Importing goods from China is a common practice for B2B and B2C companies around the world. Whether you source goods from wholesale platforms like Alibaba or manufacture your own products – after making a purchase, you need to get the goods to their designated destination.
In this article, China Gravy navigates you through the importing process as part of international trade, so you are well prepared and avoid pitfalls along the way.
Discover everything you need to know about applicable compliance and certificates, logistics and forwarding documents, as well as customs and taxes when importing goods from China.
Let’s take a look at the process step by step.
Overview of Importing Goods from China
Generally speaking, it is advisable to start as early as possible with the sourcing and importing process. Especially if this is a first-time import shipment or new collaboration with a manufacturer or supplier in China, extra time is required to negotiate terms, check certifications, conduct product tests in approved labs, and prepare required shipping and other documents.
Keep in mind important national holidays, like Chinese New Year, and the time before and after that, to ensure you get your goods in time. Calculate 3-6 months for the whole sourcing and importing process.
B2C and B2B businesses that source and import products from China, generally follow these seven steps:
- Sourcing Your Products
- Compliance & Background Check
- Sample Ordering & Supplier Selection
- Placement of Actual Order & Payment
- Production & Quality Inspection
- Shipment & Delivery
- Select a Forwarder & Incoterms
- Shipping Costs
- Shipping Documents
- Monitoring the Delivery Process & Arrival of Goods & Final Check
Read up on everything you need to know about importing from China, so this process will be quick, smooth, and efficient for your global B2B or B2C business.
1. Sourcing Your Products
Finding products in China is easy and difficult at the same time. There is an abundance of suppliers, manufacturers, and agents who are eager to do business with international companies.
This is also a challenge at the same time: the sourcing situation is confusing, and without good Chinese language skills, you often enter a dead-end in the negotiation process. Read up on everything you need to know about sourcing products from China in detail here.
Alternatively, a China expert like China Gravy can help you with this crucial step to source and import products from China for your B2B or B2C business. Our sourcing service includes supplier/manufacturer research including background checks, communication/facilitation, and our recommendation based on extensive market knowledge and expert insight.
2. Compliance & Background Check
First of all, before beginning collaboration with a new supplier to start importing goods from China, it is advisable to conduct a background check on the potential partner.
You can check supplier reviews and transaction numbers if you are using a platform like Alibaba and find out more about the supplier on platforms like Aiqicha that list registered capital and other relevant information, e.g. how long has the company been registered. This also helps you to identify if the potential partner is actually a manufacturer or only a broker/retailer who has their own margin.
Next, make sure that the product fulfills all regulations and has all certificates required for the countries of import and final use. These regulations and certificates are typically centered around consumer health and safety (e.g. foods, children’s goods, consumer electronics). In case your potential supplier/manufacturer doesn’t have these, don’t panic. It just means extra time is required to test the products and get the required certification.
The most recognized Quality Management System (QMS) standard in the world is ISO 9001. It is a certification for suppliers/manufacturers to demonstrate they have good management processes and policies in place and are continuously improving these.
For textiles and leather products that are in touch with human skin, Oeko-Tex certifies human-ecological safety in all stages of production. While Oeko-Tex is not a legal import requirement, it is an important seal and decision support for consumers. It also contributes to protecting suppliers against potential legal obligations should consumers claim skin irritation or injuries related to the product.
Besides, every country has different regulations on the labeling of products and packing. So make sure to check this with your potential supplier as well.
The most common certificates for the EU are the CE mark, the REACH certificate, RoHS for electric and electrical equipment, as well as the EU declaration of conformity.
- The CE mark (Conformitè Europëenne) is mandatory for more than 20 product groups, including toys, and mobile phones.
- When using chemicals, products must comply with the EU REACH regulation (Registration, evaluation, Authorisation, and Restriction of Chemicals) to protect human health and the environment.
- RoHS (Restriction of Hazardous Substances in Electrical and Electronic Equipment) regulates the use of dangerous and harmful substances in electrical and electronic equipment to protect the environment and general public health.
- EU declaration of conformity: An EU declaration of conformity does not mean the goods are legally compliant or marketable in the EU. The product must still comply with other EU/national regulations to fulfill legal conformity. However, depending on different directives and regulations, various product groups require a declaration of conformity, including medical devices, electric appliances, and personal protective equipment like FFP2 masks.
For the United States, the U.S. Customs and Border Patrol (CBP) offers comprehensive information on permits and/or licenses you may require. For example, all children’s products must comply with CPSIA (Consumer Product Safety Improvement Act) when importing this product category from China to the US. And food items must comply with the FDA regulations in the US.
If the supplier/manufacturer of your choice does not yet have the required certifications for your product, they will collaborate with test/certification institutes (laboratories) in China to obtain the respective certificates. The China experts at China Gravy can connect you with certified test labs for your specific product group and needs.
Keep in mind that this process can take several weeks and the original product might have to be adjusted to fulfill the required standards. Typically the buyer pays for this product certification if a supplier/manufacturer doesn’t have it yet.
3. Sample Ordering & Supplier Selection
Depending on the supplier/manufacturer background check, product description, and pricing, it is now time to order your samples.
After you have received all samples, assessed, and tested them in practice, choose the supplier/manufacturer with the best quality and price.
4. Placement of Actual Order & Payment
Once you know that the goods you are attempting to import into your country are legal to do so and have the required certifications, you can proceed with the purchase process. Make sure that the terms and conditions from the PI are still valid, place your order, and request the final commercial invoice, which you will need later on for the shipping process.
Place your order and pay for the products. Keep in mind that suppliers/manufacturers generally request 100% payment before proceeding with the manufacturing and shipping of your order. There are also solutions that require no prepayment or down payment. The China specialists can connect you with reputable brokers that offer these services.
This is where the background check of the supplier from the Compliance & Background Check comes in handy, so you don’t have to worry about unreliable suppliers/manufacturers. For larger orders, you can consider setting up an escrow account or using Alibaba Secure Payment (Escrow) or Alibaba Trade Assurance – if the supplier is on Alibaba.
Bank & FX Fees (Importing Goods from China)
It is advisable to clarify with your bank beforehand if and at what cost and time period they can transfer payments to China.
Some Chinese manufacturers have subsidiaries in Hong Kong to make it easier for international purchasers in Europe, the US, and other third countries to make their payments. Also, consider the currency exchange rate and additional costs that may apply when paying in a foreign currency.
Chinese New Year & Other National Holidays
Also keep in mind the time before and after important Chinese national holidays like Chinese New Year that typically result in delays, a decline in product quality, and other issues.
5. Production & Quality Inspection
After the payment arrives at your supplier/manufacturer, your order is processed. The goods are either manufactured if they are custom-made or prepared for shipping if you’ve selected an existing product.
Once the goods are ready, a quality inspection (QI) at the supplier/manufacturer by an external company that checks whether the goods are ready for shipping is advisable for larger orders. A China expert like China Gravy can help you to organize this.
6. Shipment & Delivery (Importing Goods from China)
So, you’ve successfully sourced and manufactured your products in China from a reliable partner and are in line with all compliance requirements. Now, all you’ve got to do is get the goods to your warehouse or office. If you are new to this process, it can be very complex, confusing, time-consuming, and costly.
This can easily consume your expected margin due to unexpected customs, import, delivery, and regulatory expenses and cause customer dissatisfaction due to longer transit times and other unexpected delays.
Take these simple and straightforward steps to get through the process of importing goods from China timely and smoothly.
a. Select a Forwarder & Incoterms
Depending on your budget and the time frame, you can choose from a variety of shipping options like air, sea, truck, or train. Typically, the slower, the cheaper and easier the transportation is.
When selecting a forwarder, also make sure that they are reputable and experienced with the logistics of exporting your product category from China and importing it into your country. In case you are unsure, a China expert like China Gravy can help you with a background check.
The International Commercial Terms (Incoterms) are also known as shipping terms, freight terms, or trade terms that determine which parties are responsible for the shipment at any given point during the transit.
This typically includes loading and unloading of the goods, import and export customs clearance, export and import taxes, audits, and transportation of the goods to the final destination.
The total landed cost is therefore determined by the type of forwarding you choose, e.g. ex works, delivered duty paid, or any other of the list above.
Knowing your landed costs keeps you in the driver’s seat of your margin and earnings. In some cases, you may only know an estimate before your shipment has arrived, but not the full final costs. Consider leaving a small margin for any unexpected fees and costs that may occur, especially as you go through the importing process for the first time.
The most common Incoterms are:
EXW (ex works)
You are responsible for organizing transportation from the location of the manufacturer to your warehouse or office. On the other hand, you have full control over this process and it is less expensive overall.
You collaborate with a freight forwarding company for the logistics process. Among the largest forwarders according to their gross revenue are DHL, Kuehne + Nagel, DB Schenker, and DSV Panalpina.
FOB (Free On Board)
Also known as “Freight on Board”, FOB indicates that the seller is responsible (cost, handling) for all steps and costs related to the point of loading the goods into the vehicle that was chosen as the mode of transport (ship, truck, airplane).
DDP (Delivered Duty Paid)
The seller pays and arranges transportation to your selected destination (including customs). This is very comfortable, but also more expensive, and you generally have less control over the process.
If you want to save time and energy, consider working with a third-party logistics provider (3PL), who takes care of the whole fulfillment process for you.
b. Shipping Documents & Costs
If you decide to manage the logistics process – partly or in full – on your own, take a look at the next steps.
Keep in mind that getting the respective certificates and supporting documents can require a few or several working days. Get started with this process timely to avoid delays and other issues. Even more so around important national holidays.
Rate of Duty
To find out the rate of duty that will be applied to your goods, select the international customs tariff classification number (HS Code). This 10-digit together with the Certificate of Origin (C/O or CO) determines the applicable duty rate.
Make sure to always check official government information. For example, you can check the HS Code for the US here. Besides, you can find an official CO template for the US here. You will typically have to collaborate with the manufacturer and forwarder to complete the Certificate of Origin.
The HS Code will determine the applicable tax rate. Your supplier/manufacturer typically can give you a recommendation based on their experience to save duty taxes (e.g. if a product can be assigned to several HS codes, you can choose the one with lower duty taxes).
In the EU, you will also need an EORI number (Economic Operators Registration and Identification number), which is an operator identification number that is valid throughout the European Union.
The land cost is all expenses related to shipping your product like taxes and fees.
Export & Import Duties & Taxes
Generally, the customs fee includes the declaration, cost, and time period to process your goods and shipment. If any documents are missing or not filled out correctly, lengthy delays may occur.
China imposes export taxes of up to 13% on more than 1,000 products and up to 9% on almost 400 products. This applies to steel products, for example. Keep in mind that Chinese government policies may change frequently and at short notice.
The import tax rate is determined by the country you are importing the goods to, the type of products, and whether or not there are any Free Trade Agreements between the countries.
- US: 0%-37.5% import tax; 14 FTAs (excluding China)
- EU: 19% import VAT rate (7% on selected goods like food, books); 45 FTAs (excluding China); according to the 2021 EU tax update, since 1 July 2021,
- all shipments arriving from outside the EU are applicable to VAT regardless of their value
- you can choose to close your foreign business VAT registration and file eligible intra-EU sales to consumers through one OSS VAT return
- marketplaces are responsible for collecting VAT from their customers and paying it to the respective authorities
- Japan: 10% (standard tax rate) or 8% (reduced tax rate); 21 FTAs (including China)
- Canada: 5% Goods and Services Tax (GST); 15 FTAs (including China)
- Australia: 5% Goods and Services Tax (GST); 15 FTAs (including China)
Make sure to truthfully and fully declare all information required in any supporting documents. This typically includes the country of origin, the destination, the type of goods, their quantity, and their value.
Further Shipment Expenses
Additional expenses related to the shipment may occur. They vastly vary between forwarding providers and can include container fees, packaging costs, terminal handling charges, broker fees, as well as other direct and indirect costs.
c. Shipping Documents
Together with the supplier and freight forwarding company, make sure that all required shipping documents are filled out completely and correctly, stamped, and ready for use.
Import documents, depending on your shipment terms, can include
- Indent: list of items to be imported (duplicate or triplicate)
- Commercial invoice: must include country of origin, purchase price, tariff classification, etc.
- Packaging list: with details on the products to be imported
- Arrival Notice: provided by the freight agent
- Bill of Lading (BL): issued by a carrier to a shipper that details the type, quantity, and destination of the goods being carried
- Bill of Entry (BE): filed by customs clearance agents or importers on or before the arrival of the imported products
- Letter of Credit (LC): document from a bank/financial institute that guarantees that a seller will receive the buyer’s payment in time and in full
- Bill of Sight (BS): customs declaration by an importer who is unsure about what is shipped; it allows an importer to inspect the goods before paying duties
- Dock Challan: after all formalities of customs are completed then dock charges must be paid
- Dock Warrant: to certify that the holder is entitled to goods imported and warehoused in the docks
Depending on the forwarding method, you, the supplier, the forwarder, or the third-party forwarding company are responsible to compile these documents. Regardless of whose responsibility it is though, you are required to – and it is also in your best interest – to cooperate timely and well to get all documents ready.
Special Requirements for the US: Importer Security Filing (ISF)
The ISF or 10+2 is a document that provides information about your shipment to the US. You must file it to the U.S. Customs Office in advance the day before your shipment leaves the port in China.
Without this document, you may be subject to a large fine. The U.S. Customs and Border Protection office has more details on this.
After your commercial goods have arrived at the destination port, you have five days to submit further required documentation. These must be accepted by the CBP before you file the Bill of Lading, packing list, commercial invoice, certificate of origin, customs bond, delivery form, and further requested documentation.
Expert Tips to Speed Up Customs Clearance
- Follow instructions by official authorities with attention to detail
- List the required information clearly and systematically
- Describe the exact quantity of each item of goods per box/package
- Label each box/package clearly and refer to them in your supporting documents
Keep in mind that this is in your best interest to make the importing and customs agents’ job as easy as possible. Prepare yourself to troubleshoot extensively, especially during the first time you are going through this process.
7. Monitoring the Delivery Process & Arrival of Goods & Final Check to Complete Importing Goods from China
Ask the supplier or forwarder for a tracking number to know where your shipment is at all times and to prepare your warehouse for the arrival accordingly.
Allow time for international shipment, but don’t hesitate to call and follow up, in case your goods seem to be stuck somewhere or information in the tracking system is missing. A simple call can often clarify any misunderstandings often related to incomplete or unclear documents.
On average, goods shipped from China by sea take around two weeks to reach the US West Coast and around one month to reach the East Coast. The recipient is normally notified before arriving at the port of entry, nonetheless, we recommend keeping an eye on the tracking portal.
Once your goods are imported, there is one last step we recommend.
After you receive the goods, it is advisable to do a check for completeness and quality right away. This is because manufacturers typically only process claims within a short period of time.
As a courtesy, and to maintain a good business relationship with your Chinese supplier, give them a positive online review if you were satisfied with their service. They will certainly appreciate this. In case you were not satisfied, it is advisable to raise concerns in private (not publicly) and very tactfully and delicately.
Importing Goods from China – The Takeaway
Sourcing goods from China is a common practice for B2B and B2C companies around the world. Depending on the time, energy, and budget you are willing to invest, you can hand over the process of sourcing and importing goods from China including compliance (or only individual aspects) to a third-party fulfillment provider or take care of the process on your own.
If you choose to manage the logistics process, be prepared that it may be complex, especially if you are doing it for the first time and/or with a new supplier. Make sure to follow the steps outlined in this guide to avoid common mistakes and pitfalls, and, most importantly, to be aware of the time and money it will require to get your goods from China to your warehouse or office.
Would you like a helping hand with importing goods from China? Contact China Gravy for your FREE initial consultation.