THE IMPORT BIBLE (2023 Edition)

THE COMPLETE BEGINNER’S GUIDE TO SUCCESSFUL IMPORTING FROM

CHINA

Copyright notice: All rights reserved. Copyright © 2015 Manuel Becvar

No part of this publication may be reproduced or transmitted in any forms or means,
mechanical or electronic, including photo copy and recording or by any information storage
and retrieval system without prior consent from the Author (Manuel Becvar).

Legal notice:
Neither the Author nor the publisher assumes any responsibility in errors, omissions, default,
and negligence or contrary interpretation of the subject matter herein. The purchaser or
reader of this publication assumes sole responsibility for the use of this published material.
This E-Book may not be re-sold in any way without the prior written consent of the Author.
The Author bears no responsibility in any change to the references made in this book. Any
reference made in this book is of no relation to the Author; it is simply his experience &
research over the years, published in this book

First edition: March 2015

Updated version 01.08.2022
 Table of contents:

PART 1) The Import Bible – Beginners Guide

Chapter 1) About the author

Chapter 2) How it all started and what this e-book is about
Chapter 3) About China
Chapter 4) Why should you import?
Chapter 5) The 6-step import process
Chapter 6) How to find the right product
Chapter 7) Validate your product idea
Chapter 8) Ways to product sourcing
Chapter 9) Alibaba and Globalsources
Chapter 10) Ordering Samples
Chapter 11) Testing your samples
Chapter 12) General product requirements
Chapter 13) OEM /ODM products
Chapter 14) Payment and delivery
Chapter 15) How to build a relationship with manufacturers
Chapter 16) Hiring a sourcing company
Chapter 17) Advantages and disadvantages of drop-shipping Chapter 18)
Patents and copies
Chapter 19) Calculate your costs
Chapter 20) Contact a logistics provider and get a quote
Chapter 21) Contact a third-party inspection company to inspect your goods
Chapter 22) Create an internal form to follow up your order
Chapter 23) Things you should do before placing an order
Chapter 24) Packing and labeling
Chapter 25) Minimum order quantities (MOQ)
Chapter 26) Negotiation
Chapter 27) Payment options
Chapter 28) Placing the order - the essentials
Chapter 29) Receiving your PI (pro-forma invoice)
Chapter 30) Monitoring your order
Chapter 31) Arranging the inspection
Chapter 32) Logistics - getting your order
Chapter 33) Receiving your order
Chapter 34) Claims and compensation
Chapter 35) Selling your products (EbayEbay / Amazon)

PART 2) The Import Bible – Professional Guide

Chapter 36) Re-Orders and what to keep in mind

Chapter 37) The Chinese New Year & what it means for your business
Chapter 38) Staying in touch
Chapter 39) Common mistakes when importing
Chapter 40) Price increases and how to deal with them
Chapter 41) Advanced negotiation
Chapter 42) Shipping & courier services
Chapter 43) QC
Chapter 44) Proper Alibaba supplier identification
Chapter 45) Legal requirements & certifications on products
Chapter 46) Anti- dumping rates
Chapter 47) Product liability Insurance
Chapter 48) What products do not make sense to import
Chapter 49) Making prototypes / mock up samples
Chapter 50) Private labels, brands & trading no-name items
Chapter 51) Instruction manuals
Chapter 52) Keeping track of your payments / invoices & expenses
Chapter 53) Factory standards (ISO, BSCI, SA8000…)
Chapter 54) Subcontractors & raw material suppliers
Chapter 55) Using proper (internal) supporting documents
Chapter 56) Production areas in China
Chapter 57) What to expect from a sourcing company
Chapter 58) Finding a product in China that you saw on EBay/Amazon
Chapter 59) More drop-shipment sites other than Aliexpress
Chapter 60) The brutal & honest truth about developing your own products
in China
Chapter 61) why you will like Global Sources more than Alibaba

Part 3) The Import Bible – Business in China

Chapter 62) Take your import to the next level, GO TO CHINA

Chapter 63) First timers guide to China and what this part is about
Chapter 64) Do’s & don’ts in China
Chapter 65) Why go to China?
Chapter 66) Start your preparation
Chapter 67) Competitor research
Chapter 68) When is it even worth it?
Chapter 69) How to source for suppliers (in unusual ways / beyond Alibaba)
Chapter 70) Travel chapter (Visa, Hotels, Language etc.)
Chapter 71) Business in China
Chapter 72) At the exhibition & how to prepare
Chapter 73) At the factory
Chapter 74) After the trip
Chapter 75) Summary & 10 ways to save you money

Part 4) Support

PART 1

The Import Bible – Beginners Guide

CHAPTER 1) About the author:

My name is Manuel and I was born in Austria in a little town called Melk. Asia
has always fascinated me, ever since I can remember. I remember watching
Bruce Lee and other Chinese movies as a kid and I was hooked right away.

My professional career started in 1998 when I worked for Austria's biggest

DIY retailer (bauMax [Link] ). I moved to Hong Kong in 2005 when
I was offered a position as an intern at one of the biggest sourcing offices in
Hong Kong, with a staff over 200 people.

For more than 10 years I worked with the biggest retailers in the world,
developing, sourcing, and finding new products for them. These retailers
included: Metro, Rewe, OBI, Carrefour, Tesco, Wal-Mart, Amazon, Auchan,
Lowes, Sears, Home Depot and many others.

As you can imagine, the big retailers expect their products to do more than
just conform to standards and regulations when they purchase them in Asia.
They need to be of the highest standard and quality. These retailers cannot
afford to have a product recalled due to quality problems or defective
components. These products need to be top-notch.

In those 10 years I got to know all about the standards and product
requirements, and additionally I gained a lot of experience and insight
working with factories in China.

Not just that. I learned a lot about China, its culture, and its manufacturing
facilities: where and how to find the best suppliers, how to negotiate and
communicate with them, how to arrange business travel for my customers,
and a lot more.

In the busiest seasons (April and October), I accompanied up to 30 buyers a

month to exhibitions, factories and showrooms to help negotiate, develop
products and follow up on the buyer's requests after they were gone. I got to
know all the tips and tricks you need to return home from your trip
successfully.

This eBook is aimed to make you a professional importer in a few days, using
what took me over 10 years to learn.

This eBook will guide you step-by-step on the process of importing goods
from China.

This eBook aims to take away all your worries and doubts and help you to
take your business to the next level!

I will cover all aspects of importing from China. Starting with several online
supplier sourcing sites such as [Link] and [Link], you’ll
get to know about importing procedures, dealing with factories, finding your
products, how to inspect and ship your goods, and finding out what legal
import requirements your products need. In Part 3 I cover taking your
business to an even higher level when going to China, including: travel
arrangements, visas, customs clearance, how to negotiate with suppliers in
factories, tips and tricks to get you the best prices, and simple etiquette in
China.
I’ve updated this eBook in August 2022 to reflect changes in the industry as
well as insights learned since first publishing this eBook.

Where am I now? I’ve spoken at large conferences around the world on

importing, exporting, Amazon FBA and ecommerce in general.

I now run several online and ecommerce businesses as well as coaching

programs that teach importing from China here: [Link]

If you have any questions feel free to email me at: mail@[Link]

I also invite you to join my FREE Facebook groups where like-minded

entrepreneurs share their ideas, thoughts and process:

Facebook group for importing from China:

[Link]
CHAPTER 2) How it all started and what this e-book is
about

When I started my own company in late 2013 my goal was to provide

affordable consumer electronics to customers that don’t have a buying office
in Asia and customers that do not import by themselves.

Before I started my own company I was working with large retailers and they
all had their import processes in place. But my target customers with my own
company were not these retailers. My target customers were people with
small businesses or online shops and wholesalers that would like to get
things directly from the source at a great price.

In the first few months I felt that many of my new customers were
uneducated or unaware about importing procedures and many didn’t know
the advantages and disadvantages. So instead of explaining everything in
detail in every email I decided to make a guide that they could use every
day. What started out as a few pages quickly turned into a book. To be exact
it’s the book that you are reading today - the Import Bible.

I have helped many customers and buyers all over the world with this e-book
and many tell me that this information has helped them a great deal to take
their business to the next level.

For example, I had a customer from Spain. He was selling small quantities of
product that he bought from importers in Spain with little profit on Ebay. He
was looking for a way to grow his business but had no idea about the import
process. When I started to work with him in March 2014 he had a total profit
of 800EUR a month through his eBay sales. As of today, because of my help,
he is one of the top-sellers on eBay with a profit of over 50,000EUROS and
now selling on Amazon with a turnover of 60,000USD within the first 4
months.

I will show you how to turn an investment of 10,000USD into 33,000USD

PROFIT!

With this book I want to help you to have the same success as he did with
just a couple of months of hard work. Yes, hard work. Don’t let the title of this
book fool you. To take your ideas or business a step forward takes a lot of
hard work. This book is also a great tool for you as a general guide and
introduction to importing.
There are a few chapters that may not apply to you. I recommend reading
them anyway and then deciding for yourself whether to apply these
processes or not.

I hope you enjoy reading this book and I hope it will help you the same way
it has helped many others.

Enjoy,
Manuel

CHAPTER 3) About China

There are a lot of statistics I could give you but I wouldn’t know where to
begin. Please also note (as at the moment of this update on 01.08.2022) due
to the COVID Pandemic you will not be able to visit China at this moment.
According to news reports China will not open its borders until 2025.
Depending on when you are reading this book things may have changed,
please follow official channels to get updates.

I want to break down China and its manufacturing in a few sentences.

Believe it or not, China is still the biggest production site by far. While there
are several countries in the vicinity, such as Vietnam, Thailand, and
Bangladesh, they simply do not have the infrastructure that China does.

Imagine you need sanitary items, furniture, household appliances, insurance,

and a smart phone. You walk into a Wal-Mart. You can find practically
anything you need in there and that’s within 10,000 square feet. That pretty
much sums up China's infrastructure.

Factory A provides plastic and tooling, Factory B provides packaging, Factory

C provides raw material and components, and Factory D assembles
everything. They are all within a stone’s throw away from each other. Most of
the factory bosses are related to each other. They set up a perfect system
within their “community.”

I’ll give you an example, and I am not kidding you, 95% of the world's supply
of electrical multi-sockets comes from a small town in Cixi near
Ningbo/Shanghai. When I say “small” I actually mean small for China. There
are over 1.4 million people in this town.
When you step into "Ningbo Kaifeng" (the largest factory in the world for
multi-sockets) you are overwhelmed. And when you step outside of the
building you see five competitors across the street. All the factory bosses are
related to each other. And down the street they can find everything they
need – factories that make packaging, tooling, plastic, steel, and so on.

The Chinese are so effective in terms of production and infrastructure that

some first world countries could really learn a lot.

The big retailers figured out a long time ago that nearly every large
corporation, retailer, discounter, or online shop has a buying office
somewhere in China/Hong Kong. I know this because I have been in the
industry for over 15 years. When you walk into a factory and look at the
production line you see cartons of goods with famous names on them.
Whether it is a fan from Home Depot, an audio speaker from Target, or a
ceramic pot from Bed, Bath, & Beyond, they were all made in China.

Most products are made in specific areas.

Here are a few examples:

- Guangdong province (South of China): Electronics of any kind, especially

consumer and household, toys

- Zhejiang province (Shanghai area): DIY products, tools, metal and fabrics,
lighting

- Hebei province (Beijing area): Textiles, coal, steel, iron, engineering,

chemicals, power, ceramics and food

These are the main areas for production. However, nowadays production is
also shifting inland to take advantage of lower labor and production costs.

And that’s why China will be Number 1 for production and export for many
years to come.
 CHAPTER 4) Why should you import?

I would generally say there are two main reasons why you should import
yourself.

1) There is a saying. “Margin is made in purchasing, not selling.”

Every successful buyer in the world who works for a larger company will tell
you that it’s all about the purchasing. Profits are made when buying and not
selling.

Huh? Yes sure, there is a profit to be made in selling but what if you are not
the only one selling this product? Then you have to work for your margin at
the root and not when selling the product. The competition doesn’t sleep –
they spend their time doing research on you and your sales price. If they
match or even lower their price you have a problem. You have to decide if
you want to accept a loss in margin or look for a new supplier. And you don’t
want to go to your importer for that. You go to the source directly, and that’s
the factory in China. This is the 1st part of the book.

2) Apart from reason No.1 there is also the “innovator effect” to be taken in
account. Say your competitor buys the same or a similar product to what you
have and probably from the same source (your importer). You don’t want
that. You want to have a great product with a great margin but you want it to
be sold in your shop/store only. So you have to be the first one who finds it
and make a deal with the manufacturer to have it exclusively. And the only
way this is done is by visiting China and going to factories to see their
products, and perhaps even developing your own product or private label.

Here are some more reasons for you to consider importing from China:

Advantages
- Low manufacturing costs
- Suppliers are much more open to working with smaller businesses and
providing smaller quantities
- Large number of suppliers to choose from
- For many products, China might be the only place that produces the item
- One-stop services like Globalsources have made it very easy to navigate
and purchase from suppliers
Along with the advantages of sourcing from overseas suppliers also come
several disadvantages that you should be equally aware of. Some of the
biggest disadvantages include:

Disadvantages
- Perceived lower quality of items
- (Usually) lower manufacturing and labor standards
- Almost no intellectual property protection
- Language and communication barriers can be difficult to overcome
- Difficult/costly to visit manufacturer on-site
- Longer shipping time
- Cultural differences in business practices
- Product importation and customs clearance
- Lower level of payment security and less recourse if something goes wrong

HOWEVER, with this eBook I will take away these fears and disadvantages
and prepare you for a trouble-free import.

CHAPTER 5) The 6-step import process

This is a rather large section so I will outline the six steps and go into detail in
later chapters.

The 6-step import process

This is the general outline of the process. We will look into each process in
greater detail in later sections. It is also the same process whether you go to
China or sit in the comfort of your home.

These are the 6 steps that you always need to follow through no matter what
product you want to import.

1) Decide where your product will be manufactured. In our case this will be
China or South East Asia (depending on the product).
Countries have different export/import regulations. While products may be
cheap to buy from Asia, there are many other factors that might add
costs. Requirements for importing specific commodities depend on a wide
variety of criteria. Some information, such as whether an item is subject to
quota restrictions, eligible for reduced rates of duty, or restricted from entry
because it originates in an embargoed country, can be determined only if
you know the item’s Harmonized Tariff customs number. This can be found
for the US, for example, under: [Link]

If you live in Europe or any other country simply Google “customs tariff
number your country.”

Click on the link and head over to the country’s official government website.
On these databases you can simply look for a product’s tariff or regulation
information.

At these sites you will also find a lot of tips on items that have “anti-
dumping” tax on them to minimize the import and protect the local industry.

2) Find a product
You may want to have a niche product or an item where you can make large
profits. We will go into this in more detail later.

3) Find a supplier
This is the most exciting but also the most difficult part. We go into this in
greater detail later. If you are new to importing there is usually a lot of
support from your local government, which is ready to answer your
questions. But the purpose of this e-book is to help you to understand the
process by yourself.

4) Calculate all duties and taxes

This goes hand-in-hand with the first part of the process. Import duties can
be calculated in different ways and can make or break your business.
I have a rule of thumb: I take the buying price from my supplier and add 20-
30% on top. This gives me a rough idea of what my landing price will be. This
rule applies to first-world places like the US, Europe, Canada, Hong Kong,
and Singapore, for example. Many second or third world countries are not so
open to importing and put a high percentage of duties and tax on top of
import products to protect the local industry. Many first world countries have
0% duties and tax to encourage imports.

This applies especially to “green products” that are very sustainable and help
reduce energy or waste. A good example is an LED bulb with 0% tax and
duties.
We will go through an example in Chapter 19: Calculate your costs.

5) Find a freight forwarder and customs broker

Don’t do this process (logistics) yourself. It can be a nightmare, trust me. Ask
your supplier, who usually has his own forwarders, to give you contacts. If you
already have contacts in the industry, great. If not, we will also provide you
with a list of freight forwarders and customs brokers. The freight forwarder
usually knows all the procedures and documents that are necessary. This rule
applies to bulk shipments in containers only. If you only have a few samples
or pieces to be sent then use airmail or couriers such as DHL/TNT/FEDEX.
We will also give you some contacts in this course. Oftentimes your supplier
has a preferred courier for samples with great rates. Ask him to provide them
to you.

6) Monitor your shipment and have an inspection!

If you are having a larger shipment or products that are valuable you NEED
to hire a third-party for inspection. This third-party can inspect your shipment
during or after production and send you a report. Based on this report you
can give the supplier the release of the shipment or have him REWORK your
goods. If there are problems found during your inspection the supplier will
ALWAYS agree to rework your shipment because he is still waiting for the
rest of his money, which you will only release to him once you are happy with
your shipment (do not pay 100% of your order up-front, EVER).

Many importers skip this step to save costs or trust their suppliers
completely. TRUST ME, in my 10 years working with factories for my buyers I
could tell you tons of stories where the products were not 100% according to
my order requirements. It could be a wrong instruction manual, many
scratches on the product, a faulty wire, or heavily damaged carton boxes.
Don’t let me discourage you – many times it’s just minor mistakes that can be
accepted, but, again, since I worked for the biggest retailers in the world,
products needed to be top-notch. Once you let your supplier know that you
will do an inspection on your products he is more likely to pay more attention
to your order too. And the best part? This can be done for ~300USD from
companies like QIMA (my favourite & most competitive prices inspection
company), TUV, Bureau Veritas, and many more.
CHAPTER 6) How to find the right product

As mentioned earlier this can be a very lengthy process or a very short one if
you already have something in mind. I will give you a few ideas and
guidelines if you don’t have a new product idea yet.

Unfortunately, China’s factories rely a lot on your product input. Most of the
time you can also request a little modification such as putting your company
logo on the item, private label packaging, or changing the colors of the
product.

We will cover custom products in the section OEM Products.

Other than that you will need to rely on factories for their input.
What you can give them without investing a lot of money for new products
(that no one has yet) is a good pitch. Say you see some new cool gadget on
websites like Engadget”, Wired, CNet, PCMag (to name a few in the
technology sector). You could send this idea to your trusted supplier and ask
them if they would be willing to invest in developing this product. Or
perhaps he has something very similar already in his assortment.

Fortunately, what Chinese factories are very good at is producing standard

items that you can find in your local Wal-Mart / Sears / Lowes / Bed, Bath, &
Beyond, and many more. These items can be a bathroom accessory, TVs,
garden furniture, and much more.

One of the best ways for me to find a new product is by scouting the Internet
and looking at trendy websites.

For example, this link provides all the necessary company websites that you
need: [Link]

Just click on any category and browse through the many major websites
provided.

For example, click on “Computer & Tech” and you will find the top 24
websites where you can start your research on the product that you would
like to import. It is time consuming but it’s also a great way to find ideas and
scout your potential competitors.

What also helps me a lot are newsletters. I subscribe to at least 100

newsletters of companies that I think provide cool gadgets and items. This
way you get weekly newsletters of trending products. Simply go onto a
company’s website and subscribe, easy as that. It could be your local
supermarket, a big brand name company, or some blog that always features
the coolest and trendiest items. Perhaps you could create a new email
address that you register with on these sites so that your main (work) email
address doesn’t get overwhelmed with newsletters.

Another way to find new products is obviously when you are out in a
shopping mall. To start your own import business means that you also work
when you are out with friends/family at a shopping mall. Keep your eyes
open and when you see something cool make a reminder for yourself on your
smart phone to look up this product.

Travelling is also a great way to find ideas. When you are out of your country
or state you will likely see items that your country/state does not have. There
could be many reasons why they may not be available where you live, but it’s
always worth it to check an idea out. I remember when my friend told me
about 10 years ago about Bubble Tea & Fancy Green Tea drinks sold in
Hong Kong and Asia. She was from Germany and she had never seen these
drinks back home. She didn’t go on any further with that idea but a few years
later back in Germany these drinks started to pop up and were a smashing
hit! So even when you think at first that idea might be nothing, it could be
worth millions! Share the idea with a few friends and brainstorm about it.

One of my favorite and an efficient way to find new products is at exhibitions.

There are hundreds of exhibitions each year in many countries. You get to
meet the supplier, see the products, and talk over details such as prices,
models, and much more. On top of all of that I guarantee you that you will
get inspired. To find exhibitions near you just Google the exhibition center
near you and get your entry ticket. Most times you will need to provide name
cards and contact details for that. You can order business cards for $5 these
days. Going to an exhibition prepared and with a professional image gives
the supplier a great impression of you. I will cover exhibitions and how to
behave there in another chapter in my next book.

Obviously, looking at competitors can help you find a product. But doing so
means you need to be more price competitive and that gives you a
disadvantage, unless you are selling at a different price level and providing
additional services that your customers value.
Amazon, Ebay, and the likes can help you get started on basic product ideas.
I don’t recommend starting by importing products that the majority of
companies already have. But these websites give you great input on trends
and items that sell very well.

Alibaba, Aliexpress, Global Sources, and Taobao are great ways to find
products. You could search through millions of products from thousands of
suppliers. But I don’t recommend this option, as you can quickly get lost in
the products. These sites are a great way to find a supplier, however. We will
cover these four sources later.

Now, having said all that, you might think, “but how do I figure out what
product is right for me?” Again, all options above give you some ideas where
to find products, but it is up to you to try and test them. You can start by
importing small quantities via Aliexpress (drop-shipping) and testing them
through your EbayEbay/Amazon or other sales channels.

Make sure that the product you want to import is not regulated or a
restricted item in your country. Do your research! See the section The 6 Step
Import Process.

To make this easier for you I am going to run you through an example:

How to find a product?

This is the number 1 question I get asked on almost a daily basis. I have no
definite answer for you today but I will try to break it down in two sections
and a step by step guide on how I select products and hopefully you’ll get a
few ideas.

Lets look at your personal situation (scenario) first and then see how you can
benefit from your scenario when picking the product. I’ve also written this in
a blog post which you can find here: [Link]
on-amazon/

1) How to pick your product niche:

Scenario 1: You’ve got money
Congratulations! While it is easier to get started the question of what product
you are going to pick still remains open. More on that below.

Scenario 2: You don’t have money and you’re scraping together every little
cent you have to reach 5,000$ because that’s the budget you heard of is the
minimum (well its my minimum that I recommend to everyone).
While it is more difficult to get started you have the same starting point like
everyone else out there. You probably want to make sure that the product
you are going to pick is worth the investment. But even if your first product is
not a killer don’t worry. You learn a lot in the process and in most cases you
can at least get your investment back. Read on.

Scenario 3: You have a large follower-ship on social media

You are in a great spot. You already have a list of customers to get your
launch and product going. It is imperative to pick a product that fits your
social media.

In my recent case study ([Link]

from-zero-to-7000us-in-10-days-in-one-of-the-most-competitive-amazon-
niches/) I reached out to bloggers and that boosted my launch immensely.
Even nearly 3 months after my launch I still get sales from that site.
What does that mean if you have a large followership? Lets say I have an
Instagram account with 50,000 followers that talks about eating healthy,
fitness, the outdoors etc. I could launch so many products to that
followership, even competitive niches. For example:

• Yoga mats
• Accessories for the gym (tumblers, bags, sporting items etc.)
• Backpacks, travelling gear, camping accessories
• etc.

When you research your future niche and have decided on it build social
media right away if possible. A client of mine built a social media follower-
ship of 8,000 followers within 2 months (various social sites) and then
launched her product. She sold nearly 100 pieces the first week only trough
social media. That helped boost her organic sales and the rest is history.
So consider social media right from the beginning when choosing a product.
Ideally you will want to enlarge your assortment with similar products that all
fit into your following. For example if your first product was a yoga mat and
your followership is about exercising etc. it probably doesn’t make a lot of
sense that your next product is a vacuum cleaner.
Scenario 4: You have passion about a certain product category

Let’s just say you love the outdoors, hiking, camping, and exercising in
general (like me). So many products to choose from but you have one
advantage. You know what you like and what your product should be able to
do. You already have an advantage over many other competitors. Your
passion for this category goes into your product. E.g. if you were to be upset
about quality of camping mats you would already know what to tell your
supplier where to improve. Look into categories you have passion for and
then choose a product that you feel you can talk about, improve and passion
in selling for.

For example if you like cooking you could look at developing a product that
makes a certain cooking process easier. The exciting thing about this is that
all your passion also goes into your product and listing and people just buy
your stuff because you are so convinced of your product yourself.
For example I recently bought a travel bag from a German entrepreneur
based in Thailand who loves travelling. Over the years he went trough so
many of his traveling bags already because they were of poor quality (the
straps broke, the leather peeled off etc.) and he decided to make his own
bags. After 6 months of hard work he launched his site and product and it
took off immediately. All his passion went into his product and site. You
could tell by his story that he was really passionate about creating the best
bags out there and not just copying the big brands. And only that convinced
me to buy one of the bags even that it was at a higher price tag.

Scenario 5: You have vast experience in a certain industry

Lets imagine you have 17 years of experience in selling electronics (like me).
What was the first product I picked? It was an electronic item. Why? Because
that’s where I had my experience in. I believe you should not just have
passion about your product but also have experience. When I sell a product
online I want to be able to answer customers questions and inquires. To be
able to do that I need experience in that category. Your passion and
experience goes into creating your product.

So when I choose my first product I improved an existing item based on my

experience in that industry: [Link]
private-label/
So if you have a lot of experience in a certain industry make that industry
your first product category. Don’t have experience in a certain industry? What
about a hobby? Or are you a parent? I am sure if you are a parent you have
lots of experience with your kid/children and you could start in that
category

Scenario 6: You have none of the above

Not to worry or be frustrated. Most of the people I know that get started start
with Scenario 6 and there are still many success stories out there if you are
within this scenario. Here’s an approach that you could use:

First: Take out a notebook and create a list of your interests and hobbies (or
responsibilities as a parent for example) e.g. kitchen products, electronics,
sports, your kids etc.. Yes actually write it down. Call me a bit old fashioned
but I like to drop down ideas in written.

Second: subscribe to newsletters of companies that talk about or sell

products of your interests. See below on which sites for example (point 2)

Third: Gather a list of potential products from that niche. Collect at least 10
ideas.

Fourth: Research phase. Helium10, Amazon, eBay, [Link], local shop that
sells the products etc.
See if there is any demand? Or is there space for one more seller (you)?

Fifth: If there is no demand is it because the product is in its fledging stages?

Can you improve the product with your passion and interest in this product?
Yes? Create a To-Do list of what you can improve based on customers
reviews, what friends and family say etc. and move onto finding a supplier.

Sixth: No? Are you still convinced of the product? Follow your gut feeling
and also ask around in friend circles. Move onto finding a supplier

Seven: No demand at all? Move onto product 2 of your list of ideas.

Lets say you found your niche, category or general product idea. Depending
on above scenarios here are a few examples on how to find your product:
2) How to find your product ideas:
Choose your scenario and lets look at the following options:

1. Amazon
2. Blogs, Gadget or trendy sites
3. Exhibitions
4. Supermarkets, shopping malls
5. Tools
6. When travelling
7. Alibaba & Globalsources

1) Amazon
You could look for hours on Amazon in the different categories and niches if
you already have a certain product idea. But if you have no idea to start I
suggest you start with the best seller list: [Link]

2) Blogs, gadget or trendy sites

Please don’t just look on Amazon! While there are great tools out there to
scout Amazon for products (Helium10 etc.) I get many of my ideas outside
Amazon.
One of my favorite site to find interesting blogs and trendy websites is
Kadaza. It’s a collection of the best and most interesting sites on product
ideas:
[Link]

Click on any of the categories and you will find x amount of websites in that
niche. For example if you look under the Tech category
([Link] you will find “The Gadget Flow”. By
subscribing to their newsletter you get weekly updates on trendy items (that
may not even be on Amazon yet). Lets take a look at an example:
Just a few days ago I received an email from The Gadget Flow. Its a site that
I subscribe to among many others. I found the site by looking trough above
Kadaza links.

So when I opened the email there were a lot of products that are currently on
sites like Kickstarter or other similar sites. But you know what? If its only on
Kickstarter now it means it isn’t on Amazon yet hence you can take the
product idea and even improve on it. So I looked at the first product that
caught my attention (lots of other good ideas too in that email):
After clicking on the link I found that the company is based in Denmark and
funded their product “the Sitpack” successfully on Kickstarter.

Just a quick search on [Link] and I immediately find a supplier:

 As you can see the supplier either stole the pictures or he is the
actual producer for this company. I think it is the first one but it could be
that they are the sole manufacturer.

Now I go on Amazon and see that there is only one seller, the
actual company “Sitpack” selling for 149$!!! Look at the listing. So much to
improve!!
 Also I am pretty sure that this product does not cost more than 10$
to manufacture. Wow what a margin!

Either way, the point I want to get to you is not to copy these companies but
find ideas on blog sites (subscribe to them) and see how quick and easy you
can research suppliers on Alibaba or Globalsources for suppliers. Maybe add
an accessory, change colors or whatever you feel could improve the product.
The best thing about subscribing to these sites is that you get ideas
delivered for free to your email address.

3) Exhibitions

One of my favorite and most efficient way to find new products is at

exhibitions. There are hundreds of exhibitions each year in many countries.
You get to meet the supplier, see the products, and talk over details such as
prices, models, and much more. On top of all of that I guarantee you that
you will get inspired. To find exhibitions near you just Google the exhibition
center near you and get your entry ticket. Most times you will need to
provide name cards and contact details for that. You can order business
cards for $5 these days. Going to an exhibition prepared and with a
professional image gives the supplier a great impression of you.
There are countless exhibitions around Asia throughout the year but mostly
during April and October. Here is a list of exhibitions for October
2016: [Link]
CTOBER2016_A.pdf

A great write up from one of webretailers earlier posts of Danny McMillan

who I had the pleasure of meeting in Hong Kong in
April: [Link]

4) Supermarkets, shopping malls

Another way to find new products is obviously when you are out in a
shopping mall or a local shop. To start your own import business means that
you also work when you are out with friends/family at a shopping mall. Keep
your eyes open and when you see something cool make a reminder for
yourself on your smart phone to look the product up later.

5) Tools

Helium10
You may have heard of Helium 10 already. Helium 10 is probably the most
advanced tool when it comes to navigating Amazon and finding best-selling
products. It integrates into the Google Chrome browser to streamline
product research.
Helium 10 can extract sales rank, sales volume, FBA fees, categories and
more. From the early days only available to [Link] it is now available
to track sales in almost all countries where Amazon is present. Last time I
checked it didn’t work in Australia but all other countries seemed to work.

Helium 10 has several tools at your disposal, but what I like most is the
“Chrome Extension”. It is a paid tool but it has helped me many times to
confirm a validity of a product that I wanted to sell. Personally I love their
chrome extension that you can simply install and then scan the Amazon
category pages. You get a lot of data from sales per month, potential profits
and much more. My favourite has to be the “Opportunity Score” which can
quickly tell you whether a product might be worth it to pursue. It ranges from
1-10 and while anything below 7 isn’t considered great with some of my
following strategies you can still have an opportunity. The market might be
saturated but I can still find gems with scores 7 or higher. Just the other day I
found a product for one of my clients with a score of 10 (which is nearly
impossible).

6) Travelling
Travelling is also a great way to find ideas. When you are out of your country
or state you will likely see items that your country/state does not have. There
could be many reasons why they may not be available where you live, but it’s
always worth it to check an idea out. I remember when my friend told me
about 10 years ago about Bubble Tea & Fancy Green Tea drinks sold in
Hong Kong and Asia. She was from Germany and she had never seen these
drinks back home. She didn’t go on any further with that idea but a few years
later back in Germany these drinks started to pop up and were a smashing
hit! So even when you think at first that idea might be nothing, it could be
worth millions! Share the idea with a few friends and brainstorm about it.
7) Alibaba & Globalsources

A) Alibaba
First off when you sign up on Alibaba you generally need to fill in which
product categories you are interested in. Based on this criteria and your
recent product searches on Alibaba you’ll get automated emails with new
product deals. Als you can subscribe look in their “selection site” where they
post a lot of the newest and trendiest items from their suppliers:
[Link]
__cor_selection

B) Globalsources
Pretty much the same with Globalsources. You sign up and get automated
emails with great product deals here. But not enough, they also have a
section with the best deals and newest products out of every product
category: Top Products. And my favourite part are their eMagazines that are
updated on a monthly basis with the hottest and newest product alerts on
their site.

Check out the links listed above and browse trough hundreds of
products. Use the techniques and step by step scenario as described above
depending on your situation.

Once thing I can recommend everyone at some point is to come to Asia and
visit some of the exhibitions. I feel it is just the most efficient way to find
products.

I know it may not be cheap to come here but I can guarantee its worth it. A
plane ticket and a few nights at a cheap hotel can go from $1500. But you’ll
see actual suppliers, products and samples in real. Saving you a lot of money
and time in the process. Here are a few impressions fand trip reports from my
times at the exhibitions:

[Link]

Chapter 7) Validate your product idea

You’ve found your product, GREAT! But careful, don’t get over excited about
a product that you just found or had an idea for. You need to evaluate first if
your product fits the market and its consumers.

We call this “product-to-market-fit,” meaning you have something that the

market really needs.

To evaluate your product you should go through the following steps:

COSTS:
- Cost of manufacturing
- Cost of transport. This can be crucial to your margin if the transport cost is
very high.
- Cost of duties and taxes
- Possible profit before tax

COMPETITION:
- Make sure no one or not many people carry your product.
- Analyze the market, do your research. Look at social media hash tags:
- Test the idea with a few forums (but don’t give away too much information)
- Research trends on blog sites (such as [Link])

More great tips available on Shopify:

[Link]
finding-your-first-product

Chapter 8) Ways to product sourcing

I think there are generally three effective ways to source your product:

- Internet (Alibaba, Globalsources, Aliexpress, HKTDC)

- Exhibitions / Conventions
- Contacts

Internet:
The Internet is probably the fastest way to source for products.
There are hundreds of providers on the Internet to source for products.
The most reliable and efficient ones would be:
ALIBABA (B2B-Business to Business for larger quantities)
ALIEXPRESS (B2C Business to Consumer for small order and drop shipment)
GLOBALSOURCES (B2B and Marketplace) Alibaba’s competitor in Hong
Kong
[Link] (B2B with small order and drop shipment) from Hong Kong

I mainly use Alibaba or Globalsources since they have been around the
longest and are the safest to use.
There are many other websites within China similar to those two but they are
not as user friendly and safe. For some of them, including TAOBAO or
BAIDU, you would need to speak Chinese or hire a translator.

Exhibitions/Conventions
I would say exhibitions are the most effective way to find suppliers and
products since you meet face to face and can also see the products.
As a first step Internet sourcing is fine, but maybe try to arrange your next
China trip around an exhibition.

I learned, after many disappointments, that you don’t want to place a large
order (more than 100 pieces) without knowing what you will get. You
wouldn't want to place an order with someone you never met and transfer a
lot of money to him. So going to exhibitions helps a lot.

Tip:
Even if you can’t go to an exhibition you can still find out about all the
suppliers exhibiting there. How? Simply go onto the exhibition’s website. For
example, this lighting fair in Hong Kong:
[Link]
[Link].

Then click on “Full Exhibitor List” and there you go. You have all exhibitors
exhibiting at this fair. It’s a bit of a lengthy process but you can check all
websites of the suppliers, look at their products, and contact them directly
without even going to the exhibition.

As I mentioned already, in this section we focus on the exhibitions in Asia. I

would say there are three major organizers and hosts that cover
EVERYTHING that you need. You need to preregister with all three
organizers and it’s FREE of CHARGE.

Main Exhibition Organizers in China/Hong Kong:

HKTDC
[Link]
HKTDC covers most of the fairs held in Hong Kong. All exhibitions are held
at the Wan Chai convention center on Hong Kong Island. Hong Kong
exhibitions will also be the most important ones for you (apart from Canton
Fair). They cover everything from jewelry to food to electronics, gifts, optical,
maritime, and much more. Click on the link and see all the upcoming events.
HKTDC’s events usually have the big names exhibiting. That’s a good way to
spot trends and innovative products. But eventually you want to buy from the
factories with lower prices.

GLOBALSOURCES
[Link]
Globalsources is the second organizer in Hong Kong. They exhibit at the Asia
World Expo Hall at the Hong Kong International Airport. They also cover the
most product categories (electronics, jewelry, textiles, and more). The events
are usually smaller in size and the exhibiting suppliers are mostly cheaper
than at HKTDC. Having said that I personally feel that Globalsources
organizes the best shows within HK due to their professionalism.

CANTON FAIR
[Link]
The Canton Fair is the holy grail of exhibitions. This event is so large that it is
held twice a year and each time runs over a span of 3½ weeks in three
different phases. Each phase comes with different product categories. As of
2016 there were over 26,000 exhibitors. This exhibition is a must for me and
it should be for you too. You will find a lot of innovations, big brands, small
factories, or the product you have been looking for for so long.
Plan at least 2, or better 3, days for your product category/phase. Sign up
once and get a badge that will be valid forever.

Tip: Don’t throw away your badge. You can use it for your next visit without
paying 100 Yuan for a replacement card.

CONTACTS:

Last but not least, contacts that you already have can be very helpful. Ask
around in your friend circle, relatives, and so on. You never know, your
sister’s cousin might have a contact that you didn’t know about.
Sign up on business networks such as [Link] if you haven’t
already. You can find a lot on there and can ask around if anyone has any
contacts to suppliers for your products.

There are also professional groups on those two websites with lots of
suppliers offering their services. Simply search for a group that could meet
your needs (e.g., consumer electronics suppliers / textile suppliers, etc.) and
post your inquiry to this specific group.

If you aren’t on any business networks or have no contacts, I recommend that

you start with Alibaba/Aliexpress.

Usually, government agencies in your country will also provide you with
supplier contacts. But be aware, most of these contacts will likely be
importers themselves. You will want to cut them out and go to the source.
Remember, that’s what this course is all about.

Chapter 9) Alibaba and Globalsources

We have covered important groundwork and the necessary steps to

successful importing.

Now let’s get to one of the most important parts of finding products and
suppliers.

ALIBABA AND GLOBALSOURCES

ALIBABA:
If you don't have contacts the easiest way is to start looking at
[Link].

Alibaba is also relatively simple to use.

You create an account, fill in your company information and details, and then
you can start sourcing right away.

You can filter by products or suppliers. Nowadays it’s pretty safe to use
Alibaba. Most suppliers are pre-assessed by Alibaba through document
checking, phone calls, and various other methods. Some suppliers even have
on-site checks, which means that a third-party did a factory audit and you can
actually download that audit.
There are many other cool functions, such as filtering by country or region.
Say you plan on going to Shenzhen or Guangzhou. You can narrow down the
province in filters (in this case Guangdong province), so you only see
suppliers from that region.

Most products are made in specific areas.

Here are a few examples:

- Guangdong province (South of China): Electronics of any kind, especially

consumer and household, toys
- Zhejiang province (Shanghai area): DIY products, tools, metals and fabrics,
lighting
- Hebei province (Beijing area): Textiles, coal, steel, iron, engineering,
chemicals, power, ceramics, and food.

Section 1) Begin your search:

This is fairly straightforward. You can browse two options, products and
suppliers.
We will start with products since we are assuming we don’t know the
supplier.

We are looking at a Bluetooth speaker.

Wow, over 1,000,000 products!!

Bear in mind, many of them are duplicates because of multiple entries by the
same supplier. Also, you will often find that popular and openly available
products are offered by different suppliers.

Insider tip: It’s also very easy to tell the trading companies, middle men, and
scammers from the real factories.
How? Simple. In the middle of the columns I can filter by:

Gold supplier: This is a paid membership from Alibaba for the supplier. They
get featured and can put up a lot more items in their catalogue (among other
functions).
Onsite Check: The onsite operation of the factory has been checked by
Alibaba and a third party confirmed its legal existence.
Assessed supplier: This is a third-party assessment usually done through a
testing company to verify various parts of the company. This includes
machinery, staff, engineers, workers, certification, and much more.

So how do I tell if it’s a trading company, an illegitimate company, or a real

factory? Simple. Trading or fake companies would not be a Gold Supplier or
have an onsite check done, and they would not be assessed by a third party.
First, it’s quite an investment for the supplier promoting his service (Alibaba
doesn’t pay anything), and second, if this third party arrives at the address to
check the factory they won’t find anything but three guys sitting in a small
office selling items from the real factory at higher prices.
Alibaba unfortunately has hundreds of middlemen and scammers that pose
as manufacturers. Many of these “manufacturers” are not manufacturers at
all, rather middlemen that pose as such, marking up the price and increasing
the level of miscommunication between you and the actual manufacturer
while providing little, if any real value.

With these filters you can pretty much eliminate middlemen, trading
companies, scammers, and so on. Unfortunately, you will also eliminate real
factories that are either new to Alibaba or do not make the effort of going
through all stages of verification. If your search did not conclude anything in
the first step, then you can perhaps extend the list again by unchecking “on-
site check” or “assessed supplier” and looking through your options with
Gold Suppliers first.

Moving on, through filtering I now “only” have 165,000 products to choose
from. I naturally look at the first one and a few others that interest me in
terms of design/color, etc.

This supplier uses nice photos, provides crucial details and specifications,
and even test reports at the end.
The second supplier also uses nice photos, a clear description, and a clean
look.

So what do I look for now and how do I go on?

A) The price
One of the first things you’ll look at is the price. For this listing we can see a
price of $30-60 USD FOB. FOB stands for Free On Board and means that the
seller will pay all involved costs that get the product to the nearest port. This
would be the most viable way to ship goods from Asia. The buyer pays the
cost of actually transporting the goods across the ocean to the final
destination. The price here is not really relevant as it is most likely just a place
holder.

B) Minimum Order Quantity (MOQ)

We look at the minimum order quantity. The minimum order quantity (MOQ)
is the smallest order the manufacturer is willing to accept to start production.
However, it’s important to note that this is almost always negotiable. In
our example, the minimum order is nine units. I highly doubt that this is the
MOQ. In this case it usually means that they have stock and you can buy from
nine pieces. But for mass production (and cheaper prices) they probably have
a MOQ of 100 pieces or more.

C) Payment Options
There are several common methods of payment, and each have their pros
and cons for both the buyer and the seller. The longer you work with a
supplier the easier it will be to deal with payments. If you have an established
business relationship you could ask that the next order should be paid 100%
on delivery (TT). He can always say no, but if he agrees this gives you
financial liquidity.

Let's take a look at the most common payment options and the associated
risk level to you as the buyer:

1. TT (Telegraphic Bank Transfer)

Risk Level For Buyer: Medium Risk
With a bank transfer, the supplier will receive payment before production
starts. Very important: if you agree to this payment, NEVER pay more than
30% upfront. Seventy percent will be paid upon inspection and shipment
release. This payment method bears a high level of risk to the buyer and
generally is not recommended when dealing with an unknown supplier.
There is little that can be done to get your money back if something goes
wrong.

2. Letter of Credit (L/C)

Risk Level For Buyer: Very Safe
A letter of credit is safe for both parties. However a letter of credit is rather
complicated to issue through a bank, costs quite a lot of money, and is
generally only recommended for larger purchases ($20,000 and above).

3. Western Union
Risk Level For Buyer: Very Risky
Western Union generally should only be used when dealing with people you
know very well. There is no guarantee if something goes wrong.

4. PayPal
Risk Level For Buyer: Fairly Safe
PayPal is a popular payment method for buyers as it presents a much lower
risk, ease of use, and generally pretty good buyer protection. Although it's a
popular option with buyers, it's less popular with suppliers due to difficulties
in withdrawing money, high tax rates, and potential charge backs from less
than honest buyers.

5. Escrow
Risk Level For Buyer: Very Safe
When using an escrow service, the buyer's money is held by a third party and
is only paid to the supplier after the buyer confirms satisfactory delivery of
their order. Escrow is a fairly safe payment method for buying and selling
online because it protects both the buyer and supplier.
You can read about common payment methods on Alibaba on the Alibaba
Safe Buying page.

[Link]

Generally, when you are just starting, you’ll probably want to look for or
negotiate with suppliers to either accept PayPal or some type of
escrow service to give you the highest level of protection.

The next step would be to start communicating with the supplier.

D) Contacting Suppliers

Introduce yourself to each supplier professionally. When I first contact a

supplier it usually looks like this. You can copy this section and use it for your
first contact:

Dear…,

My name is ….. and I am the ….(Manager/President/Buyer etc.) of ….

Limited/Inc.

We are a (fill in your company’s business, e.g., Importer/Buying Office/Whole

seller/Online shop) and are operating in (fill in your country).
You can also check out our website under: www. …..

I am writing to you today to inquire about the product I saw on your

website/catalogue/exhibition.

The model number is….

Could you please give me the following information: You can fill in the
details in the attached quotation format or send me your quotation in the
first step.

Unit price based on…. Pieces

Minimum Order Quantity
Available certification (CE, RoHS, FCC, GS, etc.)
Production lead-time
Available colors
Payment terms

I would then evaluate and get back to you as soon as possible.

If you have any questions please don’t hesitate to contact me.

Thanks and best regards,

E) TIPS WHEN CONTACTING SUPPLIERS:

Do this step with multiple suppliers, because it’s never good when you start
to rely on just one supplier.

Do not mention that this is your first time contacting suppliers on Alibaba. It
will probably give you a disadvantage in negotiating at a later point.

For easier reference and keeping track of your offers and suppliers I
recommend making yourself a folder on your desktop. Name it “Alibaba” or
“Sourcing” or anything that you can relate to easily. Create subfolders for
each supplier. In each subfolder create folders such as: “quotation,”
“supplier profile,” “certificates,” and so on.

Within this course we will provide simple offer sheets and supplier profile
forms that you can include in your email when sending to the supplier for the
first time.
Also, I have found that some suppliers don’t read your full email. So point
out the model number that you are interested in and ask them to quote
specifically.
Sometimes you will receive a simple email back with a PDF catalogue asking
which item you are interested in. It can be exasperating but that’s the way it
is sometimes. Politely reply back that you are “looking for a specific quote on
model number…”

You don’t necessarily have to use these forms for contacting the supplier for
the first time. Many will actually not fill it in because it obviously takes time to
do so.

HOWEVER, I recommend if you have narrowed down your suppliers you

should ask them to fill it in for your records. Keeping clean records is crucial
to your follow-up.

F) Ask questions and follow up

As you begin narrowing down suppliers make sure to ask a lot of questions
about their business and their products:

Ask for a copy of their business license and company and factory standards
(for example ISO-9001)

Ask which laboratories/third party companies they work with. If they only
work with Chinese test or inspection companies be cautious.

Ask for photos of the factory or company presentation (PDF/PowerPoint)

and sample products.

Feel free to ask for whatever makes you feel more comfortable doing
business with them. Ask who their customers are and where they are located.
If they don’t have any customers in your country be careful, as they might
have no experience dealing with your country’s regulations and standards.
Ask about them. If they already work with a competitor of yours or with an
industry similar to yours it’s a good sign that they can fulfill your
requirements.

Send a vendor profile so they can fill in their details. They should cover
production capability, how many workers/staff/engineers, main customers,
certifications, company turnover, etc.
G) Get samples

It should go without saying that before you invest any significant amount of
money into inventory you need to get samples to check and verify quality.
We explain the sample process in Chapter 10.

H). Sounds fishy!

Finally, if something is too good to be true, it usually is. Be aware of prices,

suspicious payments, or communication that doesn’t seem right. It’s never
too late to simply cease communication and look for another supplier.

Tip: When asking your questions and formatting your emails to suppliers it's
best to work with paragraphs or bullet lists of requests so that it is easy for
them to understand your requirements and needs. Make the supplier answer
each of your “bullet-questions.”

I) Requesting a quotation
Requesting a quotation/price, also referred to as a RFQ (request for quote) is
a relatively simple process. However, taking a few extra minutes to plan your
email can make a significant difference in the number and quality of replies
you receive.

Here again is a simple form for a RFQ:

Dear…,

My name is ….. and I am the ….(Manager/President/Buyer etc.) of ….

Limited/Inc.

We are a (fill in your company’s business, e.g., Importer/Buying Office/Whole

seller/Online shop) and are operating in (fill in your country).
You can also check out our website under: www. …..

I am writing to you today to inquire about the product I saw on your

website/catalogue/exhibition.

The model number is….

Could you please give me the following information: You can fill in the
details in the attached quotation format or send me your quotation in the
first step.

Unit price based on …. Pieces

Minimum Order Quantity
Available certification (CE, RoHS, FCC, GS, etc.)
Production lead time
Available colors
Payment terms

I would then evaluate and get back to you as soon as possible.

If you have any questions please don’t hesitate to contact me.

Thanks and best regards

J) Negotiating

Once you have begun conversations with multiple suppliers and have a good
idea about their prices, MOQ's, and payment terms, you can begin
negotiating with them.

Here are some tips on negotiating:

It is a given that once you place your order you negotiate the price, whether
you are below the supplier’s MOQ or not.

Use the price that you were originally quoted and decrease it by 20%. Give
this target price to the factory and let them know you would like to order with
your (20% reduced) price. In most cases, the supplier will not agree to your
new target price but he may reduce it by another 5%.

In 80% of cases he will give you a further reduction on his original quoted
price, unless your quantity is really very low.

Also, mention to him that this will be the first trial order and that if it is
successful larger orders will follow.

K) Weighing Your Options

Once you've narrowed it down to a select few suppliers, you'll want to weigh
all your options. Bear in mind it’s not always about the price and MOQ. It’s
also a gut feeling that you should get when communicating with a supplier.
Did he reply eagerly and quickly? Did he follow up in detail or just send
fragments to your questions? If you have the feeling it’s difficult now to
communicate, imagine how it would be to work with him once the order is
placed. Make sure you eliminate the suppliers with the least potential and
the most issues now!

Conclusion for ALIBABA

Sourcing a reliable supplier for your product from Alibaba can be a great
experience. Following the above steps and tips should get you working with
a reliable and good supplier. Don’t just settle on your first supplier or only
one supplier. Keep your options open and order multiple quotations and
perhaps samples.

GLOBALSOURCES

Global Sources is very similar to Alibaba. It’s just a bit smaller and less
known.

Sometimes when I don’t find a product on Alibaba I go to Global Sources, or

vice versa. What I like about Global Sources is that their customer follow up is
usually better than Alibaba’s. I guess that’s because they are located in Hong
Kong, while Alibaba is based in Hangzhou (China), so their customer support
is usually in a better English.

Start by registering and creating a profile as a buyer. It’s the same process
you followed with Alibaba.

Once you have completed your registration you can start looking for
products and suppliers.

Once you have input your product search you will see suppliers and
products.
On the right they have a nice tool that is similar to those in Alibaba. You can
see if the supplier has been verified, which customers he has, does he
exhibit, and so on.

You can also filter by “manufacturer,” “locations,” and much more. Again,
it’s very similar to Alibaba.
Check out all their features such as Magazines, Tradeshows, Marketplace and
more. There is a LOT of free information on there. I personally really love
their e-magazines. There are a lot of suppliers in there with great photos,
contact information, and much more. This is only available as a registered
user though.

Start your product search as under Section 1 on Alibaba in the previous

chapter.

Chapter 10) Ordering Samples

It goes without saying that you shouldn’t place a large order without ever
having seen a sample or product. You need to test your sample for function,
durability, and more.

When ordering samples most suppliers will charge you. And the majority of
those will charge 20-50% on top of the regular price, because making a
sample is more “costly.” The actual reason they charge more is because they
are afraid you only want to order a sample and then never come back.

Either way, this is an investment you need to make.

Insider Tip: Most suppliers will refund you the cost of the sample on the first
order. So make sure to remind the supplier of this when you place an actual
order. Here’s also a very detailed guide on how to order samples from your
supplier: [Link]
an-in-depth-guide/

Tips on sending/receiving samples:

1) When you ask for a sample, you don’t want it to be caught up in customs.
There are a few items that may not be sent via airmail or courier, such as
items with a built-in battery (e.g., power banks to charge mobile phones).
Check with your carrier or local post office on that.

2) Ask the supplier to state: “samples of no commercial value” on the sample

invoice that is packed with the sample. This way, customs will see this is a
sample not to be resold and should therefore not be taxed.
3) Ask the supplier to lower the value of the sample cost on the invoice. BUT
it shouldn’t be an amount that is too low; if it is it may sound not credible.
For example, if you order an item that is sold to you at 9USD, then the
declared amount should not be lower than 3USD. If you have an item that is
obviously expensive then make sure you don’t set the amount too low (e.g.,
real value 99USD, but declared value 8USD).

4) In some cases large sample orders will be held at customs, mainly because
samples with a value that is declared too low arises suspicion. You may have
to pay the tax and duties.

When you order a sample with the factory make sure of the following steps:

- Send an email inquiry on how many pieces you would like

- State the color and describe what the sample should look like (based on the
supplier’s offer)
- State the address it should be sent to
- Make sure the supplier states “samples of no-commercial value”
- Tell the supplier that you will deduct the sample charge from your first
order
- Declare a proper amount of sample value

CHAPTER 11) Testing your samples

Once you receive your samples it is time to perform a visual inspection and a
functioning test. Whether your sample is of a textile nature, an electric
product, or a decorative item, make sure you test it. Bend it, stretch it, use it,
and test how it functions. Often I receive samples and they are so difficult to
figure out (for example electronics) as they are not user friendly at all.

How can your customers understand and use your product in a simple way
when you can’t? Make sure that your item is easy to handle for everyone and
that it comes with an instruction manual (if applicable).

You don’t need to be an engineer to test simple functions. If you do have a

friend or colleague who knows technical things hand the sample to him and
let him give you an honest opinion.
If you found anything that you would like to change or have explained ask
your supplier to look into this, either to improve the product quality or give
you feedback on any problem. Make sure that the supplier will improve any
problems and indicate to him that (in case of an order) you will test this
during the inspection (performed by third party, Chapter 21).

CHAPTER 12) General product requirements

This goes with the previous chapter.

Larger retailers or buying companies usually have their sample tested

professionally before placing an order. This is done either by their internal
lab or a third party. If you would like to make absolutely sure that your
product conforms to regulations and is up to quality standards take this step.
It will usually cost you a few hundred USD, depending on the third party. I
recommend this step if your item is costly and your quantity is larger than
500 pieces or 2000USD in total value. You will usually receive a test report
that you could also send to your supplier and ask for his feedback or
improvement of the product before order placement.

Today there are many basic requirements that need to be met. For example,
chemical substances in plastic or textiles are not allowed to exceed a certain
amount within the product. Some items need to have a certain certificate
(such as FCC, RoHS or CE), which means that the product is preapproved
under certain criteria and OK to import.

Of all the smaller companies that drop-ship or have smaller order quantities I
know for a fact that 95% of them don’t have their items tested for chemical
substances or other technical requirements. If you drop-ship directly to your
customers (for example FBA-fulfillment by Amazon) you won’t get into
trouble. But if you are selling to larger companies or wholesalers they will
probably ask you for test reports.

If you (or the third party) found anything that you would like to change or
have explained ask your supplier to look into this, either to improve the
product quality or give you feedback on any problem. Make sure that the
supplier will fix any problems, and indicate to him that (in case of an order)
you will test again during the inspection (performed by third party, Chapter
23).

Bear in mind if you are a start-up or planning your first import this step may
not be necessary as it adds cost to your product.

However, if you have an existing business and are trying to expand into
larger importing this is an absolute must.

Depending on your product you can check general requirements here:

[Link]

Under above link you will find my latest release on my certification course.
What is it all about?

Amazon and other sales channels are getting a lot of pressure from
authorities to make their sellers comply to laws.

So far Amazon has only stated on their training pages that sellers must
comply with regulations and standards when selling on Amazon. Have a look
here:
Did you ever read this part or just flew over it quickly….

Did you ever import a product and it got stuck at customs because it did not
have the right certificates or labeling requirement that are needed for
imports in your country?

I hope not, because this can really cost you thousands of dollars. Amazon
and other sales channels will ban sellers that do not comply with standards.
Your eCommerce journey will be over before you know it.

Let's face it. Dealing with certifications and test reports isn't the most fun
thing to do but over the last 7 months I’ve worked on a course that will help
you to navigate the jungle of rules and regulations, give you actionable
advice what you need and show you how to use certificates to get a clear
competitive edge in todays overcrowded markets. I also give you examples
where you don’t need to test, how you can save money and when to walk
away from a certain product or supplier.

This alone will help you to save thousands of dollars and by getting the right
certifications and tests you can ensure compliance with all mandatory safety
standards & labelling requirements for Europe and North America.

With the growing health consciousness of customers the right certification

and compliance can give you a clear and competitive edge.

Have you ever worried about test reports, customs and what national laws
and standards you need to meet when you buy a product from China?

Then this is the course for you. In this course I walk you through all the
standards and laws there are out there for the US and the European Union.

I explain all the basics to give you a better understanding what you need to
meet legally, where you can save money and how to find the right standard
for your product.

I explain in laymen’s terms what all these standards mean and how you can
simply comply to them.

The best part is I’ve done all the work for you. I provide you with actionable
PDF’s for 27 product categories that give you a clear picture of all the
regulations that a certain product falls into.
Be it electronics, kitchen, garden, toys or furniture’s. I explain each PDF or
Product Requirement Profile and all you have to do when you source from
China is to send this PDF to your chosen suppliers and ask them if they can
fulfill your requirements.

I give examples in each PDF that apply to all product categories.

For example if you are not sure what your kitchen helper has to meet in terms
of standards and compliance you just have to look at the PDF that I prepared
for you, look at the country requirements, laws and certifications and ask your
supplier if he can meet them.

You don’t have to look any further and dig trough the internet and read
hundreds of authority or government websites still not knowing what
standard you have to meet.

I also give you case studies on different product groups and how I find out
what certification they need to meet. You’ll get contacts of test laboratories
and how you can contact them and get your product tested.

Have you ever worried that a suppliers gives you a fake certificate? Look no
further, I explain how you can find out if a supplier is sending you fake
certificates or not. This will help you filter out the good from the bad ones.

With this course you’ll get a practical roadmap to ensure compliance with all
mandatory safety standards & labelling requirements for Europe and North
America.

There is a step by step process to do all this and this is what you are going to
learn here. Again, have a look here and find out more:
[Link]

Finding inspection and third party companies that can tell you what needs to
be fulfilled is covered in Chapter 23.
CHAPTER 13) OEM /ODM products

You will also need to know what different types of products there are. There
are open (ODM) and closed products (OEM). OEM stands for “original
equipment manufacturer” and ODM stands for “original design
manufacturer.”

This is vital knowledge for your product sourcing. You need to know the
difference between these two. Anything that can be found on Alibaba or
Gloabalsources is usually ODM.

OEM:
When you see a big brand product, for example Apple’s iPhone or
Samsung’s S6, that is OEM. It means that Apple/Samsung designed
something and has an exclusive contract with the manufacturer that does not
allow the manufacturer to sell the product to anyone else. It’s an
Apple/Samsung-owned design and theirs only.
That also means that Apple probably paid the supplier all the costs to make
the tooling for the products. Usually toolings are very expensive. Small parts
like a cover or a case can cost easily 2000USD. Toolings are necessary for
production are manufacturing. A raw material will be crafted through the
tooling and will eventually become the product’s part.

OEM products are usually not showcased on a manufacturer’s

website/exhibition or even showroom. The manufacturer is not allowed to
show it to the customer.
The advantage of OEM is that you alone own the design, and no one else
can. The disadvantage is that there is a lot of pre-investment involved. I
recommend this option only if you have the available funds/backup from your
customer (for example crowd-sourcing website [Link]) or you are
willing to invest yourself because you strongly believe in your design.

OEM should also cover a non-disclosure-agreement (NDA) with your supplier

prohibiting him or any of his employees to discuss your designs, prototypes,
or product developments. We will cover that in the second part of this book
in more detail. In the first step you may not want to do OEM as you are just
starting out.

Keep in mind that:

• Not every supplier is open to OEM
• Investment is large
 • Long delivery times (tooling can take up to 60 days and manufacturing
another 40-60 days)
• Large quantities are involved
• Your product is unique and owned by you

ODM:
This means that the tooling is probably designed and owned by the factory
(or they paid someone to do it). They can sell their product and design to
whomever they want to. That means when you go to an exhibition anyone
can buy the showcased product.

This option has its advantages and disadvantages. The advantage is you
don’t need to invest in any tooling and you can buy an item off the rack from
the supplier. You can change colors or use your own branding but that’s the
extent of what you can change.

The disadvantage is obviously that everyone else can buy it too, you don’t
have a unique product.
This option is the most used option to source and buy products in China. It’s
easy, there is no design or investment involved (apart from order costs), small
quantities can be bought from the manufacturer, and the delivery can be fast.

Keep in mind that:

• Small order quantities
• Everyone can buy it
• Shorter delivery times

Some suppliers are willing to do the investment for OEM for you. But that’s
usually only if you have worked with them before and done more than
100,000USD worth of business with them.

Here is an option on how to get your design made (OEM) without

investment:

Insider tip: If you do not have the capital to invest in OEM but your supplier
has, discuss with him that he invests first, you can have exclusivity for a year,
and then he is allowed to sell it to everyone. Do this ONLY if you absolutely
believe in your product. The supplier will want to have a sales guarantee from
you in a separate exclusivity contract.
CHAPTER 14) Payment and delivery

Incoterms:

The Incoterms rules or International Commercial Terms are the way you pay
and have your goods delivered. Please look at this very detailed entry on
Wikipedia:

[Link]

When any supplier from China gives you an offer it’s usually FOB (Free On
Board).

FOB means that he produces and ships the items once manufactured to the
nearest port. His responsibility ends there and you (or your logistics provider)
take care of the rest. This is the most used option when importing from Asia.
There are many different other options that may suit you more, depending
on your budget and experience in shipping. See the Incoterms above for
more options. Discuss with your supplier or forwarder how you would like
your goods to be shipped.

The longer you work with a supplier the easier it will be to deal with
payments. If you have an established business relationship you can ask that
the next order should be paid 100% on delivery (TT). He can always say no,
but if he agrees this gives you financial liquidity.

CHAPTER 15) How to build a relationship with

manufacturers

Your suppliers are critical to your business success. The better you treat them
the more they are willing to continue business with you and give you better
service or performance than their other customers.

I have found that suppliers give better treatment and pay more attention to a
customer’s order (crucial for you) when they get treated fairly.
You think the supplier was just waiting for your business? Think again.
Established suppliers usually have a long queue of customers waiting for
them.

They are more likely to give priority to customers where they make more
margin and to ones that are easier to deal with.

In my previous job I had buyers who were very aggressive and tried to
squeeze every cent out of the supplier. It was very difficult to handle these
buyers and often I couldn’t find a suitable supplier for them. Even after
orders were fulfilled these buyers would often come afterwards and try to
claim money for a “faulty” product when there was actually nothing wrong.
Many times just for the sake of it they would try to get money out of the
supplier. This is not the way I work with my factories.

I believe in a fair respectful and trusting relationship with suppliers.

You’ll get what you put in. Want cheap? Get cheap. I guess it all depends on
what type of product you are looking for. If you are in for fighting with
competitors on Amazon or EbayEbay you are probably looking for the
cheapest there is. But don’t be surprised when your products are of poor
quality and you get bombed with bad reviews on Amazon/EbayEbay. If you
want to stand out from your competition you might as well start with good
quality products perhaps at a higher price. Sure, once in a while you look for
the absolute price entry product, but be prepared on the quality issues.

Also, I gain nothing from squeezing my supplier out of every cent when he is
struggling to fulfill the order and pay his workers. What if I want to place a
reorder or need a favor one day? He may not be around anymore and I’ll be
stuck.

In times when a supplier is in trouble because of another customer you may

want to help him. Say he has produced a lot of product that another
customer cancelled. I may even refer some customers to him. Trust me, this
kind of relationship is very valuable for you. If you help him he may offer free
samples, discounts on your next order, and so on.

I would say there are six rules to having a great relationship with your
supplier:

1. Make sure there are mutual benefits

2. Respect each other
3. Be fair to each other
 4. Trust one another
5. Support each other
6. Help each other

Having said all that, it doesn’t mean I trust my suppliers blindly. You still need
to have a few control mechanisms in place such as inspection, checking
reports and certificates he sends, and not easily accepting price increases. If
they are reasonable issues they can be discussed but I will sure do my
research on the eligibility of his claim.

Chapter 16) Hiring a sourcing company

Back in the days when I worked for a Buying Office in Hong Kong I was
travelling 10 days of the month scouting new products for Customers. As a
Sourcing Company we provided everything the Customer needed for Import
so he didn’t need to handle everything himself. We earned a small
commission (non-profit wholly owned Buying Office) on our orders and made
life for our Buyers a lot easier.

This option can be helpful if you do not wish to deal with all the procedures
and processes involved. Bear in mind that this can be quite pricy and usually
costs 30% on top of the manufacturer’s costs. There are hundreds of sourcing
companies in China that can help you.

Here’s a detailed guide on how and when to work with a sourcing company:
[Link]
china/

Chapter 17) Advantages and disadvantages of drop-

shipping (e.g. Aliexpress / EbayEbay)

[Link] is one of the most used marketplaces in the world. This will
be your new favorite channel for B2C and ordering small quantities from
suppliers in China. [Link] is part of [Link], which is also the
biggest B2B (business to business) company. They have more than 20
product categories, which include electronics, cell phones, automotive
accessories, clothing, jewelry, and other items.

I recommend this option ONLY if you have small order quantities and want to
test the water.

Bear in mind that these items are usually stock from the supplier that they sell
on Alibaba’s marketplace (Aliexpress). Be careful, as many of those items are
returned goods from the manufacturer’s other customers, faulty items, or
over-produced items from another customer’s order. In the last case it can
easily be an order from some trading company in Thailand and the
instruction manual as well as the packaging could be in Thai.

Be sure to check all these details before you place an order to a

manufacturer.

In most cases the companies offering the products on Aliexpress are trading
companies that buy stock from the manufacturer and sell online.

The prices can be 30-70% more than if you mass-produce with the
manufacturer. But again it’s a great option if you want to order 5-10 pieces of
an item to test the waters.

Here is a rough overview of Aliexpress:

A) Quality of products

You have no way of knowing. Again, these are items that the supplier has in
stock. You don’t know what’s inside and you can’t inspect the goods. On a
bulk order with a factory you would always install an inspection measurement
before shipment. With Aliexpress you have no way of knowing what you are
actually getting. If you buy from Aliexpress make sure you use a seller with
great reviews and lots of sales. Ask him to send pictures of the product taken
out of the gift box, the gift box itself, and the instruction manual that comes
with it.

B) Are the Payment Options Safe?

[Link] offers a safe and secure payment option through escrow.

Both the buyer and the seller are protected. AliPay (also an Alibaba
company) holds the escrow payment. The payment is released to the seller
once the transaction is completed. Should there be any disputes or
problems, the third party (AliPay in this case) will negotiate between the two
parties.

AliPay acts completely neutral and does not favor either party, so you can be
sure it is a fair negotiation.

One more benefit of using escrow as payment is you do not have to divulge
your credit card number, and in the event that you are not satisfied with the
delivered items, you can negotiation the price.

This escrow service is initiated via credit card, Western Union, bank transfer
or through other online payment processors. Some suppliers differ from each
other on that.

C) Shipment methods

[Link] provides free shipping worldwide. They joined hands with the
China Post Mail to provide free shipping worldwide to accommodate smaller
orders, especially electronic items. Just recently, [Link] launched
Fulfillment by AliExpress, which is designed to accommodate medium orders
so that they can have free shipment like bulk orders. This will allow importers
at least 30% savings on the shipping costs. However, shipment can be as
long as 30-60 days in some cases and there will be no tracking number
provided. Shipments could get lost.

[Link] supports DHL, FedEx, TNT, and EMS with the UPS as the
most preferred means of shipping goods. These methods deliver product
from 2 days up to 7 days, which is good enough considering that we are
talking about worldwide deliveries. I recommend using these carriers as there
will be tracking, customs help, and obviously you receive goods much faster.
Usually the prices for these carriers through AliExpress are quite competitive.

D) Are the prices competitive?

Prices are in general more competitive than if you would buy from your local
importer/wholesaler or even online store. The general rule is that the prices
are around 30% more than the actual manufacturer’s cost. Again, if you have
small orders this should still be a good price to add your margin.

E) Example on drop-shipping
There are a lot of drop-shippers from the US on EbayEbay/Amazon that
operate under the same principle as Aliexpress. They usually cooperate with
a factory in China (e.g., Shenzhen) and buy their over-stock or have the
manufacturer produce a certain quantity of a specific product. The factory
does the fulfillment while the EbayEbay/Amazon seller does the marketing
and sales part.

An Acquaintance of mine, who owns an affiliate marketing website

([Link] pointed me to a good example and
asked me how is it possible that this seller can sell so cheap:
[Link]

This seller buys from a factory in Shenzhen and the factory has the fulfillment
done.

I know for a fact that this item can be bought in bulk quantity for 0.3USD. So
they both make a nice profit. And, the EbayEbay selling price is still very
cheap.

Now how can he sell this cheap and include free shipping?

Many fulfillment centers in China have an amazing deal on logistics with

CHINA POST.

Some large fulfillment centers in China ship up to 20,000 pieces of goods a

day. Now obviously you will get a great deal for shipping costs with CHINA
POST as a fulfillment center. The downside? You as a customer might have to
wait for 30-40 days to get your item. Also, there is no tracking or tracing with
China Post, so if your parcel gets lost it’s gone for good. Many times there
will also be customs issues and you may have to pay taxes and duties.

For an item costing only 3USD you can certainly invest 3USD, knowing that
your item might get lost.

If you order larger quantities via drop shipping make sure you use a well-
known carrier such as DHL/FedEx, etc. You can track and trace the parcel and
they will handle customs issues for you too. Money well spent.

Aliexpress Conclusion

A great way to order goods online for small quantities. A few issues here and
there that can be solved with the supplier. Quick and easy for starting and
testing the waters with the product. The downsides are that you have no way
of knowing the quality of the product and that the shipment could get lost (if
you use free shipping). Use DHL/FedEx or other big couriers to make sure
that your items actually arrive and customs won’t hold them up.

Chapter 18) Patents and copies

Copies

It’s very common to find the newest gadget in China at an exhibition but
copied and for much less money than the brand sells it for.
Stay away from these!

First of all you could get in trouble when you order a sample and customs
picks it up. You could end up paying a fine or worse.

Second, if you do receive the sample and you try to sell it in your store or
website, the actual owner of the design can sue you in a lawsuit if he finds
out. This could end up being very costly and it’s simply not worth it.

There are ways around it such as a slight modification from the patent, but
it’s still very risky and not worth it.

I remember when Dyson came out with their cool ventilator/fans and vacuum
cleaners: [Link]

A few months later they were everywhere in China. And a year later I recall
there were at least three big retailers who bought these copies and had them
in their stores. They should have known better. Dyson filed lawsuits, and the
retailers had to pay a fine and remove all the items from their shops. Not only
were their profits and investment gone, they also had to pay a fine and had
their name slammed in the newspapers.

Patents

This goes in hand with the copies. Many designs have patents and again you
shouldn’t touch these items or try to find a way around the patent. Some
suppliers will tell you that they have modified the product so that they don’t
conflict with the patent. Oh they are so wrong!

If you do buy a modified design and the supplier tells you that there won’t be
any problems, stay away. He just wants you to place an order to earn a quick
buck, but if there is a lawsuit against you I am sure your supplier won’t be
found anywhere. Read more on patents on Wikipedia:
[Link]

Chapter 19) Calculate your costs

This part makes or breaks your import. It is essential that you calculate all
your costs into the product to make sure you can actually turn a profit.

Import duty can be calculated in different ways. I have a rule of thumb

myself. I take the buying price from my supplier and add 20-30% on top,
regardless on where I export it from (or import in your case). This gives me a
rough idea on what my landing price will be. This rule applies to first world
locations like the US, Europe, Hong Kong, and Singapore, for example. Many
second or third world countries are not so open to importing and put a high
percentage of duties and tax on top of import products to protect the local
industry.

Many first world places even have 0% duties and tax to encourage importing.
This applies especially to “green products” that are very sustainable and help
reduce energy or waste. A good example is an LED bulb with 0% tax and
duties.

Lets look at an example:

My product is a Bluetooth speaker and I would like to import it into the US.
First I calculate my shipping costs. I have the measurements of the product
and also of the export cartons through the supplier’s quotation. I plan to ship
1,000 pieces.

I go onto [Link] and calculate my shipping costs.

It will cost me roughly 1,200USD.
I input details such as country of manufacture, country of import, product
category (this website has a nice and easy to use auto-complete), total
product value, my estimated shipping cost, and insurance cost. Shipping cost
is the rough estimation of 1000 pieces. Insurance is usually 1% of total
product value. I press calculate.

Here we go, I have all costs listed. Wow, only 10% landing costs (excluding
shipping costs).
Here is a breakdown:

Notes on duty and tax rates and compliance:

Bluetooth speaker has an import duty rate of 4.9%. Restrictions may apply for
shipping this product with courier or postal companies (some probability).

Packaging and labeling requirements apply to lithium batteries whether they

are contained in the equipment or sent separately from the device. Please,
contact your courier for more information.

Notes on import taxes due:

For imports with FOB value exceeding 2500USD, a merchandise processing

fee of 0.3464% of the FOB value applies, with a minimum of 25USD and
maximum of 485USD.
Please note that your shipping provider may add an additional handling fee.

So essentially I have the following import costs:

• 1200USD Shipping
• ~100USD Insurance
• 10,000USD Product value
 • 1,774.64USD Customs & duties
• TOTAL: 13,074.64 USD

That leaves me with almost exactly 30% costs on top of all my product costs.
Pretty much within my “rule of thumb of 30%.”

That’s 13USD per item (we have 1,000 pcs). That gives me a great span for
margin. I know that the selected Bluetooth speaker is sold for around 49USD.

Obviously I have to calculate my domestic shipping and storage or fulfillment

costs on top but I should have a fair margin that I can sell this product with.

I calculate another 8% for fulfillment by Amazon plus another 10% storage

and packing costs. I end up with 15.34USD on the item. To be safe I round
up to 16USD. That gives me a potential margin of 33USD per item (49USD
minus 16USD). Total sales if I sell everything would amount to 49,000USD.

In other words after I have deducted all my costs and investment I have the
potential to make a gross profit of 33,000USD. I could take that 33,000USD
and invest in my next project and build an even larger product portfolio. Not
bad I would say.

If you aren’t sure about logistic or duty costs you may also contact your
logistics provider. We explain this in the next step.

Chapter 20) Contact a logistics provider and get a quote

Here are some notes on how to contact your logistics company and what
information YOU need to provide:

- container volume (your goods in volume, calculated by the supplier)

- estimated order quantity in cartons and units
- number of SKUs (how many different products)
- average dimensions and weights (if you have more than one product)
- labeling requirement (this is covered in labeling and packaging)
- visibility requirement (where do the labels and stickers go)
- delivery points and address (pick up and destination address)
- what material do you provide (labels, boxes, seals?)

If you are unsure of any of the above information, ask your supplier to
provide this for you. They usually have good experience dealing with logistics
companies. Every factory should have a “shipping department.”

After you have received the logistics provider’s quote you should also ask
your factory’s logistics provider about a quote, just to compare and make
sure you are not getting ripped off and your prices are competitive.

Take the shipping costs into consideration with your customs and tax duties
and you have your landing price.

The most viable option of shipment is sea-shipment. What does that mean?
There are two different shipments by sea:

FCL – Full Container-Loading

That means that you order a full container from a supplier only packed with
your goods. Some items may have a large quantity per container, especially
when they are very small.

LCL – Low Container-Loading

You ordered a quantity lower than a full-container-loading and it will be
packed with goods from other customers and other suppliers in one
container.

When you start off with importing you will probably have a LCL shipment
because your quantities will be low. A FCL shipment can easily be a few
thousand pieces of your product.

You don’t need to arrange anything for the loading and unloading. Your
logistics provider will handle this part.

Logistic costs will decrease the more items you order and can fit into a
container.

Here is a calculation example:

A 20’ container holds 28 cubic-meters. My product (Bluetooth speaker) fits

11,636 pieces into a 20’ container. A 20’ container to the US typically costs
2,000USD. If I would order different quantities the costs would be as follows:

FCL of my Bluetooth speaker 11,636 pieces. Container cost: 2,000USD

Calculation: 2,000USD / 11,363 pieces = 0.17USD cents per piece of logistic
costs (excluding insurance, customs, tax, etc.)
LCL of my Bluetooth speaker say 1,000 pieces. Total CBM of 1,000pcs
Bluetooth speaker are roughly 3 CBM. LCL by CBM usually around 100USD
Calculation: 300USD / 1,000 pieces = 0.3USD cents per piece of logistic
costs (excluding insurance, customs, tax, etc.)

You see the price per piece halves if I go for FCL. But of course, if I start small
I will go for the LCL option.

Chapter 21) Contact a third-party inspection company to

inspect your goods

There are several third-party inspection companies in Asia.

Some of the big names are: Buereau Veritas, TUV-SUD, TUV-RHEINLAND,
QIMA (my preferred) to name a few. The first three are usually expensive but
also very thorough. AsiaInspection is a simple and cost efficient service that
should work in the beginning for you.

QIMA (formerly AsiaInspection) has an easy to use Dashboard and Interface.

As soon as you register someone will call you to ask if you are in need of any
service. They are very helpful and efficient.

Here is what the Dashboard looks like:

You can book several types of product inspection, send them a sample that
you would like to have tested, or have them conduct research and an audit at
your supplier.

Types of Product Inspection

• Pre-Shipment Inspection / PSI (Inspect the products after they are fully
produced)
• During Production Inspection / DUPRO (Inspect your products during
production to make sure everything goes well)
• Initial Production Check / IPC (Inspecting your products at a stage
when ~20% of the products are finished)
• Container Loading Check / CLC (Checking proper loading and
quantity count during container loading)
• Production Monitoring / PM (Simple monitoring of your products
during the production)

Lab Testing:

You can send AsiaInspection your sample, or even better, ask the supplier to
send a sample for testing.
What needs to be tested depends on your market and requirements. But
they will give you an idea what they can do and what you should have
tested.

Factory and Social Audit:

While I recommend that you have the factory audited, many factories are
already audited by either Alibaba or some other third-party for other
customers.

Simply ask your supplier to send you his latest factory audit report or look on
Alibaba. If your supplier is on Alibaba it is likely he has a factory audit that
was performed previously. Therefore, you can skip this step if the factory has
a valid and positive report.

If you are unsure and your order is large have the factory audited.

Their prices go from 309USD negotiable (full inspection) to 649USD for

auditing and more.

If you are purchasing from China for the first time AND the amount is over
say 2,000USD it makes sense to have at least a pre-shipment inspection.

This covers basics such as function test, checking the production, and making
sure the products are made according to your order-requirements.

You can choose either one or all at the same time, it really depends on how
much you trust your supplier and how sensible your product is.

Either way, you can simply do this entire process through the online-booking
system. They can also give you a call to discuss details.

Once you have your test or inspection booked and performed they will send
you a report on their findings. Depending on the findings you can now
decide if you want to place an order to your factory or if the product needs
improvements.

As for the other big names such as Bureau Veritas, TUV, SGS, and others I
only recommend them if you have business in China in excess of
500,000USD. They are usually more thorough, with more detailed reports
and so on. But they also come with a high price tag.

Chapter 22) Create an internal form to follow up your

order
I recommend once your order is placed that you have administrative files for
yourself to monitor the order. This could simply be a check-list in Word or
Excel.

Here is what it could look like. You can copy sections or make your own
checklist based on this.
Chapter 23) Things you should do before placing an
order

So you have evaluated your suppliers, calculated your costs, reviewed the
sample, researched the market, and you are ready to place an order?

Follow this simple guide to make sure you cover everything:

• Payment terms with your supplier are clear and negotiated

• Delivery time and method is clear and discussed with the supplier
• Your forwarder is informed and standing by for shipment
• Inspection company has been contacted/briefed and is standing by
• Your warehouse is ready to receive the goods
• Customs/tax and license issues have been clarified with your
government
• A form has been created for your reference to follow up on the order
• Holidays in China have been considered (CNY, Tsueng Mun Festival,
etc.)

Chapter 24) Packing and labeling

When sending an order you should also include any labels or numbers that
you wish to have printed on the gift-box, product, or export cartons. Your
supplier should be asking you (once you place your order) about the labeling
requirements. These are examples:

Specific marking and labeling is used to facilitate the following issues:

• Meet legal shipping regulations

• Ensure proper handling
• Conceal the identity of the contents
• Help receivers identify shipments and forwarding requirements
• Insure compliance with environmental and safety standards

You as the buyer need to specify (with the help of the supplier) which export
marks should appear on your cargo for easy identification. Products can
require many markings for shipment. For example, exporters need to put the
following markings on cartons to be shipped:
 • Shipper’s mark
• Country of origin (CHINA)
• Weight (in pounds and in kilograms)
• Number of packages and size of cases (in inches and centimeters)
• Handling marks (international pictorial symbols)
• Safety markings such as "This Side Up" (in English and in the language
of the country of destination)
• Port of entry
• Product description (a short description is sufficient and should be in
the language of the destination country)

Export carton markings usually look like this:

The export carton marks should clearly be stated on your PO (order form)
and from the supplier’s side on his packing list or invoice. It could look like
this:
Markings should appear on three faces of the cargo, preferably on the top
and on the two ends or the two sides.

Customs regulations regarding freight labeling are strictly enforced. For

example, many countries require that the country of origin be clearly labeled
on each imported package. Most freight forwarders and export packing
specialists can supply the necessary information regarding specific
regulations.

Example of labels on gift boxes depending on where you sell:

Labels on products:

Some products require labels on the product itself with basic information.
These are called rating labels. In textiles for example it’s the little tag that’s in
the back. Again, your supplier should have examples or give you these
labels:

Here is what a typical rating label looks like:

I provide simple labels and formats in this course.

[Link]

If you are unsure about the required labeling speak with your supplier at the
forwarding/logistics company. They usually know what goes where.

Chapter 25) Minimum order quantities (MOQ)

Most suppliers give you an incredibly high amount for an MOQ. Most of the
time this is fairly negotiable. Say for example a supplier gives you a MOQ of
1,000 pieces, and that is his desired quantity to start production.

There are ways around this. If, for example, you are not in need of a color gift
box but would rather have a white box the quantities tumble. Most suppliers
will agree to produce 200 pieces for a white box.
So why the 1,000 pieces? For one, 1,000pcs is usually the minimum order
quantity for colored or private label gift boxes. That’s a fact and some
printing factories actually require more than 1,000pcs.

If you want, say, 300pcs of an item and a color box you may ask the factory if
they can still print the color box if you are willing to pay a higher price for the
printing of the gift box.

If you don’t need a gift box but you want some label or logo on the box you
can ask them to put stickers on it. Stickers usually cost a few cents and can be
printed easily.

Chapter 26) Negotiation

It is a given that once you place your order you negotiate the price.
No matter if you are below the supplier’s MOQ or not. You are now ready to
place the order and you let the supplier know your terms.

Use the price that you were originally quoted and decrease it by 20%. Give
this target price to the factory and let him know you would like to order with
your (20% reduced) price. In many cases the supplier may not agree to your
new target price but he may reduce it another 5%.

In 80% of the cases he will give you a further reduction on his original quoted
price, unless your quantity is really very low.

Also mention to him that this will be the first trial order and that if it is
successful larger orders will follow.

Once your price is negotiated you are ready to send your PO.
This could be an informal text in an email with all details or a Word/PDF file
that you have created. We will supply a blank Proforma Order in this course.

Chapter 27) Payment options

If you are buying through Alibaba use the escrow service. If you have met the
supplier outside of Alibaba I recommend either going with a letter of credit
(L/C at sight) or with a 20-30% down payment by telegraphic transfer (TT).
My recommendation for a first-time importer would be TT payment with a
30% down payment, and the rest after you have received the copy of the
shipment documents. This option is generally safe and should be used for
any amount from 1,000-20,000USD.

If you have a large order above 20,000USD I recommend the option L/C.
This is safe for both sides as you only pay once the supplier has shipped all
goods. On the other hand a supplier can use the copy of your L/C draft (the
bank will send you this draft) to purchase raw material so he can get going
and has his production costs covered. Once you release the shipment the
bank will release the funds from the L/C to the supplier’s bank.
For smaller amounts I would go with either PayPal or Western Union.

If in doubt about your supplier’s credibility or if he insists on 100% upfront

payment STAY AWAY. It is not a good sign if he wants payment upfront. He
may be in financial trouble or he might end up scamming you out of your
money. Again, any supplier will agree with 30% down payment or L/C.

Chapter 28) Placing the order - the essentials

You are ready to place the order. Make sure all details in previous sections
are clear.

- Inform the supplier within your order that you will perform an
inspection. The costs are on you but if any re-work is necessary
another inspection will be on his account.
- Price and article number (including any color reference)
- Shipment Date
- Payment Terms
- Inspection Date
- Logistics Provider
- If possible attach a product picture
- Instruction on labels, markings on the carton
- Instructions for Destination Address (your address)
- Export carton markings
- Rating labels
-
 Place your order and wait for the supplier’s confirmation or PI (pro-forma
invoice)

Pay attention to public holidays in China. These can seriously affect your
order and shipment. Here are seven main holidays in China where most of
the factories are off (excerpt from Wikipedia):

Date English name Pinyin Dates (2014) [2]

January 1 New Year Yuándàn Wed 1 January
1st day of 1st lunar month Chinese New Year[3] Chūnjié Fri 31 January - Thu 6 February[4]
5th solar term (April 4 or
Qingming Festival Qīngmíng jié Mon 7 April[5]
April 5)
May 1 Labour Day Láodòng jié Thu 1-Sat 3 May[6]
5th day of 5th lunar month Dragon Boat Festival Duānwǔ jié Mon 2 June [7]
15th day of 8th lunar month Mid-Autumn Festival Zhōngqiū jié Mon 8 September[7]
Wed 1-Tue 7 October[8]
October 1 National Day Guóqìng jié

The period with most holidays is the Chinese New Year. Some factories close
up to 4 weeks, which means that your order is in a long queue before and
after the Chinese New Year. Try to ship goods out before Chinese New Year.

The general lead-time for shipment from the day of order placement, to
shipping, to goods arriving at your warehouse is around 90 days.

Here is a breakdown on why:

- Order placement and administrative clarification (labels,
packaging, etc.): 5 days
- Purchase of raw material: 20-30 days
- Arrangement of production: 10 days
- Start of production until shipment: 5-10 days
- Shipment (goods at sea): 30 days
- Customs clearance and transport to warehouse: 5-10 days

Keep this in mind when planning promotions or sales.

Chapter 29) Receiving your PI (pro-forma invoice)

The supplier should send you his invoice now.

Pay attention to all details especially the following:

• Unit price
• Quantity
• Payment Terms
• Shipment
• Order number

Here is an example of what an invoice might look like:

You can sign back the PI if you want but I wouldn’t recommend it. Have your
own Purchase Order be signed by the supplier (including your purchase
terms)

Chapter 30) Monitoring your order

This is VITAL. You cannot just place the order and sit back and relax.
Make sure you keep in communication with the supplier. It doesn’t need to
be on a daily basis but it wouldn’t hurt to check on the status once a week,
especially if you are in the process of arranging the inspection or shipment
date with your inspection company/logistics provider.

Unfortunately, the suppliers get a lot of orders so some smaller orders may
be given less priority. Keep reminding him of the deadlines that you have set
out.

It is common that a few parts of the order, such as the shipping mark on the
export carton, packaging, etc., are discussed AFTER order placement.

That doesn’t mean you don’t need to prepare for everything on your side
before order placement. But it will save you time having the instructions for
the supplier ready before order placement.

It wouldn’t make much sense to flood the supplier at order placement with all
information, but the essentials need to be covered. Essentials are mentioned
in the previous chapter.

Make yourself a CHECKLIST (Iprovide a simple check-list under

[Link]

Mark things complete or chase the supplier when things are dangling in the
air. See above in Chapter 22 for an example of a check-list.

Chapter 31) Arranging the inspection

There are several third-party inspection companies in Asia.

Some of the big names are: Buereau Veritas, TUV-SUD, TUV-RHEINLAND,
and QIMA to name a few. The first three are usually expensive but also very
thorough. AsiaInspection is a simple and cost efficient service that should
work in the beginning for you.

Register on their website and simply create an order with them. You can fill
out all the details or even better ask your supplier to send them a sample.
With this sample they will later go to the factory on the inspection date and
compare the actual sample with the production units.
Once the inspection is completed they will send you an inspection report.
Based on this report you can either:

- Release the shipment to the supplier

- Ask the supplier to re-work the goods according to your agreed terms and
fix problems found during the inspection

Only when you are entirely satisfied should you release the shipment. In most
cases there will be minor findings, such as scratches, dents, or packaging
issues. If this doesn’t bother you then release. If there are major problems
like faulty wires or wrong colors, ask your supplier to re-work the goods.

Trust me, he will re-work, as he is still waiting to get the full payment.
Remember, NEVER pay everything up front.

Once everything is as it should be you can give your logistics provider the
order to pick up the goods and send them to the port.
Here are a few pages on what an inspection report might look like:
You are of course entitled to skip this process, but it is highly recommended,
especially for first-timers and for order amounts above 2,000USD.
Chapter 32) Logistics - getting your order

You have prearranged with your own or the supplier’s logistics provider for
pick-up and delivery. Here are your options on forms of delivery.

SEA SHIPMENT
The supplier has released the goods and sent the shipping documents to
your logistics provider. It’s now time to contact your logistics provider to
arrange the shipment.

For most cases these are the documents that you need to provide to your
logistics company:

For example, in the US:

The US does not require an import license for most items. You need:

• Customs Bond
• Customs Broker
• ISF / HBL / Bill of Landing
• Packing List
• Commercial Invoice w/ Harmonized Tariff Codes
• Shipment advice

For example, in Europe:

• Commercial Invoice
• Packing List
• Certificate of Origin (sometimes)
• Bill of Lading
• Declaration of Conformity (EC-DOC)
• Shipment Advice

As previously mentioned, you should arrange details before placing an order

to the factory so that you know the logistics provider has space for you on
the container ship for your desired shipment date.

Your logistics provider will guide you through all necessary steps and will
advise you when your order will be received at the destination.
The general lead-time for shipment from the factory to your warehouse is
around 35-40 days. Keep this in mind when planning promotions or sales.

I also provide a few examples of shipping documents under

[Link]

Time to wait for your goods.

AIR-SHIPMENT

Sometimes it makes sense to air-ship the whole lot, but only if your order is
not large in terms of quantity and weight. Prices can quickly go up twenty-
fold compared to sea-shipment.
Sure, you get your goods probably within a week but you might end up
losing all your profit margin on the logistics.

Contact your provider on this option. He will guide you through all necessary
documentation.

Shipping by air via mail can be another option. But remember that parcels
might get lost due to no-tracking availability and long shipping times. See
more under the chapter “ALIEXPRESS.”

Time to wait for your goods.

Chapter 33) Receiving your order

Once you have paid all necessary customs taxes and duties your order should
be received within your warehouse/facility.

Upon receipt, check the contents of all goods. If you ordered a large amount
of pieces this should be done professionally by a fulfillment center/company.

Check the content of goods and open a few boxes to make sure you
received the right items.

Your products are ready to sell!

Chapter 34) Claims and compensation

Ok, so your received goods are damaged, the wrong plug is attached, or the
goods are returned from your customer for not functioning or other reasons.
This is a bit tricky.

I use this following tactic only when it’s absolutely the manufacturer’s fault. If
I also made a mistake perhaps on the order sheet or not having stated
something clearly I will go mild on him and try to settle for compensation
rather than a claim.

Collect all information on returned or damaged items. Document with

photos, emails, and reports from your customers.

Start by calculating your loss incurred due to broken/damaged items and

incurred loss due to loss of sales. Take this desired figure and add 20%.
Why 20%? Because the supplier will probably only offer you 50% of your
total claim in his first response. Hopefully you can settle on the 100% (without
your fictitious 20%)

Send a combined and detailed report to the supplier and state your claim
with the desired amount.

If it is a new supplier he will probably try to wriggle himself out.

But if you have actual proof there is nothing he can do – but he will try to pay
as little of the claim as possible.

In many cases the supplier will offer a discount on your next order. This may
be acceptable if you plan on reordering and the supplier is usually reliable
with your other orders/shipments.

If you do not plan on reordering from this factory you may as well demand
compensation right away. I would not go as far as to threaten the supplier,
but daily calls and emails will definitely help if he is stubborn on
compensation.

Eventually, you will hopefully settle for the actual desired amount.

Another option is, if you have actually done an inspection by a third party
and the report of this inspection shows no problems on the production or
that particular problem you can actually claim money from the third-party.
But you will need substantial proof, same as with the supplier. This can be
done in addition to the claim to the factory to get the maximum
compensation for your occurred loss.

There are also a few legal options if you are within your rights. You might
want to get in touch with an expat lawyer within China or a lawyer based in
your home country.

Some suppliers have product liability insurance

([Link] which covers the loss due to a
a problem with their products.

If you are importing large quantities regularly I also recommend you look into
this with your trusted insurance company. There are a few within China/Hong
Kong that provide this service if you don’t find anything within your home
country. For example, HSBC ,which is the largest bank within Asia that most
suppliers use.

Chapter 35) Selling your products (eBay / Amazon)

So you received your goods, everything went well, and you are ready to sell.
A very popular way of selling your goods from China these days is FBA
(Fulfillment by Amazon) or fulfillment centers that cater to eBay or any online
store that you sell on (e.g., Shopify).

Ihave also created several online course in April 2017 & June 2022 that cover
the complete process. From sourcing in China to selling professionally on
Amazon to building an actual brand.

Check it out here: [Link]

Join me today and learn how to start a global brand & build an ecommerce
empire.

If you have any question about the courses, simply email me

at: mail@[Link]
 PART 2) The Import Bible –

Professional Edition
Chapter 36) Re-Orders and what to keep in mind
Chapter 37) The Chinese New Year & what it means for your business
Chapter 38) Staying in touch
Chapter 39) Common mistakes when importing
Chapter 40) Price increases and how to deal with them
Chapter 41) Advanced negotiation
Chapter 42) Shipping & courier services
Chapter 43) QC
Chapter 44) Proper Alibaba supplier identification
Chapter 45) Legal requirements & certifications on products
Chapter 46) Anti- dumping rates
Chapter 47) Product liability Insurance
Chapter 48) What products do not make sense to import
Chapter 49) Making prototypes / mock up samples
Chapter 50) Private labels, brands & trading no-name items
Chapter 51) Instruction manuals
Chapter 52) Keeping track of your payments / invoices & expenses
Chapter 53) Factory standards (ISO, BSCI, SA8000…)
Chapter 54) Subcontractors & raw material suppliers
Chapter 55) Using proper (internal) supporting documents
Chapter 56) Production areas in China
Chapter 57) What to expect from a sourcing company
Chapter 58) Finding a product in China that you saw on EBay/Amazon
Chapter 59) More drop-shipment sites other than Aliexpress
Chapter 60) The brutal & honest truth about developing your own products
in China
Chapter 61) why you will like Global Sources more than Alibaba

ABOUT THIS PART

This part of the eBook is aimed at entrepreneurs who have already tested the
waters of importing from China through Alibaba, exhibitions, contacts and
more. If you have already started to import goods from China this course will
take you to the next level.

I outline the most important steps to keep your business growing, what to
avoid when importing from China, how to communicate with suppliers on a
daily basis, what to expect when in China, visiting exhibitions and how to
arrange factory meetings.

I tell you about the most important processes and explain them in detail.

Let me teach you how I negotiated contracts, battled price increases, got
bonus payments for my buyers in the amount of 100,000USD in a day and
how I got a supplier to air-ship goods on his account for 50,000USD.

I will break it down to you as simply as I can with lots of practical examples on
“how-to.”

I will dedicate a section on how to implement your PL (private label) from the
beginning to actually selling it. I give you an example on how I did it.

Again, as in the first part of this eBook there will be sections that may or may
not apply to you. I recommend reading them anyway.
 PART 2) The Import Bible –
Professional Guide

Chapter 36) Re-orders and what to keep in mind

Once you see your stock dwindle because your item has sold well you should
consider re-ordering from the supplier.

Remember that from order placement until arrival of goods it can take up to
90 days (for larger quantities and sea-shipment).

The good news is that re-ordering usually takes half the time. The reason for
this is because the supplier has all your details and order specifications on
hand.
So unless you would like to have something changed this is a fairly simple
process.

If your item sells very well you should also consider increasing the order
quantity. If your item has not sold well but you need it anyway then order the
same quantity or consider decreasing it by 20-30%.

You should also check on any modifications you wish to give the supplier. You
should know your modifications based on your customers’ feedback. This
could include: different color options, longer cables and cords, packaging or
instruction manual changes and more. It may be that you will face a price
increase but unless there is any change in material or greater effort for the
supplier this can be negotiated.

You will also want to re-negotiate the price of your re-order. Even if the
quantity changes or you request a modification of the product, you should at
least try. The simplest reason you can give to justify this to the supplier is
because you are re-ordering and giving the supplier more business. He will be
very happy to discuss the price if you are re-ordering. At the very least, you
should negotiate the last price. This can be difficult if the last order took place
more than a year ago, but, again, the supplier should be open to discussions
about price.
Once you are ready to place a re-order, send an email to your supplier and
issue yourself a new order follow-up checklist. (See the Import Bible and
document support section under [Link].)

Process of re-ordering:

- Calculate the stock you have and how long you have until the stock will
be sold out
- Take shipment times into consideration
- Request a modification of the product (if applicable)
- Re-negotiate the price
- Follow the checklist of your previous order

After you have confirmed the details with your supplier you can start the whole
process from the beginning. It should be a lot easier for you now to remember
the steps. If you have trouble remembering, follow your checklist or look up
the process in the Import Bible.

Chapter 37) The Chinese New Year & what it means for
your business

Wikipedia excerpt:

Chinese New Year celebrations traditionally run from Chinese New Year's
Eve, the last day of the last month of the Chinese calendar, to the Lantern
Festival on the 15th day of the first month, making the festival the longest in
the Chinese calendar. The first day of the New Year falls between January 21
and February 20.

The Chinese New Year is traditionally a time to celebrate with family and
friends. Many workers will travel to their hometown during that time. Some
workers come from far away provinces within China so they usually will be
gone for at least 2 weeks. Why is this? Some rural areas in China do not have
much manufacturing industries or employment opportunities, so people
need to travel far to manufacturing areas for work. These workers will usually
stay all year with the factory and then leave for 2 weeks during Chinese New
Year to return to their hometowns.

Factories

What does that mean for your business? Factories will be closed for up to 3
weeks!

The actual public holidays are usually only 7 days (depending on the
province) but factories take this opportunity to send their workers home, as
this will be the only annual leave most workers have all year. The factory will
most likely not give staff/workers any additional holidays during the year.

Staff/workers
Unfortunately for factories, many workers do not return to the factory after
the holidays. The percentage of workers not returning can be up to 50% in
some cases.

This leaves factories in a troubled spot. Not only have they been closed for
weeks and losing business but now they can’t fulfill orders from clients
because workers are scarce.

This can result in long production times for you after the Chinese New Year.
It’s also difficult to reach many factories during the Chinese New Year.
Sometimes it’s not clear how long they will be closed and who will return to
answer your emails/phone calls. Make sure that you ask your factory/supplier
for details on their Chinese New Year operation hours.

To battle this problem many factories have great incentives in place, such as
bonuses, educational programs, free dormitories or lunch within the factory,
which makes workers return.

As for regular staff of the factory this shouldn’t be a big issue for you.
Most staff has a higher salary than workers (sometimes it can be the
opposite), which will include your sales contact at the factory. They usually
enjoy more benefits than workers, such as health insurance, bonuses or
provided accommodations.

Logistics

Since the factories are closed, most of the logistics companies will also close,
but those will most likely only close for the official days of the public holidays.
Be aware that many companies try to ship out their orders before Chinese New
Year. This is a very busy season for all parties involved. Logistic companies will
also charge you higher than usual rates during this period. Many vessels will
be fully booked, so make sure that you reserve and book your space when you
have an upcoming shipment.

Chapter 38) Staying in touch

Insisting on new products

Why? Because you also live off the ideas and developments of your factory.

Staying in touch with your supplier/factory is very important to your product

development process. You need to be ahead of the industry and competition
and you need to provide new ideas and trends to your customers.

Factories don’t offer you new products because they are under-staffed and
sales people have no time to proactively offer you new products, or they
simply do not have the motivation or proper staff for sales and business
development.

I remember 10 years ago I always needed to chase my suppliers to send me

new material that I could offer buyers. I mean, it’s so obvious – the more they
send and promote their items the more people will buy. It was frustrating.
But things have changed a bit since then and now most factories train their
sales staff to offer new items proactively.

Nonetheless, make sure that you send your supplier a monthly or bi-monthly
email to check if he has any new product ideas. If he doesn’t then give him
input on your ideas and he may be willing to develop the product for you.

How to maintain supplier relationships

Keep in touch! No matter if you have product inquires, orders or un-related

things to discuss with the supplier, the better the relationship with your
supplier the more you benefit.
I have 1 or 2 suppliers that I talk to on a weekly basis. Sometimes he calls me
or vice versa and we chat about the newest developments within our
industry.

You can ask each other questions on anything really. It is so incredibly

valuable to have a good contact within the industry in China. I often ask my
contact things outside business, like, “have you heard of this factory closing”
or “do you know who produces this item for Wal-Mart/Apple etc.”

Because of my contacts, sometimes I know when my competitor’s factory will

close before he himself knows.

Your contact can give you valuable information that can put you ahead of the
competition.

Factory bosses often get together and talk over tea or Mao Tai (a not so
delicious rice liquor) about the newest gossip. Their customers’ secrets
quickly spread within China.

Even bosses that are in competition with each other will be friends and may
even refer customers to each other.

Communication

Obviously there is email, but I prefer to call my supplier and quickly have a
talk instead of writing a lengthy email and waiting for days for an answer. A
phone call can be quick and your problems or questions solved within a few
minutes.

I often use Skype, since calls via Skype are very cheap no matter where you
are based.

I also use QQ or We Chat, the latter of which is preferred by most Chinese. If

I am not mistaken it’s not possible to download WhatsApp within China, so
most people don’t have it. You might as well download QQ or We Chat
already so you can chat via messenger to your supplier in China.

When it comes to talking about your orders always be polite and stick to the
topics. State the facts and don’t let it become personal. Threatening your
supplier won’t get you any further. You need to remain professional and
focus on the task you wish to accomplish.
And the way to accomplish this is to pragmatically approach the supplier.
Giving him the idea that when he helps you it will also benefit him is a much
better approach than forcing him to do something for you. I like to call that
“Inception,” from the movie with Leo diCaprio.

INCEPTION

For example, if you sell to retailers or wholesalers in your country and some
of them request a specific certification or factory standard, this will cost the
factory some money.

I remember this one customer from Germany. They required every new
factory to have BSCI standard. (Business Social Compliance Initiative to
establish certain social standards for workers in factories.)

This audit and standards cost roughly 8,000USD. To implement these

standards it usually means than just the third party auditor cost but also
upgrades on certain things in the factory. It involves mostly work on the
factory’s side, mainly to improve the factory to a higher social standard.

Anyway, it’s a rather large cost for the supplier. My supplier wasn’t willing to
apply for the standard and audit and pay for it all himself. On the other hand,
my customer wouldn’t pay it either. So I was stuck because I knew this was
the only factory that produced this kind of item.

So, after a lengthy talk with the supplier I finally convinced him to do it. How
did I do that?

Well, for one he always asked me for more orders and customers because he
had lost business elsewhere. So I told him that if he invested in this Social
Standard it would open up doors for him to many new and big customers.
(Note that BSCI is currently a minimum standard for big retailers in Europe.)

He can now work with a lot more customers in Europe than he previously
could. I am also happy to recommend his factory to my other European
customers.

You will want your supplier to grow with you and not look for one-time deals.

There are exceptions, of course. Some suppliers are completely ignorant to

suggestions and improvements that will cost them (not you) money and they
are only after the quick and easy orders that make them money.
Well, if you have simple orders and plan never to order again from a certain
factory then forget this strategy. But, if you want to grow your business and
try to keep long lasting business relationships, it will pay off.

Chapter 39) Common mistakes when importing

- Wrong specifications and instructions to the supplier that are not clear
- Not monitoring your orders properly (remember Chapter 30 in the
Import Bible)
- Not being aware of licenses you might have to pay for (e.g.,
Bluetooth, Sisvel, etc.). The supplier DOES NOT INCLUDE these costs.
- Not keeping an eye on your supplier (blindly trusting him completely,
meaning that he promises something in an email/phone call and you
sit back and relax).
- Not having agreements about what will happen when there is a delay
in shipment
- Choosing the wrong product

Clear instructions

I often kicked myself for not being thorough enough on orders in the past. At
the beginning of my career I made a lot of mistakes or didn’t follow through
with processes and then they often backfired.

Make sure that you state your specifications and requirements to the supplier
in emails and orders. Ask him to confirm if he understood exactly what you
need.

Monitoring your orders

You need to monitor your order properly from YOUR side. Follow the steps
provided in the “Import-Bible” and live by them. Use checklists, reminders
and notebooks to monitor your orders. Make sure you have collected all
information, documents, etc., for your own administration.

Licenses & certification costs

When you order a specific product group it may be that you have to pay
licenses or certificates to a certain organization. For example, a Bluetooth or
MP3/4 speaker needs to have a Bluetooth license and a Sisvel license. This
should be paid for by the customer (you).

In most cases the supplier will not include these costs into the product and
will probably not remind you about them either.

You can check with your inspection company what requirements and
certifications your products need to comply with the law. If you are already
working with an inspection company, then they usually provide this
information for free.

In any case, make sure you check this or your products might be held up at
customs or you can get a claim from the license holder.

Keep an eye on your supplier. He might promise something in an email or

phone call and then forget about it. Say you are waiting for samples, an
invoice or whatever you might need from him. Remind him after a few days if
you haven’t received any feedback.

Not having agreements when there is a delay in shipment

Many first timers forget that there could be a delay on an order and that
might bring trouble. Perhaps you have a planned promotion or you promised
a specific delivery day to your client.

How do you avoid or fix problems caused by a delay?

HAVE A PURCHASE ORDER TERM or separate buying agreement.

This might come in handy if you have a delay and you need to air-ship your
goods to meet your deadlines (more on that in Chapter 7 on shipping).

Make sure your supplier sign this agreement or you can’t claim any penalty!!

Choosing the wrong product – example of a product launch fail

Recently I heard about a colleague launching a new product.

He was looking into portable speakers. He wanted to compete with the big
brands but at a price level far below the competition.

So we worked out a way for a model that has enormous sound quality but
still at a price level far below the big brands. Eventually, the supplier develop
the item so he could market it. He started sending out sales pitches to
customers but no one was interested. He didn’t understand – He thought
they would be buying those things off his hands in no time.

He realized people didn’t really understand the product. So he started

thinking in other ways. If retailers didn’t want to buy large quantities, then
what about crowd funding? He looked at Kickstarter and Indiegogo.
Indiegogo would be his only option as he was not based in the US and only
they allow countries outside the US to make campaigns on their website.

So he went with Indiegogo. After 2 ½ months work, he was ready to launch

the project.

He was so excited to post the campaign that he didn’t do a lot of research to

see if he had a “product-to-market-fit” prior to publishing it. He only did a lot
of research on how to RUN a campaign successfully. There would be press
releases, massive social traffic to be created and so forth. So for 2 weeks into
the campaign working 14 hours a day on it he eventually gave up. At the end
of the campaign he only reached 6% of the total funding and he refunded
everyone who bought one.

What went wrong?

First, he was so enthusiastic about the idea and project he only learned later
that there isn’t only one but at least 5 other big brands doing this product
right now. He was still competitive in pricing compared to them but he didn’t
really have a well-known brand behind his product.

And only 1 week before launching he saw German retailers with their own
private label on very similar speakers imported from China. Even worse, they
were only 49USD above his price and obviously had a bigger marketing
budget than he did.

Second, he realised people want branded items if they choose such a

product. The price tag in this product category didn’t matter, it seemed.
He did some research during the campaign and people really didn’t mind
paying a bit more for this kind of product. He also saw a similar project that
launched a month before his. Even they didn’t do that well.

Third, he had a huge problem with shipping rates. He planned on sending

the produced lot to a fulfillment center in Shenzhen and they would then
send the item to each customer worldwide. He also only realized at a very
late stage that his first calculations on shipping rates were completely wrong!
It would cost him at least 50-60 USD per piece to ship to most countries
because the item was rather heavy and large (He wanted a courier with
tracking service to make sure the item really got to the customer).

This caused a huge hole in his profit.

And lastly, again a research issue that he hadn’t thought of in the beginning
was the problem that his item wouldn’t be compatible in many countries. He
needed to change the plug and add an adapter so that people could use it
everywhere. That was another 10USD he had to add to his price.

He ended up with a profit of 1.5USD per item (from an initial 39USD, after
deducting PayPal, Indiegogo and credit card fees). And he wasn’t even sure
about some freight rates and problems that may occur during customs. It was
an absolute nightmare.

He told me afterwards that he was happy the project didn’t get more media
attention; otherwise he could have ended up with a huge loss BUT he
was happy he did the project because he learned a lot from it.

So what is the take away here?

• • He should have done research, research & more research

• He should have thought about the product-to-market fit. This
obviously wasn’t a product that people needed.
• He didn’t calculate his costs accurately enough
• He didn’t pay enough attention to product requirements for each
country
• He managed this whole project himself, with no outside help

I can’t stress enough how important it is you do your research and validate
your product idea. Make sure you calculate your costs precisely and “triple
confirm” them against each supply chain step (logistics, customs, tax, fees,
etc.).
And even if you have a great product and want to take it to Kickstarter or
Indiegogo, DON’T do it alone. Hire someone to help you on marketing and
social media publicity.

Lesson learned!

Chapter 40) Price increases and how to deal with them

So you received an email from your supplier that prices have to be increased
because the Chinese Yuan (RMB) is being appreciated, his labor costs have
risen or some other reason.

Never accept any price increase blindly.

But let’s first analyze the situation:

- Has he increased the price within the last year? If yes, how often?
- Has he stated on his last quotation the validity of the price (see next
chapter)?
- What are the reasons he wants to increase prices?

Here are common reasons for price increases:

- Labor costs need to be increased

- Raw material costs have increased
- Chinese Renminbi (YUAN) has appreciated against the USD
- Purchase of machinery to upgrade the factory

Lets go through them one by one and see how you could avoid the increase
or find an acceptable solution between the both of you. I also want to give
you background on each so that you can understand these reasons.

Labor costs need to be increased:

When I moved to Hong Kong in 2005 the average salary of a worker was
around 250USD per month. Yes, that’s right, per month. Nowadays a worker
in the production line can get up to 1000USD or sometimes more. Some of
the workers earn more than the staff in the office. Factories need to pay a
high salary to workers because it’s so difficult to find them.

Yes, China has over 1.3 billion people but not everyone wants to stand in a
workshop or production line doing rudimentary work. Education has
improved a great deal since the early 2000’s and people want to work in
offices rather than on production lines. So factories have to reach out to far
provinces to hire workers. Costs automatically rise in that process. I have
been told that some factories rent a bus and drive to provinces actively hiring
workers to bring them back to the factory that same day on the bus.

What can you do in that case? Honestly not much. But if a supplier keeps
increasing prices because of labor costs you might want to look for another
supplier who has more machinery or automated processes that require less
workmanship. This can actually be more expensive (because of the
investment for machinery) but you should have more stability on prices in the
future.

Raw material costs have increased:

This requires a little research but if a supplier uses this reason for price
increases you can quickly find out if he is lying.

Go onto websites like the following and research the price index on your
product’s main material:

[Link]
[Link]

Unfortunately, there is not much free information on the Internet; you have to
pay for most services if you want real accurate data. You can also check out
your local stock or commodity market online and see if you can get free data.

Once you find your product’s raw material price check the development over
the last few months or even years. Compare it with the orders that you made
to your supplier at the specific price drops or increases. If for example you
ordered your item before at a lower raw material price than now, you can use
this information to negotiate with your supplier.

I often find that suppliers use this excuse of raw material price to increase
their profit margin. When you have data that backs that the raw material
price has perhaps even decreased since your last purchase, let the supplier
know and share the link or information that you found. Demand the same or
an even lower price than what you are paying now.

If raw material really has increased then you might want to check by how
much. If the supplier’s price increase does not match the actual raw material
price increase, let him know and demand a lower price increase.

Chinese Renminbi (YUAN /RMB) has appreciated against the USD

The Chinese Yuan has risen over 40% since its revaluation in 2005 (when it
was pegged against the USD). It has been undervalued for a long time but
that has changed since the economic reforms under Deng Xiaoping. Since
China opened to the rest of the world and became the world’s factory the
Yuan has risen a great deal.

Many factories increase prices once the Yuan gets appreciated against the
USD.

If the Yuan gets appreciated against the USD it is usually in the news and you
should hear about it. You can also check official USD/RMB exchange rates to
verify this claim.

Not much you can do here either, except perhaps asking for one more order
with the last price before you accept the new price.

Purchase of machinery to upgrade the factory

This usually doesn’t happen very often, but when the factory claims there is
machinery to buy to upgrade the factory it’s actually a good thing for you. It
will lower the labor costs over time and you should have a stable price for a
while.

Ask your supplier to explain the type of machinery he is buying and how you
can benefit from it in the future. Let him give you a guarantee or confirmation
that this will benefit your price in the future.
Chapter 41) Advanced negotiation

Validity of prices

Always ask your supplier to give you a validity of the quoted price.
A common time frame should be 90 days, sometimes more sometimes less.

In any case, ask your supplier for a validity of 180 days (6 months). It might
take you a long time to decide to order this product for various reasons.

If you get back to the supplier after a while and you haven’t confirmed
validity he might increase the price. That can put you in a difficult spot if you
gave the quoted price to your customer. You might have to re-offer to your
customer and that’s never good.

Big retailers usually have 1 year or even longer terms with suppliers. They can
do that because the suppliers know that the quantities will be large and
retailers often take a long time to decide because of their decision
chain/process.

How to avoid or battle a price increase:

Short term:

- Insist on the last order price for this order. Tell him you are about to
give him a re-order.
- Look into raw material price sheets. There are free sources on the
Internet. You don’t even need to be updated all the time, but simply
look at a price curve of the main material of your product for the last
few months. Has the price dropped or risen significantly? Did the
supplier claim that the “xxxy” material has sharply risen? Check it out
before you trust him.

Long term:

- Put measurements in place such as contracts or buying terms to which

the supplier has to agree before you do business. Set up your own
buying terms with, for example, a minimum validity of prices in all
offers.
- Ask for bonus payments or agreements. If you know that you will be
re-ordering from this factory, make a written agreement that you will
 receive a discount of a certain percentage from the next order based
on your previous year.

Bonus payments:

It is getting more common to agree on bonus payments these days. It works

the same way as back home with your local supplier. You agree on certain
delivery terms, merchandising payment, back-payments and bonuses if a
certain turnover is reached per year.

This usually only works with suppliers that you already work with. But you can
certainly try it on any supplier. Even if you get a few hundred USD discount
or bonus payment it’s definitely worth it!

You could set the following simple bonus payments with your supplier:

Turnover Goal 2015: xxxxx USD

If reached, bonus payment of 5% (for example) to be discounted from the
next order.

For every xxxxUSD above this amount a further 1% (for example) to a

maximum of X% applies.

Send this agreement to your supplier. You can obviously work out a more
detailed agreement but this is a simple illustration on how it could look.

In any case I am sure there is some bonus or discount that can be arranged
on future orders. The best option would be a direct bank transfer of the
bonus at the year’s end but most suppliers will only agree on a discount
deducted from any future order.

Other ways:

How to negotiate a good price with a low order quantity:

It is quite common that the supplier will send you a price based on a certain
order quantity. Say 10USD for a quantity of 1,000 pieces. Sometimes
suppliers will give you 2-3 different prices for different quantities.

If you are planning to order an item, you should have a general idea of how
to negotiate when you ask your supplier for a quote. DOUBLE (2,000) or even
TRIPLE (3,000) this expected order quantity when asking for a price. It’s a
tactic I use to see what the price range can be. If I actually order this item
later at the quoted price but I am below the requested MOQ of the supplier I
will pledge with the supplier to keep the price so that we can get started.

I will also mention that it will be a trial order and if everything goes well I will
order the initial MOQ that the price was based on.

Perhaps the supplier will not give you the price based on your 1,000 pieces
but he will give you the price based on 2,000 pieces to show his support.
This works in most cases. A supplier always will want to support you because
they need to feed their factories with orders, even if they t make less profit,
just to keep production running and to be cost effective.

Ask for a mixed calculation:

Say you buy 4 items from the same supplier and there is one item out of your
assortment that is really price sensitive but the other 3 items are not.
Ask your supplier to keep the price on the price sensitive item the same (or
decreased) and allow him to increase the other items at the same time (up to
the maximum of the original price increase).

This way you can still offer the price sensitive item at the same price to your
customers and lose only a little bit of profit on your higher margin items.

Advanced raw material purchase:

Many suppliers like to increase the price on your re-order.

Let him know that you have an order coming up and that he should purchase
raw material now at the lowest prices and that you want to have a better
price than the previous order. He may want a written order confirmation for
that so that he can purchase raw material on your behalf.

Other suppliers offer on hand (or not)

If you have other suppliers’ offers on hand that are cheaper than the same
item from your current supplier then tell your supplier and demand at least
the same price. If you don’t have another offer on hand you could also
pretend that you have an offer that is (say 10%) cheaper. Some suppliers may
ask who it is from or if they can see it, but you don’t necessarily have to send
it to him.
If you do have an offer from another supplier I would actually send it to my
current supplier and ask him to lower the price.

How I got 7 suppliers to pay my buyer 100,000USD in bonus payments

I had a buyer for Christmas items flying in from Austria pre-order season.
We arranged to meet up with 9 suppliers over 2 days in our office in Hong
Kong. I asked the suppliers to come in and meet with us to discuss the up-
coming orders and next season items. The suppliers were happy to come
and meet us because we usually would place orders in excess of 100,000USD
to each of them per year.

We started off each meeting the same way. We told them we would be
selecting new items and then we would tell the supplier how happy we were
with the previous season and that we wanted to enlarge business this year.
This got them in a happy mood. We selected a few new items to add to the
assortment with each supplier.

Eventually my buyer sat back and I started to talk about newly introduced
bonus payments to each supplier. We wanted 10% of the last year’s order
amount in bonus payments to be deducted from the next order. I also
prepared an agreement to fix the payments right there and then with the
supplier’s signature.

We sat a long time with each supplier explaining the difficult economic
situation, the EUR/USD exchange rate and how this all made it difficult for
the buyer to succeed in his business. We needed the supplier’s support,
there and then or else there might not be any increased orders. (You can
always use other reasons, such as economic situations in your country, etc.)

Two suppliers wouldn’t pay anything but we ended the 2 days with over
100,000USD in bonus payments (some suppliers had orders of over
300,000USD from us). This was a lot more than we expected. How did I do
that?

Initially the suppliers were reluctant. Since I wasn’t the actual buyer but the
product manager it sure was a good thing the buyer was there. This way the
supplier saw the buyer and had no way of wriggling himself out easily.

Chinese do not want to lose face in front of their customers. They often
promise the “best prices / best services,” etc., and it was time to prove they
meant what they said. If you continually insist on a bonus and financial
support they will eventually give in, because they want your future business
and they don’t want to upset you.

In your case, since you will be the buyer, you see the importance of coming
to China to negotiate your deals. A negotiation like this is highly unlikely to
succeed via a phone call or an email.

You don’t need to have an office here. You can hold meetings and
negotiations in your hotel or at the factory.

Even if your quantities or order value are not as big as the example above
you still have an edge. Even the smallest discounts on your next orders could
cover the airfare ticket you bought to get to China. Not to mention the
suppliers you met on other days to source for new ideas. It will definitely be
worth it.

Before you go into a negotiation with a supplier, plan ahead with a clear
strategy similar to the one described above.

Chapter 42) Shipping & Courier services

When does it make sense to ship what in which way?

The 3 most common shipments are done via SEA, AIR & SEA/AIR or TRAIN.

Sea shipment

Sea shipment is done for most of the import/export business these days.
It is simply the most economic way to ship goods. But it is also the slowest
way to ship goods.

There are generally 4 different types of container shipments. Depending on

the volume of your goods you can choose from the different capacities.
These are (Wikipedia Excerpt):
Normally a 20’ container will fit your goods in volume. But if you have larger
shipments you may have to combine different container sizes.

So what suppliers do in that case is to give you the calculated volume of

goods, which you will then provide to your logistics company. They will give
you the best and normally the cheapest way to ship your goods.

Sometimes it makes sense to order a full container and pay a little more even
though you don’t have enough volume. This is because the container will
only hold your goods and not anyone else’s, as in LCL (low container
loading). See the Import Bible for details.

Lets take a look at 2 examples and what to choose from in which case:

1) Your goods have a volume of 29 cubic meters.

If you take a full 20’ container you would have to have 33.1 cubic meters.
But not necessarily. You can still order the full 20’ container and pay a little
more so that the whole container is yours.

Which means there will be no foreign goods from other customers in your
container, so that the container goes directly to you and does not have to be
unloaded to separate the goods. This also saves time.

You could of course take a LCL shipment, meaning that you book 29 cubic
meters with your logistics company and only pay for the 29 cubic meters. But
the forwarder/logistics company might fill the remaining 4.1 cubic meters
with other customer’s goods.
2) Your goods have a volume of 72 cubic meters.

You could either go with a:

- 40’ container (67.5 cubic meters) and the rest (4.5 cubic meters) by
LCL
Or

- Order a 40’ high cube container (75.3 cubic meters) and pay the full
price but have the container only loaded with your goods.

Now Option 1 will be probably cheaper but you have the risk that other
goods might delay your shipment. Option 2 will probably be around the
same price and safer for you.

What if you have a small volume like 3 cubic meters?

Depending on the following 3 factors you can either decide to sea or air ship:

- Weight
- Size/volume
- Urgency

If it is not urgent, the size and weight are not very big and you don’t mind
shipping by sea, you will save a lot of money if you choose sea shipment.

If it’s urgent there are 2 more options:

1) SEA / AIR shipment

You can go for this option if it’s semi-urgent.

It is more expensive but also shaves off more than half of the time compared
to sea shipment.

Three cubic meters to an American airport can typically take 30 days via sea
shipment. With SEA / AIR shipment this can take up to only 14 days.
How does that work?

Logistic companies usually have slots booked for air shipments on their
freight planes or even commercial planes.
For example, if you produce an electronic toy in Shenzhen, goods will
typically go from Shenzhen to Korea (Seoul) via ship and then be transported
onto a plane that flies to an American city.

I do not have exact figures as they fluctuate a lot but this is usually 60% more
expensive than by sea.

This option could be necessary if your supplier has delayed your shipment
and you need to have the goods for a planned promotion.

If it’s the supplier’s fault, negotiate with him so that he takes care of the extra
charges that occurred due to the delay.

INSIDER TIP: Remember to have an agreement on your order that states

there will be a penalty if there is a delay. So he either pays the penalty or
makes sure that the goods arrive on time, meaning he pays for any air or
air/sea shipment extra costs. Also see this part under Chapter 4 (not having
agreements when there is a delay in shipment).

AIR SHIPMENT:

Now, if you have a low volume like 3 cubic meters and the goods are not too
heavy then it makes sense to air-ship.

Courier services like DHL/FedEx/TNT, etc., can usually handle the entire
process for you from picking up the goods, loading them onto a plane,
taking care of the entire customs process and having the goods delivered to
your doorstep. This is also called “customs brokerage” within the courier
industry.

Your supplier should have a contact and preferred rate with these courier
services. If not you can contact your local courier service to get a quote.

Often the cost of shipment is calculated by volumetric weight (for courier and
express services). This can quickly become a very expensive shipping option.
If the volumetric weight is higher than the declared weight, the costs will be
based on the volumetric weight, making some shipments very expensive.

I did a calculation for one of my products as an example. It’s a large

Bluetooth speaker and due to its size it will be calculated in volumetric
weight (4 pieces export carton / 10KG, 0.058cbm). It would be very
expensive to ship it via couriers like DHL:
It would cost me around 467USD to send this sample shipment to my
customer in Germany! But then again, this was a price directly from DHL’s
website and it didn’t include any discount. Usually when you have an account
you get 5-15% off your shipments, sometimes more, all depending on your
turnover with them.

Unless you are a huge retailer or corporation don’t book directly with these
couriers. Here is how you go ahead with DHL through your factory:

I went to [Link], which is a China-based fulfillment center.

Remember when I mentioned that big fulfillment centers (and even your
supplier) get a much better rate with courier services like DHL/FedEx/TNT?

I used the same carton weights and measurements and the indication prices
were as follows:
DHL was now at 109USD. And even better, when using another express line
(which is most likely China Post registered air mail) the costs were even lower,
at 80USD.

This example gives you an idea of how much air-shipment can cost you and
what rates suppliers can get with their discounted courier prices.

Even if your suppliers don’t have an account with a courier (very unlikely) you
can get these rates. Simply contact your logistics provider and let him give
you a quote. You can also go over to [Link] and check out
their freight services.

TRAIN SHIPMENT

This actually only applies to shipments from China to Europe as there is

obviously no train route from China to the US. Generally I would recommend
to have train shipments if you are not in a hurry but still want to cut down on
shipment time (from Sea shipment) by half.

Costs range anywhere from 45% to 80% on top of your product costs. So if
your shipment is worth e.g. 1,000US$ then you could calculate another 450-
800$ for train shipment costs. These are rough figures and they vary greatly,
especially after COVID times.

Air shipment - big style

A few years ago my German customer (a very big retailer) was about to miss
his planned promotion with a solar lamp because of a delay in shipment. He
promoted this solar lamp on his website and advertisement flyers sent out to
a few million households. The season was about to start and the goods were
delayed for over a month.

Eventually the supplier had to air-ship the first lot, which was roughly a 1 x
20’ container (10% of the order), because of the agreed penalty when goods
are in delay. The rest was shipped out later by sea but I managed to get the
urgently needed first 10% for the start of the season to be shipped by air.
Once again, this points out the need for a purchase order term for delays or
a separate buying agreement with penalty fees
(make sure your supplier has signed this buying agreement with penalty
terms).

It cost the supplier around 50,000USD to ship these 10% by air. Not
something you want to do as a supplier, but he had no choice as the order
was done by L/C (letter of credit) and he wouldn’t get his money otherwise.

Obviously this German retailer had very large business with this supplier and
was therefore able to have his way. If you are a small fish for a factory the
most you could probably hope for is a percentage penalty. But you should
be able to get something from the supplier.

Remember to have buying terms and penalty agreements on your orders

with the suppliers.

Chapter 43) QC (Quality Control)

What kind of quality control should you have in place?

I stressed this part already in the Import Bible. You NEED an inspection and
quality control in place especially when you are placing large orders.

Why is that?

Larger retailers or buying companies usually have their sample tested

professionally before placing an order. This is done either by their internal
lab or a third party. If you would like to make absolutely sure that your
product will conform to regulations and be up to quality standards take this
step. It will usually cost you a few hundred USD, depending on the third
party.

I recommend this step if your item is costly and your quantity is larger than
500 pieces or 3000USD in total value. You will usually receive a test report
that you could also send to your supplier and ask for his feedback and/or
improvement of the product before order placement.

Today there are many basic requirements that need to be met. For example,
chemical substances in plastic or textiles that are not allowed to exceed a
certain percentage within the product. Some items need to have a certain
certificate (such as FCC, RoHS or CE), which means that the product is pre-
approved under certain criteria and OK to import.

Of all the smaller companies that, for example, drop-ship or have smaller
order quantities, I know for a fact that 95% of them don’t have their items
tested for chemical substances or for other technical requirements. If you
drop-ship directly to your customers (for example FBA – fulfillment by
Amazon) you wont get into trouble. But if you are selling to larger companies
or wholesalers they will probably ask you for test reports.

If you (or the third party) found anything that you would like to change or
have explained ask your supplier to look into this, either to improve the
product quality or to give you feedback on any problems. To make sure that
the supplier will fix any problems, indicate to him that (in case of an order)
you will check this during the inspection (performed by third party; see
Chapter 23).

Bear in mind if you are a start-up or planning your first import this step may
not be necessary as it adds cost to your product.
However, if you have existing business and are trying to expand through
larger importing this is an absolute must.

Depending on your product you can check general requirements here:

[Link]

My Certifications course aims to educate you about requirements and

regulations in your home country. With this course you’ll be able to
understand how certifications and regulations work.

Make an agreement with your supplier in the beginning of your business

relationship. This should include, for example, that you will pay for the first
shipment inspection and if it fails, the supplier is responsible for the re-
inspection (if you wish to have one).

Many larger suppliers also have an in-house inspection teams or even

laboratories. Some even have certified laboratories through third-party
inspection companies. Ask your supplier what his QC procedures are and let
him explain them to you.

Here is an example from Switzerland’s largest retailer on how they ask for a
quote from new suppliers (in this case that was me). Obviously I wouldn’t
recommend you to be so precise when sending your first QC requirements to
your supplier. It will only confuse him, especially if it is a small factory with no
or little experience with western customers. I admit this example is a bit
extreme, but that’s how the big retailers work with factories in China.

==============
We are now looking for a good supplier who can supply us the BEST QUALITY products for
Switzerland market.

1-2 functional samples (full set) should be provided to xxxxx HK upon requested and they
are for quality verification before placing the order.

Your offer products must be free to third parties. Supplier shall undertake to bear all costs
and losses incurred in this respect.

Kindly send us the price in our offer sheet in attached, together with the product spec for our
reference.
Please quote on FOB port basis, TT / LC AT SIGHT payment on a quantity as above,
included 2% of Free of Charge units and mention that what kind of sales packaging and also
include export carton costs into your price, which also included the C/O–FTA, all valid
testing certificates + reports and all the related license fee if applicable. Offers shall be valid
at least 3 months.

Products will be printed with our OEM logo.

Standard guarantee for the products by suppliers is 2 years.

Sales packaging is included gift box and user manual in 3 different languages – 4C printing.
The round transparent of “Original” label shall be enclosed the opening of gift box/blister.

The quality of export carton must be strong enough, min double-ply thick in order to pass
the drop test. 2 of TU labels printed with project info shall be adhered in outers.
Max gross weight per export carton is 25kg. Export carton size shall be matched to the half
Euro pallet in 60 x 40cm max. Products that jut out on the pallets are not tolerated.

Never use PVC for packaging what also INCLUDED tapes and stickers

European testing regulation needs to be fulfilled by your products including the packaging,
and suppliers should provide their existing test reports for any update standard(s) that is/are
required by law “legal & market requirements”. ErP and RoHS as a part of legal regulation,
related test reports shall be provided. REACH and RoHS must be complied. Besides, PAH,
Phthalates and Organotin test reports shall be provided for reference purpose if any.

Inspection and random checks from different products out of inline and or final inspections
will be carried to insure the products can comply the law requirements under AQL
standard. Drop test will be applied at least 3 export cartons.
Inline 20% and FRI 100% of well packed products in export cartons (Ready to ship) per
shipment by xxxxx QC.
Costs of Re-inspection, due to rejections, will be at supplier’s cost.

The Inspection Certificate (IC) will be issued by xxxxx HK QC team after the positive FRI
result is done.
Any questions related to the inspection issue, please feel free to contact our xxxxx HK QC
team at

Supplier shall undertake the Product Liability Insurance. An insured sum of not less than
CHF 5 million per personal/material injury or loss (combined loss), whereby the insured sum
shall not limit the third-party liability of the supplier.

Supplier/factory is obliged to comply with the Code of Conduct of the BSCI [Link]-
[Link] , and to permit the appropriate controls.
If supplier/factory has the BSCI report, please send it to us as reference. We will visit the
factory to assure that the product is produced under the xxxxx requirements, in all sub-
factories as well.

Kuehne + Nagel Ltd. is our nominated forwarder for the shipments arrangement.

- Preproduction sample in final full packing – at least 2 pcs of each color and per
model (before production)
- Production Sample - at least 2 pcs of each color and per model (before inspection)
- Shipment Sample - at least 1 pc of each color and per model (during the
inspection)

You can take out a few examples of this email and apply them to your
supplier. I recommend especially the part where they tell the supplier that if
you fail the inspection, the costs are on them. “Costs of Re-inspection, due to
rejections, will be at supplier’s cost”

I can tell you for a fact that 70% of the suppliers who receive this inquiry will
not reply. Not because they don’t want the business but because they will
not be able to comply with the standards and requirements of the big
retailers. If they do reply they most likely haven’t read through half of the
email and are simply ignoring the requirements for now, hoping they could
do business anyway. But this retailer will eliminate suppliers at a certain stage
that can’t comply to their standards 100%.
Chapter 44) Proper Alibaba supplier identification

In addition to the Import Bible Part 1 chapter on Alibaba and Global Sources,
here are a few more tips.

I often get asked how do you determine if a supplier is legitimate or not?

How do I know if he will he scam me or if he is a real manufacturer? There are
many ways to develop a gut feeling and there are a few ways to make
absolutely sure that you won’t get scammed.

Alibaba is the largest supplier database in the world. Naturally a lot of

middleman/scammers are on there as well.

They hide among millions of supplier listings and it is difficult to filter out the
right ones. I covered the basics already in the Import Bible Part 1.

Here are some steps that help you filter out these middlemen and scammers:
Look at the company profile. There is a lot of information that you can take
away from that page. Also, there is a lot of information that might lead you to
immediately establish if something is off or fishy.

Check if there is a Management Standard (such as ISO9001 or BSCI). If there

is no standard mentioned you might as well skip this supplier (or middleman)
altogether. If there is a standard, ask for the certification. Pay attention to the
name issued on the certification. A middleman/scammer will not invest in
such a standard.

Look at the supplier’s product categories. Does he specialize in a few

product categories or does he have hundreds of different products, from
bananas to computers? It’s usually a sign that it is a trading company if they
have a lot of different products.

What about registered capital? Some suppliers will mention their registered
capital. If a supplier has a registered capital of say 50,000RMB but he has an
annual turnover of 50Mil. USD something doesn’t add up.

Remember also that some suppliers are pre-verified by Alibaba or another

third party (even on-sight at the factory). This should help you when selecting
as well.

I am not saying that all the information on the Alibaba company profiles is
accurate. If Alibaba verifies it, this is only sometimes done through an email
or a phone call. Email the supplier and ask him to send you his latest audit or
report done from a third party.

I think you will get a feeling right from the start for who might be a
middleman or scammer. If numbers, pictures, or anything else doesn’t add
up, beware.

If I get the feeling communication is difficult or if he only follows up my

questions with answers in fragments that are usually the biggest no nos for
me. The factory standard is usually a certificate available also in English that
is easy to verify yourself. Compare addresses and names on the certificate
with the address you have. If it doesn't add up... you know it.

The business license is usually in Chinese so it is a bit more difficult to verify.

If he is refusing to send it, it’s a sign he is just a trader (or scammer) and
doesn't want you to know it.

Make them produce a customized sample for you that they do not have on
hand and have them video Skype with you. Simple things can go a long way
towards legitimizing who you are dealing with.

Lets take a look at an example with a supplier that I would feel comfortable
working with.

This supplier has been established for 12 years. I don’t really care if he is a
Gold Supplier for only 1 year, it doesn’t mean anything.

What interest me are the verifications from third parties and his main
customers.

Quick facts:

- The annual turnover makes sense for a 12-year-old company.

- Their main markets fit with my customers.
- They have the necessary factory standards that I need for my
customers (ISO 9001& 14001).
- Their main customers are big name customers (Wal-Mart, Best Buy),
which puts me at ease because I know they have very high
requirements.

- They have third-party supplier assessments and reports from TUV-

Rhineland, which is one of the leading third party inspection
companies from Germany.
 - I check and the report is valid.

Also, if I am serious about a supplier, I will give him a call. During the call I
ask many questions, such as who do they work with, their annual production
capacity, their certifications, etc.

I will then develop a “gut” feeling before I move on.

I often come across supplier profiles that don’t make sense. Either their
turnover is huge (compared to their 15 workers) or other data doesn’t add
up.
You will develop a “gut” feeling after a while on Alibaba.
TIP: If you are unsure of the supplier’s honesty and not sure about prices or if
he is legitimate, make them produce a customized sample for you that they
do not have on hand and have them video Skype with you.

The next logical step before placing an order would be to visit the factory.
Since that might not be possible for you, you should consider booking a
factory audit with a third party inspection company (depending on the
turnover or order amount).

Trading companies on Alibaba:

Working with a trading company on Alibaba

Don’t eliminate a supplier because he has “trading” somewhere in his name.

It is quite common that many factories do not have an export license, which
is necessary if they want to sell overseas.

In this case they will hire a “trading company” that deals with their export
affairs. The “trading company” will charge the factory a small percentage in
order to issue documents such as licenses and trade on behalf of the
manufacturer with you.

There is one way you can tell trading companies from real manufacturers.
Trading companies put the name of their hometown within their company
registration. Manufacturers, on the other hand, use the province name. For
example: “Ningbo Better Lighting Company” (made up name) is probably a
trading company but “Zhejiang Ningbo Better Lighting Company” is
probably a manufacturer.

Chapter 45) Legal requirements & certifications on

products

The basic information on legal requirements and certifications is covered in

the Import Bible. For in-depth help please have a look at my certifications
course here: [Link]

I will give a few more examples here:

In the early 1990’s when import from China really started to boom it was very
easy to import goods. I didn’t experience it myself but my first boss in Hong
Kong told me when they started their company in 1991, buyers wouldn’t ask
for any certifications, samples or testing reports. They simply sent an Excel
file with a price and a picture and got an order. Sometimes they would also
get orders right on the spot when they exhibited or when customers came to
their showroom.

A lot has certainly changed since then. Governments these days regulate
nearly every product. Products need to fulfill strict laws, regulations and
certification statuses. Europe is a pioneer in enforcing new laws and
regulations, especially related to electrical products.

This comes from the European Directive of Energy related products (ErP). It
prohibits items from having a certain level of energy consumption. The
ultimate goals of this directive are the reduction of energy consumption and
making products more economical.

It can be a headache for suppliers as many of these regulations are “made

up” somewhere in Brussels by a “team of specialists” that have no relation to
the manufacturing industry in China.

Many regulations are difficult to apply to products and sometimes they even
mean that a factory will go out of business.

There is no question that these lawmakers have a common goal. Namely, to

protect the environment and their citizens. It is certainly not easy for Chinese
suppliers to keep up with the regulations and ongoing new requirements.

A good example is the regular incandescent bulb. They have already been
phased out in most of Europe and the US since 2011. LED bulbs are the new
light source for the coming years. But even these LEDs have requirements
that get more and more strict over time. Suppliers that are established will
oblige and keep up with requirements but small factories will struggle.

It is essential that you have a supplier that keeps up with requirements and
standards. If he doesn’t know what they are but you want him to apply them,
you can get him in touch with third party inspection/laboratory companies
like TUV, SGS, BUREAU VERITAS, ASIA INSPECTION and so on.

If you are about to select a new supplier make sure that he knows what you
need and what the requirements in your countries are. If he doesn’t, explain
it to him, that is, if you want to work with him.
Before I start sourcing for a new product I usually check the minimum
requirements with my contact at a third party inspection company.

I then send my requirements and product ideas to the supplier and ask in the
first email if he can comply with them. If he cannot and has no idea about
these requirements I usually eliminate him in the first sourcing round. If I have
no choice and have to take this supplier (because he might be the only one
supplying the type of product) I will try to educate him and help him to
understand the requirements.

Important: Make sure that you get a reply/confirmation to your quality

requirements in your emails. Often when I send out a new sourcing request
to a supplier I get an email back with an Excel sheet that includes a price and
some specifications. The answers to my product requirements can often not
be found anywhere.

Email or call him back and ask him about the quality or legal requirements
that you sent. I usually call in that situation via Skype and have a quick talk.

If he simply forgot or didn’t read it in the first email AND he confirms he can
comply ask him to send you test reports or certificates.

Check these and if you are unsure on how to read them or if you don’t
understand them, send them to your third-party inspection company for
checking.

I had 2 cases in the past where a supplier sent me certificates and only too
late did I find out that these were forged. This can be checked through your
third party inspection company. I use my contact at the third party inspection
company for a quick check, and it usually costs me nothing.

If you are importing in small quantities you still have to fulfill certain
requirements if you are in a B2B industry, whether it is for textiles, furniture,
ceramics or others. Some product categories (such as electronics) can be very
strict and complicated. If you sell online B2C such as Amazon or EBay you
technically still need to meet them, as you are the importer of the goods.
But, it is unlikely that your end customer (e.g,. your buyer on EBay) will send
the product they bought for testing.

In most cases the suppliers have basic certificates and test reports that allow
you to import goods into your country. This could be a CE, FCC or RoHS
certificate, among others.
Chapter 46) Anti-dumping rates

To protect the local industry some products have a very high tax rate on
import. These are called “anti-dumping” rates. Dumping in this case refers to
overseas suppliers flooding/dumping products into the local market with
prices that are far below the local suppliers.

Local suppliers complained to government agencies and they enacted “anti-

dumping rates.”

These rates have been in effect for a while now (since 1994) and apply to
quite a few products. Essentially, it means that products bought from
overseas (especially China) become even more expensive (after import tax)
than prices of the local supplier. It really differs from country to country but
here are a few examples of items that have a high anti-dumping rate in many
countries:

- Batteries
- Solar lamps or solar cell components
- Steel

Avoid products with a high tax rate or anti-dumping rate. It is likely that you
have a major competitor in your country or that the tax rate will kill your
profits.

Chapter 47) Product Liability Insurance

Once you start importing larger quantities and perhaps on a private label you
may want to consider product liability insurance.

Some suppliers have product liability insurance or are asked by their

customers to apply for it (as in my earlier example with the Swiss retailer).

Product liability insurance ([Link]

covers the loss incurred due to a problem with your products.
If you are importing large quantities regularly I also recommend you look into
this with your trusted insurance company. There are a few within China/Hong
Kong that provide this service if you don’t find anything locally.

So what does that mean and what does it cover?

Say you are importing a product from China to the United States, to sell this
product to another business, importer, retailer or online shop and suddenly
one day you have a serious problem – a customer or business suing you for
your sold product.

This could be because of a defect in the product that caused bodily harm,
destruction of property or other serious issues. The terms are defined in the
Wiki link above.

Not only because of the moral issue of bodily harm but also the financial
impact, this could become a serious problem.

The first step is obviously to figure out what caused the problem. Is it a
singular incident? What part of the product caused the problem?

Check if this particular problem was found during the inspection. If yes, why
wasn’t it reworked or why was it accepted? If no, why weren’t you made
aware of the problem? You could successfully blame your third party
inspection company if you have a strong case of negligence.

If you didn’t have an inspection or were not aware of the problem your
product liability insurance comes in handy. Usually you can take out this
insurance for just a group or for all of your products. Some can cover up to
5Million USD. It really depends on your insurance policy.

Normally your insurance would come into effect now to cover these losses or
lawsuits.

For a list of providers if you are selling on eCommerce you may have a look
at Amazon’s list for example here:
[Link]
nsuranceEstablishment/global/render (you need to be logged in to Amazon
Seller Central)
Chapter 48) Products that do NOT make sense to import

Some items really don’t make sense to import (together with the anti-
dumping rate items).

These items are usually license-required items, large items or items that are
manufactured in a low-income country near you. China is getting some
competition from a few countries, not only because of labor costs but also
due to government import restrictions (mentioned under the section on anti-
dumping).

Products that are difficult for importing:

- Anything related to gas

- Cars
- Supplements
- Foods, drinks
- Animals
- Guns, weaponry
- Hazardous material
- And more

For the above items you would need to obtain proper licenses first and this
can be quite difficult.

Here are a few examples on emerging markets you can also import from if
your product is of a large nature with high logistic costs from China:

Mexico:

Did you know that there is massive production in a few parts of Mexico of
household appliances and other consumer electronics?

That’s right, a large portion of appliances for the American household comes
from Mexico these days. Many big names such as Electrolux, Miele, and
Bosch have set up tents (factories) and are producing at large capacity.

The proximity to the US makes it an ideal purchasing market for American

companies. Even though the labor costs are higher, the logistic costs are a
lot lower than goods from China, making it ideal for small importers.

Large household appliances especially make sense to produce in Mexico.

For example, washing machines and refrigerators. The logistic costs on
importing these items from China are immensely high compared to Mexico.

Large quantities still make sense to import from China, as the amount of
pieces will drive the logistic costs down.

Turkey & Eastern Europe:

Turkey also has a large production industry but it is not limited to household
appliances. Many other categories are produced in Turkey (textiles, ceramic,
bathroom items). Even the big names like H&M, Zara, etc., produce in
Turkey.

Turkey has a very strict policy on imports. Their import procedures including
necessary documents and tax rates makes it a nightmare to import from
Turkey. This way they protect the local industry, which in turn definitely
benefits citizens of Turkey.

Quite a few Western European retailers buy a lot of goods from Turkey these
days.

Eastern Europe also has some production facilities and due to their low labor
costs it is quite affordable for importers within Western Europe to buy from
there.

Chapter 49) Making prototypes / mock up samples

I covered OEM/ODM already in the Import Bible. If you read that, you should
understand the difference between OEM (closed) and ODM (open) products.

If you have a design idea it doesn’t necessarily mean you immediately need
to invest in toolings just to make samples. Having said that, you can’t simply
give a design to a factory and assume they will make you a prototype or a
sample in a few days.

A lot of factories can hand make samples these days in their workshop.
Some more advanced factories even have rapid prototype machines.
Prototype machines obviously make non-working samples, but it could be
enough to take photos for marketing or sales purposes.

Handmade samples can be made to work but the product may not be as nice
as one that has been mass manufactured. But, with a handmade sample, you
can get a pretty good idea on the final outlook and can decide based on that
if you want to go ahead with mass production or not.

If your supplier does not have the means to create a prototype or sample you
can go to: [Link]

This company has a huge range of services available and you can request a
quote with them based on your requirements. Simply contact them and state
your details.

Chapter 50) Private labels, brands & trading no-name

items

There are 3 different business models that could work for you:
1) No Name, 2) Private label and 3) Brands

What’s a brand?

A brand would be, for example: Samsung, Bosch, Apple, Toyota, Philips and
so on.

A brand is usually a company and can be well recognized in the media.

Private label

What’s a private label? Private label means that a company has created a
separate label of their brand and the manufacturer/supplier is printing the
private label name on a gift box or even has a label with the name of your
brand on the product.

An example of a private label is the US based company and brand “Monster

Inc.” with its private label “BEATS by Dr. Dre”; Monster is the original
company / brand with the product and manufacturing knowledge and they
teamed up with Dr. Dre to create BEATS.
Technically you can select a product off the rack from a supplier and ask him
to make a custom gift box with your brand or private label on it. But it is
likely that if you can buy it off the shelf from the supplier, that others can do
so too. Perhaps you will want to work on an exclusivity contract for your
country.

Also be aware that a gift box print with a private label usually requires a
minimum of 1,000 pieces.

It’s not the requirement of the factory but the requirement of the printing
company. Most printing companies in China will not print color boxes below
800 pieces. It simply gets very expensive if your quantity is below that.

How I started my own private label

When I created Mandarin-Gear I had a vision of creating a brand that will be

recognized as affordable and high quality. But I was also in need of more
customers and wanted to make them trust in “Chinese quality products.” I
needed a product and a brand that customers could trust in terms of quality,
service and follow up.

The idea was to be inexpensive but still offer high quality products.
When I decided on consumer electronics I looked at the manufacturers and
what they offered. There were a few that had quality products but lacked the
marketing and sales experience to become bigger or attract more customers.
They were sitting back and waiting for customers to come.

They also created products that didn’t fit the market. Apart from the standard
items that sold well, they had a few innovative products but the finishing and
quality was often poor or not attractive for big buyers.
So I started to talk to 1 of my suppliers about my idea and what I wanted to
do. I didn’t want him to OEM or design something for me.

I took his existing product to make it better and sell it myself. So the next
step was to think how to achieve that.

I didn’t have enough money to invest in designs, new tooling and heavy
marketing. BUT, I could take the supplier’s product and make it more
attractive for buyers.

Here is what I did on my first project with a Bluetooth speaker:

- I changed the color of the product to a more appealing one

- I asked him for the up-cost in a better driver & speaker to have better
sound

- I asked my friend to create a layout/packaging for me based on my ideas. I

knew nice packaging is half the work of getting sales.

- I prepared presentations and a few PDFs with nice photos and detailed
descriptions

- I revised the instruction manual with proper content and grammar

When I thought about the packaging, I knew I wanted something that really
stands out and that people would love. So one day when I was out grocery
shopping I grabbed a product off a shelf and saw the nutrition facts on the
back of the product. This was something that could work!

I gave the idea to my design company and asked him to put the "nutrition
facts" of my product on the packaging. I put the essential technical
information on it and came up with a few fun facts too.

Here is an example of what my packaging looks like:

All of this didn't cost me anything and I had a very presentable product
already. I took this method and used it on about 15 products, which made up
my first catalogue.

It really astonishes me that Chinese suppliers have so little knowledge of

western trends and how customers perceive their products. The first sample I
saw of that Bluetooth speaker looked so cheap because it had shiny plastic
finishing.

When it came to my finishing I was really happy with the idea to have rubber
finish. It gave the product a completely new look and the impression of high
quality.

Remember, this was all on paper. I didn't actually ask the supplier for a new
color sample, change the finishing, improve the sound quality or print my
packaging. But, I did all these steps to see if I could find customers based on
my modifications.

I did ask for the costs of every process, be it the color box print, the upgrade
in components in the product or the MOQ needed on my specific color.
When I got the first feedback from customers I made samples.

This process applies to pretty much every product, a household appliances,

fitness gear, clothing, tools or whatever. The products are ready, but there
are so many options to make a much nicer product out of an existing item.
Think outside the box.

Look at a product from a supplier and think about what would it take for you
as a consumer to buy it. But remember to keep it realistic and not to change
the entire product in the process.
This was the easy part. Now I needed to make sales.

If you are just starting with a private label you can also ask your factory to
print a digital print of your private label gift-box so you can show it to your
customers or check it out yourself. Digital printing is usually rather expensive
and can be up to 40USD per piece.

I did some digital printing myself in the early days of my company to show
customers how my brand/private label looks. Here is a look at a few gift
boxes that I had digitally printed:
As you can see it’s not perfect, there are a few air bubbles and wrinkles, but
it does the job of showing the product in the packaging to customers.

No name packaging:

When you start off importing you are probably selling items off the rack (no-
name items) from the supplier bought through Aliexpress or Alibaba.

Usually these items have the manufacturer’s “brand” or even just a simple
white box when they are shipped to you.

A manufacturer’s brand or no-name brands are not really brands. They are
simply the manufacture’s name on the packaging with no or little meaning to
your end-consumer. You can see a perfect example of a “Chinese brand”
here:
Which type of business model makes me the most money and which one
should I choose?

Well if you are just starting out it probably doesn’t make sense to create a
brand or a private label because no one knows you yet and they have never
heard of the brand/private label that you created.

Once you start selling larger quantities and have bigger customers (online
and offline) you will want to introduce a private label.
You probably want to start out with drop-shipping smaller quantities through
Aliexpress. If possible ask the supplier if he has a neutral packaging, perhaps
a white box. If your quantities are very low, say 5-50 pieces it is very likely
that you have to go with the supplier’s packaging. Drop-shipping the no-
name brand will make you a nice small profit on each of your products. But
it’s always a calculated profit, as you need to keep competitive within the
market.

In most cases of no-name packaging, this is some really un-attractive

packaging with horrible grammar and English on it (just like the previous
example on the earlier page).

What you could ask the supplier is to have stickers made with your company
name on them to be placed over the supplier’s name/brand on the box.

If you are ready to place larger orders to your supplier in the range of 100-
500 pieces you should be able to request a neutral packaging for yourself.
This could be a white box with a color sticker and your logo on it.

I would also recommend Alibaba suppliers for that and not Aliexpress as
Aliexpress items are usually items in stock with a supplier’s packaging. Plus
you don’t get to inspect your shipment from Aliexpress.

Once you have quantities in the range from 500-1000 pieces you should be
thinking about a private label or a brand packaging. You will want to have a
packaging that sells the products itself without you doing too much. Private
labels will make you the most profit. People trust brand names and are
willing to spend more money on high-quality product/packaging.

Take a look at the packaging above from my company. It cost me nothing to

design and create (apart from the printing costs). I gave the designer the
input and general idea what I wanted and he duplicated the design on each
of my products.

You can also ask your factory to design packaging for you based on your
ideas. Every factory has a design department but it is likely that your design
will be heavily “Asian-themed,” meaning that it’s not really attractive.

So I recommend that you take a few hundred USD and pay a professional
packaging designer to create a brand or private label. There are a lot of
freelance designers on websites like: [Link] or [Link].
Obviously if you are selling online only and your customers don’t really need
to see your packaging before buying you don’t need a private label
packaging.

But if you are selling larger quantities to retailers, supermarkets or

wholesalers they will more likely buy from you if you have a nice packaging.

If you do have your private label ask your factory to always print at the same
printing factory. Give the factory your artwork files, pantone colors and other
details (provided by your designer). The reason for doing so is that you will
want your packaging to always look the same.

If your packing is printed in different printing factories it is very likely that the
color or printing will differ each time.

Chapter 51) Instruction Manuals (if applicable)

Once you are ready to order a product more often and in larger quantities it
makes sense to have a proper instruction manual for your customers (to be
included in your gift box).

Obviously not every product needs an instruction manual but they may have
tags (e.g., clothing).

I have seen a lot of instruction manuals from Chinese factories and many of
them are embarrassing in terms of grammar and English.

Ask your supplier to send you the instruction manual or label and take a look
at it. If it isn’t too much information to be translated or checked, do it
yourself. If it’s a lot or you don’t want to do it, send it for translation or
editing services. [Link] has a lot of these services available for
5USD.

Trust me, it makes a much better impression if your customer opens the
package and there are easy to understand instructions included.

You probably get more positive feedback too as a seller on Amazon or EBay
for that. It’s the little things that make you stand out from the crowd.
Chapter 52) Keeping track of your payments / invoices &
expenses

Whenever you have an expense, invoice, payment or receipt make sure you
save a digital copy on your computer. I keep a very organized structure of my
expenses, invoices, etc. I do this because I might need to reference them
later as well as for tax reasons.

Also I keep a separate “expenses” folder for sample payments. Most

suppliers charge for a sample when you order with them and before I agree
to pay for a sample I will confirm with him that he will refund the sample
costs on first order. It might not seem like much at the time but when you
have 30-40 sample payments a year (or more) it really adds up and makes a
difference if you can get the costs refunded.

Chapter 53) Factory standards (ISO, BSCI, SA8000…)

Factories themselves also need to (or should) comply with certain standards.
The government does not set these standards but they are for reputation,
safety and organizational purposes.

Retailers usually pay a lot of attention to factory standards. It also helps you
to identify if a factory is operating within international standards.

In my previous job my buyers actually eliminated factories based on their

standards, even if that factory was the only factory for a certain product.

So what do these standards mean?

These standards help you to identify a factory’s dedication to business

development and social compliance. If a factory has no standards at all it is
usually because they have no money to invest or don’t have business
overseas. Even for Chinese buyers it would be a turn-off if a factory doesn’t
have a minimum standard of ISO 9001.
These standards are basically a quality management system (QMS) that helps
to organize a factory and its processes. There are guidelines to be met from
the International Organization for Standardizations :
([Link]

Factories can apply for a certification from a third party inspection company
(such as TUV, Bureau VERITAS, etc.) to have their factory undergo an audit by
these inspection companies. If the factory complies with the standards they
will be awarded a certification valid for a certain period (1-3 years).

If they do not comply they will have to re-work the “failed” issues within the
organization until they comply to receive a certification.

If a factory can achieve a high status of standard such as SA8000 it is not

necessary to have a standard of ISO9001, as SA8000 covers everything
below this standard and more.

Many big retailers or corporations showcase social compliance on their

websites. It’s all about showing the general public that “we treat our
employees fairly,” “we produce in green ways” and “we are socially
compliant,” by not purchasing from factories below a certain social standard.

Standards of factories

ISO 9001

To begin with this is the absolute MUST standard for a factory these days.
It is actually very easy to obtain. Among others these would be the 6 main
processes that they need to comply with (excerpt from Wikipedia):

- Control of Documents (4.2.3)

- Control of Records (4.2.4)
- Internal Audits (8.2.2)
- Control of Nonconforming Product / Service (8.3)
- Corrective Action (8.5.2)
- Preventive Action (8.5.3)

You can read more here on Wikipedia:

[Link]

ISO 14001
This standard is a bit more difficult to obtain and it focuses more on
environmental management than quality. You can read in more detail here
on Wikipedia:

[Link]

BSCI

BSCI stands for Business Social Compliance Initiative and it focuses on social
compliance, meaning basic things like: do the workers have access to fresh
water, is food provided, do they have strict policies on child labor, and much
more.

As of today, most European retailers will only work with factories that have
this standard. A factory can apply for this standard but has to meet a lot of
strict criteria and it is very common that factories fail at the first or even
second audit. I would guess that around 10-15% of China’s factories have this
standard. So, if you work with a factory with this standard you should be in
good hands. Read more here: [Link]

SA8000

SA8000 is the holy grail of standards. If a factory has this standard it is

probably at a higher production management and organization level than
most factories in the western world. I personally only know 5 factories in
China that have this standard. Obviously this standard is very expensive to
maintain.

Factories with that standard usually have a lot of incentives for employees
such as training or management trainee programs, excursions, free English
classes, dormitory for the workers on site, free lunch, etc. It also means that
you are paying a premium price for your product.
But if you were in the right niche this would be your ideal supplier. I cannot
give you a name but I have been to this one SA8000 factory twice and I have
never seen anything like it in China.

They produce coffee machines for the biggest brands in the world like
Nespresso, Bosch, Krupp’s, Philips and much more. These brands can
obviously not afford a lot of return from their customers so they need top-
notch quality. This one factory has a 0.8% return on most of their products,
which is insanely low. Most factories have a return of 8-15%.

If you are starting out you don’t need the fancy factories but if you are
importing larger quantities and building a name for yourself you should have
at least ISO9001 or even better BSCI standardized factories to work with.

Working with a factory that has a certain high standard doesn’t mean you are
safe in all aspects but it gives you a better feeling when you know there is
some quality, social or economic management behind your production.

After all, even if you want to buy cheap from China you wouldn’t want your
items to be produced by a child or have the factory dump all their waste into
a nearby river.

Chapter 54) Subcontractors & raw material suppliers

Beware of sub-suppliers/contractors and make sure that your supplier

receives proper raw material.

Your factory is obviously not making the whole product them-selves. Most
factories outsource their material, workmanship, tools and even assembly.

It is simply too expensive these days to manufacture and assemble

everything in house. Therefore, factories will most likely buy raw materials,
tools, components, etc., outside and then assemble within their factory.

It is important to know that all materials and components come from a

reliable source and that your assembling factory has quality controls in place.
This step should assure that all components of your product are either
certified or come from a source that complies with your standards and
requirements.

Ask your supplier which in house quality control he has in place for incoming
material. A good supplier usually has quality checks at his warehouse. After
all, he also doesn’t want to get scammed from his raw material supplier. Ask
to see the certificates of the incoming raw material.

It doesn’t matter if you understand what’s written on the report but it will
make the supplier think twice before he scams you with cheap material.
You can actually give the report to your third party inspection company for a
quick review. Or you could send it to someone you trust who speaks Chinese
to check it for you.

Chapter 55) Using proper (internal) supporting

documents

You probably noticed how much attention I pay to administration and

supporting documents. That wasn’t always the case but I learned through
many mistakes that keeping everything organized from day one of a project
makes life a lot easier.

Here is what I keep on file to have total overview of my orders, products and
suppliers

Product Excel Spread Sheet (or shopping list)

I keep a list of all product ideas with a picture, link where I saw it, price and
some more details. Keep track of your product ideas. Make remarks on what
you think is good about it, what the margin could be and so on.
I use it for research but also for sourcing. I will go into detail later about the
shopping list.

Order forms (To & from)

For each order I place or receive I keep an order follow up checklist. You can
find it on [Link]

General Checklist

For each sourcing project I work with my ImportDojo Checklist. You will find
it on [Link]

Supplier forms

I use a “vendor profile” that I send in a blank format to every supplier that I
think I will do business with. He can input all necessary information like:
annual production capacity, turnover, staff, product categories, customers,
etc. You will find it on [Link]

Offers

I use a general quotation sheet for all of my customers. It includes pictures,

weight, dimensions, detailed descriptions, container details, etc. You will find
it on [Link]

Chapter 56) Production areas in China

I mentioned a few examples in the Import Bible already and you may need
this information for your next trip to China. You should know where the main
production areas are and what the disadvantages are for each one.

- Guangdong province (South of China): Electronics of any kind, especially

consumer and household, toys

- Zhejiang province (Shanghai area): DIY products, tools, metal and fabrics,
lighting

- Hebei province (Beijing area): Textiles, coal, steel, iron, engineering,

chemicals, power, ceramics and food

These are the main areas for production.

Let’s look into each one and a few others with a bit of background on the
province:

Guangdong province (South of China):

[Link]

Guangdong province, often referred to as “Canton,” has 4 main production

cities: Guangzhou, Dongguan, Shenzhen and Zuhai. Each of these areas has
literally thousands of suppliers. There are also over 105 million people living
there, most of them working in the manufacturing or hotel industry.
It is difficult to pinpoint which factory is in which city as they are all over the
place.

- Household appliances (toaster, blender, hair-dryer, fans, etc.)

 - Lighting (indoor & outdoor decorative, LED, contemporary)
- Toys (plus plastics, kids toys, etc.)
- Furniture (chairs, tables, outdoor furniture)
- Consumer electronics (mobile phones and accessories, tablets, etc.)
- Bathroom items (ceramics, toilet accessories, shower cabinets, etc.)

Zhejiang province (Shanghai area):

[Link]

Zhejiang province has 4 main production areas in and around Shanghai,

Hangzhou, Ningbo and Shaoxing.

- DIY tools (garden tools, vacuum cleaners, household tools)

- Metal and wood tools (workshop tools, wood working tools)
- Fabrics and textiles (T-shirts, jackets, jeans etc.)
- Lighting (outdoor lighting, luminaries, stainless steel products, solar)
- Tea (Hangzhou area)

Hebei province (Beijing area):

[Link]

Hebei province focuses a lot on the below categories. There are many heavy-
duty product factories in and around Beijing, which results in a lot of smog
and polluted air. Most of the factories that use natural resources are situated
in the Hebei province.

- Raw materials and natural resources (coal, steel, iron, etc.)

- Engineering
- Chemicals
- Power
- Ceramics
- Agriculture and food
- Textiles (high quality textiles, function wear, etc.)

Fujian province (South East):

[Link]

- Tea production
- Clothing and sports accessories manufacturers
- High quality technology (Boeing, Dell, GE, Kodak, Siemens, etc.)
- Decorative items (Christmas, seasonal items)
- Furniture (outdoor/garden/indoor)
Shandong province (Middle East)
[Link] - Economy

- Cotton / textiles
- Agriculture
- Precious metals

Henan province (East)

[Link] - Economy

- Food
- Increasingly, electronics

Chongqing province (Center of China):

[Link] - Economy
- Automobile industry (local but also overseas carmakers)
- IT (Dell, SAP)
- Finance / Banking
- Iron, steel, aluminum
- Natural resources (oil, gas, minerals)

There are of course many more provinces with factories but the ones above
cover most product areas. There are also many sub-categories, which I didn’t
mention, because each province has a small production of nearly all product
categories. You can also look at Alibaba or Global Sources and filter the
supplier by province. You will see that most suppliers are in the above
provinces.

Labor costs have drastically risen in provinces like Zhejiang and Guangdong.
What used to be 250USD salary per worker in 2005 is now 1000USD or more.
It is not uncommon that factories in and around the bigger cities open up a
new factory further inland to lower the labor and production costs.

Chapter 57) What to expect from a sourcing company

A sourcing company can take all your worries and headaches away. But they
can also take your profits away. By saying this and making this course I am
working towards unemployment myself.

Having said that it still makes sense to hire sourcing companies, especially if
you don’t want to deal with all the hassle and work or if you are having
difficulties locating a specific supplier and monitoring your order.

Big retailers all have their own sourcing companies in Asia. Most operate on
a non-profit basis, meaning these offices only charge their mother-companies
a small fee to cover expenses and staff salaries. Even small importers have
their buying or sourcing operations in place.

Many work in cooperation with other retailers/importers to save costs and

increase order quantities through bulk purchasing, which results in lower
prices.

There are thousands of Chinese sourcing companies catering to small

companies but also to foreign companies that focus on western service
levels. I recommend going with the latter.

Here is a rundown of the main services of a sourcing company/agent.

- Product sourcing
- Factory/supplier on-site verification
- Quality inspection
- Translation services
- Price negotiations
- Sample processing
- Low container consolidation
- Administrative services (flights, hotels, Visas, etc.)
- Door-to-door service

Fee structures:

- Most sourcing companies charge 5% minimum on top of the factory’s

price. Depending on the type of service that can be up to 30%.
This means that the price quote you will receive from the sourcing
company will already include the service fee unless stated otherwise.
 - Some sourcing companies also charge an up-front fee to cover all the
investment and possible time spent on working on the client’s case.

- In all cases you will pay the sourcing agent when you place an order.
He in turn will pay the supplier (deduct his fee) and then handle the
order from there.

Here is a more detailed blog post on the subject on when and how to work
with a sourcing company: [Link]
with-a-sourcing-company-in-china/

Chapter 58) Finding a product in China that you saw on

EBay/Amazon

I have been asked about how difficult it is to find the supplier or

manufacturer of a product found on EBay, Amazon and other websites.

It can be very difficult or very easy depending on the product.

You basically have 3 options:

- Alibaba
- Contacts
- Sourcing Agents

Alibaba:

The key to finding the exact replica of the product you are looking for on
Alibaba is keywords. Unfortunately many suppliers don’t post a proper
product description on Alibaba so it can be very hard to find a suitable
supplier. But if it’s an obvious product, it shouldn’t be too difficult to find it.

Contacts:

If you have a supplier that manufactures similar or related products send him
an email with a link, product descriptions, your estimated quantity, and other
details you want him to know. Even if this product is not in the supplier’s
usual product category, you never know. As I mentioned in the Import Bible,
suppliers are often friends with each other and they help each other too.
Send the request to all the suppliers you know. The worst that could happen
is that they don’t have the product.

Sourcing Agents:

Sourcing agents usually have loads of contacts and suppliers in different

product categories. Bear in mind that you will pay a percentage on top of the
manufacturer’s price.

If you feel comfortable with that, meaning you also don’t have to deal with
the sourcing part, the negotiations and so on, go with the sourcing agent.

I will give you an example. In this illustration I am actually a “sourcing agent”

for my client. A client of mine has asked me to look for this product:

[Link]
Dunkelblau/dp/B00LUHNJNW/ref=sr_1_sc_1?ie=UTF8&qid=1424075651&sr=8-1-
spell&keywords=blinkerrucksack

It’s in German but you get the product idea. The first thing I did was to go on
Alibaba since I didn’t really know a supplier for this product.

I typed in “LED Vest” and got 10,660 results. Ok, I got some leads there.
When I scrolled down a little further I saw a product very similar to the one I
was looking for. I looked at the supplier’s website and saw that they
specialize in these products. So I sent him an email with my inquiry.

Basically I was asking for a price, MOQ, delivery time and about the
customers he sells this item to. Obviously I also did my routine checks on
factory standards, product certifications and supplier profile. If I wanted to
order from this factory later I would definitely go to see the factory. But as a
first step this was sufficient.

I sent an inquiry to 3 more companies on Alibaba.

Two days later I eventually received a quotation for a product that was very
similar to mine.

Milestone 1, check!

The second thing I did was to send my suppliers an inquiry, just like I sent
one to the Alibaba suppliers. I think I sent it to around 10 contacts.

Within 3 days I had 2 suppliers offer me the product. One of them was
exactly the product I was looking for.

Milestone 2, check!

Out of the 3 offers 2 had a similar price and 1 was way off my target price.
I confronted that supplier with the offers of the 2 other suppliers and asked
him to explain his price difference.

He emailed me back and was honest enough to tell me that they are a
trading company, even though initially he said they are a manufacturer.

INSIDER TIP:

Take this step to confront the supplier if you have more offers on the table.
Not just to reveal the possible “middleman,” but if he is an actually a
manufacturer, he might give you good reasons why he is more expensive.

Perhaps it is because of a different product material, certifications or other

important reasons that may be vital to your decision. Don’t just brush him off
if he is initially more expensive.
In this case it was really because he was a middleman, so I took my two offers
from the real manufacturers and sent them to my customer. Three months
later I received an order for the item.

Will the products be inferior in quality compared to the “original”?

This is a good question.

I would take the specifications of the original item (copy details from
Amazon/Amazon etc.) and send them to the supplier.

If he says that he has equally good specifications I ask him for proof.

I would also recommend ordering a sample of the product that you found in
China and once received, check quality and functions. Perform a simple “fit-
for-use” test yourself and then decide whether you want to go ahead with
this product or not.

Also remember to calculate your costs properly. Is your margin good enough
to make you an actual profit? Because, bear in mind, you probably need to
be at least 30% below the “original” product to be competitive.

Having said all this, please do not try to copy products exactly. Especially
branded items. There are a lot of items out there that are “open” and can be
bought regularly in the factory “off the rack.” Counterfeit or copied items are
simply not worth the trouble, especially if you live in a first-world country.

Chapter 59) More drop-shipment sites other than

Aliexpress

There are of course more than the 2 usual suspects Aliexpress or Global
Sources. Here is a selection of some drop-shipment online shops:

[Link]

This is run by a Finnish guy who I personally know. They are very dedicated
when it comes to service and quality. Prices are a little higher than Aliexpress
but it’s worth it because this guy makes sure you get your goods.
Some of the other drop-shippers that I have used or that I know of:

[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]

Chapter 60) The brutal & honest truth about developing

your own products in China

I often receive the question on how to contact factories with your own ideas
& designs. Basically, how to get a supplier manufacturer your design.

Lets say you have an idea of a completely new product or you want to
modify/improve something that’s already in the market.

Basically, you want to alter the design of an existing top selling product (i.e.
make it better than the competition), but you aren’t sure of the process to
develop this modification and the potential patent laws around it.

It seems to be simple (you have a basic sketch drawn up and know it could
work based on a similar mechanism used in a different, unrelated and very
successful product), but you have no engineering/tooling knowledge.

Simply put, base level product that you want to alter (not just adding a logo
or changing color) to make it better than the competition. How do you go on
to develop this idea and get someone to manufacture it for you?

2 things you have to consider:

 1) patent issues (for making existing items better)
2) finding a manufacturer without the means of funds/financial back up

1) patent issues

Lets say we are looking at a famous design from a brand. For example a fan
or vaccuum clean from Dyson.

While they do have a patent on the product they also have a registered
design.

Meaning that even you go to a factory and ask them to modify the inner
components and change the design a little bit it still relies heavily on their
original design.

Meaning you are in breach of their design & patent.

Now, if you are going to sell this “new” product of yours at a local shop or
some street market in Thailand you probably won’t have any problems.
But if you are going to sell online in your shop or for example FBA you are
very likely to get in trouble with the patent or design holder.

Many factories will tell you not to worry as the design & components are
slightly changed. Technically correct yes, but there is still the issue of the
“registered design” which means that anything that has similar functions or
design is inflicting the patent will have some problem.

There is no way around it. In Chinese factories it is often so obvious when

they are trying to copy a big brand’s product. Likely they will sell to some
South East Asian country where no one cares. But lets assume you live in a
first world country like the US. So you will definitely have issues.

There are patent lawyers that can check if “your product design” is inflicting
any design or patent. If you are looking at a large-scale production and order
I recommend doing this step. This may take weeks and cost you quite some
money.

If your “idea” is completely different in terms of components and functions

you don’t need to worry.

2) finding a manufacturer without the means of funds/financial back up

No matter who you are speaking to about your product from the
manufacturing side first you need to ask them to sign a NDA to protect
yourself.

Then you should contact several suppliers that already work on similar
products. You can find suppliers easily on Alibaba/Globalsources. Follow my
guide on contacting suppliers there.

Once you have narrowed down the suppliers you should ask if they are
interested in OEM with you. Meaning you are also willing to commit to
orders and financial pre-investment.

If you have no means of financial back-up you probably won’t have many
chances on finding a supplier that will pre-invest for you without knowing
your product idea.

Also It is very likely that if you don’t sign an NDA with a factory that they
“may" steal your idea.

Honestly speaking without any contacts and factories in China it is very tough
for you to develop your own design. Factories will want to see orders before
they start developing client’s ideas. Unless you are already ordering from a
factory it is difficult to ask them to make something for you.

After all they don’t know you and they don’t know if your product that you
designed is going to sell. Say you find a factory that really believes in your
product they will pre-invest for you if you allow them to sell it to other
customers as well. If you want to have exclusivity you need to give written &
most likely financial investment.

Why is all this? Developing a product requires a lot of tooling & engineering.
Tooling’s are very expensive and can take weeks to make.

Here is what you could do to get the funding for your product and contact
manufacturers:

1) There are popular crowd-funding websites such as [Link] or

[Link] that help bringing your design & idea to life.
Depending on how well your campaign is running you could contact
suppliers during the campaign, before or even after.
 2) If you are working with offline customers such as retailers, present your
ideas & design & get funding or confirmed orders from them.

My advice to this post is: start small and with products that are known to
work. Work your way up in terms of order quantity and develop a private
label at some point. Once you see good results in sales you should start
developing your own products. At this point you will also have suppliers that
you trust and that are willing to invest money in developing products for you.

Chapter 61) why you will like Global Sources more than
Alibaba

I am so surprised that not many people know Globalsources.

I find them to be much better than Alibaba actually. Their English is better,
the suppliers are much more professional, they provide amazing free services
& their customer support is out of this world! I also get the feeling that there
are less scammer than on Alibaba.

Lets take a look at some of their highlights:

Buyer support:

On their site there is a section with “Buyer support”.

[Link]
[Link]?source=GSOLHP_TopNav_OS_BS

Here is a summary of what they do for you (as a registered user):

We know how important it is to find the right supplier for your business,
especially when sourcing from overseas. We have compiled this library of
sourcing advice (articles and videos), FAQs, surveys, monthly newsletter
updates, monthly top products, and more to provide you with information to
assist your preparations and decision-making when sourcing from China and
Asia.

The information is collected from our in-house experts, as well as third party
experts from large buying companies and import/export consultancy
companies. Each of the targeted sections below will lead to individual pages
for your further reading. We recommend you start with "What Every Buyer
Should Know" and continue from there. Or if you have a specific question in
mind, click on the "Ask The Experts" section to see if your question has
already been asked/answered, and if not, go ahead and send your question
direct to our experts. For general help to navigate and use our site, click on
the Help/FAQ and User Guide sections.

Then there is their “Private Sourcing Events” section.

[Link]
S_PSE

You can practically contact Global Sources and request to be at their next
Sourcing Event as a invited Buyer. I attended one of their events in 2011 as a
Buyer.

What happens is that Global Sources will ask what products you are looking
for, what your quality requirements are and so on. Then they will send you a
list of say 20 pre-selected suppliers within a few days and you can chose to
meet with these suppliers at the said event.

Global Sources will take care of everything for you, organize to meet the
selected suppliers, provide you with catalogues, quotations etc and all you
need to do is come to the event.

At the event you will sit down with each supplier and discuss the suppliers
products. The great thing about this is, they have been screened by Global
Sources already and they know of your requirements, market etc. You don’t
need to explain much it’s a meet & match.

Not sure which country in Asia is the best manufacturing country for your
products?
Check out their country sourcing reports with statistics, developments &
potential outside China:

[Link]

Also one of my all time favorites, their Sourcing Magazines:

[Link]
003844&design=clean&language=en&page=emag/SourcingMagazines&src=
hdr&pi_proj=10AWJP&source=GSOL_TopNav_MR
They hand pick suppliers and trending products in a lot of product categories
in their magazines and its all for free!

Once you have started using Global Sources you will see what I mean.
Having said all that, Alibaba is still a giant with many products & suppliers
that Global Sources cannot offer. Therefore it always makes sense to check
out both websites when you are looking for a new supplier/product.
 PART 3 The Import Bible – Business in
China

BUSINESS IN CHINA
Chapter 62) Take your import to the next level, GO TO CHINA
Chapter 63) First timers guide to China and what this part is about
Chapter 64) Do’s & don’ts in China
Chapter 65) Why go to China?
Chapter 66) Start your preparation
Chapter 67) Competitor research
Chapter 68) When is it even worth it?
Chapter 69) How to source for suppliers (in unusual ways / beyond Alibaba)
Chapter 70) Travel chapter (Visa, Hotels, Language etc.)
Chapter 71) Business in China
Chapter 72) At the exhibition & how to prepare
Chapter 73) At the factory
Chapter 74) After the trip
Chapter 75) Summary & 10 ways to save you money
 Chapter 62) Take your import to the next level, GO TO
CHINA

Hey y'all, I am heading to China!!

Yes, I mean actually getting on a plane and visiting China and its factories.
But not so fast! There are a lot of things to prepare before you go. Please
also note (as at the moment of this update on 01.08.2022) due to the COVID
Pandemic you will not be able to visit China at this moment. According to
news reports China will not open its borders until 2025. Depending on when
you are reading this book things may have changed, please follow official
channels to get updates.

In any case, once borders to China are open again, you should prepare for a
trip that is at least 12 days long. You should visit at least 1-2 suppliers per
day, and 2 days for exhibition, 2 days for travelling and 1-2 days for
sightseeing. Yes, enjoy yourself a little too.

So that gives you 6 days of supplier visits, for a total of 12 potential suppliers.
That would be a good number of suppliers that I would be comfortable with
when I am going on a trip.

When I used to work for the buying office we did up to 4 suppliers a day.
I definitely was against that because you don’t have time to sit down, discuss
details and look at projects with the supplier.

When you plan a trip you need to consider:

- The product you are sourcing for

- The area you are going to
- The relationship you have with this supplier (or not)
- The purpose of your trip or ultimate goal (new products, negotiation,
new suppliers)
- Time of the year (go when there is an exhibition)
- The type of Visa you need (business or tourist)
- Hotel bookings
- Transportation
Say you want to source for lighting products. There are 2 main areas within
China. One is in southern China (Guangzhou/Guzhen area) for decorative
indoor lighting, the other in Zheijiang province (around Shanghai) for outdoor
lighting and stainless steel products in Ningbo/Cixi.

So I would recommend going to the southern part first and then to the
northern part as the southern part can be combined with exhibitions around
Hong Kong / Guangzhou.

I go into details on where to go in the travel chapter.

This needs a lot of planning. But if you have tools and measurements in place
this can be fun and easy. I would also recommend that you start 4 months
prior to your planned visit to China, because of Visas, hotel bookings, setting
up meetings with suppliers and making sure you are really prepared.

I did a few trips on a few days’ notice, but that’s a lot easier when you have
done that a few times. Without experience I really do recommend enough
time to plan.

If you plan a trip on short notice, hotels and flights can get very expensive.
Not to mention that you might not be able to find a hotel during an
exhibition period. Hotels that usually charge 60-80USD per night charge
400USD or more, for example, during the Canton Fair in Guangzhou.

You may also want to go to China if you have your own production running.
Let me tell you, it’s quite a feeling to see your own products being produced.
On top of that you can also carry out your own inspection of goods, making
sure everything is up to your standards. That doesn’t mean that you need to
fly to China for every product production, but if you can schedule a trip
around a production of yours I recommend doing so.

Chapter 63) First timer’s guide to China

This part is aimed at entrepreneurs who have already tested the waters of
importing from China through Alibaba, an exhibition, contacts or more. If you
have already started your import from China this part will take you to the next
level.
I outline the most important steps to keep your business growing, what to
avoid when going to China, how to communicate with suppliers at their
factories, what to expect when visiting exhibitions and how to arrange
meetings.

I will teach you how to negotiate contracts, travel around at virtually no cost
in China, meet the real suppliers and perhaps even manufacture your own
design. Sound good?

Then this is the perfect course for you to take your business to the next level.

We focus on how to make you become a professional China buyer in this

course. You will also discover the best way to narrow your sourcing results
without limiting your competitive advantage. You can figure out the best
sourcing strategy along the way.

Parts of the course also aim to make you understand business in China, how
to fit in and how you can avoid several problems, such as delays in shipment,
your shipment being lost somewhere in China and making sure your factory
follows the discussed topics after you leave the meeting.

I mention in Part 1 that it is essential to meet your business partner in China,

be it for negotiations, to see his other products, to spy on your competition
or just to get to know your partner in China.

Chapter 64) Dos & don’ts in China

What are the obvious dos and don’ts in China?

Do’s

Indulge in the food

Food in China is very different from what you get back home. The Chinese
food back home is “westernized” so that the average American will enjoy it.

Having said that, I personally like the food in China better. It’s without all the
MSG and sweet and sour sauces.
You might enjoy a Peking duck, dumplings in the south or seafood at a local
restaurant. What I love most are the vegetables, especially broccoli and
morning glory.

Tell your supplier when sitting down with him for food that he should choose
the dishes. Just tell him that you may not be into “special things” (fish heads,
pork skin, chicken feet or other things that you don’t like). Don’t worry; they
don’t serve any dogs in China anymore.

Sightseeing

Depending where your trip takes you I would recommend you to take a day
or two for some sightseeing. If you are in the bigger cities like Beijing,
Shanghai, Hangzhou, Guangzhou or Hong Kong, there are lots of things to
see and do. Trip Advisor usually has great tips and reviews on things:
[Link]

Try your Chinese

It doesn’t matter if you don’t speak Chinese. You can learn just two words
that will be much appreciated by your partner or supplier. “Ni Hao” meaning
“Hello, how are you” and Xie xie meaning “thank you.” People will
appreciate you more if you can speak those two words.

Appreciate gifts and don’t refuse them

It is very common that suppliers give gifts at the beginning or end of your
meeting. Usually it would be tea or some product that may relate to the
factory. Don’t worry, it’s not a bribe and you don’t necessarily have to bring
something too. It is just a little thank you for coming to visit. However, please
do not refuse them, unless it’s obviously a bribe or something very large that
you can’t fit into your suitcase. It will make your partner lose face in front of
you. Gladly accept the gift with both hands open and perhaps make a nice
comment.

Give out business cards with two hands

When you exchange business cards give and receive with both hands. It’s an
expression that pays respect.
Address people by their last name

If it’s the first time meeting someone, address that person by his/her last
name.
Chinese people may get offended if you address them by their first name. It’s
very similar in Europe. You are not “friends” yet and have not done business
together, so be professional.

Don’t

Criticize China or its politics

Don’t criticize China or its politics. Chinese are quite proud of their country
and their accomplishments. Even if you don’t agree with the country’s
politics, wait until your partner/supplier takes the first leap into criticizing, but
even then don’t overly criticize in any way.

Criticize partners/suppliers/strangers

Do not criticize someone in front of others, especially if you don’t know each
other well. Losing face is a very big thing in China. Also do not jokingly make
remarks that could potentially upset someone. Chinese don’t take western
humor so well.

Be late for meetings

Chinese pay a lot of attention to being on time for meetings, picking you up
somewhere or at gatherings. Try not to be too late for meetings or use it as a
tactic for negotiation (making someone wait).

Touch strangers

Don’t touch someone on the head, or shoulders unless you know each other
very well. It makes most Chinese uncomfortable.

Be offended for very private questions (relationship status, salary etc.)

It is quite common in China to ask for one’s relationship status, salary or

other personal matters. Don’t be offended, it is often asked in meetings. You
can choose to answer or not, they won’t be offended if you don’t answer.
Chapter 65) Why go to China?

Honestly, there are so many reasons! Here are 8 reasons for you:

1) You will want to see the production and how your product is being made.
It’s a great experience.

2) If you want to develop your own products you may want to do so in person
with the factory. It may be difficult to handle through email.
Details are often misread or misunderstood in emails, especially when they
are technical. A simple meeting with a supplier can solve many problems and
obstacles.

3) See the real factories and not the trading companies behind Alibaba’s
“curtain.”

4) Meet the people you have solely been dealing with over email so far. Get
to know each other and perhaps even become friends. See also Chapter 3 on
staying in touch and why meeting in person can be so important.

5) Get the best prices and negotiate prices one on one. Believe me,
negotiating with someone face to face will get you further than any email.
Over the phone or email I have been told so many times that this is the best
price they can offer. Being at the factory a few days later and convincing him
in person that I need this price and his business depends on it made him
agree. This also applies to claims and compensations.

Here is an example:

I remember one time when my German customer had to re-call a product

from his stores and claimed the factory owed him 40,000USD. That was
obviously an almost impossible task through email for me. There is not much
I (or you) can do from an office 1000 miles away from the factory. I knew that
my customer was asking for too much and that he would be happy with
5,000USD. To start I sent the supplier an email and explained the situation. I
didn’t have much evidence from the customer either, apart from an email
and some back up material. For weeks the supplier wouldn’t agree to any
compensation.
So I eventually flew up to Ningbo to talk to him under the pretense of
expanding business. We met up, discussed new potential products, and
eventually I mentioned the claim. I told him I am not leaving until we have a
solution. So eventually around 11 pm that night he agreed after hours of
talking (he actually left for 1 hour in between) to a compensation of
20,000USD. And not just to be deducted from the next order but a
telegraphic bank transfer within the next 2 days to the customer’s bank
account.

You can imagine how happy my customer was because he didn’t expect
anything at all, knowing he was thousands of miles away and couldn’t do
much.

How did I achieve that? “Simply” by meeting up with the supplier face to
face. Ok, obviously if you are based far away and you have no means of
travelling to the factory for a discussion like that it’s going to be difficult. But
you get my point.

6) Become an expert in your products and understand even technical

specifications that your customers will love you for. If you want to stand out in
today’s competition you need to be an expert. When you sit at a meeting
with your potential customer and you are confident with your products and
company’s ideals, it will give you an edge over your competition. No one but
the manufacturer can explain his product as good as he can.

7) Take the time to visit another country and get new ideas. Apart from
seeing new products and ideas at exhibitions and factories you can also get
inspired by trends. Remember Chapter 6 in the Import Bible. Travelling is a
great means to get inspired by trends in other countries.

8) Last but not least you will want to go to Yiwu. Where is that? It’s a “small
city” near Ningbo (Zheijang province) that houses “The World's Largest
Wholesale Market.” Here is a report from Business Insider. It would definitely
be worth going there, especially if you don’t have many supplier contacts yet
or there is no exhibition at the time of your trip.

[Link]
10?op=1#ixzz3V5meL6e8
Going to China can be quite an experience and there are many reasons to
make the trip.

I have heard from buyers that it’s dreadful for them to go to China.
Well, it’s certainly a different culture and there are many differences from the
western world, be it the food, the people, the traffic jams or the
bureaucracies.

But if you follow this guide I can guarantee you that you can make your trip
comfortable and most of all, successful, and you’ll want to go back!

What’s more, you will have fun during your trip and perhaps enjoy a cup of
tea somewhere in Hangzhou or sip a cocktail in the world’s highest bar in
Hong Kong. China has its perks and I hope you will discover them.

Chapter 66) Start your preparation

Once you decide you want to go to China, take a notepad and write a few
things down you will want to cover on your trip. Here are some examples on
what you need to consider:

Am I seeing my existing suppliers?

If so, you should prepare yourself for that. Print out all price sheets, quotes,
or topics that you would like to discuss with your supplier.

Put it in your “trip-book” (see later chapter). Is there an ongoing negotiation

or claim you would like to discuss? Make sure you have all details with you
that will come in handy when talking to your supplier.

Shopping list:

When I go on a sourcing trip I prepare a “shopping list” for the supplier and
myself.

It’s a simple Excel file (you can use the one in the supporting docs of this
website and I’ll give you an example below).
I input ideas I find on the Internet or at competitor’s websites and send them
to all my suppliers before I go on a trip. Hopefully they send back some
offers of items or even samples before I go there. Then, once I am there I
don’t need to look any further but to the meeting room in the factory and I
can discuss the products one by one. Here is what a shopping list may look
like:

Am I looking at new potential suppliers?

If you are unhappy with your products or your current supplier you may want
to look at a new supplier to discuss your terms. Look in this course and the
Import Bible on how to find new suppliers.

Are the flights for my dates within the budget and available?

Most flights to China from anywhere in the world range from 800-1500USD.
Check on your preferred website for booking flights or your travel agent for
your desired dates. I usually use flight-search engines like www.

Once I find the cheapest flight I go onto the airline’s website directly. Often
times the flights there are cheaper if I book directly with the airline. This also
allows free changes while most agents will charge you a fee to change a
flight.

Check if there is a direct flight to your desired city. Many airlines around the
world have a direct (or 1 stop) flight to your final destination.

Tip: The preferred and most economical way of course would be

coach/economy class. But often people don’t even look at business class (or
premium economy). I often find flights that are only 200-300USD more than
economy. If that were the case I would definitely book business class. That
way I get to arrive fresh and probably sleep a few hours while I wouldn’t in
economy. That’s also probably because I am very tall and on top of that
scared of flying (especially in economy).

Are there any Chinese holidays when I will be there?

Also see Part 1 of this eBook. Check if there are any holidays when you are
scheduled to be there. Otherwise you might end up going and find that
everything is closed.

Which products am I looking for this time?

Do you have new product ideas that you want to discuss or do you want to
enlarge your assortment with similar products? Bring samples of your new
products, print outs or your shopping list as support.

Which area am I going to?

Depending on your product you might want to fly directly to the nearest
largest city where you have a base for the trip. Many carriers fly directly from
Europe or the US to large cities like Guangzhou, Shanghai, Beijing and Hong
Kong.

How can I travel between suppliers and exhibitions or meetings?

I will go into detail later but my preferred way of travelling within China is by
car, usually provided by the supplier. If I go from Hong Kong to Guangzhou
or Shenzhen, though, I take the train.

The purpose or ultimate goal of my trip

What is the ultimate goal of my trip? Write yourself a to-do list and what
goals you want to achieve. While on your trip, keep looking at the list and
remind yourself of your goals.

The type of Visa you need

There are many types of Visas but the most common ones are tourist or
business Visas. I will go into detail in the travel section.

What’s my hotel budget?

Hotels in China are very cheap and ultra-modern compared to the western
world. The big names and 5 star hotels like Marriot, Hilton, Crowne Plaza,
etc., can go for as little as 70USD per night. That is off-season and not in the
big cities like Shanghai, Hong Kong and Guangzhou. But there are many
Asian 5-star chains that are equally good and are cheaper. More on that in
the travel section.

Prepare prices & raw material costs for negotiation

Print out raw material costs that you can find on the Internet. This might help
you during a negotiation when someone claims an increase of raw material
prices.

Chapter 67) Competitor research

This is an essential part of your trip, to research a product that your

competition has that you don’t have or to make sure that your ideas aren’t
already showing up everywhere.

Know your competition! Since you started your business, have you done
research on your competition?

What do they already have in their shop/store that you don’t?

How can you get this product and perhaps even have a better one?

Take a few hours of your week and look at your competitor’s websites.
Search for new products or announcements.
Subscribe to their email newsletter (use a email other than your work email)
and get their latest products into your inbox.

You will also want to take the ideas and new products from your competition
with you on your trip. Print information about the products out and put them
in your trip book (the trip book is explained in a later chapter).

Send your suppliers your competitor’s products (perhaps in a shopping list)

and ask them if they have something similar or even more advanced. This
saves you a lot of time because by the time you get to China you may
already have a sample on the meeting table that is similar or even better than
your competitor’s product. (See also the previous chapter regarding
preparation.)

Chapter 68) When is it worth it to go to China?

If you have read the Import Bible and you are absolutely comfortable with
the ways you are importing then you probably shouldn’t be going. Perhaps
you aren’t ready yet either. Business is going well and you need more time to
focus on sales rather than purchasing. That’s fine.

But if you feel that you are stuck with price negotiations, have had a bad
experience with existing suppliers, want to see some trends at exhibitions or
look at your competitor’s production then you should be going to China.

When you haven’t done business directly with Chinese factories then you
can’t know for sure if this is going to bring your business forward.

When you meet someone face to face it’s a completely different relationship.
Your and your supplier will have more trust with each other. What’s more,
Chinese hospitality is actually very open and welcoming.

Many times during a meeting in a factory there are situations where you can
learn a lot about your competition. Either the supplier gives away some vital
information about trends or you can actually find a gift box of your toughest
competitor’s in the production line.

Or perhaps you see production for a company that you don’t know but it
could be your potential next customer? Take a snapshot and do some
research later.
All these things cannot be done through email or phone calls from the
comfort of your home. You need to see them.

Chapter 69) How to source for suppliers (in unusual ways /

beyond Alibaba)

This chapter is dedicated to finding suppliers in an unusual way, beyond

Alibaba. There are a few ways to find suppliers that I am going to elaborate
on now:

Taobao

Taobao is the equivalent to EBay and Amazon based in China. It belongs to

the Alibaba group. You will need to speak and read Chinese if you want to
communicate with the suppliers.

Actually most people on there are not suppliers but private persons, similar
to EBay sellers.

If you are using Google Chrome you can auto-translate the site but be aware
that the translation might not be accurate.

You can, however, find some great products and ideas if you auto-translate
the site and its categories. You can browse through categories and if you see
something that you like on there you could send it to your supplier and ask if
he has any knowledge of this product and where to find it.

There are many items on there that you won’t find on Aliexpress or
Alibaba/Globalsources, mainly because these items are created for the
Chinese market and taste.

BUT, you can find items or trends in China on there that could very well work
in your country too. Remember, country specific trends could be your next
great idea (see the Import Bible on ways to product sourcing).

Global sources magazine

I mentioned this already in the Import Bible. Global Sources provides a
magazine that lists suppliers and their products.

I am really astonished on how little people know about this service. They
usually update every category every few weeks/months. The content is
amazing. High quality photos, descriptions, supplier details, trends,
everything!

It’s a great way of getting ideas and finding suppliers.

Have a look here and take a look at the many different product groups that
they cover:

[Link]
003844&design=clean&language=en&page=emag/SourcingMagazines&src=
hdr&pi_proj=10AWJP&source=GSOLHP_TopNav_MR

Another great services by Global Sources:

You can actually contact Global Sources and ask them anything for free (as
long as you are registered). If you are looking for a product or a supplier of a
specific product, maybe even in a specific area, they can help find it.
Check it out:

[Link]
[Link]?source=GSOLHP_TopNav_OS_BS

Exhibitor’s lists

I also mentioned this in the Import Bible already. You can look at and find
suppliers from exhibitions even you if you haven’t attended.

Insider’s tip:
Even if you can’t go to an exhibition you can still find out about all the
suppliers exhibiting there. How? Simply go onto the exhibition’s website. For
example, this lighting fair in Hong Kong:
[Link]
[Link].

Then click on “Full Exhibitor List” and there you go. You have all exhibitors
exhibiting at this fair. It’s a bit of a lengthy process but you can check all
websites of the suppliers, look at their products, and contact them directly
without even going to the exhibition.

This applies to almost any exhibition in the world.

By the way, this is also a great way to find potential CUSTOMERS.

If you are planning to sell to retailers or wholesalers you can also look at
these exhibitor’s lists and see them as a potential sales lead.

Baidu search

Baidu is the most used search engine in China (since Google is blocked).
Everything is in Chinese, but just like Taobao you can auto-translate the
page.

I use it sometimes to look for a specific product. It’s like a supplier directory,
listing a lot of suppliers. For example, if you type “handbag manufacturer”
you will find mostly results that lead to Chinese companies. A few overseas
websites are listed too but not as many as if you would use Google.

Baidu can also help you to find patents on items that you may be looking for.
Baidu has a separate website for that, called Baidu Zhuanli:
[Link]

Again, you can translate via auto-translate but it is very difficult to navigate if
you don’t read/speak Chinese. You can ask your supplier to check it for you.

How to find local fairs & wholesale markets

Apart from finding the big exhibitions that I mentioned under Part 1 in the
Import Bible, there are many other exhibitions or wholesale markets that may
be worth looking at. At many of those markets the MOQ can be quite low, so
this might be an ideal starting point for you.

Prices are usually a little more expensive than from the factory since many of
the companies there are trading companies or agents for factories.

Many cities in China have an “exhibition center” that houses all-year

exhibitions or wholesale markets. Here is a list of some of the biggest
wholesale markets/all year exhibitions in China:
The most famous one, housing everything from electronics to toothbrushes is
in Yiwu.

YIWU MARKET:

[Link]
10?op=1#ixzz3V5meL6e8
[Link]

Clothing wholesale markets:

Guangzhou Baima market

[Link]
Address: 16 Zhannan Rd Guangzhou Guangdong Province

Humen Fumin Fashion City

[Link]
Address: Humen Town, Dongguan City, Guangdong Province

Hangzhou Sijiqing apparel wholesale market

Over 1200 manufacturers with stores at this market. There is an annual sale of
6billion RMB reported from this market.
Address: 31-59 Hanghai Rd Hangzhou Zhejiang province

Furniture wholesale markets:

Shunde furniture wholesale market

The largest furniture wholesale market in China. It’s actually 1 mall after
another on that road. You could drive for 15 minutes along that road and you
will still find showrooms of factories.
[Link]

Electronics wholesale markets:

Shenzhen SEG Electronics Wholesale Market

This market is China’s largest electronics market and sits in between Shennan
Road and North Huaqing road. It is located at the SEG plaza and occupies
the first to the tenth floors. The market has over 3000 shops.
Address: Intersection of Mid Shennan Rd and North Huaqiang Rd, Shenzhen
[Link]

Shenzhen Huaqiang Electronics World (HEW)

This market is China’s second largest electronics market and covers many
categories.
There are 2800 stores that specialize in electronics and computers.
Address: No 1007—No 1015 North Huaqiang Rd, Shenzhen, Guangdong

Guangzhou Electronics Wholesale Market (GEC)

Guangzhou Electronics City (GEC) is a large-scale market that specializes in

electrical equipment. It is located on the first floor of a newly built exhibition
center that is to the west of the Guangzhou Cultural Park on Xidi Second
Road. With more than 6000 m2 business area and over 300 independent
stores, it covers communication equipment, fax machines, telephones and
various audio and photography equipment, as well as game consoles and
other small electrical appliances.
Address: No 94 Liwan Rd, Guangzhou

Toys wholesale market:

Guangzhou International Toys & Gifts Centre

Located in the Guangzhou Huangpu International Logistics Park, the

Guangzhou International Toys and Gifts Centre (GITGC), with 1.5 billion total
investments, covers a total construction area of 320 thousand square meters,
which makes it the largest toy and gift distribution center nationwide.

There are nearly 800 shops that are mainly in the form of street shops.
Address: F14 West Tower, Shangjian Bldg, No66 Huacheng Ave, Zhujiang
Xincheng, Guangzhou.

Beijing International Toys City (BITC)

Beijing International Toys City (BITC) has over 1000 shops. You will find
famous domestic and international brands of toys of all kinds such as
electronics, plush toys, woodwork, handicraft gifts, etc.
Address: No 67 South Third Ring Rd

China Toys & Amusement Facilities Wholesale Market

China Toys and Amusement Facilities Wholesale Market sits in Tianjia Wan of
east Xianning Road in Xi’an. The market is divided into five areas, namely
toys and children’s articles, amusement facility wholesale, electric toys
wholesale, fitness appliance wholesale and arts and crafts wholesale. There
are approximately 300 stores.
Address: No 188 Tianjia Wan, East Xianning Rd, Xi’an.

Chapter 70) Travel chapter

1) Travel preparations
2) Which area do I go to?
3) How to book and how to cancel hotels
4) Lowdown on what to expect in China in terms of lack of English
5) Basic Visa overview
6) The trip book
7) What to pack
8) How to travel within China

1) Travel Preparations – The Essentials

When I plan a trip for a buyer or for myself to check out factories I go through
the following checklist:

- Do I look for new products or do I want to negotiate existing

items/contracts?
- What products am I sourcing for?
- Which area do I need to go to for these? (Alibaba filtering by
product/province)
- Do I have supplier contacts for these products or do I need to source
for them first?
- How many days do I want to go?
- When do I want to go?
 - Can I combine the trip with an exhibition?
- Can someone take care of my daily business back home? (Be
reminded Google and Gmail will not work in China so you can’t check
your Gmail.)

2) Which area do I go to?

Based on your products you can figure out which area you need to go to.
Main airline carriers sometimes flythrough directly to big cities like
Guangzhou, Hong Kong, Shanghai and Beijing these days.

3) How to book and how to cancel hotels

I usually use [Link] for my hotel bookings. First off you get reward
points that you can later use for free rooms (or for a discount on your
bookings) and secondly I find that they usually have the cheapest rates out
there.

There are a few price comparison websites out there such as

[Link].

You can also look at [Link] or [Link] to compare the

rates.

Sometimes I also ask my supplier if he has any special rate for a hotel nearby
his factory. Suppliers often get great rates (that you won’t find anywhere on
the Internet) because they send hotels a lot of customers. For example, I
have 1 supplier in Ningbo who can get me a rate at the Ningbo Marriot for
650RMB while the rate online is 1080RMB and through travel agencies it
would be 900RMB.

If you don’t feel comfortable booking online or through your supplier then
ask your local travel agency, but I have found they are usually more
expensive.

Print out your booking confirmation, as you may need it for check in or to
show it to a driver (or taxi) who picks you up at the airport. The booking
confirmation often has the local address in the local language.

Insider’s tip:
If you aren’t sure about your trip and itinerary yet book through
[Link].

Why? Some of their rooms online can be cancelled 7 days before arrival
without a charge. Why is that important?

When you apply for your China Visa you need to provide flight and hotel
booking information upon application. So even if you aren’t going to stay at
a certain place you can book it for now and cancel it later after you have your
Visa.

Hotels during the exhibition

Book a hotel now if you haven’t booked it yet!

Hotels can get quite expensive during the exhibition periods, especially
Hong Kong and Guangzhou hotels. What’s more, hotels could easily be
booked up during these periods.

When you book a hotel try to be close by a subway, train station or airport
for convenient travelling.

Hotel tips in large cities

When I worked for a large retailer we usually stayed in a 5 star hotel with
prices up to 150$. But if I wanted to save money a 4 star hotel in China is
equally good as a 5 star hotel overseas and they go for 60$.

Here are a few hotel options. Most of them are at a reasonable price off-
season and ideally located to where I needed to go.

$$$ - Plush/luxury
$$ - Mid range / business hotel
$ - Budget

Shenzhen

Shangri-La $$$
This hotel is within walking distance to the Hong Kong border and at a
reasonable price. Ideal when you want to leave early morning to the factories
or go for some shopping at the nearby mall.

Best Western $$
Also ideally located next to the train station. Convenient to get around.

Guangzhou

Garden Hotel $$$

Expensive but very nice rooms and excellent breakfast buffet. Not far from
the most important spots.

The Landmark $$
This is my favorite hotel in Guangzhou as prices are extremely competitive
during the exhibitions and it’s right next to a Metro line that takes me all the
way to the Canton Fair.

Lavande Hotel $
Budget hotel I stayed in on my last trip during Canton Fair. Ok for 1 or 2
nights.

Hangzhou

Shangri-La $$$
Very nice rooms and ideally located. Too expensive for my taste but nice.

Citadines $
Almost budget hotel. Good location and easy to get around.

Ningbo

Ningbo Marriot $$$

Expensive for Ningbo but still affordable. Great location and excellent
restaurant.

Howard Johnson $$
Not far from the CBD and very affordable.

Crown Plaza $$
Great location, the food is so-so.

Cixi
Cixi Hangzhou Bay Hotel $$
Very nice location, the back yard looks onto the mountains. Food is ok for the
area but not much of a selection.

Shanghai

The Langham Shanghai Xintiandi $$$

Very expensive but in the middle of Xiantiandi, great for a stroll at night.

Pullman Shanghai Skyway $$

Inexpensive, location ok and a nice bar on the top floor.

Hotel Equatorial Shanghai $$

I usually stayed in this hotel in Shanghai during my trips. Great price, nice
rooms and OK food.

Beijing

Park Hyatt Beijing Hotel $$$

Very nice hotel, but also very expensive. Great location.

Four Seasons Hotel Beijing $$$

Similar to the Park Hyatt, but a little less expensive.

Traders Hotel Beijing By Shangri-La $$

Affordable and great location.

Novotel Peace Beijing Hotel $$

Great location, great food, easy to reach.

Radisson BLU Hotel $$

Heavily Asian themed but rooms are ok.

Swissotel Beijing Hong Kong Macau Center Hotel $$

Very nice and great prices.

Dongguan
Sheraton Dongguan Hotel $$$
Great food and excellent location.

Mels Weldon Dongguan Humen $$

Stunning rooms for a great price. Excellent Teppaniaki restaurant attached.

Grand Mercure Dongguan Humen By Accor $$

Excellent prices and rooms.

Shunde

Sheraton $$
Large buffet selection and great rooms.

Hong Kong (based on my buyers)

Shangri La Kowloon East $$$

Pricey but excellent rooms and food. Many restaurants nearby.

Intercontinental Kowloon East $$$

Great sea view rooms, next to the harbor.

The Royal Pacific $$

On Canton Road where all the big brand shops are located. Great for a walk
at the park or a stroll down to the Star Ferry.

iClub $$
On Hong Kong Island, ideally located in Sheung Wan (next to Central) and 4
minute walk to the metro line (MTR).

4) What to expect in China in terms of lack of English

Pretty much everyone speaks English these days, especially representatives

of factories or staff at hotels. Your main concern when it comes to non-
English speaking people would be taxi drivers, staff at train stations or local
restaurants.
Make sure that you carry around your hotel’s name card or booking
confirmation with the address in Chinese on it.

If you are out on your own for sightseeing bring a map from the hotel or ask
your supplier to give you a few tips on what to see and not get lost.

There are also inexpensive Chinese language books you can buy back home
to bring along the way. They often have the most common phrases that
might come in handy at the back of the book (Marco Polo, Lonely Planet,
etc.).

Your factory contact should be able to speak proper English. More on that in
a later section.

5) Basic Visa overview

Visa
Visitors to Mainland China need to obtain a Visa from their country’s
consulate to China. Visas can be issued for up to 30 days, depending on your
passport. Here is a Wikipedia excerpt:

[Link]

To look up what Visa you need for China you can go onto Wikipedia and
then click on your country’s link. You will be redirected to your Visa
requirements for all countries, based on your nationality.
Most of my buyers usually applied for a business Visa. That’s because it was
an official business trip from a large company. To do so, you need an
invitation letter from your supplier that states that he is inviting you to China
to do business. This can be a simple letter that your supplier can draft for
you.
A business Visa usually takes 4-7 days, depending on your passport.
You need to apply for it at your local embassy to China.

For individuals who come to China for the first time I recommend you apply
for a tourist Visa. A tourist Visa allows you to stay up to 30 days and you can
travel within China as you like. Most first-timers use this type of Visa as it’s
easy to attain and no one will know if you are doing business or just
sightseeing. You need to apply for it at your local embassy to China.

Tourist Visas can generally be done within 7-10 days, depending on which
one you need.

If you are going to the south of China (Guangzhou) you can also get a Visa on
arrival in Shenzhen (border to Hong Kong) for 3 days. You can only use this
Visa within Shenzhen, but they don’t need to know you are going to
Guangzhou after your entry. Just don’t depart through any other border than
the one you entered.

This Visa on arrival also applies now in 13 other bigger cities within China:

[Link]

If you are one of the qualifying countries from the list you can stay up to 72
hours within the city of arrival. However, you may not exit through any other
immigration point other than the one you entered through.

China Visas issued in Hong Kong are also an easy way to get a Visa.
There are many providers for this kind of service in Hong Kong. This one here
is the most widely used provider:

[Link]

They can be found everywhere around HK, at the airport, train stations,
subway stations, etc. You give them your passport and depending on how
fast you want your Visa, they can sometimes do it in a day. It gets more
expensive the faster you want it, obviously.
Type of entry:

Single
Double
Multiple

Most visitors will only be issued a single entry into China, especially for
tourist Visas. That means once you exit China you need to apply for a new
Visa.

Double entry Visas will only be issued for a business Visa.

If you have previously been to China you can apply for a multiple entry Visa
that usually lasts 6 or 12 months. You can come and go as many times as you
want within the given time frame. This Visa is usually only issued for business
Visas and if you have had a double entry Visa issued before.

Conclusion:

If you are planning a single trip to China for a few days, not leaving the
country, for example Hong Kong/Taiwan, and planning to come back I
recommend you apply for a tourist Visa. If you are going on a trip that
requires you to enter and exit China at least once, I recommend you apply
for a business Visa.

Here is a scenario: you plan to visit an exhibition in Hong Kong, and then
head to China for factory visits or an exhibition. You then come back to Hong
Kong and leave Asia through Hong Kong.

You can apply for your Visa back in your home country or on the day of
arrival in Hong Kong. BUT note that you need to have at least 2-3 days within
Hong Kong before you can get your Visa (unless you opt for the expensive
express service). Once you have received your Visa in your passport (for
example single entry tourist Visa) you can go to China via train or plane.
Make sure you book a return ticket for your Visa application.

6) The trip book

You definitely want to make yourself one. It will come in handy, trust me.
So what is the trip book and what does the trip book include?
Basically it’s a small binder map that I make myself with all necessary
documents and prepared material.

Print out the following and put it in there:

• Hotel reservations
• Flight bookings
• Addresses of the hotels and factories that you are going to.
• Price sheets of offers from suppliers (who knows, your laptop might
die on you).
• Your own company presentation / flyer / catalogue.
• Prepare yourself a small introduction of your company (perhaps a
PowerPoint presentation) that you can print out and show the supplier.
• Supplier profile sheet (I provide an example sheet in the supporting
documents available in my ImportDojo Masterclass:
[Link]
• Raw material price sheets
• Shopping list
• Import Bible

You want the suppliers to be professional so be professional yourself.

If you can, print the e-book of this course, so you can look up something if
you forget.

7) What to pack:

First, what time of the year is it? It can get pretty hot from April-October and
very cold in winter, especially in the factories as there is usually no heating.

Here is a list of what I pack when on a trip:

• Travel adaptor
• The trip book
• Laptop / tablet
• Business cards
• Warm clothes
• Business attire (you wouldn’t want to be greeted in shorts and a t-shirt
either)
• Casual attire, for those strolls along the Bund in Shanghai or the Star
Ferry ride in Hong Kong.
• Passport
 • Pens and paper or notebooks
• Power packs to charge your electronic smart-devices
• Chinese money (Renminbi-Yuan), but not too much, as withdrawing
from the ATM in China is cheaper than exchanging at banks/airports
or at home

8) How to travel within China

My preferred way of travelling is by car. There is a great train network within

China but it can be a hassle to get tickets and you will be surrounded by
hundreds of people in the train. If I travel by car (from the supplier) I get to
work on my laptop in peace and I am taken straight to the door of my next
appointment.

Travel for FREE within China (almost)

I almost never pay for anything when I travel within China apart from the
flight or hotel costs.

How do I do that?

Simply ask your supplier to pick you up at a specific place (your hotel) and
bring you to another place. I have never had a supplier who refused to pick
me up or bring me somewhere, even if I didn’t have business with him (yet).

When I look at my schedule I will give my first supplier my pick-up address. I

will also give him the address of my second appointment. This way, the
supplier can take me to the next address after the meeting. I then advise my
second appointment of my estimated arrival time and tell him where my third
appointment is that he should take me to after our meeting.

You can also give your second appointment the address of the first
appointment but you never know how long your first appointment may take.
So it’s better your first appointment has the address of your second
appointment. If I have more than 2 appointments in a day I repeat this step
for each supplier until the last one, who I will ask to bring me back to the
hotel or airport.

To be safe you should also ask your first appointment how far the second
appointment is from his factory. Generally I would say that most factories are
1 ½ hours away from each other. So plan accordingly.
I also give each supplier the telephone number of my previous and next
appointment, just in case the driver gets lost and needs to call my next
appointment for directions.

I use this tactic also with suppliers when I land at the airport.

I will ask my first appointment supplier to pick me up at the airport and bring
me to the hotel, even if the appointment is the next day. I will be seeing
them during the trip and they are usually happy to pick me up and have a
quick chat in the car before they drop me off at the hotel.

Most suppliers will provide me a car for a distance not further than 200
kilometers from their factory. If a distance is further than that I use trains or
planes.

Air tickets will obviously be on my expense account but this way I save train
tickets or taxi fees. It also gives me time to chat with the supplier in the car or
to work on my notes from my previous meeting.

Chapter 71) Business in China / OEM / Private label etc.

- Finding translators, evaluating translators

- Do’s and don’ts of dealing with Chinese, business culture,
appearance, and customs
- What to expect and a small guide of common situations (supplier
invites you to eat... and so on)
- OEM
- NDA (Non-disclosure agreement)

Finding translators, evaluating translators

The question actually is, do you need one, because most people speak
English, especially your factory’s sales contact.

In my 10 years in Asia I didn’t need to learn the Chinese language. That

doesn’t mean I didn’t learn it but I was fine in the first few years without it.

When you constantly have someone from the factory to help you, you don’t
need a translator. And honestly if no one at the factory speaks some English I
wouldn’t even recommend working with that factory. Just imagine how
difficult it will be to process an order with him if he doesn’t speak basic
English. You might as well skip the “translator” part.

There are times when a person who speaks Chinese comes in handy, such as
when the factory sends you off with a driver to your next meeting or hotel.
But in that case you should always have the mobile number and address in
Chinese of your previous or your next meeting’s contact.

If I look at my statistics throughout travelling to China within the last 10 years

(being stationed in Hong Kong), I was not once stuck somewhere that I
needed a translator. If my English can get me through and I am not native,
then so will your English.

It’s a different situation if your English is not as good as you would want it to
be. Then I would recommend you find a translator. Honestly I never used a
translator so I don’t have any good references. Translators are very easy to
find though on Google or even Alibaba.

Often times you will find Chinese people waiting in front of exhibition centers
to offer their translation services. Don’t hire them. You really don’t need
them. Again, most staff of factories will speak English at a level that is
sufficient for your business.

Dos and don’t’s of dealing with Chinese, business culture, appearance, and
customs

It is rather common that when you meet with a supplier the first thing they
ask is if you want to eat. They simply don’t want you to be hungry it seems.

I don’t travel for fun and food but for business. So usually when I have a tight
schedule I will politely ask for some fast food to order while we have the
meeting. Often times they will want to go for lunch or dinner with you after a
meeting.

Most of the time it takes about 1½ hour to go from one meeting to another,
so I usually decline lunches as my day is normally packed with meetings with
other suppliers. Your supplier won’t be offended, just explain that you have a
packed day of meetings and that you would be happy to have a meal
another day.
If you do find the time to have lunch or dinner go for it. Mostly the supplier
pays for it but you should offer to pay for your share or the entire meal. But
again, in 99% of the cases he will not let you pay for the meal/dinner anyway.

It is also common that suppliers will present you with a gift before or after
your meeting. Usually it is some tea, a tie or some small inexpensive gift. It is
expected of you to take it. You don’t have to bring gifts but if you have some
inexpensive gift as well it sure is a nice way to treat your supplier.

When I go to meetings within China I usually wear a suit and a shirt. I wear
suits because they are comfortable to wear and sit in. You don’t have to wear
a full suit and tie, as it is not expected of you. But I recommend you to wear
long pants and a long-sleeve shirt or a polo shirt. You will want to have a
professional image in front of the supplier. I wouldn’t take a buyer seriously if
he showed up in shorts and a t-shirts.

When you meet your supplier for the first time, name cards and basic
pleasantries will be exchanged. After that you usually get to the subject or
issue on hand. There is no need to have hours of small talk. Just get to the
point, be precise and make notes of what was discussed.

It is quite common that the supplier will sometimes ask you very personal
things like income or relationship status. Don’t be alarmed; it is simply their
way of showing interest in you.

OEM

I explained OEM in the Import-Bible already. OEM stands for “original

equipment manufacturer” and it means that you have your (or your clients)
own design that you will want your supplier to manufacture for you
exclusively.

OEM products are usually not showcased on a manufacturer’s

website/exhibition or even showroom. The manufacturer is not allowed to
show it to customers other than you.

The advantage of OEM is that you alone own the design, and no one else
can.

The disadvantage is that there is a lot of pre-investment involved. I

recommend this option only if you have the available funds/backup (for
example, from crowd-sourcing website [Link]) or if you are willing
to invest in it yourself because you strongly believe in your design.

When does it make sense to manufacture OEM?

If you are not in a niche and you have many competitors you will want to
stand out.

Selling items off-the-rack works just fine in the beginning but if you want to
take your business to the next level you will want to introduce new and
unique products to your clients.

Most factories will advertise in their first email “welcome for OEM business,”
While the actual truth is no factory will immediately agree to do OEM with
you without having established any business. Their first intention is to sell you
their existing items as OEM involves a lot of planning and financing.

Depending on your product, OEM usually requires a larger up-front order

quantity to cover the tooling and development costs. This applies to
products that need some sort of mold or tool. Textiles or other one-part
products can be made at lower quantities. Prices for tooling can start at
8000USD and go up to 50,000USD.

If you have a design or prototype it makes sense to discuss it with your

supplier and figure out the costs that are involved. Factories usually have an
engineering department that can calculate costs involved. The supplier will
then usually give you a price that covers all costs or he may offer you a lower
price and add an extra charge for the tooling.

NDA

OEM should also cover a non-disclosure-agreement (NDA) with your

supplier, prohibiting him and any of his employees from discussing your
designs, prototypes or product developments.

It is vital that you have an NDA agreement with a supplier if you work with
him for a long time and if you are discussing exclusive product
developments.
Suppliers are usually ok with signing an agreement.
You never know, an NDA agreement can come in handy if you need to deal
with lawyers or lawsuits.

I provide a sample NDA agreement under supporting documents here:

[Link]

Chapter 72) At the exhibition & how to prepare

Here is what I bring to exhibitions:

- Name cards (an absolute MUST)

- Trolley to carry all the catalogues that I collect
- My own (printed) company presentation
- Notebook & pens
- Passport photo (some exhibitions such as the Canton fair require a
passport photo)
- Comfortable shoes (you will be walking all day)

How to register?

Most exhibitions require you to pre-register if you want to get in for free.
All you need to do is look up the exhibition’s website and there will be an
area or link where you can fill in your application.

Registration on-site is also possible but usually there will be a fee of 10-
20USD. You will need to provide a name card for your registration.

When you pre-register online, just fill in your company’s details and print out
the confirmation. Bring that confirmation and you will be handed a badge for
entry.

The Canton Fair has the same procedure, however you can keep your badge
for years to come. If you lose your badge you will have to pay a fee of
200RMB for re-issuance. There is a first time registration fee of 100RMB. If
you have a supplier who can invite you, you don’t need to pay any fees. Also
remember to bring along a passport photograph for the application
(required).

You can register here, among other useful tools for the Canton Fair:
[Link]

Remember to keep the badge for the Canton Fair, as it is valid for years to
come.

How to act and ask questions at exhibitions

I usually prepare a little speech before I go to the exhibition. It depends on

my project or product that I am looking for but I like to introduce myself a
little bit and give the supplier a professional image of me.

He is likely more interested in giving me answers, good prices or proper

email feedback after the exhibition. Here is how it could look:

Hi, I am Manuel and I am the Managing Director of Mandarin-Gear Limited in

Hong Kong.

I manage/own a sourcing and buying office for many large retailers

worldwide.

My customers are looking for product “X” and I am interested in discussing

more details or receiving a quotation based on my customer’s requirements.

Then I ask my questions and once I am satisfied I will ask him to provide me a
quote based on my requirements. I will hand him my business card and I will
MAKE SURE that he wrote down everything we discussed.

Could you please send me a quote of this item (from his booth) based on
“X” quantity, including certification “XY”?

I will also take his name card and catalogue to study later.

Here are some questions that I ask the suppliers. You can adapt these to your
product or requirements as necessary. You can also make yourself a checklist
with these questions and print it out for each supplier meeting you have.

Obviously you can also memorize these questions and make notes on your
notepad.

Clip the supplier’s name card to your notebook and write down answers to
these questions:
- When was his factory established?

This is important as to figure out if he has been doing business for a

long time or if he is newly established. If the factory is brand new I will
be wary of dealing with them, while if they are older than 5 years I will
probably go ahead with further questions.

- What is the total count of staff, workers, engineers and managers?

A well-organized factory has at least 200 employees. That could be

160 workers, 30 sales staff, 10 engineers and 10 managers.

- What certifications can he provide for product “X”?

Know the certifications that you need for your product. If a supplier
has no idea about FCC, CE, RoHS, ERP, GS or other certifications of a
chemical or other nature, you can probably leave the booth right
away. If he is aware of the certifications and requirements but hasn’t
applied them to all his products it’s not an eliminating criteria, but
make sure to ask if he is willing to apply for the certifications after
order-placement.

- Who are his main customers?

Do you know the customers he is talking about? Do they have a

certain reputation in your country that would make you feel
comfortable working with him? If he is working with customers that
you know, it should be a good sign of his competence.

- Mention a few of your competitors or bigger clients

Drop a few names of the bigger competitors or clients of yours. If he

knows them it’s a good sign. If not, it is very unlikely that they are
doing overseas business and perhaps aren’t even interested in your
business, knowing that your requirements are too high or “too much
work” for him.

- What is his main market?

If he operates already within or near your country it is also likely that

he can fulfill your requirements. It’s usually a good sign if he works for
 countries like the UK, Germany, Switzerland, Sweden, the United
States, Canada and other first world countries. It means that his factory
is able to pass audits, tests and certifications needed for these
countries.

- What is the factory standard?

Remember that good factories are also easy to spot if they have a
certain quality management System (QMS) such as ISO 9001, BSCI
and so on.

- What is the MOQ?

Can he actually provide the low or high MOQ that you need? Is he
willing to produce a first order based on a very small quantity or does
he have the capacity for large volumes?

- What is the rough price of this item based on X quantity?

Most suppliers will give you a very rough figure for the product they
are exhibiting. These can be vague as often these are “blank” prices
that do not include any certification, licenses, etc. But it is necessary to
ask for prices (and write them down in your notebook) for your follow
up. You can also use my “rule of thumb” to add on 20-30% on top of
the supplier’s price to calculate if the price is competitive.

- What certification is included in his price?

Does the product currently fulfill your minimum requirements for

certifications or standards? If not, is he willing to apply for
certifications after order placement? Is he aware of the different
certifications that you need or do you get the feeling he doesn’t know
what you are talking about?

- Ask if he can provide samples after the exhibition

If you would like to have a sample after you come back home ask him
if he is willing to send samples. Most likely he will agree but make sure
you remind him once you are back home to send you the sample.
Some suppliers will actually sell or give you a sample right on the
booth if you ask for it. It is actually not allowed but if there is a sample
I would need right away because it’s that good and I want to show it
to customers back home, I will ask anyway.
 - Ask for payment terms

Are his payment terms a K.O. criteria? Make sure he agrees to your
payment terms and doesn’t insist on 100% payment upfront.

- Ask for his top-selling items and who his customers are

Sometimes you may not have time to look at all products so you might
miss the best selling items. Ask him either to show you his best selling
items or send you a quote later for his top-sellers. Make a note that
you are expecting his prices and offers later.

If I get the feeling after 1 or 2 questions that a supplier has no idea what I am
talking or asking about, I politely end the conversation and leave the booth.
There is no use in screening a supplier with all questions when I already know
he is not interested or can’t fulfill my requirements.

After all, I need to scan the entire exhibition and I can’t waste my time with
suppliers that are ignorant or need a basic education on my
market’s/customer’s requirements. You will develop a gut feeling pretty soon
if it is worth it to speak to a supplier longer or if you should leave the booth
right away.

How to spot good and bad factories

You can easily spot the good from the bad factories by asking all the
questions above. If his customer base is small or his answers are weary you
should stay away. If you still would like to continue with this supplier make
sure that you follow up on all of your requirements in writing by email.

Know your goals

Remember you don’t have all day. I usually try to finish an exhibition within 1
day (except the Canton Fair). But this is also because I know how to spot the
good from the bad ones and know which questions to ask. As a first timer I
recommend you take some more time but don’t try to spend more than 20
minutes per booth with each supplier.
If you spot some item that really catches your attention and you would like to
discuss further steps with the supplier right away, take your time.

It is likely you will have 2-3 meetings that can take an hour.

Price preparation

You will likely be looking for a category of a product so you should prepare
yourself with some basic prices that you have received from suppliers
beforehand. Knowing your prices is essential before going to an exhibition.

If you are looking at new products and are not aware of prices try my “rule of
thumb” calculation of 30%, adding this to your margin and calculating your
selling price. You will quickly figure out if the price the supplier gave you at
the booth is realistic or not.

Prioritizing

Some exhibitions are enormous in size. Grab a map at the entrance or the
information counter of the exhibition and take a moment to study the areas
of interest. You can also look online prior to going to the exhibitions at which
hall or category is where to save some time.

Once it is clear where your suppliers are situated, start there. Go through
each hall in an organized way and prioritize the halls by importance.

Once you completed all the halls you wanted to see you could go to the halls
that were initially of the least interest to your business. You may find some
ideas on other products in less interesting halls too.

HOTELS DURING THE EXHIBTIONS:

Many hotels will provide a free shuttle bus to exhibitions. Check with the
hotel staff to see if this service is provided.

Book hotels now if you haven’t booked them yet! Hotels during exhibitions
can get very expensive. The sooner you book the better.

I usually won’t stay too far from the exhibition area, as I don’t want to waste
time. Unfortunately that carries a price tag.
If your budget doesn’t allow this, find a hotel near a subway (MTR).

Whatever you do, don’t take a taxi TO and FROM the exhibition. Take the
subway or free shuttle buses provided by your hotel. At the Canton Fair, for
example, it is impossible to get taxis at night. You can take a taxi in the
morning TO the fair; that should be ok.

Once you are at the exhibition, get a map; you should be able to get them
anywhere.

Chapter 73) At the factory

It makes sense to pre-arrange meetings before your trip with existing and
potential suppliers.

Simply follow the guidelines on preparation and instruct your supplier of your
visit.

Sometimes during exhibitions I will meet a good supplier there and I will try
to arrange a factory tour right after the exhibition. Most times the exhibiting
suppliers will still have staff at the factories so that you can visit even while
they are exhibiting.

Once you have arranged a meeting with the supplier and you arrive at the
factory a representative will usually greet you and bring you to the meeting
room.

Once you sit down you should give a brief introduction about yourself and
your company. This shouldn’t take longer than 10 minutes.

You should usually have a brief meeting in their showroom first to exchange
pleasantries and then take a factory tour followed by a detailed sit-down in
the showroom to discuss products and other details.

Once you arrive at the factory ask what time the factory will have lunch break.
Most factories will have lunch break around 11.30am-1pm. So make sure you
arrive well before 11.30am or take a factory tour first before the sit-down.
Otherwise, you might be touring an empty factory after the first sit-down.
And you definitely came to see production in the factory and to see how
things are assembled or made.

Suppliers sometimes forget that step and it happened to me before, that I

arrived at the factory, sat down for a while and discussed things only to
realize workers had gone for lunch once our meeting was finished.

You can also politely ask about lunch arrangements. I prefer the supplier to
order in some fast food that would typically arrive after the production visit. If
you have time for a lunch with the supplier you can discuss it now.

If you have time to discuss all details before the production visit, here are
some general meeting guidelines:

- Have your pre-printed checklist ready on which you can take notes. It
could look something like this:
 (I have these templates within my ImportDojo Masterclass)

- Ask for a brief introduction of the supplier and his factory. Most
suppliers will have a company PowerPoint presentation.

- Ask about his business and turnover figures

- Does he have insights on upcoming trends to share with you?

- What are his goals in the near future in terms of product and customer
development?

- Is he investing in new technologies or looking into other product

categories that could be interesting for you?

- What is he doing to battle raw material and labor cost increases?

- State the purpose of your visit and go through it step by step.

You can basically also ask all the questions from the exhibition chapter. They
pretty much apply for the factory as well and can help you to filter things.
Usually a factory has a showroom with the supplier’s products. Follow these
steps:

- Walk through the showroom with the supplier and let him give you
details and explanations of his products.

- Ask for his best sellers and unique products.

- Make sure that he or his assistant takes notes and will follow up after
your meeting.

- Take photos and notes yourself of the products you are interested in.

Once you have finished your showroom tour and general meeting it is time
to visit the product line.

When I walk through the factory I look at the following things and ask about
them:

- Production lines

How many are there? Is the production busy or empty? If empty, ask
for the reasons. Is there a quality control at the end of each production
line to assure the product’s functionality?

- Quality control

Usually factories have a separate quality control room with some

inspectors and engineers, testing their current or new products. In
there they should also have all the documentation and certifications of
their products. Ask to see a certificate of a certain product. Even if you
don’t understand it, take a look.

- Machinery

What machinery do they use? Is it old or new machinery? Ask if he has

invested in new machinery lately or if he is planning to.

- Work shop
 Do they have their own tooling shop or are they outsourcing all
tooling and tooling maintenance? It is usually a good sign if they have
a work/tooling shop because this way they control their tooling and
maintenance of machinery more efficiently.

- Warehouse

Is the warehouse in a mess or rather organized? What other customers

packagings and outgoing shipments can you see? Is he selling to your
competitors or perhaps to a new potential client for you?

- R&D department

How much attention goes into their R&D (research and development)?
Is he simply copying other supplier’s products or are they actually
investing in new products and designs? A good R&D department can
be crucial to product development, hence feeding you new product
ideas.

- Incoming material

Is the incoming material documented and checked once it arrives? Do

they keep records of all their raw-material suppliers?

- Competitor’s production

Keep an eye out during the whole production visit for other
customer’s or competitor’s production. There are usually a lot of
cartons and packaging lying around that could give you your next
potential customer or product idea. It is also an indication of whether
he is competent enough to deal with the market you are operating in.

I also take samples off the actual production line. Don’t be shy, take an item
off the production line, inspect it, bend it and ask anything that you want to
know.

After the production visit it is up to you to go into the meeting room again
and discuss anything that is still on your mind.

I always repeat the discussed topics and make sure the supplier has
understood what I need him to do now. We will set a deadline on when
prices, samples or material will be sent and what he needs from me to
complete this task.

I also set myself a reminder for that deadline to remind him if no feedback
has been received.

It is also a good opportunity to discuss any future bonus agreements, claims

or compensations of previous orders. Take a look at Chapter 6 of Part 1 of
this course (advanced negotiations).

Once you finish the meeting and factory tour ask your supplier to drive you
to your next appointment or back to the hotel. Remember to pre-inform your
supplier before the meeting of your travel arrangements.

If he invites you for dinner and you have time I recommend you to join him. It
is most likely a Chinese restaurant or the restaurant of your hotel that he will
invite you to. I enjoy these dinners as the supplier loosens up a lot and
probably gives away some industry secrets or information about what my
competitor is up to.

Chapter 74) After the trip

You have to follow up on what you and the supplier discussed.

Once I get back home or to my office I start following up immediately. I don’t

wait around for the supplier to send me the offers or the discussed material.

I want to get started right away because I have other tasks that need my
attention, especially since I have been away on a trip. Often times I do it the
same day after the meeting on my way to the hotel or at the hotel.

So if a supplier hasn’t sent me the follow up material yet I will drop him an
email that could look like this:

Dear….,

Many thanks again for your time during our meeting at the
(factory/exhibition/hotel, etc.).

I would like to re-cap the discussed points and need your earliest feedback:
Quotes for…
Pictures of the discussed product
Etc.

Please send me ….. At your earliest convenience so that I can follow up also
from my side.

If you do have any questions please don’t hesitate to contact me.

Thanks and best regards,

Manuel

Look at your notes from the trip and remind the supplier of missed topics if
necessary.

Chapter 75) Summary & ways to save you money

You see there are a few procedures and guidelines that you can follow to
make your trip and import from China a successful one.
In time you will get a good feeling for each step of the import process and it
will come naturally.

When I started over 10 years ago I was at the same stage that you are now
(or probably behind you). I hope that my experience written down in this
course and the Import Bible will help you along the way to build your import
empire.

To sum up some of the tips and tricks in previous chapters (including the
Import Bible) I want to outline them here again:

1) Sample agreements

Samples can cost you a lot of money over time. Most factories will charge
you for samples. Even if you are a big retailer, factories will likely ask you to
pay.

You can certainly ask to waive the sample costs. On the other hand you can
also ask the supplier to pay the sample costs and say that you’ll take care of
the freight costs. This way you will share 50/50 of the costs.
Try to avoid paying for samples all the time by making agreements that once
you place an order the sample costs will be deducted from the invoice.

Also, you should ask your supplier for free samples in the future after you
have established business with him.

To avoid high freight costs ask your supplier to send samples with his courier
service. Tell him that you prepay sample and freight costs and they should
use their courier account. They probably have better courier rates.

NEVER give away your courier express number (if you do have one). I have
had suppliers use my account for other customers.

2) Inspection & re-inspection agreements

If you have a “failed” inspection result you should do a re-inspection,

depending on the seriousness of the found problems. If you have scratches,
dents or minor mistakes on a few inspected items you can probably ask your
supplier to re-work the goods and send you a Letter of Guarantee.

However, if there are more serious mistakes you should have a re-inspection
and this time the supplier should pay for it. This should be agreed on before
placing an order to a supplier. Simply include this purchasing term in your
official order form and have him sign it.

3) Bonus agreements

Once you have established business with your supplier you should have
bonus agreements in place that guarantee you money back at the end of the
year. Even if it’s not much, it could cover traveling costs for your next trip to
China or your next holiday or gadget.

4) Travel for free within China

Remember to arrange a car from each supplier to pick you up and bring you
to your next appointment. Most suppliers will provide you with a mini-van
that has a lot of space and you can work on your emails while travelling to
your next appointment or take a nap after a stressful day.

5) Calculate your costs

Calculating your costs appropriately makes or breaks your import. Remember
this! Make sure you take all costs into account, such as taxes, duties, licenses,
freight costs or associated fees. Keep track of each cost on a sheet and
calculate your expected profit.

6) Hire inspection companies

You don’t want to open ordered goods back home and find that either the
wrong product has arrived or that there are major problems with quality.
Inspections are affordable and should be done for larger orders. If you have
small orders through drop shipping or just a few pieces you can skip this part.

7) Product to market fit

Do your research and be diligent. Make sure your new product isn’t out there
already and has a product-to-market-fit.

8) Shopping lists

Work with a research list (or shopping list as I call it) to track your ideas and
new products. Send them to your (trusted) suppliers and ask them to give
you quotes for the same or similar items. Copy links in your list so that you
can make reference again at a later stage. Look through your lists once in a
while and get inspired.

9) Proper documentation & administration

It is vital to have proper documentation and administration. You may need to

refer back to an email or letter from a supplier months or years later that
stated something that you relied on. You will also want to keep a proper
organization for your own sake.

10) Negotiate re-orders

Make sure to ask for a discount on your next order, even if your quantity is
smaller this time. You have power in hand when you have your official order
ready to send. Suppliers are likely to give you a discount on your next re-
order.

11) The 6-step import process

Follow this process for each product life cycle. It applies every time. Each
product idea you have should go through at least a rough check with each
step to make sure your article will sell and not end up in your warehouse.

12) Aliexpress vs. Alibaba negotiation tip

Here's a pretty nice tip I've discovered and use whenever I can. I always
check aliexpress first for what I'm looking for. I then contact the supplier and
ask for the amount that I want to purchase (usually a lot more than the
amount they are selling on aliexpress) and if they can give me a quote for a
bulk discount.

Usually they respond pretty quickly and we come to a price. I then place an
order via aliexpress for the amount of that product that I want (but don't pay
for it yet) and have them change the price to the price that we agreed on. I
then pay for the items and now I have the aliexpress security blanket set for
me so I can get refunded if they scam me.

13) Let Global Sources or Alibaba source for you

They provide sourcing services, you just tell them what you are looking for
and then they source from well-known and respected suppliers, all FOR
FREE.

14) Hire an inspection service and decide on the AQL level yourself

You will want a minimum of 5% to be inspected when you do a shipment

inspection. You hire them, send them a sample or tell them what there is to
be inspected. Then you ask your factory for a date when 80% of the goods
will be finished. This is the date you give your inspection company to go and
inspect.

On the day after the inspection you will get a report on which you base your
decision of releasing the shipment or not. If there is re-work to be done don’t
worry, the supplier will have to do it, otherwise he won’t get his 70%
payment (since you should never pay 100% up front).
PART 4) SUPPORT

If anything in this eBook hasn’t been covered you may contact me directly at:
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I will try to answer all questions that you may have within a reasonable
amount of time.

For other topics on import or eCommerce please visit my website:

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