Buying Products From China
The meaning of China direct buying is purchasing straight from the source without intermediaries in between. Buying directly from China is not the same thing as buying from a Chinese trading company, or buying China-origin goods from a USA warehouse.
Now that the definition is clear — when considering China direct buying, one must ask 3 simple questions:
Why Buy Directly from China?
Are you looking into buying direct products from China to save production costs? Most importers look to China as a source because they are looking for quality products at a low price to maximize their profit margins and/or compete with other companies. China is amongst the most reliable low cost sources for most consumer and industrial goods.
What?
You can buy directly from China about any product these days.
- What kind of buying?
- Personal use: Single product bought on an online platform such as Alibaba and shipped directly to one’s address via DHL or Fedex
- Resale: China direct buying in bulk to resell to distributors, retailers or consumers
- Component parts: To add value to a manufacturing program, i.e. parts or accessories for products made in the USA.
- Promotional purposes – marketing materials, gifts.
- What products can you buy direct from China? You can buy just about any product direct from China these days, including:
- Raw materials and components
- Complex and/or tech-intensive products
- Basic consumer products – footwear, garments, jewelry.
For more see our Industry Experience page or our blog on the Best Product Categories to Source From China.
How?
Technology has made China direct buying easier. But, making sure the goods arrive the way intended and on time is still hard. Depending on your product, your objectives, and your business size, there are many different ways to ensure your purchasing in China is optimized:
Trading company:
Reputable trading companies usually buy a specialized array of different products from China. There are various trading companies that cater to different industries and they have a vested interest in making sure the product they deliver conforms to your expectations.
On the Internet:
The internet has made all things possible. With platforms like Alibaba and Aliexpress, suppliers are now at your fingertips. But you will need to do your due diligence to verify and validate each supplier before working with them.
From a distributor:
Distributors specialize in a specific product range which they supply to retailers, which then sell them to consumers. Most distributors have warehouses in the USA for quick delivery and offer easy payment terms.
Direct from a manufacturer:
You can skip the middle-men, go straight to the source and get the best prices. But this requires a bit more effort. Buying products direct from Chinese factories means it is up to you to ensure they arrive as planned. Many importers turn to sourcing agents, or sourcing companies that offer on-site sourcing services to support their direct access.
Despite the additional expertise required to buy direct from China, in the long run, it is the best and cheapest way to control your sourcing program.
To see how CPG’s services could benefit you, click here.
China Direct Buying FAQ
- Identify your needs: determine what you need to buy, including the type of goods, the quantity, and the desired quality level.
- Find a supplier: carefully evaluate potential suppliers to ensure that they are reputable and capable of meeting your needs.
- Negotiate terms and prices: including the price, delivery schedule, payment terms, and any other relevant details.
- Handle logistics and shipping: This can involve coordinating with your supplier, arranging for transportation, and complying with any necessary customs and import regulations.
- Quality control: ensure that the goods you receive meet your expectations. This may involve inspecting the goods before they are shipped or having them inspected by a third party.
No. In most cases, you do not need a specific license to buy wholesale from China. However, you may need to obtain certain licenses or permits in order to import the goods into your country, depending on the specific regulations in place. Certain types of goods, such as hazardous materials or controlled substances require special licenses or permits before importing goods from China. Failing to do so could result in delays or other issues during the import process.
In most cases, you will need the following documents to import goods from China:
- Commercial Invoice: This is a document that lists the details of the goods being imported, including the name of the product, quantity, unit price, and total value.
- Bill of Lading (B/L): This is a document that serves as a receipt for the goods being shipped and also acts as a contract between the shipper and the carrier. It includes information about the shipping route, the parties involved, and the terms and conditions of the shipment.
- Certificate of Origin: This is a document that certifies the country of origin of the goods being imported. It is often required for customs purposes and for availing certain trade agreements or preferences.
- Import License: Depending on the country you are importing to and the type of goods being imported, you may need to obtain an import license or permit.
Depending on the specific requirements of the importing country and the nature of the goods being imported, you may also need to provide other documents such as an import declaration, a packing list, a sanitary or phytosanitary certificate, or an insurance certificate.
Yes, you may be required to pay customs duties and taxes when you import goods from China. Customs duties are fees that are levied on imported goods by the government of the importing country. These duties are typically based on the value of the goods and the classification of the goods under the applicable tariff schedule. You will generally need to provide a commercial invoice and other relevant documents to the customs authorities in the importing country. You may also need to classify the goods under the applicable tariff schedule, which will determine the rate of customs duties that applies to your import.
It is important to note that customs duties and taxes are not the same thing as shipping costs, which are separate fees that are charged by the carrier for transporting the goods.
The amount of goods that you can buy from China without paying duty (also known as the “duty-free allowance”) depends on the country you are importing to and the type of goods being imported. Most countries have a duty-free allowance for certain types of goods, such as personal effects, gifts, or samples, that are imported in small quantities and are intended for personal use or non-commercial purposes.
In the United States, the duty-free allowance for most personal imports is $800 per person, provided that the goods are for personal or household use and are not intended for resale. In Canada, the duty-free allowance for most personal imports is CAD$800 per person, and in the European Union, the duty-free allowance for most personal imports is €150 per person.
You may be required to pay duties and taxes on imported goods that are valued at more than the duty-free allowance, or on goods that are subject to special duties or taxes, such as tobacco, alcohol, or certain types of luxury items.
The minimum order quantity (MOQ) for products purchased from China represents the minimum number of units a supplier is willing to manufacture/sell for a specific product. MOQ exists for products made in a production line because setting up a production line and tooling is time-consuming and costly.
This quantity can vary considerably based on factors including the supplier’s current order book, the product type, the supplier’s production capacity, the type of equipment used and tooling set up, whether molds are needed, the material and labor costs, packaging and labeling requirements, etc.
MOQs can also be affected by the particulars of the sales agreement, including price, payment, and delivery terms.
In general, MOQs for products procured from China are typically higher for custom-made items or products because bespoke products require higher levels of customization or complexity. Conversely, off-the-shelf products often come with lower MOQs because there may be inventory available or an order can be added to an existing production run.
NOTE: Products that are “hand-made” in a workshop, including industrial machinery and prototypes can have an MOQ of as little as 1.
The lead time for delivery from Chinese suppliers is the time it takes for the supplier to produce and deliver the goods to the buyer. It is important to be clear about the meaning of “Lead-time” in order to avoid confusion.
“Lead time,” also known as “production lead time” means “the time between order placement and receipt of the goods ex-works, or, more often, FOB (Free on Board of a shipping vessel).” This delivery commitment is usually covered in the contract between the buyer and the seller. Once goods are ready for shipment, the only delay is the delivery method from China to the USA. That tends to be a known variable but one that the vendor is not responsible for.
Some buyers use another definition: “Lead time” or “Order lead time,” meaning “the time between order placement and receipt of the goods at my warehouse”. Such an understanding is helpful for inventory management.
Production lead time can vary significantly depending on the supplier, the product, the raw materials, and the terms of the sale. In general, the production lead time tends to be 30 days. NOTE: It can be much shorter, as little as 1 week, but it is longer for custom-made products or products that require a higher level of customization or complexity (Example: The production lead time for custom-made clothing or accessories may be several weeks, while the lead time for custom-made electronics or machinery may be several months or more).
Delivery time is mostly affected by the delivery method (air or sea freight), customs clearance, and local transport upon arrival at the country of destination.
In sum, “Order lead time” = “Production Lead Time” + “Delivery time.” This can take as little as 2 weeks (assuming air freight) and as much as 1 year or more, the average is about 3 months.