment, the seller or supplier will only deliver the goods to his local nearby port you specified. The receiver will be responsible to handle all the importing process, custom taxes, duties, and sales taxes. He’ll pay all the expenses on his will, the seller will just drop your order at his local port. From the seller’s port to your doorstep, the receiver will handle ever
FOB – Free On Board
In this type of shipment, the seller or supplier will only deliver the goods to his local nearby port you specified. The receiver will be responsible to handle all the importing process, custom taxes, duties, and sales taxes. He’ll pay all the expenses on his will, the seller will just drop your order at his local port. From the seller’s port to your doorstep, the receiver will handle ever