Sharing my lifetime experience in export/import. Product sourcing specialist.

[Walter Hay]

BUYING LOCALLY

It may seem strange that I would suggest buying locally rather than importing, but although importing is often the best option because of the generally lower prices available outside of developed countries, in some circumstances it may be worth buying locally.

Manufacturing industry is today a much more fluid field than it was prior to the internationalization of the world’s markets that began in earnest after WW2. Now with the world being a global village manufacturing will move from country to country following low labor costs and also technical skills and material resources.

One symptom of this is the slow return of some manufacturing industries to their country of origin after manufacturing for 10 or 20 years in lesser developed countries.

This means that it may be possible to buy locally at prices equivalent to, or even less than you can buy from Asian or other low labor cost countries. It is certainly worth checking it out in relation to the type of product you are interested in selling.

One major drawback to this idea is that manufacturers in Western countries have a tendency to be reluctant to deal direct with small retailers, and insist on working through major distributors. This is a big factor in the growth of small importing businesses, because the distributors’ margins eat into the profit margin available to small retailers.

Search for manufacturers in your home country who are advertising that they want to export. These are generally more entrepreneurial and may be more inclined to deal with smaller local businesses. There are a number of sourcing sites that relate specifically to one country, or you can inquire through your country’s trade department responsible for exports.

Don't just look at price. Take into account ease of communication, no international shipping costs or duty etc., you ability to more easily visit the manufacturer, and most importantly quality control. If you can sell a product in Germany that is Made In Germany, and your price is reasonable, that could be a great marketing advantage.

 

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[1step]

Hey Walter, I plan to visit a manufacturer while in China, is there an expected "dress code?"

 

[Walter Hay]

Hey Walter, I plan to visit a manufacturer while in China, is there an expected "dress code?"

Don't wear white! That is the mourning color. Otherwise dress formally. A yachting jacket and trousers would be acceptable but a suit is better.

Chinese business people tend to dress conservatively, but with warmer weather coming on in the southern parts they may suggest casual wear. In that case never wear shorts. Shirts should button up, but don't go casual unless invited to do so.

Best wishes for your trip.

 

[ddzc]

MINIMUM ORDER QUANTITIES (MOQS), HAGGLING, AND DISCOUNTS FOR BIG ORDERS.

While it is usually true that the larger the order the lower the price, the price differences for various order quantities can be surprisingly small.

Chinese manufacturers in many industries have been obliged to work on low margins. Consequently prices quoted for their MOQs will often be near to the lowest price possible from that supplier. If a person wishes to order less than the MOQ, a manufacturer may seize the opportunity to gain some extra profit, even if the order is small and the total profit still won’t amount to a lot.

If someone wishes to place a very small order, it is reasonable to expect that a higher price will be required to cover the cost of processing which will be approximately the same, regardless of order size.

If however an MOQ is 1,000 pcs @ $5/ pc., and a new customer wants to order 100 pcs, the price should not go up beyond say, $7. That allows $200 to compensate the manufacturer for handling the small order. While I advise against haggling, this situation will often require negotiation that resembles haggling. I define haggling as trying to beat down the price by making extremely low counter-offers. The best way to gain the manufacturer’s cooperation is for the buyer to describe the small order as a “sample order.”

The myth of big volume discounts. Those who think that volume means large discounts have never dealt with Asian manufacturers. Sure they give discounts for larger quantities, but those discounts are usually very small.

Over 22 years of importing, I found that discounts for volume were typically in the 1% to 2% range for doubling the size of an order. Multiply the order quantity by 10 and then you might get a discount as high as 10% if you are lucky. Therefore buyers should not expect substantial discounts for volume. In fact, as the volume increases, the % discount falls.

Warning: Haggling can result in extremely low prices, but that will invariably lead to reduced quality. Watch out for another post to come soon on Quality. It also harms the business relationship and the supplier may choose to no longer supply.

I just ran across this with a supplier. I finally found a great factory with awesome top notch quality products. When I upped the order from like 5 to 50-100 pcs, the discount went from $62 to $61 per pc, I thought it was a joke at first.

I did find another factory who would give me a whopping 30% discount per pc if ordered >50 but the quality wasn't as good as the above. This is the trend that I see these days.

Great posts, thanks Walter

 

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[Samy Bazizi]

Hey walter,

A local company is interested by one of my invention. They've sent me a list of manufacturers located in Taiwan that I should contact to make a prototype or licence the invention. I was planning a trip to China and wanted to meet some of these companies to try and sell the invention
Therefore I have some questions:
- What is the best way to contact them and arrange a meeting with them?
- Is there a different etiquette or way to convince people or sell something in Taiwan that is different from North America?
- I don't want to lose time while Im there so how do I know which company is the best potential licencee and how do I find if it is a legit one?

 

[Walter Hay]

Hey walter,

A local company is interested by one of my invention. They've sent me a list of manufacturers located in Taiwan that I should contact to make a prototype or licence the invention. I was planning a trip to China and wanted to meet some of these companies to try and sell the invention
Therefore I have some questions:
- What is the best way to contact them and arrange a meeting with them?
- Is there a different etiquette or way to convince people or sell something in Taiwan that is different from North America?
- I don't want to lose time while Im there so how do I know which company is the best potential licencee and how do I find if it is a legit one?

Hi Samy,

Before I answer your questions, may I ask 2 Questions.

1. Have you investigated local production, or production in another Western country such as the USA?
2. Have you taken appropriate steps to protect your intellectual property (IP)?

Now to your questions.

• You need to search for suitable companies in a related field in much the same way as if you are wanting to buy one of the products they currently supply. In other words you do your due diligence. Usually I would say do all of this yourself, but if you don't have importing experience you may need to hire some help.
• The processes of prototyping and licensing are better understood in Taiwan than in mainland China, and you might find it easier to handle the process there. There is also more respect for IP rights in Taiwan.
• The entrepreneurial spirit is very strong in Taiwan, and they tend to be more innovative, rather than just copiers. As a result, they will understand the American way of doing business. Chinese customs still prevail, so you must be prepared to go slowly at first.
• Checking the legitimacy of a potential prototype maker and in particular a potential licensee is one of the few occasions when I would seek professional help. If you like I could refer you to a consulting company in China that has the skills to sort the good from the bad as well as having their own legal department to draw up appropriate contracts. They could find the reliable manufacturers you need.

Let me know if you need more help.

 

[Samy Bazizi]

Hi Samy,

Before I answer your questions, may I ask 2 Questions.

1. Have you investigated local production, or production in another Western country such as the USA?
2. Have you taken appropriate steps to protect your intellectual property (IP)?

Now to your questions.

• You need to search for suitable companies in a related field in much the same way as if you are wanting to buy one of the products they currently supply. In other words you do your due diligence. Usually I would say do all of this yourself, but if you don't have importing experience you may need to hire some help.
• The processes of prototyping and licensing are better understood in Taiwan than in mainland China, and you might find it easier to handle the process there. There is also more respect for IP rights in Taiwan.
• The entrepreneurial spirit is very strong in Taiwan, and they tend to be more innovative, rather than just copiers. As a result, they will understand the American way of doing business. Chinese customs still prevail, so you must be prepared to go slowly at first.
• Checking the legitimacy of a potential prototype maker and in particular a potential licensee is one of the few occasions when I would seek professional help. If you like I could refer you to a consulting company in China that has the skills to sort the good from the bad as well as having their own legal department to draw up appropriate contracts. They could find the reliable manufacturers you need.

Let me know if you need more help.

I have done a US provisional patent. Is that enough to protect my idea in Taiwan? And local companies in the US and Canada are not manufacturing those products, they only buy parts of it from China and Taiwan.

So you recommend me to look for a professional company that would help me contact those companies? What kind of company offers that kind of service? I was thinking of just calling them on the phone, but Im afraid there is too much barriers to contact the right person in the company and some of them might not even speak english...

 

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[Walter Hay]

I have done a US provisional patent. Is that enough to protect my idea in Taiwan? And local companies in the US and Canada are not manufacturing those products, they only buy parts of it from China and Taiwan.

So you recommend me to look for a professional company that would help me contact those companies? What kind of company offers that kind of service? I was thinking of just calling them on the phone, but Im afraid there is too much barriers to contact the right person in the company and some of them might not even speak english...

Bear in mind that I can't provide legal advice and that includes patent issues.

As I understand it, temporary protection in other countries is there theoretically, but in practice it won't work unless you have a patent registered there.

Perhaps you could have components manufactured in Taiwan without letting them know the ultimate use? Maybe have different parts made in different factories.

Communicating in writing is far better than using the phone. Most language problems can be sorted out that way.

I have been working for some time with a Chinese company that is highly westernized, but very capable in handling sourcing and quality issues. As I see it their in-house legal department is one of their biggest assets. I will PM details if you like.

 

[Samy Bazizi]

Bear in mind that I can't provide legal advice and that includes patent issues.

As I understand it, temporary protection in other countries is there theoretically, but in practice it won't work unless you have a patent registered there.

Perhaps you could have components manufactured in Taiwan without letting them know the ultimate use? Maybe have different parts made in different factories.

Communicating in writing is far better than using the phone. Most language problems can be sorted out that way.

I have been working for some time with a Chinese company that is highly westernized, but very capable in handling sourcing and quality issues. As I see it their in-house legal department is one of their biggest assets. I will PM details if you like.

It would be greatly appreciated! thanks

 

[RisingStars]

Hey Walter,

I found a supplier and looked for a CE certification.
The certification company is called "global testing services". Short GTS.
Is this legit?
I am from germany, so TÜV would be my first choice, but the suppliers dont offer that :/

Thanks.

 

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[Walter Hay]

It would be greatly appreciated! thanks

PM sent

Regards,
Walter

 

[Walter Hay]

Hey Walter,

I found a supplier and looked for a CE certification.
The certification company is called "global testing services". Short GTS.
Is this legit?
I am from germany, so TÜV would be my first choice, but the suppliers dont offer that :/

Thanks.

It seems unusual for a Chinese company to arrange CE certification through an Australian testing service. As far as I am aware, GTS do testing of installations, but do not issue CE certificates.

I have contacted GTS and will let you know the outcome.

 

[RisingStars]

It seems unusual for a Chinese company to arrange CE certification through an Australian testing service. As far as I am aware, GTS do testing of installations, but do not issue CE certificates.

I have contacted GTS and will let you know the outcome.

Thank you very much. Would you mind telling me how exactly you contacted them? I got another reply from a other supplier who got a CE-certification from "Shenzen CTL Electromagnetic Technologie Co., LTD"
I would like to check them out myself. What should I write? How do you do that?

Thanks.

 

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[Walter Hay]

Thank you very much. Would you mind telling me how exactly you contacted them? I got another reply from a other supplier who got a CE-certification from "Shenzen CTL Electromagnetic Technologie Co., LTD"
I would like to check them out myself. What should I write? How do you do that?

Thanks.

First you need to check with http://www.cnas.org.cn/english/index.shtml which is the China National Accreditation Service. You will find the site extremely difficult to navigate, partly due to Chinese business names being registered in Mandarin only. When CNAS translate those names into English, the list remains in Chinese alphabetical order, not in English.

Being unable to find GTS on the CNAS list, I decided to contact them direct. I knew they were an Australian company and finding contact details was easy, but no reply yet.

Your next best step is to go to the Shenzen CTL Electromagnetic Technologie Co., LTD site and see what accreditations they claim, and then to see if they provide a service enabling you to check the validity of the certificate offered by your supplier.

I did this and found what to me is an unsatisfactory Accreditation claim. The only reference to CNAS is second-hand being mentioned in a letter from a US company, Timco Engineering, that is more like a reference than an Accreditation.

I would personally not accept the Certificate provided by your supplier. They may be OK but I prefer to be cautious.

 

[mikeobi]

Hi Walter,

I'm looking to start importing overseas and I have a couple of questions before I get going.

1)When it comes to determining tariff and if I have to pay them or not, do you have a website or a list you use to look it up? I want to make sure what I'll be paying customs or if I won't be charged at all.

2)Where exactly does one pay duty? I've purchased things from Japan numerous times before but never had to pay any tariff, probably because it was under the amount that can be charged. If a package comes in to San Francisco and I live in Sacramento do I pay the duty virtually?

Thank you

 

[edward222]

Hello there Mr. Walter,

Ive read all your advice's and instructions about importing/exporting in this thread.
Its really informative, really great, its makes want to try this kind of business.
Would you recommend this kind of business to those
people who dont have any idea (like me) how to run this kind of business
and dont even know how to start the business?

If I want to learn this kind of business, would it take me years to
study and absorb the basics in this field?

Edward

 

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[Walter Hay]

Hi Walter,

I'm looking to start importing overseas and I have a couple of questions before I get going.

1)When it comes to determining tariff and if I have to pay them or not, do you have a website or a list you use to look it up? I want to make sure what I'll be paying customs or if I won't be charged at all.

2)Where exactly does one pay duty? I've purchased things from Japan numerous times before but never had to pay any tariff, probably because it was under the amount that can be charged. If a package comes in to San Francisco and I live in Sacramento do I pay the duty virtually?

Thank you

@mikeobi, 1. For occasional use without paying you could use https://www.dutycalculator.com/ but in practice, if you source direct from genuine manufacturers, you will find that the small amount of duty ypu might have to pay (Average about 5%), but often nil, won't be a problem.
2. Your air courier, or freight forwarder will pay it on your behalf. They will deliver to the address you specify. Don't just accept FOB quotes. In addition, find a local freight forwarder and get them to quote you from the FOB point right to your door. Make sure they include Customs clearance work in their quote.
If the shipment is small get the supplier to quote you for air courier door to door.
Regards,
Walter

 

[Walter Hay]

Hello there Mr. Walter,

Ive read all your advice's and instructions about importing/exporting in this thread.
Its really informative, really great, its makes want to try this kind of business.
Would you recommend this kind of business to those
people who dont have any idea (like me) how to run this kind of business
and dont even know how to start the business?

If I want to learn this kind of business, would it take me years to
study and absorb the basics in this field?

Edward

Hi Edward,

I think the great majority of people who buy my book have no idea how to safely source products overseas or how to import them.

Before looking at how to do those things you need to know what you want to sell and how to sell it. Sourcing and importing are the easy parts. Marketing your products will be the hard part. Once you have those things sorted out, you can learn the basics in a day or two.

I can make some suggestions about who to contact if you need help with marketing, but I am not the one to advise on marketing.

 

[edward222]

Hi Edward,

I think the great majority of people who buy my book have no idea how to safely source products overseas or how to import them.

Before looking at how to do those things you need to know what you want to sell and how to sell it. Sourcing and importing are the easy parts. Marketing your products will be the hard part. Once you have those things sorted out, you can learn the basics in a day or two.

I can make some suggestions about who to contact if you need help with marketing, but I am not the one to advise on marketing.

Cool!
I really dont have any idea in this field, and I think its better for me to have a research first.
I do know that the marketing part is difficult, hhhhmmm
that contacts of yours that can help me in marketing, are they free?

By the way, how much money I should ready to start the business?

 

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[Paul Vincenti]

INTRODUCTION.
Through my eBook on safe sourcing and easy importing I have helped hundreds of people in 35 countries learn how to enter the high profit world of importing. Their questions through my support channel provide the subject matter for alt of what I plan on posting here.

There are myths and misinformation in abundance on forums everywhere. I am here to dispel those myths and correct the misinformation that I see being published daily in business forums.

A bold claim? Yes, but all you need do is ask me some questions about sourcing and importing and you will soon find that because I have been there – done that for most of my long life, I do actually know what I am talking about.

Disclaimer: I do not pretend to be expert at online marketing. There are plenty of others who have far more experience than I in that field. I am well on my way through reading all 40 pages of Ecom man’s thread, but I already see that he can offer some good advice on the product selling side.

I have been self-employed since 1967, and I started with just enough cash to buy a typewriter and some letterheads. My first job after college was with a big shipping company. Eleven years after I started that first business in 1967 I began exporting my products to Asia/Pacific countries including China which I have visited on countless occasions.

After selling that business in 1987 I began importing from countries including China, Taiwan, Korea, Singapore, Malaysia, Vietnam, and Brazil. This new business sold products B2B. I had no retail sales. Business boomed and soon I ran out of family members to employ, so I expanded by selling franchises until I had franchisees operating my importing business in 4 countries.

Heart surgery a few years ago forced me to sell that business but my brain won’t slow down so I wrote my book and am now having more fun than ever helping new entrepreneurs get a safe start into importing.

Fire away with your questions.

Love this, thanks

 

[Paul Vincenti]

Hi Edward,

I think the great majority of people who buy my book have no idea how to safely source products overseas or how to import them.

Before looking at how to do those things you need to know what you want to sell and how to sell it. Sourcing and importing are the easy parts. Marketing your products will be the hard part. Once you have those things sorted out, you can learn the basics in a day or two.

I can make some suggestions about who to contact if you need help with marketing, but I am not the one to advise on marketing.

Interesting indeed. Thanks for this!

 

[Walter Hay]

Cool!
I really dont have any idea in this field, and I think its better for me to have a research first.
I do know that the marketing part is difficult, hhhhmmm
that contacts of yours that can help me in marketing, are they free?

By the way, how much money I should ready to start the business?

The one who can introduce you to some great ideas on eBay marketing does have a very good free eBook. I will PM the details to you.

I have had people start with as little as $300. It is slow work, but possible and can be grown. In an article on my Just In Time system, I referred to this subject. Have a look at it here: Sharing my lifetime experience in export/import. Product sourcing specialist.

Regards,
Walter

 

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[edward222]

The one who can introduce you to some great ideas on eBay marketing does have a very good free eBook. I will PM the details to you.

I have had people start with as little as $300. It is slow work, but possible and can be grown. In an article on my Just In Time system, I referred to this subject. Have a look at it here: Sharing my lifetime experience in export/import. Product sourcing specialist.

Regards,
Walter

Great! Thank you so much for the help.
I will be waiting for the details

Have a nice day.

 

[Walter Hay]

Great! Thank you so much for the help.
I will be waiting for the details

Have a nice day.

Sorry Edward, but he now charges $5 for his little eBook, but I think it's worth a lot more so I PM'd the link for you anyway.
Walter

 

[Chantal]

Hello again, Walter

Thank you for your response from a while back. I'm sorry I could not respond sooner.
Would you recommend L/C as a safe form of payment, particularly when dealing with Chinese suppliers?

 

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[Walter Hay]

Hello again, Walter

Thank you for your response from a while back. I'm sorry I could not respond sooner.
Would you recommend L/C as a safe form of payment, particularly when dealing with Chinese suppliers?

Hi Chantal,

L/C, together with escrow from a reliable escrow service such as escrow.com, would be the safest forms of payment. There are scams even using L/C, involving the use of forged documents such as a Bill of Lading but these are usually perpetrated on a grand scale, so smaller importers are rarely hit.

For complete safety, use of an inspection service to supervise loading and authenticate documentation could be worthwhile.

Another, probably cheaper method of protection is to specify in the L/C that payment is subject to satisfactory inspection at the port of discharge. There can then be no possibility of switching contents.

Please note that "Escrow" services provided by Alibaba, DHGate etc., do not provide complete protection. They don't even call them escrow any more themselves. You can thank Alibaba's NY stock float for that.

 

[RisingStars]

First you need to check with http://www.cnas.org.cn/english/index.shtml which is the China National Accreditation Service. You will find the site extremely difficult to navigate, partly due to Chinese business names being registered in Mandarin only. When CNAS translate those names into English, the list remains in Chinese alphabetical order, not in English.

Being unable to find GTS on the CNAS list, I decided to contact them direct. I knew they were an Australian company and finding contact details was easy, but no reply yet.

Your next best step is to go to the Shenzen CTL Electromagnetic Technologie Co., LTD site and see what accreditations they claim, and then to see if they provide a service enabling you to check the validity of the certificate offered by your supplier.

I did this and found what to me is an unsatisfactory Accreditation claim. The only reference to CNAS is second-hand being mentioned in a letter from a US company, Timco Engineering, that is more like a reference than an Accreditation.

I would personally not accept the Certificate provided by your supplier. They may be OK but I prefer to be cautious.

Thanks a lot. When I go to Cnas.org I click on "Find an Accredited Body" Then there are a lot of options to choose from, like QMS, EMS, OHSMS etc.
Is this right so far? Where should I look for GTS then on what Certification Body?

Please let me know if they answer you.

In my case now, what would you do? Should I just stop writing my supplier(s) or should I try to explain them that I dont like their certifications?

Thanks again.

 

[Walter Hay]

Thanks a lot. When I go to Cnas.org I click on "Find an Accredited Body" Then there are a lot of options to choose from, like QMS, EMS, OHSMS etc.
Is this right so far? Where should I look for GTS then on what Certification Body?

Please let me know if they answer you.

In my case now, what would you do? Should I just stop writing my supplier(s) or should I try to explain them that I dont like their certifications?

Thanks again.

You are right so far. The best option is QMS, (Quality Management Systems) followed by OHSMS (Occupational Health and Safety Management Systems). I doubt that you will find GTS in either place, because I am sure they are not CE certifiers. I have had no reply and that is probably why.

I would ask the supplier for references to show that the products have been exported.

I can ascertain that for you if you privately give me their name.

Regards,
Walter

 

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[Chantal]

Hi Chantal,

L/C, together with escrow from a reliable escrow service such as escrow.com, would be the safest forms of payment. There are scams even using L/C, involving the use of forged documents such as a Bill of Lading but these are usually perpetrated on a grand scale, so smaller importers are rarely hit.

For complete safety, use of an inspection service to supervise loading and authenticate documentation could be worthwhile.

Another, probably cheaper method of protection is to specify in the L/C that payment is subject to satisfactory inspection at the port of discharge. There can then be no possibility of switching contents.

Please note that "Escrow" services provided by Alibaba, DHGate etc., do not provide complete protection. They don't even call them escrow any more themselves. You can thank Alibaba's NY stock float for that.

Thank you so much! You give such valuable information. I will definitely keep this in mind. I sent an inquiry to a Chinese supplier yesterday, however, I think they're actually a trading company. *Sigh* I see why you don't recommend Alibaba.... I don't trust this site either, but I can't find any other suppliers with the products I want.

 

[RisingStars]

You are right so far. The best option is QMS, (Quality Management Systems) followed by OHSMS (Occupational Health and Safety Management Systems). I doubt that you will find GTS in either place, because I am sure they are not CE certifiers. I have had no reply and that is probably why.

I would ask the supplier for references to show that the products have been exported.

I can ascertain that for you if you privately give me their name.

Regards,
Walter

Thank you very much, I've sent you a message.