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

Discussion in 'Product Creation, Inventing, Importing, Sourcing' started by Walter Hay, Sep 17, 2014.

  1. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    CANADA; It is very difficult to be specific unless the product is known, so I have to work on averages to answer you. The average (most common) duty is 8.56%, but it ranges from 0% to 35%. Regarding Sales Tax, for commercial importing into Canada you will pay only GST and not HST.

    USA. The average (most common) duty rate is 5.63%, but it ranges for 0% to 37.5%. Sales tax is not automatically collected, but state authorities get the import value information from USCBP and may choose to collect at some time subsequent to the import. You will have probably sold the goods by the time they hit you with a bill.

    With a duty difference of only around 3% duty is possibly less of a consideration than other factors such as inland freight costs and cross border freight costs. Canadian postage charges seem out of all proportion, but private courier services should be able to do a better price for you. Remember that freight costs are among the most highly negotiable items in trade. NEVER pay schedule rates. They are just published for newbies and dummies. Negotiate! Think 50% as a minimum discount.

    If you choose to have your overseas supplier ship direct to a fulfillment center such as Amazon FBA, that can be done. There are private fulfillment centers that will be easier to deal with than FBA, but you lose the potential benefits of selling via that Amazon system. If your items are prepacked and labeled to suit Amazon, you can ship direct to them but I don't like the idea of overseas suppliers knowing the system. In my opinion it is better to ship to a prepping service who will receive the goods, check for damage, pack and label as necessary and forward on to FBA. Some will even store part of your shipment for you at much lower rates than Amazon charge, and send them to Amazon in smaller quantities to save you paying big storage fees.

    TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
    Introduction. Dealing with myths and misinformation.
    Some things you should know or do before you start product sourcing.
    Part 1. Traveling to source supplies. Do you need to visit China? Trade Fairs.
    The difference between Alibaba and Aliexpress.
    Traveling to China to visit factories.
    ■ Do your suppliers use child labor or slave labor?

    Q & A 1,2,3
     
  2. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Thanks for letting me know.

    Welcome to world of high profit margin direct importing. Please let me know if you either regret it or are delighted.
     
  3. Dicky Dee
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    Dicky Dee Contributor Read Millionaire Fastlane

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    @Walter Hay Thank you for your insight. I did not know shipping was negotiable! Although i have searched far and wide in Canada for cheaper shipping into the states with tracking i have yet to find one that allows me to compete with U.S. shipping companies, the cheapest i have found is with Canadapost and the rates are laughable still compared to say USPS. If you know of any carriers up here that are better please do share!

    I've actually heard about shipping to FBA, and i may give it a shot once i start selling on amazon and get the gist of how things are sold on there. As for the prepping service is there any that you can recommend? How about costs for this service? If i go this route i would have to pay shipping to the prep centre then once again shipping to FBA which takes roughly a 30% cut of your sales to my understanding which would mean i would need a big margin product.
     
  4. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Part 2. Traveling to Source Supplies. Do you need to Visit China? Manufacturers.

    In Part 1 I dealt with visiting trade fairs. Now I will concentrate on visits to manufacturers, specifically to inspect their factories.

    If you plan to visit China in your search for suppliers, you should first research online and narrow down the possible list of suppliers to a manageable number depending on their location and the amount of time you will be in the country. Communicate with them frequently to help you assess their attitude to service, QC, etc. Let them know that you plan to visit, and would like to see their factory. If they won’t agree to that you will have one name to cross off your list.

    Take with you a supply of business cards printed in English on one side and Mandarin on the other. Exchange of business cards is more than a business custom it is rather like a ritual.

    It is acceptable to let the potential suppliers know that you will be visiting and that you will contact them on arrival in the city where you will be staying. Having made an appointment after arrival at the hotel, check all travel arrangements necessary to be there on time. The hotel staff will usually help you with this. Travel within Chinese cities can be appallingly slow. Whenever you venture out, always take a few of the hotel’s business cards to give to taxi drivers for your return trip.

    If your prospective supplier is impressed by you, that could result in your visit lasting a couple of hours. If they invite you to lunch, that can take as long as 3 hours.

    Once you arrive at the business premises, you will usually be greeted on arrival by someone who may appear to be a junior staff member, but it is customary for a female staff member to be appointed as your hostess. She will speak good English and her mission is to make you feel like an honored guest while observing strict propriety.

    She will often have some authority to negotiate, but price negotiations on the first contact are not desirable. Do that later in your visit, or even later on your return home. Visits are mostly restricted to the reception area, where you usually drink Jasmine flavored green tea. If you empty your cup, it will be refilled, so unless you love Jasmine flavored green tea, you should only take very small sips. Don't ask for coffee.

    After a suitable time, which you will have to judge by the flow of conversation, you should ask to visit the factory. If this is on the same premises, you may be sure you are dealing with a manufacturer. If taken to another location, do the following to determine whether or not the people you are dealing with own the factory: Assuming you cannot read Chinese, just compare Chinese characters on signs outside the premises with those on the business card supplied by your hosts. If they match, they are probably genuine manufacturers, but changeable signs are not unknown.

    Bear in mind that factories are often multistory, with a multitude of businesses in the same building, so there may not be a noticeable sign. In that case ask the factory manager for his card. If this causes embarrassment or he cannot supply one, it strongly suggests that you are dealing with an agent, not directly with the manufacturer.

    If you request a card, you should also offer yours. Ask your hostess, “Do you own this factory?” You will only know the answer is truthful if she says no. If she says yes, you cannot be sure. This is not necessarily due to dishonesty, as she may misunderstand your question, or she may interpret it to mean, “Is this the factory that produces all of your products?”

    As you can see, even when visiting personally, confirming factory ownership is not easy. You could spend a lot less money by employing the services of Intertek (UK) or SGS (Switzerland) for a few hundred dollars and staying home, but you miss out on the delights of tax deductible overseas travel.

    TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
    Introduction. Dealing with myths and misinformation.
    Some things you should know or do before you start product sourcing.
    Part 1. Traveling to source supplies. Do you need to visit China? Trade Fairs.
    The difference between Alibaba and Aliexpress.
    Traveling to China to visit factories.
    ■ Do your suppliers use child labor or slave labor?

    Q & A 1,2,3
     
  5. Franklin
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    Franklin New Contributor Read Millionaire Fastlane

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    Hey Walter,

    Awesome thread!

    Just finished reading your book, very helpful. Can strongly recommend it to anyone that want to get more insight in export/importing.
     
  6. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Thanks Franklin,

    I will try to do even better on this thread.
     
  7. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Q & A 4.


    Q. Do you know if many of these manufacturers will do Private Labeling? Did you ever do this? Once I find the right product, I would like for them to be able to place a logo without greatly increasing cost. Any thoughts?

    A. Internet marketers seem to have found private labeling as the best new thing since sliced bread, but it has been around for many years. Yes, most manufacturers will do private labeling although some are easier than others to deal with. Find one that is cooperative and does not charge excessively.

    When I was manufacturing industrial products that I exported to China and other Asia Pacific countries, all my exports had my own label, but I also did private labeling for numerous local customers.

    There I am introducing a mild warning…… I invented an industrial product that also had a big potential market to consumers. I did not promote it, but resellers came to me for the product and they wanted it private labeled. I sold it to any who asked but I did not promise exclusivity to anyone. It went out under at least 18 different labels (from memory), and they were all competing with one another with the identical product.

    The same could happen to you. Only 3 of those businesses succeeded, but they all went on to develop big markets and knowing their retail prices and their purchase volume I can tell you that it was a lucrative business for all of them.

    When I began importing in 1987, all of my products carried our own label. There were many different products in our range and they came from different factories, so over the years we spent at least $100,000 on set up costs. All our sales direct to business end users wore my brand, but we also produced (in our suppliers’ factories) products bearing our customers’ logos because we knew how to source them and they did not.

    Private labeling can take many forms, from printed stick on labels, through hot foil stamped logos, screen printing, woven labels, molded silicone labels, stamped and plated metal labels etc……

    Set up cost can vary from $20 for a simple one color print, to $300 for a jacquard needed for a woven label, up to $5,000 or more for an injection mold for debossing or embossing your logo in a generic molded plastic product. As a general rule the label cost or the printing or embossing cost is only a few cents, but a stamped metal logo to attach to your wooden furniture may cost as much as $1 - $5.

    For those interested I suggest that one of the lowest cost private labeling methods is hot foil stamping. It can be used on a wide variety of substrates, but definitely not on metal or cloth. If you want a classy look that will last it needs to be debossed, not embossed, and preferably not have large solid areas of foil print.
     
  8. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Have you tried Purolator? I know they do parcel consolidation as a means of reducing cost.

    They receive multiple parcels all addressed to the various customers, then they shrink wrap them together on a pallet and they go through Customs as one shipment, and it is charged at the single shipment rate. On arrival at their US depot, the wrap is removed and the parcels are all sent to the individual recipients and freight is charged at the local rate.

    Hope this helps.
     
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  9. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Q & A 5.

    This is a question from a person to whom I had been explaining how escrow works.

    Q. So sir,

    It means i have the advantage of checking the products before releasing the money? meaning i pay alibaba 100% then alibaba hold the funds until i say that the product delivered by the seller is working and in good condition?

    then its a good concept and safe way of doing business also the 5% is nothing compared to the safety of our transaction.

    Correct?

    A. That is correct. It one of the safest ways to do business, but the big drawback is that you must not let a supplier keep you in discussion until the time limit runs out. That is a strategy that has often been reported.

    The Escrow rules published by Alibaba are very complex and it is difficult to get the full story on their site.

    I suggest you go to the Alibaba site, click on For Buyers, then under Trade Services, click Escrow. On next page click on Learn More in the section "What is Alibaba's Escrow Service?" Next page click on FAQ. Next page look at the Dispute section on the right.

    Take special note of the section "How do I make a refund request?" You are expected to negotiate with the supplier, and if no resolution after 30 days the matter automatically goes to mediation. See also the time limits in the section "How do I Open a Dispute?"

    While there is no mention of the fact that you must complete negotiations within a certain time, I strongly recommend that you ask for mediation if you have not been given a firm and positive answer by the supplier within 10 days of opening a dispute.

    I have received many sad tales about Alibaba paying the supplier because the dispute had not been escalated within the required time. That required time used to be published on their site, but I am currently unable to find it.

    Some of the recent changes to their site have not been done competently and if you click on certain buttons in your escrow search you will find the page not available.

    Rather than use Alibaba's escrow service that I believe is weight too heavily in favor of the seller, I suggest you tell suppliers that you want to use escrow.com and that you will pay the escrow fee. Many will say no, largely because they don't know escrow.com, so you will need to show them details of that company's financial registrations in various states.

    Escrow.com's fees are very high for very small transactions, but a lot lower than Alipay when the transaction is for $2,000 or more. There is an online calculator on their site but just to give you some idea, here is what their escrow protection will cost you, including a a flat rate service fee of $25.
    $200 25.0%
    $500 10.0%
    $1,000 5.7%
    $2,000 4.5%
    $10,000 2.0%

    By using escrow.com you can be sure of safety in the transaction.

    On transactions of $10,000 or more it is cheaper than what most banks would charge for processing an L/C.
     
  10. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Parallel Imports USA

    Is there a legal way to import well-known brands into the USA for resale? The answer in brief is: If a product or a brand does not have a CBP Recordation number displayed on the USBC website it SHOULD be safe for you to import that product or brand, but please read the entire post before you order!

    There are many big brand products that can be purchased overseas, even at retail, at prices way below the retail price in the USA.

    It is vital to appreciate that there is absolutely no way you can safely or legally import imitations, counterfeits, or knockoffs. Even items that look like big brand items may be confiscated by the US CBP Service. Reconditioned big brand items may suffer the same fate.

    Before proceeding please understand that this article is not intended as legal advice, and the author accepts no liability for any outcome resulting from acting upon any matter or matters referred to in the article.

    This post is specific to the USA, but if there is sufficient interest I might be persuaded to write about the issue in relation to other countries.

    First: What are parallel imports? Parallel imports (also known as gray market goods) refers to genuine branded goods that are imported into a market and sold there without the consent of the owner of the trademark.

    The goods are “genuine” goods (as distinct from counterfeit goods) in that they have been manufactured by or for or under license from the brand owner.

    However, they may have been designed with small differences, or even packaged differently for a particular jurisdiction, but then imported into another jurisdiction (USA). This can lead to the presence of what is called a material difference. What you might consider is a trivial difference can be classed as material by CBP or a court of law.

    Here are some of the things that courts have determined constitute material differences:

    · Packaging differences, including absence of certain familiar markings;
    · Product appearance, even a slight difference in shape or distinctive color;
    · Difference in smell;
    · Different appearance of labels;
    · Missing legislated labeling requirements;
    · If it is food, beverage, cosmetic etc., different ingredients.

    A material difference is one that consumers familiar with the brand would notice and consider relevant to their decision to buy. If a consumer is familiar with a branded product, and after purchasing a parallel import notices that the product’s characteristics are inconsistent with his or her previous purchases, the consumer may begin to doubt that he or she has purchased a genuine product.

    These differences are important because of potential damage to the brand owner’s image or reputation.

    Why Try Parallel Importing?

    One of the best ways to answer this is to say that according to the World Health Organization, Bayer sell ciprofloxacin (an antibiotic) in India for $15 per 100 units (500 mg) but in Mozambique they charge $740.

    The clear reason is that there is absolutely no competition in Mozambique, but there is a huge amount of competition in India. Wow! What an opportunity! Or is it? ..........

    Now don’t rush to buy ciprofloxacin in India and try to sell it in the US. Pharmaceuticals are one of many product categories subject to specific legislation that would make it impossible. There are other branded products that are either impossible to import or can only be purchased as parallel imports if certain very tight rules are observed.

    About 5 years ago, in a U.S. Customs and Border Protection's Customs Bulletin, the agency announced that it was applying the “Lever rule” (a landmark court ruling in the case Lever Bros. Co. v. United States, 1993) to cover certain brands of watches. Importation of the watches is now forbidden unless they bear labels warning potential purchasers that they are “physically and materially” different from watches normally sold in the United States under those trademarks.

    This ruling applies to many product categories, and consequently anyone considering parallel importing should seek expert advice. Experienced Customs Brokers should be able to identify which products have been specifically listed as restricted gray market goods.

    It is possible to conduct a search on the CBP site located at: http://iprs.cbp.gov/ and find the Intellectual Property Rights Search (IPRS) page. Enter the brand name in the "Keyword" box and if that brand has requested and been granted gray market protection, a CBP Recordation number will be displayed. If one clicks on the entry under the second column, which is labeled "Title Product", on the brand name, the CBP Recordation opens up to another screen and displays more details.

    So, the message of value amounts to this: If a product or a brand does not have a CBP Recordation number displayed it SHOULD be safe for you to import that product or brand.

    Although I have provided that search information I can assure my readers that I would not personally rely solely upon those results. If your Customs Broker cannot give you a definite answer, it would be unwise to proceed with parallel importing without obtaining legal advice.

    Just a word of caution: If you intend relying on any expert or legal advice, you must have that advice in writing.

    Is Parallel Importing Worth the Trouble?

    That is a decision for each one individually, but if you obtain sound expert advice that gives you a definite assurance that you are on safe ground, parallel importing can be extremely lucrative.

    In some countries where government protection of big business interests is not as great as it is in the US, parallel importing is actively encouraged. Japan and New Zealand are two notable examples, where there is a thriving market for parallel imports and some quite large businesses have grown up around that business model.

    It is always necessary to do your research before beginning any enterprise, but in the case of parallel importing, thorough research is absolutely essential, but I believe there is so much profit potential that time spent on research could be handsomely rewarded.

    Just think; Do you think the manufacturers, (Bayer) are selling at below cost in India? No it would not cost them anywhere near $15 to produce 500 gm. (just over 1 lb.) of ciprofloxacin. After all, Indian manufacturers are profitably selling the same antibiotic at around that price. Bayer is also no doubt selling at a profit at $15, yet they found a market (Mozambique) where they can sell the same product for $740.

    You may not find such extreme price differences for products that interest you, but huge differences do exist. Maybe you can capitalize on that.

    TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
    Introduction. Dealing with myths and misinformation.
    Some things you should know or do before you start product sourcing.
    Part 1. Traveling to source supplies. Do you need to visit China? Trade Fairs.
    The difference between Alibaba and Aliexpress.
    Part 2. Traveling to source supplies. Visiting factories in China.
    ■ Do your suppliers use child labor or slave labor?

    Q & A 1,2,3,4,5.
     
    Last edited: Nov 3, 2014
    Jbat, Ross Morgan, Magneto C and 8 others like this.
  11. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Questions Please....

    I know I have posted a lot of information, and I intend continuing to do so, but so far I have only had a handful of questions.

    This is an AMA thread and I love to help, so hit me with your questions and see if we can resolve some problems not only for the ones who pose the questions, but also for those other readers who are finding the same obstacles to their progress in building an importing empire.

    Q & A 6 coming up tomorrow. I hope these Q & A's are useful.
     
  12. ddall
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    ddall continuous self-improvement Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    Walter, your thread is fascinating.

    I have a few questions if you care for them:

    1) If a supplier ships you a sample, and the Airwaybill states another company, what would you make of this? The 'supplier' has a website, uses an email address based on that website, and has reasonable MOQ's (500 and below) however the sample arrived under a different company name as sender on the waybill. When I inquired specifically about the discrepancy this was their reply:
    " You don't need to worry about it, we are the manufacturer, and we also deal with the trading, because some of our old customers will ask us to find other products to them, they trust us base on our long term partner ship. But the name shown on the waybill is not our company, maybe our DHL agent send the products under other company's name. "

    2) I know you touched on this previously, but what strategies would you suggest to 'soft negotiate' with a supplier. That is, without coming off as brash, rude or demanding, any wording or methodology to gently inquire about lower pricing now or in the future. In my limited experience I have very gently nudged the situation at opportune times, but as you stated it seems more appropriate to bring up when ordering second and third orders and bumping up the moq.

    3) If time were no issue, is their any benefit to shipping via air vs sea?

    4) Looking into the future, where do you spot the next major opportunities for business within the realm of importing?

    Thanks Walter
     
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    ljb7 Bronze Contributor Read Millionaire Fastlane Speedway Pass

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    Walter,

    I'm stuck trying to find the manufacturer for a product I've bought. I'm 95% sure I'm dealing with a trader (albeit good) at the moment and want to get this price down.

    I've scoured the sites you recommend. The company I'm dealing with isn't 'compliance verified' on the one site, and isn't on the other great site. It is on Alibaba though.

    I would really appreciate your help so I can dig deeper and find the original manufacturer without potentially destroying the relationship I have with the existing trader, because they are a little too pricey but still provide great service.

    Thank you!
     
  14. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    ddall, Thanks for your questions.

    1. Most businesses in China trade under at least 3 different names and I have known some with as many as 10 names. The practice of trading in other products is very common. In fact I used to do it myself, when satisfied customers would ask for products outside of our usual product range.

    The expression "maybe our DHL agent send the products under other company's name" is not much cause for concern when you understand Chinese use of language. "Maybe" can be an all-embracing way of saying "The simple fact is that we use DHL's services under the name of one of our companies and that is why a different name appears on the AWB." You can be sure that because they had to pay the freight bill, they know exactly which company name was used.

    2. The simplest way to negotiate softly is to obtain competitive quotes and use them in non forceful way. It helps if you can scan and email a copy of a competitor's quote, but it is best to obscure all identifying printing including company name, address, phone/fax numbers, logo, etc.

    When using a competitor's quote to try to get a better price, you should mildly compliment the supplier you are negotiating with, and add that you would prefer to deal with them because of those good points, but you must consider the costs.

    Because you have already given away a negotiating point with your praise, they will rarely match that price but they will often lower the price to a compromise level. The praise is used to help cement your relationship, and in my opinion the risk of not getting them to lower the price all the way to match the competitor is worth it if you believe you have found a really good supplier.

    3. There will always be an issue of opportunity cost. That is, the value to you of the money you have outlaid while you wait for delivery. With air freight you get to turn that money into sales a lot faster than if you use sea freight.

    Depending on order size, air freight can sometimes cost a lot less than sea freight. Once you reach container load quantities, that is almost impossible. Always remember the distinction between air freight and air courier service. Air freight does not automatically include pick up from supplier, customs clearance, or delivery to your door. It should be arranged through a freight forwarder.

    4. My crystal ball is slightly cloudy, but I do see big movements away from China. Many Chinese companies are now doing what Taiwanese companies did about 20 years ago, and that is they are starting to look for low labor cost countries. A large number of Taiwanese companies transferred their manufacturing to mainland China.

    Some of them are now moving again, looking at other Asian countries but also Africa. Chinese owned companies are doing likewise. I don't see great opportunities for importers because the manufacturers will continue to be the old hands at the game. The only benefit will be the maintaining of low prices.

    Walter
     
  15. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    It can often be very difficult to locate the real manufacturer of a specific product. It is always possible that the manufacturer is small, and does not have an export license or does not want to be bothered with the hassles of exporting.

    If that is the case you may have no option but to deal with the trader.

    I would be happy to check them out for you if you care to give me their name confidentially. You could do so by starting a conversation.

    If they are in fact the manufacturer, you will have to slowly work on them to get a better price. Sometimes you can get other concessions such as lower freight charges or upgraded packaging.
     
  16. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    As promised I checked them out, and without any doubt your supplier is not the manufacturer. See our conversation to find the real manufacturer's identity.

    For the benefit of others, but without disclosing anything that will identify your niche I will just make a few points.

    Some suppliers sell a range of products that are all closely related and the whole range is needed in order to provide a complete package. These suppliers can't possibly manufacture the whole range, although they might have started off manufacturing one category within their range.

    For the convenience of sourcing a package from one supplier you can expect to pay more. If you only want to buy a product that is just a part, and not the whole package, it would pay to do some more searching to find the actual manufacturer of that product.

    This is what I have done for you now. As you know it only took me a few minutes.

    This leads me to provide a hint on how to search B2B platforms. Explore different keywords and different combinations of keywords. For example you may want to buy a combination bath and shower made of acrylic.

    Search possibilities are:
    Acrylic tubs.
    Acrylic baths.
    Acrylic showers.
    Acrylic combination bath and shower.
    Bath tubs.
    Shower tubs.
    Tubs.
    Showers.

    There are actually a whole lot more possibilities and your success can depend on how persistent you are.

    It is also worth noting that some B2B sites will not recognize (American spelling) a word if it is spelt using American English and others won't recognise (British spelling) a word if it is spelt in British English.
     
  17. ljb7
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    ljb7 Bronze Contributor Read Millionaire Fastlane Speedway Pass

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    Thanks a lot, I appreciate the help Walter.
     
  18. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Q & A 6.

    Q. Can I get my shipments delivered by airfreight with duty paid?

    A. People often mix up the terms airfreight and air couriers and I suspect that you may mean air courier not air freight.

    Airfreight with duty paid refers to the INCOTERM DDP which means delivered, duty paid. It is a term occasionally quoted by suppliers, but not by freight companies and it is very rarely offered. If you have ever been quoted those terms you would be the exception rather than the rule for the simple reason that overseas suppliers do not want to take the risk of paying more duty than they expected to when they quoted you.

    To clarify the matter, I think you mean using a freight service that includes clearance through Customs and payment of duty on your behalf. This can be done two ways:
    1. Use a freight forwarder who has included door to door delivery and customs clearance in his quote.(Make sure the quote is in writing.) The clearance service also invariably involves payment of duty and tax (if applicable) on your behalf. You then pay the forwarder and they deliver the goods to you.
    2. Use a door to door air courier service. This can be arranged by you or by your supplier. Just like the freight forwarder service I describe, it also normally involves payment of duty and tax (if applicable) on your behalf. You then pay the air courier and they deliver the goods to you.
    Neither of these services meets the description DDP, but they do achieve what you want to do.

    All intending importers should be aware that it is not possible to know in advance the exact amount of duty payable. Your Freight Forwarder or Customs Broker should be able to give you a close estimate, but there are variables that can result in Customs imposing a lot more or a lot less duty than even those experts would expect. This is one good reason why suppliers would very rarely be willing to quote DDP.

    TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
    Introduction. Dealing with myths and misinformation.
    Some things you should know or do before you start product sourcing.
    Part 1. Traveling to source supplies. Do you need to visit China? Trade Fairs.
    The difference between Alibaba and Aliexpress.
    Part2. Traveling to source supplies. Visiting factories in China.
    ■ Do your suppliers use child labor or slave labor?

    Q & A 1,2,3,4,5
     
  19. ddall
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    ddall continuous self-improvement Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    Walter, this thread in my opinion is gold, particularly for would-be entrepreneurs seeking wisdom from an experienced master of his craft. Thanks for taking the time for sharing the insights you've gleamed over the years, I will be buying your book.
     
  20. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    I really think that it will help smooth the road for your fastlane ride, but don't hesitate to ask more questions. A book can't possibly answer every question that might come up.

    That is why I have such a huge bank of questions and answers that I am posting every few days.
     
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  21. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Q & A 7.

    Q. How much of the rules and regulations do you really have to learn before it is safe to start importing? Like, I looked up the Customs site and it is scary.

    A. I don’t blame you. For someone new to the industry it must be very scary. There are thousands of pages of rules and regulations and the worst part is that they are changing all the time.

    Those constant changes were a big factor in me deciding that although I was qualified to handle my own Customs clearances, I would leave that to others to do for me. I figured that my time was better spent sourcing, importing, and selling, rather than reading, reading, and reading, just to stay up to date.

    It was also more cost effective for me to pay someone else to do the work for me than to do it myself.

    I certainly did not have enough shipment volume to set up the online links to Customs that are used by Customs brokers to streamline the process. A broker can lodge a clearance quickly, sometimes in a matter of seconds, and rarely would it take more than a few minutes.

    You will have already worked out from my answer that you barely need to know any of the rules, and that I would advise using the services of a Customs broker to do the clearances for you.

    There is one rule you must learn. You are legally responsible for the facts declared in any declaration lodged for clearance purposes. Even if your broker makes an error, you are legally responsible.

    One area that few consider in this respect is declared value. It is almost universal practise for Asian suppliers to under declare the shipment value, thinking they are doing you a favour. When shipping documents arrive in advance of the shipment reaching your country, you should check the invoice value, and notify your broker if the value is not correct.

    It is preferable to instruct your suppliers in advance that you will not accept invoices for less than the true value.

    TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
    Introduction. Dealing with myths and misinformation.
    Some things you should know or do before you start product sourcing.
    Part 1. Traveling to source supplies. Do you need to visit China? Trade Fairs.
    The difference between Alibaba and Aliexpress.
    Part2. Traveling to source supplies. Visiting factories in China.
    ■ Do your suppliers use child labor or slave labor?

    Q & A 1,2,3,4,5,6
     
  22. ddall
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    ddall continuous self-improvement Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    Walter,

    Thanks again for your great thread. I have a few other questions, this time on exporting to China. Are you familiar with this?

    I would love to explore exporting some high end food products, not wine (perhaps you read of those young american friends who have done quite well importing wine from California to China at a premium?), but similar. Given China's massively growing middle glass and growing hunger for status, high-quality food, I think their is an opportunity there. I know how to import and market from China, but for the reverse...I have no idea even where to start. Any direction?
     
  23. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Yes I exported to China from 1978 through 1987. I also exported to other Asia Pacific countries during that time.

    First I must say that exporting is much more difficult than importing. Finding prospective buyers can be very time consuming. Once you have located good prospects, it is imperative to make a personal visit, and for each contact you will need to allow at least 3 days. The first day will be largely socializing, including dining out and being entertained. You should stay at a top hotel in order to impress.

    You will be obliged to work through an interpreter. This is because that puts you at a disadvantage when negotiating! Your Chinese associates will talk freely among themselves and your interpreter will not interpret what they say. He/she will only interpret what they want you to hear.

    The biggest obstacle you will face is actually locating prospects. To do this there are several possibilities. You could contact the World Trade Center in Beijing. https://www.wtca.org/locations/china-world-trade-center-beijing?locale=en.They are much easier to communicate with than the one in Shanghai. Be prepared for a long delay in getting any response. The alternative is to register as a vendor on Alibaba. I know I knock Alibaba as a site for buyers to use, but for sellers it is unbeatable. I am still a registered vendor there, although I have not sold anything for years.

    Currently you can buy Gold Supplier status for $699 instead of the usual $2,999. You will receive numerous buyer requests, most of which will be from opportunists who operate from a residential apartment and do not even have an office. If they appear to have an office you will need to check the address to see if it is a serviced office, or if it is one they rent permanently, otherwise you may waste a lot of time on someone with no resources. Use a throw-away email address. gmail is OK, but one with your domain name is better, even if the domain name is throw-away.

    I found my Chinese agent through my agent in Taiwan. I found the agent in Taiwan through the World Trade Center in Taipei. The WTC in Taipei is extremely active, and contacting them could well lead you to a Taiwanese company that has appropriate contacts in mainland China, so it is well worth a try. Many Taiwanese businessmen have business links to the mainland.

    If you need more details, please just ask.
     
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  24. GrensonMan
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    GrensonMan Bronze Contributor Read Millionaire Fastlane Speedway Pass

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    It's because of guys like Walter Hay that this forum has so much value! It's seriously unreal.

    Walter, question for you regarding duties and tax. When importing from lets say China, the shipment requires a customs value. I understand this value to be the fair market value of your items. Does that mean that if it cost me $5 to make in China but I will be selling it for $20 in the states then I pay duties and tax on $20? What would happen to a guy that just placed the value at $5 and made sure his paperwork was consistent from start to finish? Couldn't one potentially argue that the fair market value was what you paid to have the item manufactured, which would be $5.
     
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  25. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    You are close to the mark, but the value you should declare for duty and tax purposes is:

    Purchase cost + freight + insurance if any. Your duty and sales tax will be calculated on that total figure.

    If you are selling in a jurisdiction that requires you to charge Sales Tax, you then have to charge your customer the local sales tax rate, but that has no connection to the sales tax that the Customs dept may impose when you import.

    It is a serious crime to understate the value. With duty rates in most cases now being so low, I cannot understand why anyone would take the risk. When I first started importing, average duty rate was around 15%. Now that the world is a global village, average US duty rates have fallen to 5.63%.

    If your buying price doe not allow you to bear that small amount, then you are buying in the wrong place from the wrong people.
     

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