Sourcing goods from China – The how to guide

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The demand for Chinese goods in India is on the rise and imports are expected to reach $80 billion before 2018. Importing goods from China to sell in Indian markets is not a new trend. Many online sellers have begun purchasing their stock of goods from here. There are many benefits of purchasing goods from China and the most important one is related to price. It is much cheaper to sell ready made goods especially if they are produced at a cheaper rate.

Why should you consider selling Chinese goods online?

Indian Online Seller (IOS) communicated with different category online sellers who acquire their inventory from China. They informed us of the following benefits they witnessed when sourcing goods from China –

  1. Affordable pricing

Brand Hawkers, a multi-channel retail consultancy and management startup helps sellers manage their marketing, warehousing, packaging & dispatch. They informed us that they cater to online sellers who buy products from Chinese manufacturers to sell online in India. As a result, they enabled us to derive a couple of facts about acquiring goods from the China through two of their clients, Anshul from Livtel Power Banks and Ankit Neerav from Addic, a specialist in the sale of watches.

Ankit says, “The costs of most (Chinese) goods are lower in comparison to Indian manufactured goods. Even after considering shipping and other costs. Apart from that there are established brands that sell worldwide from China and it is easy to import and sell their products in India because of the recognition.”

According to Anshul, Indians have a habit of seeking low price but good products, so Chinese suppliers are the best option for this so far.

He claims, “They can provide you products in the quality you want (means the amount you want to spend on it). All their units are almost fully automatic which again saves your time. And the Chinese govt. gives their exporters some draw back duty which again indirectly decreases the cost of the product.”

  1. Availability of new products and different qualities

Narendran, a clothing and accessories seller mentions to IOS that he chooses Chinese suppliers because they introduce new products and have different qualities to suit the Indian consumer’s taste and budget.

Electronics seller, Kuntal Shah informs us of the same benefit.

Brand Hawker’s seller Anshul says he mainly purchases his stock from China because of its scarcity in India.

The seller claims, “We deal in power banks so the raw material, specifically the cell of our product, is not available in India and even the technology of making it is still not here.”

  1. Ease in procurement

It is relatively easy to procure goods from China, multi-category seller, Sanjay Kumar informs us. He says there are a couple of steps involved in acquiring goods from Chinese markets, however, the actual process of bringing the products to the India is relatively simple.

How can you acquire goods from Chinese Manufacturers?

Before jumping on board a plane to China, you need to know the process of sourcing goods from there. According to the online sellers we spoke to, you can purchase Chinese commodities by directly communicating with suppliers in the Chinese subcontinent or indirectly through online portals like Alibaba, Aliexpress and Dh gate.

Sounds quite simple right? So, how do you begin?

Online seller Sanjay Kumar explains to us the basic steps he follows when purchasing from Chinese manufacturers.

Step 1 – Select products that are easy to sell online

Before buying a product to sell online make sure you have selected one that is easy to sell. For example, all health and beauty care products are slightly difficult to sell, due to the tedious approval process from the marketplaces such as Amazon and Snapdeal.

If you are not absolutely certain the products you import will be a hit in the Indian market, you can always test its demand through a dry run. It will cost in the short run, but the knowledge you gain can help your in the long run.

Sanjay advises to avoid products which are sophisticated and for which some expertise is required; like in the case of electronics, computer accessories, watches and furniture.

“Remember that damaged headphones require far greater skill and money to repair than say a T-shirt with a thread protruding out. Also, It can be sold again at a steeper discount and one can make modest margins there than in the former case,” He elaborates.

Step 2 – Choose your manufacture wisely

According to Sanjay, “The general perception is alibaba.com has lots of fly by night operators and cannot be trusted. To a certain extent it is true, however, I can assure you that careful selection of vendors can avoid any such ‘misadventures’ .”

  • Check genuinity

Neofeils owner, Narendran says, “Research your manufacturer and check for genuinity. Also, make sure they use a reliable payment gateway.”

Kuntal agrees with the same. According to him, “Sourcing the right products from right manufacturers is most important.”

Sanjay states that ratings of a vendor on online marketplaces like Alibaba should help you determine his genuineness.

He adds, “Alibaba charges its vendors for displaying their company’s details on alibaba.com. The ratings of these companies essentially means that the company has been vetted by Alibaba and these companies have greater chances of being genuine compared to others.”

  • Ask for samples

“No vendor worth their name would refuse samples to the interested buyer. But, remember you are asking for samples, so you may have to spend a little for both the product and for getting it at your doorstep via courier,” multi-category seller Sanjay informs us.

Some sellers connect with their Chinese manufacturers via Skype and Wechat. This will make it easier to communicate your custom requirements say two of the sellers we interviewed.

  • Visit the manufacturer if possible

Anshul explains that apart from samples, sellers can also visit the manufacturer and his factory unit. This will enable price and product quality inspection.

  • Make payments in instalments

“Give the manufacturer an advance to initiate the process. Tell him the quantity you need and he will give you the time. Only at the time of delivery give him balance amount.” Anshul advises.

Step 3 – Choose a third party payment site

After negotiating prices with the Chinese manufacturer, the next thing is creating a purchase order. Managing a secure payment is essential to avoid being scammed. To reduce the risk of being cheated, use a third party payment site you can trust.

“This is another crucial step.” Sanjay informs, “Since one is negotiating everything through online and having ascertained their (manufacturer’s) credentials, it is still better to lower the risks by making the payment through mediums like Paypal rather than direct wire transfer or by Western Union.

Paypal is costly. So, a better option (if you are using Alibaba) is contacting the Alibaba office in Delhi or Mumbai and informing them that so and so vendor has been identified by you and share the payment details with them. This is comparatively cheaper and you are safer, as Alibaba ensures the smooth delivery of the order.”

Step 4 – Payment of customs

If you are making a direct purchase from manufacturers in China you will be required to pay customs. For this, you must meet with the concerned authorities and get the necessary paperwork and finally pay the required custom duties for your shipment from China.

Is it risky buying from Chinese manufacturers?

Though the process of acquiring Chinese goods is quite easy there is no guarantee that it 100% without risks or challenges. The online vendors we spoke with listed the following challenges when dealing with Chinese manufacturers:

  • Returns and warranties
  • Fraudsters selling fakes
  • Language barriers hampering communication
  • Fraudsters selling low-quality products
  • Shipping expenses
  • False commitment
  • Inability to take legal action (when direct purchases are made)
  • Goods getting stuck in customs
  • Delays in shipments

How to avoid the risks involved in purchasing from Chinese manufacturers?

To avoid the risks and challenges mentioned above, the sellers we communicated with offered the following tips –

Narendran advises,

“Never rely on suppliers who do not agree to payments via PayPal or escrow.”

In Kuntal’s opinion, the best thing to do is,

“Find the right source and quality of products. You need to have someone there to take care of orders and follow-ups as well as quality checks before shipment.”

Ankit suggests the same. He says,

“You should get a local agent in China to cross check your shipments and help with payments,”

Online seller Anshul claims it is never good to bargain too much or else it could lead to devastating outcomes. He mentions,

“They (Chinese suppliers) have their fixed margin of profits so what they will do is cut down on quality to fulfil your pricing.”

“Never negotiate with a vendor who accepts all of your demands even unreasonable ones. This is a classic scam technique adopted by unscrupulous vendors, for whom getting money from you is more important than delivering products,” states online seller Sanjay.

Other tips that will come in handy

– Cost of procurement must be considered before buying Chinese products. Consider which is cheaper buying through an online platform or directly from the actual manufacturer.

– Negotiate with trading companies give you higher chances of procuring large product portfolios compared to stand alone companies that produce only one unit.

– For orders whose total weight is less than 90kg, air freight and sea freight may not make much difference in value. But as always use discretion.

– For samples try to import under your individual name instead of your registered company. It will help avoid lots of paper work and time delays at customs, but most importantly paying customs duties if ordered as samples.

Build personal relationships with manufacturers right at the beginning.

It appears clear that obtaining goods from Chinese manufacturers involves some unbelievable benefits that could get you ahead of the competition. However, the risks cannot be ignored. But, now that you know how to overcome them do you feel sourcing goods from China is a viable option?

Have you tried sourcing goods from Chinese manufacturers? Do share your experiences with us in the comments section below. And, if you’re curious to know more about importing Chinese goods for online retail click here!

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3 Comments

  1. Sanjay Kumar K Reply

    Hi IOS,
    The article came out very well. Regards step 04 about customs duties clearance, please be informed, that as importers and online sellers, it is best left to the experts such as CAs or consultants to handle this. Maybe over a period of time, one will gain specific experience for clearing, but for starter, it is recommended that they route all customs clearance through forwarding agencies or clearance consultants.

  2. It really feels great when people in India are always ahead of competitions. But at the other side I always feel bad we are loosing skills for creating a cheaper product in India. Are we not getting to dependent ? What if import duties increases ?

  3. Don’t hide the fact that you intend to send an inspector to check up on your goods . Instead, tell your supplier from the very beginning that you intend to verify that your products are compliant with your specifications and quality requirements. This is also true for product testing, make them aware that you intend to verify that the product is compliant with the certification standard in your country.

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