VAT on Imported Goods from China: A Complete Guide

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Imported from Asia to the EU, or selling cross-border? In this guide, we explain what importers, Amazon sellers, and cross-border e-commerce companies must know about the Value Added Tax (VAT) in the European Union.

We also collaborated with Alex Wyatt from SimplyVAT and Dr. Matthias Oldiges from KMLZ, two of Europes leading experts, to create this comprehensive VAT guide.

This is covered

  • VAT calculations for European importers
  • VAT rates in EU member states
  • How and when to pay VAT
  • VAT registration for EU companies
  • VAT registration for non-EU companies
  • VAT when dropshipping products
  • VAT when selling products online within the EU
  • VAT registration when selling from overseas to the EU
  • VAT when selling on Amazon

What is Value Added Tax (VAT)?

The 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 subtract the VAT paid on imports, from VAT added on top of the sales price.

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 a VAT of $1,000. 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 VAT on Imported Goods from China: A Complete Guide

Trading Companies in China: A Complete Guide

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Trading Company

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Everyone wants to stay away from Trading Companies and go directly to factories when buying from China. That said, it’s not always clear when the trading ends and the manufacturing begins. In this article, I aim to explain what a trading company is, and how they differ from manufacturers.

Further, I also cover the different types of trading companies, some of which are good and some of which are less so. Continue reading Trading Companies in China: A Complete Guide

List of Product Testing Labs in China: An Overview

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accredited laboratories

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Lab testing is the only way to verify that your imported product is compliant with all applicable safety standards and substance regulations. However, not all test reports are equal, as only those issued by accredited testing companies are actually valid.

For example, the CPSC in the United States lists testing labs around the world that are accredited, meaning that they only accept test reports issued by the listed companies.

In this article, we list some of the world’s leading testing labs in Mainland China and Hong Kong:

  • QIMA (Formerly Asiainspection)
  • CMA Testing
  • SGS
  • TUV
  • Bureau Veritas
  • Intertek

In addition, you’ll also get these questions answered:

  • Why do I neeed an accredited testing laboratory to check my products?
  • FCC Accredited Labs in Asia
  • FDA (USA) Accredited Labs in Asia

Continue reading List of Product Testing Labs in China: An Overview

Factory Inspections & Audits in China: A Complete Guide

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factory inspection

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Found a supplier online but not sure if they’re everything they claim to be? Factory inspections, which can easily be booked online, can quickly put boots on the ground and verify what’s actually going on behind the factory gates.

In this article, you will learn everything importers and Amazon sellers should know about factory inspections:

  • What is a factory inspection?
  • What is not covered in a factory inspection?
  • How can a factory inspection or audit help my business?
  • At what stage should we book a factory audit?
  • How much does a factory audit cost?
  • Can we visit the factory ourselves?
  • How long in advance do we need to book the inspection?
  • What is the difference between a quality inspection and a factory inspection?
  • Should we always book a factory inspection before deciding on a supplier?
Bonus Content
  • List of Factory Audit Companies
  • Factory Inspection Sample Report (PDF)

Continue reading Factory Inspections & Audits in China: A Complete Guide

How to Find a Design Freelancer for Your Customized Products

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In the age of Amazon brands, Aliexpress and Wish, it’s becoming increasingly difficult to succeed with generic private label products. Creating unique, custom designed, products is the only way forward for smaller E-commerce businesses that can’t compete on price alone.

Yet, while many E-commerce businesses have great ideas for custom designed products they want to bring to market, they lack the in-house design expertise, or budget, to turn their visions into practical 3D design files and technical drawings.

But, as I explain in this article, the creation of a custom-designed product is not nearly as complex or difficult as you might think.

Keep reading, and learn how our customers have used Upwork.com to find amazing freelancers, turning their concepts into technical drawings and CAD files for as little as $100.

1. Prepare a ‘Design Concept’ PDF

Product designers are not psychics with mind reading abilities. They need clear instructions in order to turn your product and design ideas into drawings that make sense to a manufacturer.

As such, the first step of the process is to define those ideas the form of text and basic drawings.

If I want to create a wristwatch design, for example, I should prepare the following material in a PDF file:

  • Watch case sketch (various angles)
  • Indexing sketch
  • Crown sketch
  • Hands sketch
  • Strap sketch

In addition, I’d also specify the following:

  • Colors
  • Logos / Engravings

There’s no right or wrong when it comes to communicating your ‘design vision’ to a freelancer, as long as it’s done in a way that they can easily understand. Use photos of similar brands edited in photoshop, or a rough napkin drawing – what matters is that you don’t leave the designer guessing what you want.

Finally, you must also set a clear deliverable for your future freelancer. If we stick to the wristwatch example, I’d request the following:

  • Watch case design (AutoCAD)
  • Strap design
  • Logo file
  • Backplate engraving file

The more specific you are, the faster your designer can turn the project around. Continue reading How to Find a Design Freelancer for Your Customized Products

[New] Starter Package: Upload & Share Files With Suppliers

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We have added a function to the Starter Package Dashboard that enables our users to upload files and share them directly with team members and suppliers. For example, you and upload, store and share:

1. Product specification files

2. Product images

3. Design drawings

4. Logo files and packaging files

5. Contracts

6. Quotations

7. Test reports, certificates and quality check reports

8. Shipping documents

This is available as of now for all Starter Package users. Continue reading [New] Starter Package: Upload & Share Files With Suppliers

How to Make a Telegraphic Transfer (T/T) to a Chinese Supplier

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Telegraphic Transfer (T/T), which commonly called ‘Wire transfer’ is still the most common payment method, when transferring money internationally.

Yet, making Telegraphic Transfer payments is not without risk. In fact, the risks involved are far bigger than most importers might think.

In this article, we explain why a slight misspelling could result in tens of thousands of dollars being withheld by the receiving bank – and why you should never pay privately held bank accounts.

Keep reading, and learn how you can avoid payment delays, scams, and other Telegraphic Transfer related issues.

1. Get the beneficiary name, address and other account details right

When writing money to your supplier’s bank account, you need to make sure that all beneficiary and bank details are correctly, and fully filled in.

If, for example, the beneficiary name is not correctly typed in, the money will be withheld by the Chinese bank – and finally returned back to you.

This is indeed a good security measure, but this will cost you at least 2 to 3 weeks. In addition, you don’t get the bank transaction charges from neither your bank or the suppliers. But, that quite irrelevant, in comparison to what a month long delay could cost your business.

So, why is this even an issue to begin with? Continue reading How to Make a Telegraphic Transfer (T/T) to a Chinese Supplier

Air Freight When Importing from China: A Complete Guide

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Air freight can bring your cargo from a factory floor in China, to your warehouse, in a matter of days. However, Air freight is not a viable option for all sorts of cargo.

In this article, you will learn more about Air shipping costs, customs procedures, cargo restrictions, and insurance options when importing from China.

air cargo loading

1. Air freight is the fastest mode of transportation

Air freight is superior to Sea freight in many ways. However, the primary reason to get your cargo delivered by air, is shorter delivery time.

While Sea freight can take a month from port to port (that depends of course on the destination), with a few more days spent on administration and wire transfers – Air freight can get your product from the factory floor to your office, in only 5 days.

The specific delivery time depends, as there are various classes of Airfreight, such as express and economy. Regardless, you will save plenty of time.

An interesting fact is that only 5% of the world’s international transportation, in terms of cargo volume, is delivered by air. However, if we instead look at the total value, that figures jump up to 30% of the world’s total. Continue reading Air Freight When Importing from China: A Complete Guide

Do NDAs Work When Importing from China?

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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 Do NDAs Work When Importing from China?

How to Find the Right Ecommerce Product: 5 Inspiring Concepts

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Finding the right product

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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 How to Find the Right Ecommerce Product: 5 Inspiring Concepts