The Ultimate Guide to Buying Direct from China 2024

A hat for 1 dollar, a dress for 2 dollars – buying goods in China often exceeds our price expectations. But buying directly from China is not easy for foreign traders. This article provides detailed steps on how to buy from China and profit from international trade.

Several Benefits of Buying Directly from China

Lower Cost

China is rich in production resources, low labor costs, and infrastructure, so sourcing from China is cost-effective, and direct sourcing eliminates middlemen, avoids additional costs, and improves profit margins.

Rich Supply Chain

As a major trading nation, the Chinese government has formulated several policies (e.g. preferential tariffs, free trade agreements, etc.) to support the foreign trade supply chain, which can help you deliver goods to their destinations smoothly and efficiently.

Better Quality and Technology

Nowadays, thanks to improved infrastructure and production technology, you hardly need to worry about the quality of “Made in China” as long as you can find trustworthy suppliers.

Flexibility and Customization

By working directly with Chinese suppliers, you can customize your products, such as adding your brand logo, changing details and designing packaging. This helps you to be more competitive in the market and sell at a higher price.

The Latest Steps to Purchase Directly from China

Find Good Products That Can Make A Profit

Before you start your foreign trade journey, you need to know your target market. Find a good product that has potential or market demand. Make sure that the imported goods are saleable so that you can at least break even, if not make money.

Keep in mind that the best-selling product on the website is not always the right one for you. If you’re a beginner, it’s hard to sell products in the “red ocean” of competition. Instead, look for innovative “blue ocean” products with growth potential.

For example, it is well known that Xiaomi started out as a smartphone company. As the smartphone market became increasingly competitive, they conducted thorough market research and found a “blue ocean” opportunity in air purifiers. They launched the Xiaomi air purifier and quickly captured the market.

Get Familiar with Chinese Business Culture

China has a long history, and its traditional culture has deeply influenced its business culture. It is often said that China is a “relational society”. Understanding the following aspects of business culture can help you do business effectively in China:

Hierarchy and Respect Culture

1. Toast: The host or the person with the highest rank usually starts the toast, and some words of blessing can be said during the toast. When making a toast, the wine glass should be slightly lower than that of the elder or the person of higher rank to show respect.
2. Address: In business activities, it is best to use honorifics or add titles, such as “ Zhao” or “Manager Zhang”.

Cooperation and Harmony Culture

1. Win-win: Just like Huawei’s cooperation with its suppliers, business in China highly values the concept of win-win. So, don’t just focus on your own interests.
2. Harmony: In Chinese business activities, most people prefer to resolve conflicts through negotiation and communication. So, avoid immediate confrontation when conflict occurs. Trying to solve the problem harmoniously is beneficial to both parties.

Modesty and Low-Profile Culture

1. Humble: In business, others may praise you. Even if you have achieved something, don’t brag about it. You can humbly say, “Our company still has a lot of room for improvement” or “We still need to learn from you.”
2. Keep a low profile: The Chinese honor not to show off their wealth. Act modestly to avoid arousing jealousy and resentment from others.

Ceremony and Etiquette Culture

1. Seating Arrangement: In Chinese business banquets, seating arrangement is very important. Usually, the host sits in the main seat. Older and higher ranked people sit near the host. If you are not sure about the seating arrangement, it is better to sit humbly at the back.
2. Gift-giving: When attending a Chinese business event, it is best not to leave empty-handed. Even small gifts show goodwill. Bring a nicely wrapped gift to present at the beginning or end of your visit. Be careful with your gift choices: avoid clocks (they sound like “goodbye” in Chinese) and scissors (they imply bad luck).

Find Trustworthy Suppliers

While you should respect, understand and trust others, it is vital to find trustworthy people. To find a reliable supplier, research their online reputation and certifications. Make sure they are able to produce quality products that meet your standards. If possible, visit their factory in person to inspect the production environment and equipment.

Recommended Channels for Finding Suppliers：

Recommended Channels for Verifying Supplier Qualifications：

 Contact Your Suppliers

After choosing a good supplier, remember to keep in touch with them. Regular communication will help you build trust, understand the Chinese market, and keep up to date with customs and shipping changes.

The more information you gather, the better for your future business. It gives you a basis for price negotiations and helps avoid being cheated by unscrupulous suppliers or facing product discrepancies due to miscommunication.

Learn to Negotiate

When doing business with the Chinese, you must learn to negotiate. Walmart was able to capture the Chinese market before other brands because it spent a lot of time studying the Chinese market. They learned to respect each other and be flexible in negotiations. If you don’t know how to negotiate, it’s hard to make money in the Chinese market.

When negotiating import and export trade with Chinese suppliers, focus on the following areas:

1. Price: initial offer, bulk discount price, long-term cooperation price.
2. Payment: payment method, payment terms.
3. Delivery time: delivery cycle, delayed delivery penalty, expedited order time.
4. Quality: quality standards, quality inspection, quality assurance terms.
5. Packaging and Labeling: packaging requirements, labeling content, customized packaging needs.
6. Transportation and logistics: transportation mode, transportation cost, transportation insurance.
7. Contract terms: contract content, liability for breach of contract, dispute resolution mechanism.
8. After-sales service: after-sales service, return and exchange policy.
9. Minimum order quantity: minimum order quantity, trial order quantity.
10. Intellectual property rights: intellectual property rights protection, brand usage rights and fees.

Request Samples and Test Sample Quality

Before placing an order, you can ask the supplier for samples, which will help you to confirm the product quality, specifications and other details. Many differences can not be seen from pictures and videos, and can only be fully verified by getting the products.

When choosing factories for our customers, we will also ask for samples first, screen them and send them to our customers for inspection, and then place an order for production after confirming that there is no error. This can effectively control the risk and reduce the time and economic loss caused by the picture does not match with the real thing.

Sample inspection process:

• Confirm the sample specification and quantity.
• Check the package and verify the quantity.
• Check product appearance.
• Check product labeling.
• Verify product specifications.
• Test product functionality.
• Check product materials.
• Evaluate product quality.
• Ensure product safety.
• Compare with expected samples and document differences.
• Provide feedback and make adjustments.

Understand Legal and Contract Terms

When sourcing from China, you need to understand the relevant Chinese laws and regulations to ensure a smooth process. It is also important to understand the terms of the contract. List the terms that protect your rights to avoid contractual disputes and unnecessary hassles, saving you valuable time.

Here are some laws and regulations for your reference:

• Contract Law of the People’s Republic of China
• Import and Export Commodity Inspection Law of the People’s Republic of China
• Customs Law of the People’s Republic of China
• Law of the People’s Republic of China on Product Quality
• Law of the People’s Republic of China on Protection of Consumers’ Rights and Interests
• Intellectual Property Law of the People’s Republic of China
• Law of the People’s Republic of China on Environmental Protection
• Law of the People’s Republic of China Against Unfair Competition
• Labor Law of the People’s Republic of China
• Law of the People’s Republic of China on Administration of Tax Collection
• Anti-Monopoly Law of the People’s Republic of China
• Electronic Commerce Law of the People’s Republic of China

Confirm Orders and Deliveries

Often times, the details make the difference. More than just placing an order, confirming order and shipment status is easy to overlook, but very important.

Apple has made this mistake. in 2016, Apple’s new product releases and production schedules were severely impacted by not confirming orders with key suppliers in a timely manner. This caused consumer dissatisfaction and further affected Apple’s market share.

Plan Transportation and Logistics

Planning transportation and logistics can also be a challenge. If you lack experience and time, consider working with a professional international freight forwarder. If you have enough time to learn, arranging the entire logistics process on your own can be more hassle-free.

So, how do you arrange your own logistics?

1. Choose a suitable mode of transportation according to your goods.
2. Find a reliable logistics company or freight forwarder.
3. Compare offers and services and sign a transportation contract.
4. Prepare customs clearance documents and complete customs formalities.
5. Arrange warehousing services and final delivery.

Give Feedback to The Factory and Make Adjustments

H&M, the world’s leading apparel retailer, had failed to resolve logistics and quality issues with its Chinese suppliers in a timely manner, resulting in overstocking of some items and out-of-stock of others. Failure to adjust product quality in a timely manner also damaged its reputation and led to a significant loss of customers.

Providing feedback and making adjustments to suppliers is often forgotten. If you are satisfied with your current supplier and intend to establish a long-term relationship, be sure to provide timely feedback on product issues. This will save you trouble next time and help avoid repeating the same mistakes.

FAQ

What Is The Quality of Products Made in China?

Many people may have a stereotypical image of “Made in China” as meaning cheap products. However, over the years, Made in China has produced many high-tech, high-quality products.

Made in China technology has always been strong and product quality can be very good. The problem is that some people blindly cut costs to increase profits, resulting in poor quality. You and your partners must develop quality control strategies in advance to prevent low quality products.

What Is The Profit Margin of Chinese Products?

Profit margins on products imported from China vary by industry. According to online data, the highest profit margins are found in footwear and apparel, home appliances and toys, which reach 30-60%. However, the actual profit depends on factors such as production costs, logistics, and product pricing. You need to be able to manage and balance these aspects.

Is It Safe to Import from China?

China is politically stable and has good law and order, and in general it is safe to import from China. However, there are some uncertainties affecting safety, such as whether the suppliers are qualified, whether the products comply with laws and regulations, and whether the logistics are safe, etc. Patience and attention to these details are required.

Are Chinese Sourcing Agents Reliable?

If you find a reputable and professional purchasing agent, they can save you a lot of time and help you avoid many risks.

However, some agents may masquerade as legitimate agents but are actually scammers. Always check the agent’s company registration and business license to make sure they are operating legally. Communicate through transparent channels, use official payment methods and don’t transfer money to others easily.

Conclusion

After reading this article, you now know how to source directly from China and understand many of the details that even the experienced may not be aware of. It’s time to put this knowledge into practice.

If you get stuck, SourcingWise can help. We offer customized import and export solutions to save you time and money.