China is one of the most popular countries to import from, but it’s difficult to get all the details figured out when you’re halfway across the world in Canada. You might have heard horror stories about importing from China like receiving low-quality or damaged goods. If you follow these tips, you’ll avoid making costly mistakes when you’re importing from China to Canada.
Here are 10 things to keep in mind if you decide to go with a supplier in China for your import-export business:
1. Obtain an import number and permit for Canada.
This is the starting point for your import-export business. You’ll need a Business Number (BN) from the Canada Revenue Agency (CRA) in order to conduct trade in Canada. You’re also required to have an import license, which can be procured from Global Affairs Canada in Ottawa.
Go here for a list of the best products to import from China.
2. Find a reliable supplier.
Depending on which product you’re importing, there might be thousands of different suppliers in China to choose from.
First, decide whether you prefer a factory or a trading company. Trading companies typically have a higher price than factories but have a greater product selection and lower minimum order quantities. Factories have a lower price because they manufacture products directly. If you’re unsure whether a specific company is a factory or a trading company, look at the supplier’s name and website. If the name and the website are completely in English, you’re likely dealing with a trading company. When in doubt, ask the supplier.
If you find a factory or trading company with especially low prices, you should be extra cautious. In China, low prices usually mean low-quality products. Other reasons the price might be low include less desirable shipping terms or much higher minimum order quantities.
The best way to find potential suppliers is to visit China and go to a supplier trade show in Guangzhou, Yiwu, or another production hub. You can also use Alibaba or Aliexpress to find a supplier, but be careful not to get fooled by high-quality photos and be extra vigilant in your communication.
3. Build a relationship with your supplier.
This is an often overlooked aspect of importing from China to Canada. It’s important to develop a relationship with your supplier once you’ve chosen them. You can do this by communicating in a respectful way and sending small gifts when possible. Chinese people do not respond well to harsh blame or direct criticism, as it makes them lose face.
Remember, there are tons of importers all over the world competing with you for suppliers. If your supplier decides you’re not worth the trouble and they find better customers elsewhere, they’ll simply stop responding to your messages.
That being said, you can try to negotiate with suppliers for a small price discount. The best way to negotiate is by asking to lower the minimum order quantity, which many suppliers will be willing to decrease by as much as 50%.
4. Write detailed product specifications in Chinese.
Once you’ve chosen your supplier, you’ll need to make sure you cover every single detail of your product so the supplier does not substitute inferior materials or incorrect measurements. If at all possible, find someone to help you write your product specifications in Chinese. This will ensure your supplier does not make mistakes when it comes to manufacturing your product.
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5. Visit the factory before shipment.
Even if you’ve already visited the factory when choosing a supplier, it’s important to send one of your team members to visit again before the first shipment. That way you can be certain the products meet your standards. This may seem like an extra cost, but it could save you lots of money and stress in the long run. If you skip this step, you might have a low-quality first shipment (even if the sample products you saw on your first trip were high-quality). Visit at least a week in advance of the first shipment to make allowance for changes if necessary.
6. Determine which shipping method is best for you.
There are three options for shipping from China to Canada: air courier, air freight, and sea freight. Air courier is the fastest and most expensive option, taking 2-5 days and costing at least $10 (USD) per kg. Air courier is best for small shipments with a time crunch. Airfreight takes 3-10 days including customs clearance and costs around $5-$7 (USD) per kg. Sea freight is the cheapest option as well as the slowest, taking 15-40 days including customs clearance and costing less than $1 (USD) per kg. Sea freight is ideal for the largest shipments and is priced based on volume rather than weight.
Check out the latest shipping trends and how they might affect your import-export business here.
7. Mind your Incoterms.
Incoterms are International Commerce Terms, the global standard in international trade for identifying who is responsible for the shipment throughout the transit process. To keep it simple, we suggest ensuring your supplier agrees to Free on Board (FOB), which makes the supplier responsible for transporting your goods to the ship. FOB is followed by the name of a port such as Shanghai, Ningbo, Guangzhou, or Shenzhen. You’ll want to choose the port which is closest to your supplier.
Watch out for Ex Works (EXW), as this would mean you’re responsible for picking up the goods at the supplier’s location and transporting them from there. This is typically a more expensive option and involves added risk.
Click here for a guide to the most common Incoterms.
8. Invest in insurance.
You might think that insurance should be covered by your carrier, but that’s not always the case. It would be awful to find yourself in a situation where your imported TVs have cracked screens or something like that. If your goods are expensive and fragile, it’s vital to purchase cargo insurance to make sure this doesn’t happen to you when you’re shipping from China to Canada.
9. Expect unexpected fees.
You probably already know about import taxes and customs duties, but what about customs examination fees? If you’re a first-time importer to Canada, your first two or three shipments will likely get inspected at the border. These examination fees range from $150-$2,000 (USD).
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10. Hire a customs broker.
To minimize the hassle involved with importing from China to Canada, you would do well to hire a customs clearance broker. Customs brokers help you throughout the process, including preparing the necessary paperwork, arranging taxes and duties, following all laws and regulations, and clearing shipments through customs.
Looking for an expert to help you navigate the difficulties of importing from China to Canada? BorderBuddy is the premier customs broker in Canada. We have the experience necessary to walk with you every step of the way. Give us a call today.