• What to import from China as a startup?

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    what to import from china

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    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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