Basic Questions

[Elijah]

Hey guys, I am thinking about producing a product in china and have several questions. Would be great if someone has an answer, I want to make it as cheap as possible. Several facts first:
The weight is 5 kilo per product, like 1000 kilo in total. 1 kilo costs me around 3-4€ I want to sell it for around 50€ (as I said, 5 kilo in total).
My question now is: Can this be profitable? If so, how can i make it possible? Shall i let it packaged in China and maybe even sell it from there? In this case I would not have importing costs to Europe. How much costs packaging in total? Should I let it package in China at lesst and THEN import it to Europe. How much are the costs for a warehouse, how much do I have to pay for duty?
Are there any other expenses I totally forgot?

Thank you very much!

 

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[Olimac21]

Hi Elijah

First of all those are many questions which do not have a fixed answer, the costs of a warehouse would depend on the location you plan to keep them, for how long, size, etc. Whether is profitable or not also depends on how much you plan to sell, the amount of price, perhaps employees you plan to hire to help you?

Understanding Total Landed Cost For Your Supply Chain this explains what is known as total landing cost and why is it important.

If you have time and are willing to do, I would suggest taking a short course or read about operations management-supply chain this can help you to manage your business better from the beginning and discover problems you might not even aware of at this stage.

 

[Elijah]

Hi Elijah

First of all those are many questions which do not have a fixed answer, the costs of a warehouse would depend on the location you plan to keep them, for how long, size, etc. Whether is profitable or not also depends on how much you plan to sell, the amount of price, perhaps employees you plan to hire to help you?

Understanding Total Landed Cost For Your Supply Chain this explains what is known as total landing cost and why is it important.

If you have time and are willing to do, I would suggest taking a short course or read about operations management-supply chain this can help you to manage your business better from the beginning and discover problems you might not even aware of at this stage.

Thank you very much for your answer!

 

[Walter Hay]

We need more information if we are to provide useful answers to most of your questions.

1. Is the product totally new and your own design?
   
2. Are you sure you are dealing with a real manufacturer, or a middle man?
   
3. Is it an improvement on an existing product?
4. Why 1000 kg? Have you been quoted an MOQ?
5. Have you been quoted a unit price?
6. Are you sure you can sell for €50? Could you charge more?
   
7. Is the product a consumer product or is it suitable for B2B sales?
8. If the product is shipped to you, is time a major factor? If not, sea freight would probably be your best option.

As @Camilo Ardiles said, some of your questions cannot have a fixed answer. I would add: Unless we know a lot more as per my questions above.

Here are my comments on some of the matters you raised:

• Profitability will depend in part on the price you have to pay, packaging and freight costs, duty etc.
• Packaging will be required for shipping to Europe, but that will usually not be packaging suitable for display or for presentation to customers.
• If you ship to customers direct from China, you will have to pay the fulfillment service in China a fee for storage + packing for shipment, + shipping cost.
• If you ship to customers direct from China, your customers will most likely have to pay duty and VAT.
  
• There are risks in entrusting orders to a Chinese fulfillment service.

To get some understanding of what is involved, you might like to browse my AMA GOLD Sharing my lifetime experience in export/import. Product sourcing specialist.

Walter

 

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[Elijah]

We need more information if we are to provide useful answers to most of your questions.

1. Is the product totally new and your own design?
   
2. Are you sure you are dealing with a real manufacturer, or a middle man?
   
3. Is it an improvement on an existing product?
4. Why 1000 kg? Have you been quoted an MOQ?
5. Have you been quoted a unit price?
6. Are you sure you can sell for €50? Could you charge more?
   
7. Is the product a consumer product or is it suitable for B2B sales?
8. If the product is shipped to you, is time a major factor? If not, sea freight would probably be your best option.

As @Camilo Ardiles said, some of your questions cannot have a fixed answer. I would add: Unless we know a lot more as per my questions above.

Here are my comments on some of the matters you raised:

• Profitability will depend in part on the price you have to pay, packaging and freight costs, duty etc.
• Packaging will be required for shipping to Europe, but that will usually not be packaging suitable for display or for presentation to customers.
• If you ship to customers direct from China, you will have to pay the fulfillment service in China a fee for storage + packing for shipment, + shipping cost.
• If you ship to customers direct from China, your customers will most likely have to pay duty and VAT.
  
• There are risks in entrusting orders to a Chinese fulfillment service.

To get some understanding of what is involved, you might like to browse my AMA GOLD Sharing my lifetime experience in export/import. Product sourcing specialist.

Walter

The product is not new, my goal is to be (way) cheaper than anyone else but still have a good quality. Therefor I want to skip some steps like wholesalers, simplify the process to make it as affordable as possible. This is the reason I also want to make huge packages to spare some money there as well.
I wanted to start with 1000 kilo to see how it and if it works, I do not want to start with too high kilos and 1000 kilos is pretty much the minimum I guess in order to be even able to buy from the supplier.
The product is primarely for consumers but since I want to be a wholesaler I could also sell it to retailers.

Are there also some licensing issues to even import stuff from China plus are there some trustworthy companies in China which can controll the quality of the product so I do not have to be around all the time? Are there any average tarifs for them?

Sorry for all these questions I am at the beginning of the thought process so I have literally no clue about anything.

Thank you for your help!

 

[Walter Hay]

1 The product is not new, my goal is to be (way) cheaper than anyone else but still have a good quality. 2 Therefor I want to skip some steps like wholesalers, simplify the process to make it as affordable as possible. This is the reason I also want to make huge packages to spare some money there as well.
3 I wanted to start with 1000 kilo to see how it and if it works, I do not want to start with too high kilos and 1000 kilos is pretty much the minimum I guess in order to be even able to buy from the supplier.
4 The product is primarely for consumers but since I want to be a wholesaler I could also sell it to retailers.

5 Are there also some licensing issues to even import stuff from China plus 6 are there some trustworthy companies in China which can controll the quality of the product so I do not have to be around all the time? 7 Are there any average tarifs for them?

Sorry for all these questions I am at the beginning of the thought process so I have literally no clue about anything.

Thank you for your help!

I have numbered the points in your post.

1. Without making the product superior in any way to the existing product, you might only succeed in starting a price war.
2. That is a good move. Wholesalers eat up your profits, so you should go direct to the real manufacturer.
3. Assuming that the price to you would be about €15 per unit, that means an outlay of €3000 for your first order. Unless your market research has found that you can be very confident of selling the product for your target price, that is a big risk. If you have been quoted 200 pcs (200 x 5kg = 1000kg) as the MOQ, you should negotiate a much smaller quantity for a trial order.
4. You must take into account the cost of packaging to suit a consumer market, as well as packaging and freight to deliver to your customers. I recommend that you read the article linked by @Camilo Ardiles about Total Landed Cost.
5. You don't need a license to import most products into the EU, but you might need certification, such as CE, but there could be others depending on the product. I suggest you search my AMA thread using the term Certificates so that you can read some important information on this subject.
6. Search my AMA thread using the term Inspection. There is a lot of helpful information on that very important subject.
7. It's not possible to answer this without knowing what the product is.

I hope this helps. You need to do a lot more research before you go much further.

Walter