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Do NDAs Work When Importing from China?

NDA in China

Many Ecommerce business owners are, rightfully, worried about their suppliers duplicating their products. For many, a Non-Disclosure Agreement (NDA) seems to the logical method to prevent suppliers from ever making replicas.

It makes sense in theory. Make your supplier sign an NDA, and you go perpetual exclusive rights for that power bank or handbag you plan to sell on Amazon.

The reality is, as you will learn in this article, very different.

What is the purpose an NDA?

An NDA is a confidentiality agreement that is meant to prevent, for example, manufacturers from disclosing product information. This may include the following:

  • Design drawings
  • Technical drawings
  • Bill of materials
  • Artwork
  • Software

In theory, an NDA prevents a supplier from using your product specifications to manufacture products, or share them with other companies. The NDA also sets penalties, in case the supplier would fail to comply with the terms.

In addition, an NDA can be set to be terminated after a certain time, or when a milestone (i.e., the product is officially launched) has been reached.

When dealing with Chinese manufacturers, however, things are not that straightforward. Continue Reading →

How to Find the Right Ecommerce Product: 5 Inspiring Concepts

Finding the right product

 

I’ve spent the last 8 years helping Entrepreneurs go from idea to finished product. While I’ve dealt with both good and (really) bad product concepts – I am a firm believer in a more creative product conceptualization approach.

The Entrepreneurs that succeed are not the ones who happen to find a ‘best seller product’, or by chance identify a one in a million market gap on Amazon.com.

I’d even go as far as saying that I can’t see much of a correlation between how much money they put in, and their chance of success.

I know Entrepreneurs that made it big, investing less than US$10,000 on the whole product launch. I know others that spend ten times that amount, and didn’t even get a final prototype ready.

It’s all about coming up with something new and finding a unique niche in an increasingly crowded ecommerce space.

But, as I will explain in this article, that is a whole lot easier than you probably think.

1. Use public domain artwork and photographs

public domain artwork

Old paintings and photographs are generally open for anyone to use. This is also a huge resource that is very underutilized by Ecommerce companies.

There’s a wealth of beautiful European and Asian artwork, that can be applied to apparel, watches, accessories, phone cases and many other product categories.

Any textile, plastic or metal can be printed or engraved with classic artwork or photographs.

This is certainly where I would look for inspiration today, if I was about to launch a new product.

Examples

  • Waxed cotton watch straps
  • Classic artwork printed on textile wallets
  • Photography etchings on aluminum phone cases
  • Chinese art puzzles
  • Rembrandt card game collection

Continue Reading →

US China Tariffs: How They Hit Importers & Amazon Sellers

China US tariffs

We have received many emails from worried Importers in the US about the risk of a new trade war. We see daily media headlines about a looming trade war, but at the time of writing, things are still very open ended.

With this article, I hope to help you better understand the situation, and how it might impact your business, as I cover the following:

  • Which products are affected by the new tariffs?
  • Which products are not affected by the new tariffs?
  • What does this mean for US importers?
  • Why the new US tariffs might benefit Chinese ecommerce companies
  • Why EU businesses might benefit from a US China trade war
  • What happens next?

Keep in mind that this is a developing story, and what you read in this article might be outdated in a matter of hours. I will try to keep it somewhat updated, but I make no promises.

I also want to highlight that we are not in the business of politics. We take no stand for or against the United States, or China.

Our job is only to report how this might impact startups and SMEs importing goods from China.

2018-07-20 Update

This article was originally published in April 2018, a few months before the implementation of these tariffs. At the time of writing, increased tariffs are imposed on US$34 billion of imported goods (total value).

As expected, these tariffs mostly apply to industrial parts, chemicals, vehicles and other related products.

Apparel, accessories, electronics and other consumer goods are not affected as of today.

Continue Reading →

VAT on Imported Goods from China: A Complete Guide

Suggestion: Watch the 10 minutes video tutorial before reading this article

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Importers based in the European Union must pay Value Added Tax (VAT) on top of the Customs value. In this article, we help you navigate the complexities of ‘Import VAT’ when buying from China.

Keep reading, and learn more about VAT calculations, and whether or not Import VAT is deductible.

We also explain how and when you declare and pay VAT, and much more.

What is Value Added Tax (VAT)?

VAT is a consumption tax in the European Union. In B2C transactions, VAT is always included in the price. If you, for example, buy a product online from an EU based online store, the price you pay includes VAT.

The seller can then offset the VAT it ads on its sales, to the VAT it paid to other other EU businesses, when buying products or services.

Below follows an example:

  • Sales: $10,000 (Including VAT, 20%)
  • Expenses: $5,000 (Including VAT 20%)

This allows us to make the following calculation.

  • Sales VAT: $2,000
  • Paid VAT: $1,000
  • Total: $2,000 – $1,000 = $1,000

Thus, I would need to pay $1,000 of VAT. If I’d spent more on VAT than I added on top of my sales, I would instead get money back from the state.

Continue Reading →

Buying Private Label Products in China: A Complete Guide

Suggestion: Watch the 10 minutes video tutorial before reading this article

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Starter Package: All Categories

Importing Private Label Products from China is a shortcut to success. How hard can it be to just pick a product, send over a logo file and start selling something on Amazon? Well, as I explain in this article, reality is a lot more complex than what many importers may think.

Keep reading, and learn why private labelling is not really what it seems to be in China, and why it can be more complex to get an ODM product right – compared to a custom designed product.

We also explain what Startups and SME’s must know about Intellectual property issues, printing specifications – and how much you should expect to pay a logo print! Yes, this is by far the most comprehensive guide on private label imports written.

What is Private labelling?

A private label product is manufactured by Company A, but with the brand name (i.e., logo and packaging) of Company B. In theory, Company A (the producer) provides a ready-made ‘product template’, to which other buyers can apply their own brands.

The benefit of private labelling is that you can create a branded product, without investing into all too much time and money in product development – and tooling. Hence, you can launch a product much faster.

Continue Reading →

Payment Methods when Importing from China: A Complete Guide

Suggestion: Watch the 10 minutes video tutorial before reading this article

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Starter Package: All Categories

About to pay a manufacturer in China? The payment method, and the process, often has a major impact on the outcome. In fact, it can  spell the difference between success and failure, when buying from overseas suppliers. In this article, we introduce you to four common payment methods, used when transferring funds to Chinese suppliers.

Telegraphic Transfer (T/T)

The Telegraphic Transfer is standard bank transaction, placed either through your internet bank, or in a local bank branch. This payment method is accepted by all Chinese manufacturers with a bank account. Virtually all, that is. Albeit common, it offers no protection by itself, unlike the Letter of Credit, which I’ll get back to in a bit.

That is, however, not saying that T/T is necessarily an unsafe payment method. Continue Reading →

Bribery and Corruption in the Quality Control Industry: By Renaud Anjoran

quality control bribery

Importers rely on third party quality inspection agents to accurately report defects on every order.

Receiving a batch with a high defect rate can put you out of business. Especially if you’re an Amazon seller, as you must maintain a very low return rate.

Send a shipment to a fulfillment center with a 10% defect rate and it’s game over.

In other words, your business stand and falls based on the accurate reporting of quality issues and defects, from your QC partner.

Now, what if QC partner accepts payments from your supplier – in order to not report quality issues that can potentially shut you down?

That’s a nightmare scenario for everyone importing from China.

But there are things you can do to save your business, before it’s too late.

Renaud, why is bribes a problem in the QC industry?

Many buyers are quite afraid of this, because the inspector does not report all of his findings. As a consequence, a batch of products that presents a serious and widespread quality problem is accepted.

It means the buyer pays entirely for an order, and (in the worst case) might be unable to use or sell the products. A lot of money is lost, and credibility is lost on the market. Materials have been processed and shipped across the ocean but have to be thrown away. It is a huge waste!

To make matters worse, as the buyer, you likely have no leverage over the supplier. Typically, the order has been paid in full at that point. Not many buyers have a strong enough contract and accompanying documentation that allows them to sue the supplier for the loss.

More than 95% of Chinese suppliers actually use the fact that you did a quality inspection before shipment to their defense.

They will say ‘oh, but even your inspector hasn’t found about this issue, so how were we supposed to find it?’. That’s frustrating, to say the least. Continue Reading →

Customs & Taxes When Importing from China: US, EU, Australia & Canada

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Starter Package: All Categories

Understanding import duties, customs fees, VAT and other taxes is crucial when importing products from China. However, each country or market (i.e., the EU) have their own customs duty rates and tax calculation methods.

In this article, we explain what every Importer must know about custom & taxes when importing products to the following countries / markets.

Product Liability Insurance For Importers & Amazon Sellers

product liability insurance

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Starter Package: All Categories

Product liability insurance for Importers (sometimes called Import liability insurance) can save you from financial ruin, in case your products would be the case of injury or property damage.

Falling back on your supplier is never an option, so get used to the fact that you will be on your own to deal with possible product liability claims in the future.

This is covered:

  • What is covered by a product liability insurance?
  • What is not covered?
  • For what kind of products is an insurance necessary?
  • Do I need a product liability insurance to sell on Amazon?
  • Can I get an insurance for the US if I sell in another country?

We also provide a list of companies offering product liability insurance products in the United States, the European Union and the United Kingdom, Australia, New Zealand and Canada.

What is product liability insurance?

A product liability insurance can protect your business against personal injury or property damage claims. If you sell a product that, for any reason, harms a customer or damage property, the insurance covers legal and court fees.

With a product liability insurance, you are unprotected. Injury or damage claims can cost hundreds of thousands of dollars.

It’s practically impossible to be completely certain that your products don’t pose any risk whatsoever to your customers – regardless of how many quality checks and lab tests you do.

These are a few examples what might go wrong:

a. Li-ion battery powered devices: Fire hazard, explosion hazard

b. Children’s products: Choking hazard

c. Furniture: Fire hazard

d. Apparel: Choking hazard

e. Food contact materials. Food and beverage contamination hazard

While T-shirts are much less prone to explosions, compared to high capacity power banks, the risk that you will face a claim is always present. Continue Reading →

[Case Study] Launching a Watch Brand on Kickstarter: By Reinder and David from DR.W.

Kickstarter watch

DR.W. signed up for the Starter Package in late 2017. Today, they have successfully developed a new types of watch that can be used as a wristwatch, and a pocketwatch.

Keep reading, and learn how they went from idea, to supplier sourcing and working prototype.

At the time of writing, they are also getting ready for their Kickstarter campaign. One reason is obviously to raise funds, but crowdfunding today is as much about funds, as it is about exposure and proof of concept – before a wider product launch.

Do you want to support DR. W. on Kickstarter?

The Kickstarter campaign is currently active. Visit this page to get your Watch before everyone else.

Reinder and David, please tell us a bit about yourself and what you did before you started DR.W.

Thank you for the introduction Fredrik and ‘hello’ to all the readers.

We are from the Netherlands where we grew up in the same northern region and went to the same university.

We got to know each other about seven years ago when we both started our first job, a traineeship, for a Dutch multinational.

We both had an interest in watches and found out that we had a shared dream of creating our own watch at some time. Although it took some time we are eventually getting there!

design process

So, why did you choose to launch a watch brand?

So we both had this shared goal to create a special watch at a certain moment since we both like watches. Reinder collected many different watches over time. David, at the other hand, was still looking for that perfect watch that he could not find.

We brainstormed about how our ‘perfect watch’ could look like and how we could make it really special.

Eventually, after a couple of years, we were inspired by a real-life problem that Reinder’s brother faced during work. He works in a hospital and is not allowed to wear wrist watches for hygienic reasons.

Alternative timekeepers (for example pocket watches) are limited in choice and also medics might like to wear a wrist watch outside work. Therefore, we came up with a new watch concept that allows you to switch from a wristwatch to a pocket watch (and reverse) in just a few seconds!

Why do we think our watch is made for everyone? Because it is fashionable and it will fit basically every dress code.

Because it will suit all practical occasions, including hygienic restrictions. Because it is a timepiece representing the history of the watch. And, last but not least, because we believe it looks great! Switch your style in just a few seconds! Continue Reading →