Risks You Should Know when Importing from China

import china risk

Table of Contents

Quality Issue

Quality Issues

Risks

  • Pictures they provide may not be real. Scammers could download pictures from the genuine supplier’s website.
  • Your quality standards may not be clearly communicated or specified in detail in the contract
  • You pushed too hard on the price and get less than satisfying product in the end.

Resolutions

  • Don’t believe the pictures. Ask for samples and sign contacts based on the quality specifications of samples.
  • Specify your quality standards in details and define several levels of acceptance. Like Target Condition, Acceptable Condition, Defect Condition.
  • Provide a list of common defects.
  • Quality inspection.
  • Don’t push too much on price. Sometimes lower price results in compromise in product quality.
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Unforeseen Costs and Expenses

Risks

You may not have been fully aware of the costs that may incur when importing from China. When the product reaches you, all the costs could have made it impossible to generate any profit.

Resolutions

  • Here is a list of costs that could happen, take them into consideration when making your import plan:
    • Price of the goods
    • Shipment costs (inland and international)
    • Loading/Unloading and Handling costs
    • Insurance for transportation
    • Custom brokerage service fees for custom clearance
    • Custom tax
    • VAT
    • Any additional regulative fee such as anti-damping tax etc. if applicable to your product
    • Terminal fees, warehousing costs during custom clearance
    • Any certification fees if necessary
    • Any custom’s examination fees if necessary
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Payment Fraud

Risks

Some scammers may ask you to pay more once you place the order and won’t deliver unless you make extra payment.

Resolutions

  • Don’t pay fully in advance
  • Always sign a contract
  • Only pay via trusted platform
  • Only pay through trusted payment method like wired transfer
  • Letter of credit when you don’t know much about the supplier and not sure if you can trust it.

Real-Life Case

An unfortunate lady in Philippines tried to import a batch of electronics from China. She found a small company on the internet. The price she was quoted was $345. After she confirmed the order and made the payment, the company asked her to pay $110 for the taxes and logos, which was not mentioned at all beforehand. She refused the further payment. Then the company threatens that the customs will confiscate and sell.

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Product Safety & Compliance Issues

Risks

The goods may be confiscated at the custom if not in compliance with certain laws or certification standards. For example, if you are importing electronic products into the US, the product must be certified with FCC mark. If you are importing food, medicines or medical equipment from China to the US the product must be approved by the FDA.

Resolutions

Know the regulations in your country before importing.

Here is a list of example regulative certifications:

COUNTRYMARKIMAGEINFO
BelgiumCEBECCEBECCEBEC is a private Belgian rating label for the quality assurance of electrical appliances. Use of this label indicates that a piece of equipment conforms to European safety standards
Eurasian Customs UnionEurasian Conformity markEACThe Eurasian Conformity mark is a certification mark to indicate products that conform to all technical regulations of the Eurasian Customs Union.
ChinaChina Compulsory Certificate3cThe China Compulsory Certificate mark, commonly known as a CCC Mark, is a compulsory safety mark for many products imported, sold or used in the Chinese market. 
EuropeCE MarkCECE marking is an administrative marking that indicates conformity with health, safety, and environmental protection standards for products sold within the European Economic Area
IndiaISI MarksISIThe ISI mark is a standards-compliance mark for industrial products in India since 1955. The mark certifies that a product conforms to an Indian standard (IS)
United KingdomUKCAUKCAUK Conformity Assessed (UKCA) marking is a certification mark that indicates conformity with the applicable requirements for products sold within Great Britain
United StatesFCC Declaration of ConformityFCCThe FCC logo or the FCC mark is a voluntary mark employed on electronic products manufactured or sold in the United States.
Commonly Seen Regulative Certificate Marks

Real-Life Case

A wholesaler in the united states imported 500 pairs of eyeglasses from China. The US customs hold the eyeglasses. In the US, eyeglasses are considered medical device, thus must be certified by FDA before it could be legally imported and sold in the country.

bankruptcy

Supplier Bankruptcy

Risks

Under the impact of the COVID, many Chinese company faces bankruptcy. The risks exist that they may not be able to deliver your order.

Resolutions

  • Make use of public information
    • Check if they are on the government’s blacklist for being dishonest
    • Check if they are under civil litigation
    • Search for negative news on the web
  • Send people for an on-site inspection
  • Some signs might indicate they are under dire financial situation
    • They refuse to rework some issues
    • They refuse to sign a contract
    • They have troubles with their suppliers
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Trade Barriers

Risks

Sometimes due to political reasons, or to protect manufacturers from their own country, the government may impose restrictions on foreign products, commonly in following forms:

  • Tariffs
  • Import licenses
  • Export control / licenses
  • Import quotas
  • Subsidies
  • Voluntary export restraints
  • Local content requirements
  • Embargo
  • Currency devaluation
  • Trade restriction

Depending the types of trade barriers encountered, it could make it hard to generate profit, or even make the import impossible to happen.

Resolutions

  • Check laws and regulations related when doing your pre-import research
  • Keep up with the news
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Natural Disasters, War and Pandemic

Risks

Force majeure such as war and pandemic may make your supplier unable to produce your product or unable to ship it.

Resolutions

  • Take these into consideration before importing.
  • International trade insurances could recover your loss if any of these unfortunate events happens.

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