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Product Liability Insurance For Importers & Amazon Sellers

product liability insurance

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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 →

BSCI and Sedex Audits in China: What Importers Must Know

BSCI Sedex audits in China

Importers are facing more pressure from customers to ensure that their products are, at least to a certain extent, ethically produced.

However, actively monitoring working conditions in a country far away, costs millions of dollars. In other words, ensuring social compliance in China is out of reach for any company that’s not on the Fortune 500.

That’s where BSCI and Sedex comes in.

What is BSCI?

Business Social Compliance Initiative (BSCI) is a system meant to make supply chains more transparent and fair.

Importers and manufacturers anywhere in the world can become BSCI members, which requires them to comply with the 11 core BSCI principles:

  • The Rights of Freedom of Association and Collective Bargaining
  • Fair Remuneration
  • Occupational Health and Safety
  • Special Protection for Young Workers
  • No Bonded Labour
  • Ethical Business Behaviour
  • Decent Working Hours
  • No Child Labour
  • No Precarious Employment
  • Protection of the Environment

Audits are carried out, by accredited companies such as Intertek, to verify that the supplier complies with these principles.

Each audit rates the supplier in one of the following categories:

  • A (Outstanding)
  • B (Good)
  • C (Acceptable)
  • D (Insufficient)
  • E (Unacceptable)

However, BSCI is not a certification scheme. It’s based on gradual improvements over time. Continue Reading →

The Future of Manufacturing in China: 2018 Edition

future of manufacturing in china

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Are Aliexpress sellers going to take over ecommerce in the whole world?

Are Chinese factories about to finally start acting like professionally managed companies?

Or, are they just about to lose out big time to suppliers in Vietnam and India?

Nobody knows for sure.

But I have a set of opinions to share, about what manufacturing in China looks like today, and what we’ll see in the years ahead.

1. Higher factory prices aren’t that much of a problem

There is no country that can match China, when it comes product availability.

That said, Chinese products are not as cheap as they used to be.

But, it’s still the only realistic manufacturing destination for many products.

Try to get a watch assembled anywhere in the world apart from Shenzhen. Well, other than Switzerland that is.

The same can be applied to electronics and many other industries.

At the same time, inflation is not unique to China.

When manufacturing prices go up here, retail prices climb overseas. Increasing prices are, for the time being, a relatively small issue.

There are still big problems in the China supply chain, but the price is not the main issue if you ask me.

2. Shenzhen is the place to be in 2018 (and next year)

Just a few years ago, many self proclaimed ‘China experts’ claimed that Shenzhen, and the rest of Guangdong province, was down for the counting – mainly as a result of rising labor costs.

They claimed that all manufacturers would pack up and move inland, to Henan, Hunan and Sichuan.

But that’s not what happened.

Instead, Shenzhen kept advancing to the point where it’s today the epicenter of manufacturing in Asia.

What makes Shenzhen so unique is the combination of a huge and highly accessible manufacturing base, and the complementary ecosystem of service providers.

You can get almost anything made in Shenzhen. That’s not the case in Shanghai, Yiwu, Xiamen or even Guangzhou.

Watches, Electronics, Sportswear.

You name it. Shenzhen has a supplier for it, or 200.

Then there are the service providers.

The quality assurance companies, including our partners Sofeast and Asiainspection, are based here.

The maker spaces are based here. The Amazon FBA logistics companies are based here.

And, it’s the only city in Mainland China that offers visa on arrival (5 days) to foreign visitors.

All of this makes Shenzhen far more accessible for foreign startups and ecommerce businesses, compared to other cities and provinces in the country.

The fact that Shenzhen is next doors to Hong Kong, and integrated with Dongguan and Guangzhou, also helps a lot.

Shenzhen can absorb price increases, because the ecosystem that exists in the city can’t just be transplanted to any other region in China, or other countries.

Shenzhen is also the place to source suppliers for our customers.

Today, I’d say that more than half of our customers that visit suppliers in China go directly to Shenzhen.

If there ever was a golden age of manufacturing in China, it’s happening right now in Shenzhen.

3. Chinese manufacturers still have a long, long way to go

Manufacturing is difficult. Yet, many Chinese suppliers have a talent for making it more difficult than it has to be.

Difficult and cheap might work.

But difficult and ‘not that cheap anymore’ will definitely not work for much longer.

This is how I think that suppliers should improve in 2018:

a. Standardize your specification sheets and materials and component options. Let your customers know what you can and can’t do.

b. Standardize the ordering process, and use sales contracts instead of Skype or WeChat conversations to keep track of specifications and order terms.

c. Start using proper collaboration tools instead of endless email exchanges (though I understand that’s hard when Google Docs and most other tools are banned in China).

d. Accept that your customers must do quality inspections and lab testing. Don’t argue against this.

e. Learn the basics of product safety standards and labeling requirements in your main markets.

f. Implement proper replacement and after sales service policies. These don’t have to be unconditional, but forcing the buyer to ‘negotiate compensation’ for every defect unit is a dead end.

From the supplier’s perspective, the buyers are still making the same mistakes as always. They don’t educate themselves about the product, or make an effort to understand the basic reality of manufacturing.

I’d even say that most of these issues are not ‘China problems’, but ‘manufacturing problems’.

But at the end of the day, Chinese manufacturers that want to become more competitive must get better at dealing with customers and processes.

4. Vietnam and India are now realistic alternatives to China. For some products.

2017 was the first year that we saw a notable number of customers that are shifting production from China, to Vietnam or India.

Some of our customers don’t even consider China, but go directly for suppliers in Vietnam or India.

There’s been a lot of talk about this, but now it seems like it’s actually happening.

These are the top reasons I keep hearing:

1. Chinese suppliers are notoriously difficult to deal with. Some buyer’s don’t care if prices are higher or lower in other countries. Based on my experience, however, Vietnamese and Indian factories are not necessarily that much easier to deal with.

2. Prices are, in some cases, lower than China.

3. It’s easier to get visas. This matters to both ‘digital nomad’ Amazon sellers and experienced buyer’s, that want to inspect goods on site, and meet new suppliers face to face.

What kind of products can you find in Vietnam and India?

Textiles, furniture, home products and construction materials (i.e., tarpaulins) seem to be the main products imported from Vietnam and India.

It’s also true that these countries cannot, even combined, match China’s industrial scale (and therefore product selection).

But, things move fast these days. Just like Shenzhen a few years ago, I don’t think Vietnam and India should be underestimated.

Saigon will not become another Shenzhen overnight, but a lot can and will happen in the next 10 years.

Chinese suppliers will need to work on everything, from their approach to customers to compliance and quality systems, to stay competitive.

Difficult and cheap might work.

Still difficult and ‘a lot more pricey than Vietnam’ won’t cut it in 2025.

5. Product safety and compliance is still a big problem

We recently executed a supplier screening on behalf a European client.

They had found a supplier based in Beijing that claimed that all their ODM products are ‘CE marked’.

After a basic audit, it turned out that the supplier did not have a single test report, and they refused to provide any of the technical documents required to legally make a product ‘CE compliant’.

In other words, the customer could not legally import their products to the European Union.

As usual, the supplier claimed that the EU don’t actually have any product safety laws (yes, seriously), and that the buyer should just ‘stop worrying and send the money’.

Case closed.

This is, unfortunately, the state of product compliance among suppliers in China.

Not that I think the is much better in Vietnam or India, but China has been a major exporter for over 30 years. It’s about time to catch up.

Factories can’t build respected brands, if their products don’t meet the basic safety standards and documentation requirements in their intended export markets.

Claiming that product safety regulations don’t matter doesn’t help either.

However, the problem is not only the supplier, but also Importers in the US and Europe that completely ignore product safety requirements.

The global trend right now is more product safety regulations, not less.

6. You can now manage the entire importing process online

Create an online purchase contract, wire the money and book quality checks from your laptop. You don’t have to ever visit factories, or even see your products.

This is where things are happening:

a. Alibaba Trade Assurance

The Alibaba Trade Assurance is the first serious attempt to make the order process truly digital. You create a digital purchase contract on Alibaba.com, covering technical specifications and order terms.

Then you wire the money to a designated bank account.

Next, it’s up to the supplier to make sure that the products comply with the written technical specifications, and the final shipment date.

If not, Alibaba.com can withhold the payment.

This creates an unprecedented layer of security for small to medium sized businesses importing from China.

In a few years, it would be amazing to the see the Trade Assurance program expanded on a global scale.

Adding trust and transparency in international trade can create far more jobs than any state banquet or free trade agreement ever could.

Trade Assurance is not perfect, but it’s a big step in the right direction.

b. Logistics

Until recently, you had to wait days to get a shipping quotation. And once you’d received it, in the form of a poorly edited excel file, you’d better have a PhD in international trade law to understand the price structure and terminology.

Thanks to companies like Freightos.com*, those days are over.

Now, you can get quotations, book, pay and track your shipment using an online dashboard.

We also see more and more customers using fulfillment centers, rather than managing the final delivery on their own.

Hence, they don’t even see their product, as they have an automated workflow from placing the order with the factory, to final delivery.

*Freightos.com is our shipping partner

c. Quality Control and Lab Testing

Booking quality checks and lab testing online is not new. Our partners Sofeast and Asiainspection launched their online booking platforms years ago.

But it’s becoming the industry standard, as basically every QC agency have online booking platforms these days.

7. Factory to Consumer (F2C) and Cross Border Ecommerce will not take over the world

Are Chinese factories going to take over ecommerce in the rest of the world too? Is this already happening?

Not really.

1. Being a factory owner is not necessarily that much of an advantage anymore. There will always be factories that are willing to make your product.

2. Products and brands are built on ideas. Tooling cannot replace ideas.

3. Going from a ‘make to order’ to ‘let’s build a brand for 3 years with no guarantees that we’ll make a profit’ mindset is a big leap. Most factory bosses are not willing to make this.

Today, many of them are more concerned with their retirement, rather than betting their savings on risky ecommerce projects.

If there is a ‘threat’, it comes from the younger group of Chinese, especially in Shenzhen, rather than old and overworked factory managers.

These people don’t necessarily have any experience with manufacturing. They are just regular people who want to try their luck in ecommerce.

Some of them will end up having pretty good product ideas that will work.

Yes, they have an advantage in being closer to suppliers, but you’re on the other hand closer to the market.

Now, what about Aliexpress and Wish?

B2C marketplaces, such as Aliexpress and Wish are huge these days, including in the West.

The number of packages delivered are counted in the hundreds of millions.

A watch for 3 dollars.

A pair of sunglasses for a euro.

An iPhone charger for less than a tenth of what you’d pay at home.

And, best of all, you don’t even need to pay import duties or other taxes. The customs authorities simply don’t have the resources to tax more than a very small share of the e-packets.

Their secret? They ship directly from China to customers all over the globe.

This makes it harder for Importers to compete. Many consumers actually believe that they are buying the same goods off these websites, as from local ecommerce sellers.

That is of course not the case, but it still results in less sales for Importers.

Well, until now. Something big just happened.

Countries in Europe are now starting to add postal fees, to cover the immense cost of managing the huge inflow of e-packets from China.

PostNord, for example, is now charging a flat rate administrative fee of 9 euros.

All of a sudden, that pair of sunglasses will cost you 10 euros, instead of just 1 euro..

Not that affordable anymore, and that 3 week delivery time doesn’t seem that appealing.

It’s already making a massive impact, as large volumes of parcels are now left unclaimed in warehouses, or shipped back to China.

This benefits Importers, while cross border sellers are not that competitive anymore.

In other words, we are not entering a world of global free cross border trade

In a utopia without import tariffs, different (and lack of) product regulations and tax systems, this model could have worked.

But we don’t live in a utopia.

It was only a matter of time until there would be a crackdown on this practice.

I believe that this is only the beginning. The European Union, the United States and China will do everything they can to keep jobs within their borders. Especially as more jobs are lost to automation.

They will make it all but impossible for the cross border ecommerce model to work.

Instead, they will force companies to first import the goods into the market, pay import duties, VAT and pass compliance checks.

They will likely also require that sales taxes are paid based on local revenue.

The borders will not be closed, but I don’t think that the drop shipping and cross border model will exist on the scale it does now. If anything, it’s a historic anomaly.

The other option is that countries integrate their tax systems with each other, in order to make sure that the responsibility of paying import taxes falls on the seller, not the customer.

This is already being tested, as the European Union now allows foreign companies to get VAT registered.

The negative aspect of this development is that ecommerce companies will need to register with the tax authorities in every single market they sell to.

But that is probably the only realistic solution to the future of cross border ecommerce.

Do you want to launch your own private label or custom designed product?

It can be hard to go from a design drawing to finished product. To help you manage the entire process – from creating a specification, to sampling and quality control – we created a Starter Package:

a. Private Label & OEM Product Manufacturer Lists

b. Product Specification Templates

c. Product Label Samples

d. Tutorials, Video Walkthroughs and Task Lists that guide you step-by-step through the entire process

In addition, you can also book quality inspections, lab testing and shipping directly from the platform. Click here to learn more.

[Starter Package] New Supplier Check Tool, Dashboard, Downloads & More

During Q1 2018 we have rolled out several new features, and a brand new layout for our Dashboard. These updates are available to all Starter Package customers as of now:

  • New Dashboard
  • Freightos Tools (Shipping cost estimator, US import duty estimator and more)
  • 10% Shipping Discount (Valid for Sea and Air)
  • New Supplier Check Tool
  • New Country Guides: Canada, Singapore

Still didn’t sign up? Visit this page to order the Starter Package.

1. Dashboard

a. Layout

New Dashboard Layout

b. Partners

Partner Services Updated

c. Freight Tool

We have integrated several Freightos tools, including the shipping cost estimator, directly on the Dashboard

2. Supplier Check Tool

The Supplier Check Tool can tell you if a supplier is qualified, or not.

We updated the layout to simplify the Supplier Check Tool

3. Downloads

The Downloads section also got a complete makeover. From now, you find all Document Templates, Attachments and Country Guides in one place.

Country Guides for Canada and Singapore added

How to Make Design Changes to An ODM Product

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Changing the design of an existing private label (ODM) product can save you both time and money – compared to creating your own custom designed product. At least in theory.

In this article, I explain how to implement the following changes:

  • Logos and other prints
  • Colors
  • Materials
  • Components
  • Product design

I will also explain why ‘small design changes’ can sometimes be far more complicated, expensive and time consuming than you might think.

a. Logos and other prints

Logo printing or engraving requires no special technical capability. Virtually all manufacturers listed on Alibaba.com and Globalsources.com offer branding.

All you need to do is to provide a logo file, and the following information:

  • Print type (i.e., engraving or screen print)
  • Color (i.e., Pantone)
  • Position (i.e., centered)
  • Dimensions (XX x XX mm)

You can use various file formats, including .jpeg and .png. However, I recommend that you use a .ai (Adobe Illustrator) or .eps. Continue Reading →

[Case Study] From Idea to Product Launch: The Story Behind TheDrawBag.com

john k founder of drawbag

The life of every product begins on the drawing board. While most products also stay on the drawing board, that is not John had in mind for his product, The DrawBag.

In this customer success story, John explains how he managed the process, from finding the right supplier and making product samples, to design patents and trademarking.

I believe this product will become really big, so don’t forget where you read about it first!

(And btw, you’ll get something extra at the end of this article)

John, please tell us a bit about your background and why you ended up moving to China.

I’m American, and grew up on the east coast of the US. I worked professionally as an artist, actor, and director in NYC and regionally before moving to Sydney, Australia in 2017 where I helmed the Creative Arts department of a large private school for four years.

I then moved to Guangzhou, China to help launch both the Art and Drama programs at two separate international schools here.

While here, I realized I had the great opportunity to try my hand at manufacturing some of my own design ideas.

Classic version

Interior (Classic)

Signature version

Signature version

I was really impressed the first time I saw your product. How did you come up with this concept?

The DrawBag is basically three existing things combined in a new way: a backpack, kraft paper, and writing/drawing utensils. I had seen kraft-paper emerge as a usable material in fashion bags in the months leading up to my conception of the DrawBag, and while out idea-hunting at the Canton Fair early in 2017, I suddenly made the connection between these three existing elements, which to me as an artist seemed an obvious combination worth creating.

My initial design idea was to create a graduation-specific backpack for high school seniors with which to collect signatures and well-wishes from friends in the last week or so of school, but this idea quickly expanded into a bag that was less specific in its application, and more open and inviting to the unique personality and creativity of each owner in how they might design and use it. Continue Reading →

Product Labeling Regulations in the US, EU and Australia

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About to import products from China or elsewhere in Asia? Then you need to ensure that the products are properly labeled.

In this article, we explain what every importer must know about labeling requirements in the EU, US and Australia.

We also explain why you cannot rely on your manufacturer to ensure compliance on your behalf. In fact, most of them don’t even know how products must be labeled in your market.

Keep reading, to ensure that your products are not seized by the customs authorities!

What is ‘Product Labeling Requirements’?

Most countries have legal requirements for how a product shall be labeled. A label can, for example, inform the customer about the following:

  • The manufacturing country
  • If the product meets certain legal safety requirements (i.e., compliance marks)
  • Size, material and other general product information
  • Warning labels and user instructions

Some labeling requirements apply to all, or a wide range of, product categories.

For example, all products in the US must be labelled with the country of origin (i.e., Made in China). In the European Union, many products must be CE marked.

Other labeling requirements apply to specific products. Examples include toys, electronics and textiles – each with their own set of unique labeling requirements.

Notice that labeling requirements are usually just one of many requirements that importers must fulfil to ensure compliance with certain regulations.

In addition, you may need to keep track of the following:

Technical Compliance: This means that the product is manufactured according to certain technical standards, or substance restrictions. The product is therefore able to pass the necessary tests.

Documents Requirements: The Importer is required to create and store a set of documents. Such documents may include circuit diagrams, component lists, design drawings and risk assessments.

It is important to underline that this article does not include information above the two points above. Continue Reading →

Procurement and Purchasing Agents in China: A Complete Guide

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The Procurement Agent is a freelancer, or part of a larger organisation, arranging various aspects of the trade between China and the buyers around the world. There is no set standard for what exactly a Procurement Agent shall do.

For the sake of clarification, I list a few examples below:

  • Supplier Identification & Price Research
  • Sample & Prototype Development
  • Quality Assurance & Quality Inspections
  • Social Compliance Audits
  • Product Compliance Consulting & Product Testing
  • Shipping & Logistics
  • Customs Procedures & VAT

This industry, which has grown very big in Asia in the last few decades, includes everything from rogue agents to major trading houses. The purpose of this article is to explain what a Procurement Agent can be expected to do for your business, and how they differ.

Continue Reading →

Top 10 Wholesale & Dropshipping Websites in China 2018

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Why bother with making custom designed or private label products when you can simply import off-shelf items from one of the many Chinese wholesale websites?

While importing wholesale products is not as straightforward and risk free as you might think, you should still be aware of the top China wholesale and dropshipping websites – and learn how they all differ.

Alibaba.com

Alibaba is known as the world’s largest B2B supplier directory. While a significant number of wholesalers and trading companies are listed on Alibaba.com – it was not created as a wholesale website.

Since it was launched, and until today, Alibaba.com is primarily a manufacturer directory.

That said, they have implemented some wholesale and payment functions.

In the future, it’s likely that Alibaba.com will evolve into a platform that enables transactions for both off-shelf and ‘make to order’ products – directly on the website.

Notice that you don’t actually do business with Alibaba.com. They provide supplier listings only. Continue Reading →