In today’s ultra-competitive business environment, smart companies are looking for ways to become more competitive. For many Australian businesses, importing from China has proven a successful tactic. According to the Department of Foreign Affairs and Trade, 19% of all imports into Australia come from China which equates to just over $47 billion AUD. Major import commodities include telecom equipment and parts, computers, clothing, furniture and other home furnishings. Read on to learn 5 tips that can assist you when importing from China.
1) Visit China and learn about Chinese business culture
Visiting China is the best way to learn about importing from China. A trip, which can be organised by a state or local Chamber of Commerce or if your importing requirements are substantial enough, your freight forwarder, will give you a chance to meet prospective suppliers face to face. You can also see the factories and meet the person in charge. The “relationship” is quite important when doing business with Chinese companies so meeting in person will give you a chance to make an impression, gain confidence and to get an understanding of business practices and cultural values of your (Chinese) partner.
Chinese business culture is quite different to the businesses culture in Australia. It is therefore quite important to read up and be prepared. Small things such as your business title, the design of your business card and how you greet your potential supplier make a difference. My favourite book on the subject was written by Terri Mossison and Wayne A Conway. It is titled Kiss, Bow or Shake Hands: Sales and Marketing. This book provides you with a small amount of important information on the sales and marketing side of doing business in different countries.
2) Ensure your prototype is exactly right
The prototype that is manufactured by them and approved by you will be used as the example of how the product should function and look. Insist that they use the actual materials they will be manufacturing with and that it meets all of your quality checks as it will be used before and during manufacturing in order to ensure and maintain consistent quality standards.
3. Raise a red flag with the cheapest supplier
We have all heard it before, but cheapest may not be the best. If you come across a quote that is significantly cheaper than the others, raise a red flag. It may be possible that it is a valid quote, but is may be a mistake. Ensure you double check the materials and the manufacturing process of each quote so you can feel confident in the products you are importing from China.
4) Define payment terms and Incoterms®
When purchasing from a supplier in China, generally speaking a deposit of 30-50% will be required with the remainder due when the goods are received. Of course you could negotiate a different arrangement. Either way, ensure this is clear within the contract of sale and be aware that negotiation techniques may differ from your Australian/Western experience. In addition, finalise the Incoterm® you are purchasing under. Incoterms® are a set of rules which define the responsibilities of sellers and buyers for the delivery of goods. They are published by the International Chamber of Commerce and are updated every 10 years. The difference in shipping costs can be quite significant so learn the difference between the different terms, choose the most appropriate and ensure the agreed Incoterm® is clearly stated within your contact of sale.
5) Work with an experienced freight forwarding company
When it comes to getting your cargo here, you want to have confidence that you are working with a freight forwarding company that has experience. You don’t want to be the guinea pig in terms of their experience with an origin or commodity. Medium sized freight forwarding companies have the scope to deliver the services which will be required and are small enough to provide personalised service and customised solutions. To learn more on this topic, read 9 Red Flags to Watch Out For When Deciding on 3PL Providers.
Importing from China can be complicated. But the rewards in terms of cost savings can improve your company’s bottom line. Follow these tips and do your research and you too can benefit from importing from China.
For more than a century, BCR has continued to help small, medium and large businesses achieve an optimum logistics solution with warehousing and transportation, including air freight and sea freight services to and from the major ports including Brisbane, Sydney, Melbourne, Adelaide and Fremantle (Perth).