Expect to receive a response from the factory within a couple of days. Never make a buying decision based on only one quote. Be sure you make contact with several factories. Don’t get excited too soon. Build a profile on each factory you contact. Make a note of how long it took to get in touch with the factory. How many days it took them to respond to you. Did they provide you with detailed information? Were they sensitive to your questions?
Don’t commit to doing business with the company until you have established a rapport with them. Research the company online. Visit online forums within your industry and search for comments about the name of the factory. Google the name of the company and see what you find out.
Ask for samples. Samples are usually free, but expect to pay for shipping. I recommend asking for pictures through e-mail prior to shipping anything. Shipping, even a small sample, can cost you close to $50.00. A sample from here, another sample from there could add up. Make sure your contact understands exactly what you are looking for.
Expect to pay for tooling and other set up charges if you are creating a new product. Get multiple quotes from various factories, to get a feel for tooling fees. Tooling can cost several hundred to several thousands of dollars. Before you pay for tooling, be sure the factory understands the exact dimensions and material of your product.
Request your contact to photograph the sample next to a ruler, so you have point of reference. The Chinese use the metric system, but they are used to working with American companies and can provide you with measurements in inches. If they can only provide you with metric measurements, there are free online utilities that can quickly convert from metric to inches.
Find out the FOB price for the product before you get your sample. If the price is over your budget, there is no point in getting a sample. Many people get overly excited about receiving a sample that they forget negotiating a good price. The price always decreases as the size of the order increases. Be ready that your contact will want you to buy more than you need. Be firm, and explain that this is your first order, but subsequent order will be larger. Explain that you are looking for long term partnership, and you are going to be placing orders in the future for larger quantities.
Throughout the above processes, you are going to get an insight into the responsiveness of the factory. It is a good sign if they are quick to communicate with you. Pay attention to whether or not they pay attention to details. Are they following your instructions? Do you have to explain everything twice to them? Are they easy to do business with? Use this opportunity to build a profile of the company.
If your experience is less than desirable in the early stages, you should look for another company. You might be out a few hundred dollars, but at least you have eliminated a potential disaster.
Once you have received the sample, and you are ready to place your order you will be required to wire transfer the deposit. The deposit is usually 30 to 50 percent of the order total. To minimize risk, try to negotiate the smallest possible deposit. Wire transferring your deposit is not without its risks.
If your contact wants to walk away with your money, there is not much you can do about it. I was only ripped off once, but it doesn’t mean it can ‘t happen to someone else more often. Importing takes risks. Don’t cut corners. Constantly communicate with the company. Clearly explain your expectations. Build a good working relationship with them.
After the order has been completed, you will be required to pay the balance. Don’t agree to pay until you receive the faxed Bill of Lading. Once you receive the copy of the B/L, you can be sure that the product was loaded at port. Unfortunately, you won’t know for sure what you got until you receive it on your end. Importing is risky business. It is an exhilarating experience, requiring careful planning, negotiations, and bit of luck.
Practical Example: FedEx Trade Networks is a great forwarding company. I have used this company for years, and they do an excellent job. They are a well-established company. The company takes care of all aspects of your ocean freight. They help you care of shipping, brokerage, taxes, duties, permits, and required licenses. With FedEx Trade Networks you can expect door-to-door service. They’ll pickup the shipment at the factory overseas and deliver it to your business in the U.S.
Dumping penalties can greatly increase your product costs. Certain products such as candles imported from China are penalized by an extremely high dumping tax. Prior to committing to import a product, research applicable taxes. If you are not careful, you could end up doubling your product costs. Unfortunately, antidumping laws have little to do with maintaining a “level playing field,” and a lot more with good old-fashioned protectionism. Research potential taxes and duties at United States International Trade Commission’s website usitcdotgov.
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