Shipping from China 101
The Ladingo Team
October 21, 2020
Your step-by-step guide to shipping from China
Do you want to sell more to more people, while incurring lower overhead costs?
Do you want to truly compete with your direct competitors – and emerge the victor with all the spoils?
If you answered yes to any of these questions, learning about the stages of shipping goods from China should be your next best move.
China is a sourcing superpower, responsible for the production of a significant proportion of the Western world’s resellable goods at rock-bottom prices. Thousands of businesses across the globe source their products from Chinese manufacturers, navigating the maze that is cross-border shipping, import taxes and duties, VAT, last-mile delivery, and more, to bring anything and everything from toiletries and fabrics, to electronics and household furniture, to their local markets – and you can too!
All you need to do is follow this step-by-step guide and you’ll be contacting your sourcing agent about shipping a container of your customers’ next favorite product, in no time!
What you need to know before ordering goods from China
Before you attempt to forge business ties with Chinese manufacturers, it is important that you learn about Chinese business culture and practices, namely the concept of “face.” Giving face means being respectful, punctual, and generous. Losing face, means turning down invitations, acting rudely, or exhibiting self-control. Giving face will help you build trust, which motivates a mutually beneficial relationship. Losing face will have them prioritizing other business partners, their needs, and their timelines.
It’s also important to master some of the local business jargon. For example, EXW or Ex Works refers to the international trade agreement that states the supplier should prepare your goods for pickup at their factory. Conversely, CIF or Cost, Insurance and Freight, stipulates that the supplier is responsible for arranging for the transportation of your goods to the port of destination, as well as providing the buyer with all customs clearance documentation.
Once you’ve figured out how to express yourself when ordering products from China, it will be time for you to decide which products to source – and which to avoid. Make sure to steer clear of knockoffs, as well as those products that are trademarked.
How to safely source products from China
When looking to safely source products from China, Alibaba is a great place to start. The largest B2B import platform in the world, it is an ideal place to safely and reliably connect with Chinese suppliers and source their products.
The price per unit listed. If the price is accompanied by FOB (Free on Board) destination, the seller will bear any associated risk, while FOB shipping point will have you bearing the risk. Be cautious of prices that seem too good to be true. Chances are, they are. You can and should order samples – one under your name and one under a fictitious name and address – to test quality and value for money before making a purchase.
The minimal order quantity (MOQ). How many units you need to order. This quantity, multiplied by the unit price, will tell you how much your minimum order will cost, before shipping fees are added.
Gold Supplier, Trade Supplier, and Trade Assurance. Sellers who do not have these badges of certification have not been verified and should be avoided like the plague.
The supplier’s history. How long has the supplier been selling on this site? What is their transaction history? Where in China is their factory situated? The more you learn about the supplier, the better you’ll understand if they’re safe to order from.
Production time. This information will not necessarily be found on the import site, but should be requested upon contacting the supplier to inquire about an order. You want to know how long it should take to complete (and ship) the order, so you can engage in sales and marketing activities on your end.
Payment terms. How does your Chinese manufacturer want to be paid? When? If something doesn’t seem kosher, chances are it isn’t. Secure methods of payment include a letter of credit, Paypal, or Secure Credit (Escrow on Alibaba). Bank transfers and payments through Western Union have proven to be risky for buyers.
Read more on our Alibaba beginner’s guide to buying from Alibaba
What are the stages of shipping from China?
Stage 1 – Understand your import rights
Fill out any documentation required by your home country to enable yourself to legally import goods from China. Make sure you’re aware of the kinds of goods your country does and does not allow to be brought into their borders. Commonly restricted items include fresh produce, drugs, trademarked and counterfeit items, and flammables.
Stage 2 – Decide how you’re shipping
Will you be using a sourcing agent, a 3PL (third-party logistics partner), or will you leave the shipping to your Chinese supplier? As a logistics solution provider, we highly recommend partnering with a 3PL, and strongly dissuade against relying on your Chinese manufacturer.
Stage 3 – Settle on a price and sign a contract
Prepare yourself. Chinese manufacturers have a reputation for being savvy negotiators. To get the best bang for your buck, you’ll need to read up on your potential supplier, get quotes from similar factories to use as points of comparison, and focus on what matters most to you: price, quality, or lead times. Make sure your contract, or purchase order (PO) is legally binding, to avoid hassle in the long run.
Stage 4 – Find a shipping partner
Will you be shipping by air freight, ocean freight, or train freight? Once you’ve determined the method of shipping, you’ll need to select the freight forwarder that provides you with the most comprehensive service package, at the most affordable price, and with the promise of the speediest delivery.
Stage 5 – Calculate your costs
Determine the total landed cost of your shipment, based on the 10-digit tariff classification number for each item you are importing, the Certificate of Origin, a quote from your freight forwarder, and the rate of duty you’ll need to pay at your destination port. Doing so will not only help you understand your shipment’s profitability, but it will also help you negotiate final costs with your Chinese manufacturer, as well as enlighten you on what your resale costs should be. Pro tip: base your landed costs on your projected order volumes, not the MOQ. And remember to double-check costs according to updated exchange rates.
Stage 6 – Bring your goods home
Arrange for the freight forwarding company of your choosing to ship your order from China to your port of destination. Make sure to track your shipment, so you always know where it is, and when it’s slated to arrive. Once your shipment has made its way to your home country, it will need to clear customs before it can be released into your possession. You will need to present customs clearance officials with the following documents:
A bill of lading
An official invoice
A packing list
An arrival notice
Systematically invoicing your goods and organizing them so that the contents of each package is clearly understood will help speed up the clearance process, and enable your last-mile delivery crew to transport your order to your warehouse for resale.
How can Ladingo help you ship from China?
As a free, complete, logistics solution provider, Ladingo makes it easy, affordable, and risk-free for you to import FCL and LCL containers from China and other international destinations. Our calculators provide you with full and transparent shipping costs ahead of time, and our automated logistics documentation ensures your orders clear customs with supreme efficiency.
From pickup to last-mile delivery, when it comes to shipping from China, we’ve got you covered. Visit our website to learn more.
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