• What to import from China as a startup?

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    what to import from china

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    Asia Import Platform: General Products

    This blog has been quick to mention that certain products are harder than others to import from China. In this post I’ll focus on product categories that are a bit more suitable for startups and beginners looking for what to import from China. I begin by explaining what you shouldn’t do.

    Avoid OEM / Customized Products

    Products that are highly customized requires higher MOQ requirements. This is simply because the supplier has to purchase components and materials from a larger number of subcontractors. Each subcontractor has its own MOQ (Minimum Order Quantity) requirements and this can quickly add up to an MOQ that you cannot reach.

    Instead of importing an OEM product (custom designed) you can purchase a “standard product” and achieve customization through branding, such as the following:

     

    1. Logo print.
    2. Custom colour.
    3. Custom product packing.
    4. Add extra accessories.
    5. Upgrade the quality of the product (use better and more expensive materials and components).

    Avoid highly regulated products

    In the United States, Europe and Australia, most products are regulated by one or more product safety directives. However, ensuring compliance for certain products is even more complicated – some of which even requiring a premarket approval. Medical devices, toys, children’s products and cosmetics are such products.

    Importing non compliant items is illegal, and may result in a forced recall or major fines. Finding compliant suppliers in China is even harder. In fact, less than 5% of the Chinese suppliers, in most industries, are compliant with foreign product safety regulations.

    But there is help to get. You can either hire a China sourcing consultant, or purchase our Starter Package – which includes confirmation of applicable product safety directives for your product, and sourcing of compliant suppliers. Click here to read more

    Avoid buying from multiple suppliers

    Many small businesses make the mistake of trying to bite off much more than they can swallow. Don’t expect that you can order fifty different products from seven or eight different suppliers. Below I explain why:

    • You’ll be limited to products that are mass produced for the domestic market in China. The quality standards tend to be lower than what your customers would expect
    • Limited to none customization options if you buy small volumes. No manufacturer is ready to send back “off shelf” products to the production line for modification or branding of some sort
    • Too much administration. Importing from China is not like going down to the local supermarket and picking a little of this and that. You’ll need to provide your supplier with product specifications, buy samples and negotiate prices. This takes time, sometimes several months. Most startups simply don’t have the time and money to manage more than one product and supplier at a time
    • High freight costs. One supplier equals one single shipment, and the freight companies quote much better prices when you order larger shipments

    Case Study – Daniel Wellington

    If there is any startup company that has really done it “by the books” then it’s the mid end watch brand, Daniel Wellington, from my native Sweden. Apart from good looking and high quality products they have achieved to launch a complete online store on a low budget. Well, actually I don’t know anything about their budget but it would be possible to do what they did on a budget of around US$5000. Below I’ll explain how:

    Watch Case (Custom made)

    Firstly you’ll need a watch case. Most suppliers require you to buy a minimum of 300 pcs for each model. You’ll also need a mould if you’re importing a custom designed watch. The more models you wish to buy, the more moulds you’ll need.

    • Watch Case MOQ: 300pcs / model
    • # Watch Cases: 1 model
    • Mould price: US$320 / model
    • Unit price: US$15 (rough estimation)
    • Total cost: US$4,200 (Watch cases) + US320 (mould) = US$4,820

    Watch Strap (Off shelf)

    It’s nice to be able to strap that watch case to your wrist sometimes, that’s why you’ll also need to buy a watch strap. The good thing about the watch straps is that they are already mass produced and waiting for to ship to a buyer. This results in a low MOQ, only 50pcs per colour variation in this case.

    • Watch strap MOQ: 50pcs / variation
    • # Watch Straps: 6 colour variations
    • Mould price: None required
    • Unit price: US$1.9 (rough estimation)
    • Total cost: 50 pcs x 6 colour variations x US$1. 9 = US$570

    The point here is that Daniel Wellington has achieved to create a collection of different products in a very clever way. Since the watch case requires a fairly large investment, they limit it to only one model (they got more in reality though) and create a wider range of products by combining this very same watch case with a number of different straps. Let’s say you would do the same calculation with 6 different watch cases;

    • Quantity: 6 x 300 pcs = 1800 pcs
    • Mould: 6 x US$320 = US$1,920
    • Price: US$15 / case (including the watch strap)
    • Total Price: 1800 pcs x US$15 + US$1,920 = US$28,920

    Now that’s a major difference! With Daniel Wellingtons strategy you can create 6 different products for US$5,390 compared to the US$28,920 it would take if we buy 6 different watch cases. This import strategy is also highly scalable, you can add small variations to the watch case (different plating or dial color) or a couple of new watch straps in order to further increase the number of combinations, while keeping the investment low.

    How I would import from China on a low budget

    If you’re on a low budget, I believe that the only viable strategy is to follow Daniel Wellington and create a brand and maximize the number of products through simple forms of customization. Below I list a few examples on how this can be done:

    • Carpets in the same material but in different colors and cut into different shapes
    • iPhone 5 cases in different colors
    • Polo shirts of the same model and fabric, but with different sizes, colors and with different fabric details / print / embroidery
    • EVA Foam Rollers, same material but cut in different lengths

    Simple modifications rarely require the supplier to increase the MOQ. Try to figure out what’s complicated and time consuming for a supplier to make, and what is not:

    • Complicated, expensive and time consuming modifications: Large increase on the MOQ requirement. This includes new moulds, purchasing new materials and components etc
    • Simple modifications: Low or no MOQ increase. This includes logo print, different cutting, adding accessories, customized product packing, custom color

    Summary

    • Don’t attempt to buy too many products from too many different suppliers
    • Avoid products that require certification
    • Avoid highly customized products
    • Brand an existing product as your own
    • Invest in quality and pitch yourself as a medium to high end brand. Enjoy higher profit margins and don’t try to compete on price with the big players on the market
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  • 11 Responses to “What to import from China as a startup?

    1. Vicky Liu at 1:47 am

      They are very practical guidelines.
      Yes, even we are China mold manufacturer, we suggest not open new molds if low volume, to save more cost.

    2. Carlos S at 5:33 am

      Hi Fredrik!

      I find your articles really interesting and practical. I am from Guatemala and I am interested in producing a private label using guatemalan traditional colors. I have read about what you share of the importance of selecting a formal company in China for the production of the watch. I wanted to ask you if you could give me a recomendation of some companies that could be trustworthy and could customize watches? It will help me very much, since I have been contacting some but I can´t be complately sure that I am treating a formal and decent company. Thank you very much!! I will be waiting for your response!

      1. Edson at 8:19 pm

        Hi Carlos did you manage to get a reliable company to build your watches

    3. Fatima at 10:22 am

      Hello Fredrik!

      I love the blog- its the best and most informative. I plan to start a niche plus size clothing market for women in Middle East. I notice that a Alibaba Chinese Manufacture uses the same pictures of garments as a really nice retailer in USA who claims their clothes are locally made. I really like the fit and quality of the garments and I would like to approach the manufacturer. But Im not sure……Do they sometimes “use” the pictures without permission or is the retailer not telling the truth? I also saw a request online for a manufacturer for sweaters from the same retailer. Can you make any suggestions?

      1. Fredrik Grönkvist at 10:30 am

        Hello Fatima,

        I would place my bet on the suppliers using pictures without permission! It also happened to product we created for clients. What are you referring to with an online request? Did a supplier contact you?

    4. Vadim at 10:54 am

      Hello,
      So I’ve recently received watch samples of my completed OEM watches from a China supplier and now put my deposit on a final order of 500pcs. I’m importing into the USA and I’m a bit concerned though with a few questions…

      I am receiving big bulk of watch product and would like to know the best shipping method considering all the import hassles and fees?

      What is the sum taxes are taxed on? Is that the price I’m paying for the product as the brand owner or the price I’m selling for?

      Do you know if there are any particular marking or certification requirements for watches to be imported and sold in the US?

      If you can provide me an email for my questions outside this forum that would be great if possible.

      Thank you!

      1. Fredrik Grönkvist at 2:18 pm

        Hello Vadim,

        The taxes are calculated based on the FOB price, when importing to the United States. I think Air Freight may be viable in your case, but it’s only a guess since I know nothing about the cargo weight and volume.

        Yes, there are U.S. regulations that apply to watches. However, we would need to research which directives apply and how.

        1. Vadim at 11:13 pm

          Thank you for your reply! My price is EXW , does that mean my EXW price would be taxed? I looked into all the watch marking requirements and got that figured out with my supplier. My approximate total weight is 25kg including 2 cartons 41*29*28cm each.

          As far as any regulations. Do you know where I can find that info? I was also looking into CE and ROHS requirements but I don’t think they are required in the US just Europe. Do you think it would be smart to meet these requirements if I want to sell online internationally?

          1. Fredrik Grönkvist at 4:12 am

            Hello Vadim,

            You still get taxed on the FOB price, even if you ordered according to EXW terms. EXW requires you to arrange the transportation to the Port of Loading in China, and the export clearance. These costs shall also be declared.

            In fact, buying EXW is more expensive and complicated than buying FOB from the very beginning.

            Since the shipment is so small, Air Freight is more viable than Sea Freight.

            No, I cannot comment on that. However, it’s true that CE and RoHS are European Union regulations (which don’t apply in the USA). If you intend to sell to the EU you will need to ensure compliance with EU directives.

    5. IRR at 9:04 pm

      This is a great article, Fredrik, thanks for putting it together.

      I thought launching an initial wrist watch collection would cost significantly more. Is the $15 unit price realistic tough? Those Daniel Wellington watches look gorgeous and I am struggling to believe that they are so cheap to manufacture if you order only 300 pieces or so.

      1. Fredrik Grönkvist at 4:44 am

        Hello!

        The price tag is completely dependent on the materials used. The biggest factor is whether you choose a watch case on stainless steel or alloy. Zink alloy watches can be as cheap as US$4 – even when importing small volumes.

        However, Daniel Wellington is using a Stainless Steel case and I would admit that a US$15 price tag when purchasing 300 pcs is a bit low. You should still be able to get a watch of the same quality for less than US$20.

        I think you might also be interested in our article about importing wrist watches from China, read it here:

        https://www.chinaimportal.com/blog/importing-wrist-watches-from-china/

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