ADVENTURES IMPORTING GOODS FROM CHINA

As many know, importing inexpensive goods from China and reselling them here in the United States is a very profitable business.  Importers typically earn 300 percent or higher returns, but they also suffer some steep losses if they are not careful

First lets understand how China is organized.  A community of possibly 10 or 20 different companies will all make the same product, or similar product.  When shopping, you have many manufacturers to consider and they are all located in the same village in China.  Some are good and others are poor quality. 

For this reason, it is important to have an agent in China to find what you want and to negotiate your best price.  Also your agent should inspect the goods before they are shipped.   Frequently companies in China will unload their junk on un-suspecting buyers in America because they know it is too expensive to ship it back to China and you may never get a refund.  You have no recourse, unless you buy a gun and board a plane for China, and I do not recommend that.

You need to train your agent on what to inspect for quality.  Your agent is your middleman between you and the manufacturer and they handle a lot of different commodities, so you need to work closely with your agent and let them know what you expect.  You also want your agent to make a profit off the transaction so they will work harder for you.  A 15% markup is not uncommon, but the range is open and you need to negotiate the fee with your agent.  My agent buys the products from several different sources, then ships them to the shipping company to be placed on a container.  The agents earn their money.  

I found a girl named Polaris on Skype and she lives in Xi’an China and has proven to be very trustworthy and a great asset.  Her web site is FindChinaProducts.com.  I buy magnetic beads, head massagers, monofilament line, stage lighting and anything I need through Polaris.  I have had her research many other products.  I even designed a product to be injection molded and she took my drawing and got me some good prices.  I did not proceed because I did not feel the market was big enough to waist our time. I have also found David who specializes in magnets and I send him a lot of orders, but only magnets.   He just got married and has a baby boy that he pictures on Skype.   I have been working with Dave and Polaris for about 7 years now and never had a problem.   Both speak good English, but since they have strong accents, it works best to use Chat on Skype when communicating with some one in a different country.  

Many importers travel to China and buy their products and have them shipped home.  This is because they do not have a good agent in China, but that can get expensive with air fair and travel expenses, unless you are going to invest $100,000 or more in goods.  My orders are usually around $10,000.  

When ordering items from china you run the risk of being rejected by American customs, or the FDA.  For example I ordered 100 battery operated head massagers that make some health claims.  The FDA required the product to have a Device Number that is obtained from the FDA by the manufacturer.  It is their way of tracking a product back to the manufacturer.  Since the manufacturer was in China and shipping all over the world, he was not going to get a Device Number for us, or pay the fees to obtain one.  The end result was; I was forbidden to sell the product and had the option of either having them destroyed or shipped back to China.  While waiting for directions, my Customs Broker received a $2000 fine for importing them.  It has been 3 years and I am still waiting for direction on what to do with the massagers.  About a year ago, an FDA inspector came buy and confirmed I still had the massagers, which I did.  My customs broker is arguing that we will destroy the product when you give us directions AND refund her fine.  Otherwise she does not want to destroy the massagers until she gets her money back.  The amount is too little to hire a lawyer and the total cost of the massagers is only $300 for 100 massagers.

In the mean time I have continued to import the massagers and listing them as electro magnetic tools on the paperwork and no problems with customs or the FDA.  This lesson taught me to order in small quantities that will not break the bank if there is a problem.  At least until you get some experience importing that product.  We also don’t mention anything is battery operated.  I suspect that is because explosive devices are usually battery operated and the word “battery” is a keyword that catches the attention of security guards.

I am involved with a group importing oxygen in a can.  The last shipment, some bureaucrat in China placed a $10,000 fine on the shipment for shipping flammable commodities aboard Chinese ships.  To begin with oxygen is not flammable, but it is an oxidizer and can be hazardous.  We had to increase the price of our product by $1 a can to make up for the fine.

In another example, a friend imported a full container of florescent lighting fixtures for a high-rise building that was under construction.  After receiving the fixtures and installing them in the building, a building inspector rejected the fixtures because the ballast was not UL approved.  They had to remove all the ballasts and replace them with UL approved parts.  The cost of replacing them negated most of the cost saving from buying them in China.

Shipping from China can get expensive if shipped by air or commercial shipper like DHL or one or the others.  Through our Customs Broker we located a company that imports a container every week and it is full of small lots.  We usually get a pallet with about 8 boxes on it and the shipping costs are very reasonable.  We use the Customs Brokers bond and her cost is about $400 for the whole shipment, including import fees and everything else they can think of.  Then when you pick up your order at a warehouse, you have to pay another $55 for the forklift driver to get your load and deliver it to your vehicle.  We are located in Southern California so we do not need to ship it East like many readers will be burdened.

The bottom line is, there are some good profits to make by importing Chinese goods.  However be prepared for some bumps in the road, mostly government instigated.  Having an agent in China or taking a trip to China is most important in our opinion.  It saves a lot of time and expense.