If you take a moment to look around you, I’m willing to bet you’ll see a plethora of Chinese products. Your TV, lightbulbs, watch, phone, furniture, laptop, and clothes either contain elements from China or were made in China. The fact of the matter is, China is a manufacturing powerhouse. It makes an incredible number of products, often for a fraction of the price of domestic factories.
China is the biggest exporter in the world today. Its economy has been built on the export trade thanks to countries like the USA and Germany. In fact, the US remains China’s top trade partner for both exports and imports. Despite this mutually beneficial partnership, many US business owners are confused or intimidated by the import process.
We’re here to demystify the process of importing from China. Once you’ve read this guide, you should have the confidence to take advantage of all that China has to offer your business.
Why Do Business with China?
Put simply because China has a lot to offer your business. From lower unit costs to better manufacturing processes Chinese imports can massively increase your bottom line. Of course, it’s not all good. There are some things you should consider and be aware of when importing from China.
We’re going to take a closer look at the pros and cons of importing from China. That way you can decide whether Chinese imports are the best choice for your business.
The main benefit of importing products is the competitively low prices you will get on products. These low prices are achieved through low worker wages, the low cost of materials, and lower costs of operation in China.
The Chinese government also offers VAT refunds on goods produced for export which means that they are not taxed before they leave the country. This helps to further reduce the cost per unit.
The lower cost per unit means that you can resell for a larger profit here in the US. It also means that you can price your products more competitively than other sellers here.
China is one of the most innovative countries when it comes to tech and manufacturing. President Xi Jinping stated in 2016 that he wanted China to be the leading technological innovator by 2030. Since then, lots of money and research has been poured into different areas.
Currently, China is excelling in 4 areas of innovation. They are:
- Digital platforms and markets
- App creation and utilization
- Scientific research and development
The country’s focus on innovation means that manufacturing processes are being consistently streamlined and improved. This generally leads to quality improvements in products.
The innovation focus also means that new and unique products are being created all the time. These products range from hand household devices that save time to plasma drives designed to reduce the environmental impact of planes!
By importing from China, you can bring these new and unique products to markets like the US where they aren’t available yet. This can help your business stand out from its competitors.
Better Manufacturing Processes – There is a reason everything seems to be made in China. It’s because the Chinese assembly lines and manufacturing lines are second to none.
Despite low worker wages, poor health and safety protocols, and terrible environmental policies, Chinese factories, workshops, and fabrication plants are some of the most reliable in the world. This is partly to do with the sheer abundance of workers in China. Factories can run constantly with huge output numbers because there are always workers available for long shifts.
These workers and the production lines they fill are incredibly fast and accurate. Wastage and spoils are lower in Chinese factories than many others around the world. This is largely due to the fact that practice makes perfect.
The factories pour our millions of units an hour giving them ample time to perfect the process. They are able to speed through the expensive learning curve that is present in all manufacturing and assembly lines in the beginning.
There is the belief that the quality of products coming out of China is subpar. However, over the last decade, the quality of products has increased drastically. Of course, there are always some duds, but that’s the case in all countries.
Increased Shipping Times
There’s no way around it, China is pretty far away. This means that it takes products longer to arrive in the US than if you buy domestically or from closer neighbors.
On average, it takes at least 2 weeks to get items sent from China to the west coast of America by boat. You can add another week and a half if you’re shipping to the east coast.
Airfreight is much quicker. Products sent by air can arrive in the US the next day under the right conditions.
More often than not they arrive after about 3 days. Once your products arrive in the country, you’ll also need to allocate a few days for them to clear customs. Products can be further delayed by Chinese holidays such as Chinese New Year, Labor Day, and the Dragon Boat Festival.
The problems caused by the delay can be mitigated by being organized and on top of your orders. It also helps to familiarize yourself with Chinese culture and holidays.
Importing costs can cut into your profit margins if you don’t do your due diligence. There are a lot of different costs to consider but they can be broadly split into freight costs and the landed costs.
Freight costs cover the cost of getting your products out of China and across the ocean. If you’re shipping by air the cost is usually worked out by weight. If you’re shipping by boat, then you’re usually charged a flat rate per container. Sometimes, especially if you’re importing a smaller number of units, it is cheaper to use an international carrier like DHL, TNT, or UPS.
Landed costs include customs duties, over-land transport costs, storage, and warehouse costs. Import duties have been increased over the last 3 years in what has been termed the China – United States Trade War.
China is rated a 5 out of 5 for workers’ rights according to the International Trade Union Confederation in a system where 1 means sporadic worker rights violations and 5 means there is no guarantee of rights.
The low cost of Chinese products is often linked to poor conditions and pay for workers. This is only half of the story but there is no denying the fact that worker exploitation should concern you. If you are going to import from China, you need to do your research. Check and vet your business partners and factories before signing any deals.
Another issue with Chinese factories is their limited health and safety and environmental compliance. The Chinese government imposes very few environmental sanctions or laws on businesses. The laws that are in place are routinely ignored by many factories and plants.
This means that hazardous waste, toxic chemicals, and harmful gasses are frequently leaked into the environment. These actions and abuses carried out by factories in China are technically not illegal according to Chinese law. It’s also not illegal to import from these factories. However, just because you can, doesn’t mean you should.
That being said, the Department for Homeland Security has cracked down on some imports from areas of China with egregious human rights breaches. If you want your business to be known as an upstanding, moral, and ethical business you need to be selective about the businesses you interact with.
When trading with Chinese companies you will soon find that not all are as trustworthy as you’d like. Sometimes companies claim to be reputable, with high turnovers, and a large staff. Unfortunately, the reality is often the opposite.
To help you avoid poor suppliers or false companies services like Sino Inspection offer credit and background checks for Chinese companies.
A Step-by-Step Guide to Importing from China to the US
In this section, we are going to walk you through the process of importing from China to the US. Some of these steps may be irrelevant to people who are importing to countries other than the US. If you are importing to a different country, make sure to check the laws and duties for your country.
Check Your Import Rights
The right to import goods and commodities into the USA is afforded to all US citizens. The US Customs and Border Protection don’t require you to have a pass or license to import. All you need is a social security number proving your citizenship.
Some goods require a license to import. These are goods that are considered high risk or particularly competitive with US goods. We will cover these goods in a later section.
Choose the Goods You Would Like to Import
So, you’ve established that you have the right to import into the US. The next thing you need to do is decide what exactly you want to import. This section doesn’t cover the restrictions and regulations for import goods. Instead, it focuses on choosing a product based on market demand, credibility, and other such factors.
Identify your needs
The type of business you run, and the needs of your business will dictate the kind of products you import.If you’re in the business of reselling goods, you’ll want to look at the market and identify supply and demand. If you’re in the assembly or manufacturing business, then you’ll probably have a specific product or unit in mind.
We’re going to focus on the reselling business. If you’re in the reselling business, you’ll need to identify products that compliment your current stock and your niche. As a trade business, your products are your livelihood. If you choose the wrong products, you’re not only wasting money but time as well.
The following points will offer you advice when it comes to choosing the best products for your business.
Choose a product you like
it is much easier to sell something if you’re enthusiastic about it. Where possible, choose items that you would buy yourself. This is just good business advice in general. If you’re setting up a business, choose something you can talk about over dinner with enthusiasm.
Identify a niche or demand – Once you’ve identified a few products you might want to sell on, you need to check that there is a demand for these products. Just because you like the item, it doesn’t mean that the wider public will. A good way to check that there’s demand for your product is to check out competitors. See what’s selling well, what’s not selling so well.
You should also use online tools, like Google’s keyword tool and Google Trends. These will show you what people are searching for. You can also apply filters to narrow the results down to your target audience.
Look for unique items
The more unique your item is, the bigger the market potential. Think about it. If you’re in a marketplace selling red bikes with 5 others also selling red bikes, you’re not going to stand out. If, however, you’re selling the only green bike in that marketplace, you’re going to stand out a lot more.
While uniqueness is important, you need to balance it with market demand. You don’t want to be left with a product so unique that nobody has heard of it or wants it.
Choose bulk items
Often you can negotiate discounts with manufacturers for bulk orders. This can make it far more profitable to order items that suit bulk orders.
Bulk orders can also reduce your overall shipping costs if you are charged by container rather than weight. Freight ships usually charge for the cost of a container. If you bulk order enough to fill a container, it will work out far cheaper than paying for a half full container.4
Beware of cheap or hot items
While it’s good to identify trends and try to maximize those trends, it’s important to remember that hot items and popular trends pass. If you arrive early enough, you can cash in on trends. However, it’s important to remember that your items can take up to a month to arrive. By this time, the trend may well have passed.
When it comes to cheap items, you need to be wary of damaging or reducing your brand value. If you become known for selling cheap, easily breakable items, you’ll soon find that your customers disappear. You need to strike a balance between cheap and quality. It’s ok to look for a bargain as long as you keep a close eye on quality as well.
Government Policies and Regulations
It’s important that you understand and abide by government policies and regulations. If you don’t you can find yourself facing steep fines and possible criminal convictions.
The rules do change according to the administration’s priorities. The Trump administration, for example, increased tariffs on Chinese goods. These tariffs may be reduced by the Biden administration but there is no clarification as of writing. (03.17.21)
In this section, we’re mainly going to focus on the items that are restricted or prohibited by the US Government. Please check your own government websites if you are importing to a country other than the US.
Prohibited and Restricted Items
Absinthe – An alcoholic substance made with wormwood, anise, and fennel is a prohibited substance in the US. It can only be imported if it is thujone free. Thujone is the psychedelic chemical found in absinthe that affects drinkers.
Alcoholic Beverages – The amount you can import without a license depends on which state you import into. If you are importing over the informal import limit, you will need a license to import.
Automobiles – When importing cars, vans, motorbikes, or other automobiles, you will need to make sure that they are modified to meet American standards. If you do not get them modified, they will be destroyed.
Another thing to be aware of is the emission rates of the imported vehicle. These rates must be lower than or meet the EPA’s standards. You can find more information about importing automobiles here.
Biological Samples or Tissues – You will need a permit to import biological samples or tissues. These include the bodies, skins, tissues, or bodily fluids of animals, insects, or arthropods. The key factor when importing biological materials is whether the item is a risk to human health.
You can use the CDC website to establish whether or not you need a permit for the item you are importing. Generally, if your product does not need a permit or license, then you will need to provide documentation showing that the item does not include any infectious, bacterial, or hazardous materials.
Ceramic Tableware – While this is not explicitly prohibited or restricted, you should be aware that ceramics imported from China could contain hazardous amounts of lead. It is imperative that you get these ceramics checked for the lead content when they arrive in the US.
Cultural Artifacts and Property – Most countries, including China, prohibit the export of cultural artifacts and items. If you are going to legally import historical, or cultural artifacts, you need to get an export license from the country of origin. This must be presented when asked for at US customs. There are several prohibitions on items from specific locations and time periods.
None of these directly relate to China but it does apply if you’re importing items through China. Another thing to remember is that while US customs do not have the authority to enforce other countries’ rules, they do make use of certain laws to prevent the import of certain artifacts. This includes the import of stolen artifacts.
If you have bought an item and secured the appropriate paperwork but the item is recorded internationally as stolen, you will not be able to import the item. It does not matter how many times the item has changed hands.
Items with Defense or Militaristic Applications – If you import items that are deemed to be of importance to the military they can be seized by the Department of Defense. These items could be arms, technology, software, or technology that is deemed to be of use or importance to the DoD.
Dog and Cat Fur – Since 2000, it has been illegal to import or export any item containing dog or cat fur.
Drug Paraphernalia – It is illegal to import any drug paraphernalia that is not intended for authentic medical conditions like diabetes. For clarification about what is considered drug paraphernalia, check out this Justice Department document.
Firearms – The AFT has a number of restrictions on the import of firearms and munitions. In general, you cannot import firearms and munitions unless you are a registered importer. To register as an importer, you need to apply via the AFT. You can find the forms and further information here.
Fish and Wildlife – Importing live fish or wildlife or products made from them is not a simple business. You are not allowed to import any endangered animals, or any products made from those animals. Ivory imports are banned with the exception of warthog ivory or antique items.
To be classified as an antique the item must be over 100 years old and have appropriate documentation. Not all ports are able to handle fish and wildlife imports. You need to check with the Fish and Wildlife Authority to find out where you can import these products.
If you are planning on importing fish or wildlife products, check this website. It helps you determine whether or not you need a permit or license.
Food – Importing food can be confusing. If you are receiving food prepared by an individual for personal consumption, you do not need to file further paperwork. However, if you are importing prepared food from a business, they will need to file a prior notice in accordance with the Bioterrorism Act.
There are further regulations on the foods that can or can’t be imported. Bushmeat or products made from bushmeat are prohibited.
In general, any products containing meat are not allowed to be imported. This includes bullion, soups, and pastes.
Rice should also be avoided as it often harbors insects. These insects are counted as biohazards under the biological materials rules.
Fruit and Vegetables – As a general rule, fresh fruit and vegetables can’t be imported into the country without a permit This is because they can contain insects or diseases that can devastate local crops and life. If you do intend to import fresh or dried fruit and vegetables, you need to apply for a permit. This can be done here.
Game and Hunting Trophies – There are 14 ports equipped to handle game and hunting trophies. You need to import via these ports to avoid your items being seized. Before importing you will need to fill in form 3-177 which can be found here.
Some animals fall under trade embargoes because they carry the risk of zoonotic diseases. If you want to import these animal trophies, you need to ensure that they are treated in a manner that removes the threat of infection.
Gold – Coins, medals, and bullion can be imported from China even if they were previously banned. Copies of gold coins are prohibited unless they clearly state the country of origin.
Medication – In most cases it is illegal for individuals to import medication for wholesale or individual use. Only licensed entities may import pharmaceuticals into the country and only if they have been approved for use by the FDA.
You cannot import so-called ‘cures’ for disease prescribed by Traditional Chinese Medicine practitioners if they have not been approved by the FDA. This remains true even if the practitioners are licensed in China.
Merchandise from Embargoed Countries – China is not currently subject to any trade embargos, so this rule does not directly apply. However, you cannot import merchandise from Iran, Myanmar, Cuba, or Sudan through China to the US.
Pets – This rule applies to privately owned animals being brought into the country, not to animals imported for the pet trade. For more information about the vaccinations and documents needed to import your pet, please check here.
Photographic Film – If you’re still using film cameras, you can import the film without having to submit it for checks. The exception to this rule is if import officers have reason to suspect it contains illegal material such as child pornography. Film that originates in China will be treated as a dutiable item and will be subject to import duties.
Plants and Seeds – Some plants and propagatable seeds can be imported into the country providing you have a permit. Permits can be obtained here. Endangered, invasive, or threatened plants are generally prohibited from import.
Any item with plant materials must be declared to CBP officers including craft items containing straw. They will be inspected for pests, disease, and other infections conditions.
Soil – Soil is defined as the loose surface material of the ground. It usually consists of disintegrated rock and organic material. In general, soil is a prohibited item. Only in very rare cases can soil be imported into the US. In those cases, a permit will need to be obtained from the CDC.
Textiles and Clothing – There are generally no restrictions on importing clothes or textiles. However, clothing has been subject to safeguarding measures in the past. These measures essentially limit the number of items that can be imported from China to avoid what is known as dumping.
Dumping is a tactic that has been used by the Chinese in the past. The idea is that they flood foreign markets with Chinese goods produced for a fraction of the cost of domestic products.
In order to prevent this from happening, governments place quotas on imports from China. Currently, there are no safeguarding measures in place for clothes or textiles. Please make sure to check with the CBP before you import for the most up-to-date safeguard rules.
Trademarked and Copyrighted Materials – You can import genuine trademarked or copyrighted materials without trouble so long as you can prove their origin and authenticity. You cannot import counterfeit goods or materials that infringe on a trademark registered in the US.
Counterfeit items will be seized and destroyed by the CBP. This covers clothes, books, games, DVDs, CDs, handbags, purses, toys, and many more items.
Find a Supplier
Once you’ve decided what it is you want to import, you need to find a supplier who can ship or manufacture the products.
Choosing the cheapest supplier is not always the best way to do business. It is much better to choose a supplier based on trust and hard evidence.
Companies may exaggerate their credentials or lie about them. They are trying to compete with the millions of other companies vying for your attention.
One way of making sure you have chosen a reputable supplier is to use a service like Sino Inspection. They use legal and financial documents to verify Chinese companies. They can provide credit checks, registration checks, and general reputation checks.
Classify the Goods and Calculate the Cost
After finding a supplier, you can place your order. When placing your order be sure to be very clear about what products you want and how you want them shipped.
Sometimes things get lost in translation so it helps if you can use a translator to check or verify invoices and contracts. If you don’t challenge it then you may end up with products that don’t meet your needs.
Another thing to be aware of when purchasing is the incoterms. These are 3 letter codes that are used by export and import partners around the globe. In essence, they tell the port authorities, freight carriers, and other parts of the chain who is paying for their service.
You can see a full breakdown of the incoterms here. Ideally, you want to look for sellers who offer FOB or better. That way you are only responsible for paying for half of the journey.
Once you’ve selected your products you should be given a harmonization code. This 10-digit code allows port authorities to classify your product and impose duties and taxes. You need to have a harmonization code for every kind of product you are importing.
The harmonization codes and the incoterm used by the seller will allow you to accurately calculate the cost of importing your products.
You will be able to get quotes for your landed costs such as the cost of transporting from the port to your store or warehouse. You’ll also be able to estimate the taxes and duties you’ll need to pay to the CBP.
It’s important to work out these costs before committing to your purchase. You don’t want to be surprised by landed costs or taxes as this will cut into your profits.
Depending on the terms of your contract with your supplier you may need to arrange transportation to the US yourself. You’ll first need to decide whether you’re going to use freight ships, airplanes, or international couriers. If you are shipping heavy or bulk orders, it may be cheaper to go by sea. This is because you are usually charged by container rather than weight.
If you need the items quickly then definitely choose airplane transport. Be warned, planes charge by the kilo so this can get expensive.
You could consider hiring a freight forwarder. These companies are responsible for moving your freight from the manufacturer to the export port, across the sea, and to your port of choice. They can also act as customs brokers and manage the tax and duties on your behalf.
These companies can be extremely helpful, particularly if you are new to the import business. They manage all the logistics, so you don’t have to.
Our 5 Top Tips for Doing Business in China
Research your suppliers
Before you think about buying anything, make sure you can trust the supplier or manufacturer. Use a service like Sino Inspection to check their creditworthiness and their export credentials. You also need to check the product quality before committing to large orders. Ask for samples so you can assess the materials and construction. If you’re not happy, don’t buy!
Trade in China is built on professional relationships between suppliers and buyers. These relationships require trust and a mutually beneficial situation. Before heading into a negotiation, identify what your strengths are and what you can offer your supplier.
You might have a lot of cash and the ability to pay upfront for products. In return for the cash injection and prompt payment, your supplier may offer you a discount on the products.
Try to approach negotiations with an open mind rather than the mindset of squeezing every last cent out of your supplier.
Have a Clear Contract
Once you’ve concluded your negotiations, make sure the deal and your order are contained in a clear contract.
Your contract should detail what exactly you are purchasing, including quantities, size, shape, color, and any other options.
It should also set out the cost per unit and any discounts or deals made. Finally, you need to make sure that the contract clearly states who is responsible for what part of the export/import process.
This is crucial. If the contract is unclear, your goods could end up sat outside a port with no way to get to you.
Unfortunately, importing from a country as distant as China means that you’ll likely encounter delays. Don’t expect your items to ship as soon as they leave the factory. They will need to be transported to the nearest port. This can take a few days depending on your supplier’s location.
Once at the port, your goods need to be checked, inspected, and loaded before they can leave. Depending on the port this can take 1-2 days. You also need to remember that some shipping routes only operate on certain days of the week. If you miss the shipping day you could end up waiting up to a week for the next.
Also, if conditions are adverse, the ship or plane may not leave when scheduled. Or the journey could be delayed along the way. Once your goods arrive in the US they will need to be unloaded, checked, and inspected by CBP officers.
Depending on what you’re importing, the goods might need to be quarantined for a period of time. This usually applies to live goods or biological goods. While you might not be able to prevent many of these delays, you can plan ahead. Order your items in good time so that delays don’t impact your business.
Apply for Licenses and Permits
If you import without the appropriate license or permit you may find that your goods are seized or destroyed.
At the very least, you can expect further delays and fines. Make sure that you file for permits and licenses before you import restricted goods.
These permits are designed to protect the people, animals, nature, and economy of the US. In many cases, permits also protect global citizens and animals.
The process of applying for permits can be somewhat onerous. For starters, you need to work out which department issues the permit.
The CBP has oversight over about 40 departments including the Fish and Wildlife Service and the CDC when it comes to imports. However, the CBP doesn’t usually issue permits themselves. More often than not you will need to go to the relevant department to apply for a permit.
Importing products from China can be a great way to grow your business. Often, Chinese imports are cheaper than domestic products which means that you can increase your profits and continue to invest in your business. The process can seem intimidating and demystifying, but hopefully, our guide has made things a bit clearer.