Many UK businesses are interested in importing from China to UK. For many, this may seem like a daunting task. However, with a strong understanding of the process it can be done with ease.
This guide will walk you through the steps to import from China to UK, help you define a good business model for buying from Chinese suppliers, give you an understanding of duty and tax rules, and guide you through pre-import considerations.
Steps to import from China to UK
Thousands of British companies are earning massive and consistent profits by buying from Chinese manufacturers and importing from China to UK.
It is seemingly easy to do. Just find a product, choose a Chinese factory that can produce it cheaply, introduce it into the UK market, optimize your branding/marketing, and let the cash roll in!
However, those of you who have attempted to import products themselves will well know that doing it right seems easy but is in fact quite challenging.
There are a huge number of challenges that importers must rise above. Getting branding and marketing right, which is no small task, is just the beginning.
Here at Easy Imex, we are a sourcing company that has helped hundreds of importers grow their businesses over the years. To help you scale yours, we have consolidated this information into this step-by-step guide detailing the techniques that have worked for those companies.
By learning from our many client’s perspectives on what works and what doesn’t, we’ve been able to refine how we coach our clients in mastering the importing from China to UK process for maximum success.
1) Select Product to Import from China to UK
While choosing the right products is important for success, it is less crucial than might be expected in building a successful brand selling Chinese manufacturer sourced products.
Nearly every product has a niche, what is more important for your business is to understand the right way to source your product.
Indeed, when choosing the right product, you must consider the market environment and your available budget. However, with sufficient capital and an appropriate strategy, you can be confident in your success.
What follows are 7 key principles for product selection that I’ve learnt through helping 100’s of businesses import product from China.
I’ve helped 100s of companies import products from China, and in the process, learned 7 key principles in selecting the right product.
Those companies that experienced success obeyed the following principles:
Tip #1: Building a brand around a product is the best thing you can do
Brands are crucial for connecting with people. Rather than simply attempting to sell a commoditized product that only competes on price, creating a brand that connects with your customers builds a long-lasting business model.
Tip #2: Stay away completely from fad products
The lifecycle of hyped/fad products is very short because the novelty fades quickly for consumers. It is impossible to build a brand around them.
Instead, as mentioned above, make the choice to focus on your long-term brand by choosing products that bring sustainable profits.
In addition, be aware that novelty products often have quality problems that are not fully resolved because they are by nature new to market. Consider hoverboards, for example. They had to be recalled because of a dangerous battery issue, hurting the brand image of companies that were selling the boards to consumers.
Tip #3: Have at least one unique selling point or differentiator
Without a point of difference (POD) that separates your product from the competition, it is hard for your product to be successful. That said, there is no need for the POD to be significant. It can be as simple as a unique color scheme, a special logo that stands out from the crowd, an excellent unboxing experience, or superior marketing photos.
To begin with, keep it simple by only focusing on one or two PODs. Once your brand begins to experience growth, you can begin implementing incremental improvements so as to separate your brand/product from your competitors.
Tip #4: Don’t neglect product safety
When you import from China to UK, stay away from dangerous products. Dealing with product liability and recalls can totally destroy your business. As mentioned above, more than 5,000,000 hoverboards sourced from Chinese manufacturers had to be recalled in the United States because of unsafe batteries, wiping out many importers.
Tip #5: Perfect must not get in the way of good
It is common for companies to try to take on too much at once at the beginning and struggle to get anywhere. I’ve seen it many times.
It is wise to have a plan for added product features, design improvements, and customizations, but it is unnecessary to have this all figured out before you make your first order from your Chinese supplier.
I suggest only sticking to a couple of products at the beginning. Do them well! As your business grows, build out your product lines.
There is no need to do everything at once.
2) Find the Right Supplier
Alibaba.com takes the prize as the largest supplier directory in the world with an estimated 8.5 million active sellers and 279 million active buyers and is mainly set up as a B2B service.
No matter your product or niche, it is nearly certain that you will find the right manufacturer for it. Because the majority of manufacturers have a MOQ (minimum order quantity), you are forced to buy in bulk.
In terms of getting a great price this is good, but when you’re just starting out this can be a financial stretch. To find manufacturers and suppliers on Alibaba, simply search for the item with the words: ‘manufacturer’ or ‘private label’ in the search box.
If you take the step to become a verified buyer, you can obtain access to a more complex and detailed directory of suppliers. This gives you the capability to find experienced suppliers, see some of their most important customers, research their trade records, as well as other background information.
Although it is still possible to find trusted manufacturers without becoming a verified buyer, as a verified buyer you have greater security and information. I also recommend seeking out Gold Suppliers which Alibaba has verified.
- Chinese trade shows
Not only is China the largest manufacturer in the world, but it’s also one of the most common destinations for online sellers to source their manufacturing from to import from China to UK. There are a variety of excellent trade shows to choose from if you want to travel to China to meet in person with manufacturers. Some of the largest shows are Guangzhou’s Canton Fair, Shanghai’s Import and Export Commodity Fair, and Zhejiang’s Yiwu Commodities Fair.
- UK trade shows
Additionally, the UK hosts trade shows for nearly each industry. The M+A Expodatabase is an excellent resource, giving information on a current listing of nearly all the UK’s trade shows organized by product niche.
Using a sourcing company
The sign of a great sourcing company is that they can find manufacturers that you and your competitors are unable to.
A sourcing service based in China has the advantage of being able to search in Chinese, utilize local connections, and tap into their already existing supplier database.
Here at Easy Imex, we discover the majority of our top suppliers through industry connections and tradeshows.
In addition, we hunt down factories the old-fashioned way, by travelling to the districts where a product is manufactured and finding producers that are not listed on Alibaba or similar sourcing company platforms.
What makes this a possible approach is that Chinese towns and cities oftentimes specialize in producing only one kind of product.
Furthermore, we narrow the search down by figuring out the raw materials for production, and the exact expertise required to make the product.
It is typical for only one or two places to exist in China where the superior Chinese manufacturers are located for producing our client’s product.
When we have found the place we want to visit, we’ll travel there and speak with Chinese manufacturers that we’ve already sourced from.
Next, we’ll seek out factories that only produce for the domestic Chinese market and ask them if they know the best factories for exporting the types of product we want to sell internationally. Factories that only produce for selling domestically don’t have a problem sharing this information because it doesn’t detract from their business.
3) Select and contact the best Chinese suppliers
It is crucial to format your initial RFQ (request for quote) and email correctly.
By paying special attention to formatting, the response rate from Chinese manufacturers is greatly increased, and the process of you evaluating and tracking Chinese suppliers is largely eased.
You should demonstrate in your email that you are a potential long-term customer for the factory and a professional and reliable operation that legitimately wants to import from China to UK.
- Your email should have clear calls to action and be precise
- Your email should include the correct terms for raw materials, testing requirements, and components
- Your RFQ should have an attachment with a simple product spec sheet
I typically begin by sourcing 10-15 suppliers that seem suitable. Next, I consolidate that list to the top 3-5 suppliers based first on price, then on lead times, factory size, quality (have samples sent to you), and compliance ability.
I recommend paying most of your attention to the 3-5 superior suppliers because any more than that leads to difficulty and high cost in arranging the samples and inspecting the factories.
Visiting a supplier’s factory is the single best way to verify whether a supplier is suitable.
Visiting the factory allows you to check out the equipment, determine the factory’s capacity, and examine the quality of the sample room, the factory’s own quality control systems, and the quality of the factory employees.
Additionally, it gives you direct access to the factory’s leaders to negotiate pricing face to face.
In particular, for businesses that are already established and hoping to import from China to UK, this is a crucial step and must not be skipped!
If you are unable to spend the time in travelling to the other side of the world to inspect potential Chinese suppliers, you should hire a 3rd party sourcing company to inspect your potential supplier list.
How can I verify a Chinese supplier?
In order to verify whether a Chinese supplier is the right choice for you, take the following questions into consideration:
Question #1 – Is the factory capable of producing my product? Are they experienced in this particular product area?
It is a common tendency for Chinese manufacturers to say yes to the majority of requests. Be aware of this. When asking one whether they have the capability to manufacture your product, it is rare to get a no answer!
Ask for evidence from the factory that they are capable of manufacturing your product if you have doubts.
Question #2 – Are they a manufacturing company or a trading company?
It is easy to spot trading companies. It is likely they are a trading company if they are selling a wide variety of goods across many different product categories.
If you plan to import from China to UK and would like more information on why you should avoid buying products from a trading company, read this article.
Question #3 – Are you able to effectively communicate with the Chinese manufacturer?
When importing from China to UK, if communication is something the factory is bad at, you likely do not want to have dealings with them. If something went wrong with an order, you might have to wait weeks for an explanation as to why!
Question #4 – How will the Chinese supplier’s location impact product cost and lead times?
China is a huge nation. If you purchase a product from Yichang, for example, you must consider the extra costs and time required to deliver the product to the nearest ocean port.
You must ensure that you are buying your product from the best regions.
In almost every instance, if you are purchasing electronics, you should be buying from a factory close to Shenzhen. More information on China’s manufacturing geography and the impact it has on product sourcing decisions can be found here.
Question #5 – Is the factory sufficiently large? Can they handle my order volumes?
It doesn’t make sense to purchase from China to UK from a factory incapable of managing your order volumes. Ultimately, they will probably outsource production to another, often worse, factory.
On the other hand, if your plan is to import small quantities from China to UK, don’t buy from a massive Chinese factory because you will not be important to them, and will probably have your order placed at the end of the line when a larger order comes along, leading to delays.
At the very least, I recommend obtaining samples from the top two suppliers on your shortlist.
Make sure to be diligent when examining your Chinese suppliers’ samples. The majority of people don’t take sufficient care with the sample examination process.
Pay attention to the feel, look, function, dimensions, packaging, and performance of your product.
I also suggest asking more than a single person check the samples so that key details aren’t missed.
In the case that the product needs mail order packaging, ask that any sample that the factory sends to you is sent with the same mail order packaging that they will use on your order later.
Next and highly important when you import from China to UK is to conduct drop tests on your product. Ensurng that the packaging is sufficiently sturdy to handle being imported from China to UK. For more information on the right way to conduct drop tests, check out this article.
If the Chinese manufacturer is unable to match your requirements, then unless you want to make compromises, the proposed factory is basically unsuitable.
Several side points:
It is normal in China for samples to be redeveloped and redone so that they can reach your desired outcome. Be careful about writing off a factory too quickly if they don’t produce a perfect first sample.
If your company is developing a new product and samples are expensive to make, it may not make much sense to arrange for samples from 2 different suppliers. Instead, it may be best to work with the best supplier and arrange for a sample to be made with them.
Chinese suppliers are extremely good at negotiating. Make sure to come to the meeting prepared, or you can expect to overpay for your product.
Follow the 7 steps below when importing from China to UK to obtain the greatest results when negotiating with Chinese suppliers:
Tip 1. Do good research. You must be sure of your bill of materials and product specifications; you need to know where the factory is based in China and what it is like, you must obtain quotes from several different factories so as to have a measure of comparison; and you must understand how your product will be produced.
If you don’t have this information you will be incapable of effective negotiation and you will lose your credibility with the Chinese supplier.
Tip 2. Only conduct negotiations with suppliers on your shortlist. You are wasting time by making negotiations with suppliers that aren’t capable of meeting your requirements for quality.
Tip 3. You must understand your Chinese manufacturer. Will it offer you better lead times and pricing because you will be one of their first customers?
On the other hand, is it a well-established supplier with high MOQs (minimum order requirements), an extensive existing client base, and a low level of interest in your company?
Tip 4. Define a negotiation strategy according to the quality level, lead-times, and price levels you are looking for.
For example, is the price the main concern?
Or, is it also important that your factory use the components and materials that comply with a standard?
Will you pay a bit of a higher unit price if a factory has shorter production lead times?
Tip 5. Present a good business case and backstory to the factory. The days are gone when each Chinese factory is desperate for your business no matter your purchase order size.
If you are able to present a clear business case on how you want to import from China to UK, the Chinese factory will comprehend your goals and what they can do to help.
Tip 6. Conduct your negotiations with the appropriate person at the factory. For factories on the smaller and medium side of things, it’s best to negotiate with the boss as he/she will be the main decision maker and have the final say on reducing prices down below standard rates.
Tip 7. Stay strong. Use your research, and if you’re making a visit to Chinese suppliers for negotiations, don’t be persuaded by emotional triggers and expensive lunches.
Tip 8. Don’t overlook terms of payment when negotiating with your factory supplier. Typically, payment terms are a 30% deposit, and the other 70% is paid once your goods have been produced by the factory and have passed a pre-shipment inspection successfully.
What are the standard minimum order quantities?
If you’re planning to import from China to UK, you should acknowledge that each supplier has different minimum order quantities. In the section that follows, we will make note of various methods of procuring products in China and outline for you what typical minimum order quantities to expect.
6) Calculate your landed cost
The total cost of producing and importing your product to your distribution center/warehouse in the market you are selling in is called your landed costs, or landed pricing.
eCommerce sellers may also want to include courier costs and Amazon fees that are necessary to deliver your product to customers.
Why is it important?
You can ensure that your profit margins are sustainable and sufficient by carefully calculating your total landed cost.
It is also highly useful to know your landed costs, as they can act as a basis in negotiating prices with suppliers.
After calculating your landed costs, if they only allow for a 5% profit margin or less compared with the lowest selling price on the market, you have probably not done a good job of price negotiation and sourcing.
How to calculate your landed costs?
Although making an accurate calculation is complicated, it is a crucial step that should not be skipped when you import from China to UK! Landed costs should be based on projected order volumes for your product, rather than the MOQ (minimum order requirements) received from the product’s factory.
Be careful about basing a decision on whether a product is viable simply on a MOQ trial order, because when ordering in larger quantities (full containers), you may be able to obtain a better price.
Or course, the costs for quality control and freight when purchasing from China to UK are much lower when calculated on a per unit basis if those costs are spread out over a larger quantity of products being shipped.
Buying in large quantities also gives you greater leverage when negotiating prices.
The following information is necessary when working out your total landed costs:
- The following are necessary for getting an accurate quote from your supplier: port of loading, incoterms, product pricing and details, total cubic meters of order, overall packaging size, currency of quote, and type of shipment (less than full container load, LCL, or full container load, FCL).
- A quote that is up to date from your customs clearance agent or freight forwarder that has: local charges at the country of import, freight costs from port of loading to port of discharge, trucking costs, local taxes, and local duty rates.
- Your actual exchange rate and currency costs. These are different than the trading price.
As I walk you through the landed quote formula and examples, I’ll assume for simplicity’s sake that you are using the FOB incoterm when purchasing from your factory supplier.
Most importers from China to UK use the FOB incoterm. If you would like to learn more about incoterms and why they are important to understand, click this link here.
There is a right way and a wrong way to do it when purchasing a product from China to UK. First of all, make sure you get a purchase contract in place. To do this correctly, your purchase contact must contain the following:
- Late fines
- Payment terms
- Agreed tolerances
- Clear payment terms
- Agreed standards on quality
- Product specification including packaging, product, and instructions
A clear purchase agreement must be in place for any product imported from China to UK. It is essential. Don’t just discuss the above details, get them written up in an explicit agreement.
If you choose to work through a buying office, it is standard for them to create and manage the purchase agreement.
8) Payment Options
Payment options can be negotiated, and they can vary in different circumstances. Most businesses that import products from China work based on the importer paying a deposit, and then later paying their balance shown on the bill of lading (once the Chinese supplier has shipped the goods from China to UK).
I’ve included some examples of payment terms from ‘worst case’ for you to ‘best case’.
100% payment prior to production beginning
This carries an extremely high risk because the importer lacks any leverage over the factory they are dealing with once the money has been paid. In general, this payment term would only be used if the placed order is minimal, which would be less than £3800, for example.
30% deposit then 70% prior to shipment
In this case, the importer first pays a 30% deposit to the manufacturer on the order. Once the goods are produced, the importer pays the remaining 70%. The goods can then be shipped. This is not the best scenario from either a cash-flow or risk perspective for the importer. If the Chinese manufacturer wanted these terms in the deal for any order greater than £7,600, it should be a warning sign that the manufacturer has a reason for offering such poor terms to the importer.
30% deposit, 70% against bill of lading
Any importer should expect these terms as standard for to import from China to UK. The importer pays a 30% deposit to the manufacturer, enabling the importer to have strong control over the quality of the goods being manufactured. Once the goods are shipped out of China and in a container on the way to them, the importer can pay the remaining 70% of the balance against the bill of lading. This strategy also enables importers to better manage their cashflow.
0% deposit, 100% against bill of lading
These are great payment terms for the importer. There is no required deposit, and the Chinese supplier agrees to manufacture the product according to the importer’s purchase order. Only once the goods have been shipped out of China and are on their way to the importer must the payment be made. These payment terms are generally only achievable if you’re working through a sourcing service, such as Easy Imex.
0% deposit 100% balance after 90 days (ordering goods on credit)
These are basically the best payment terms you can achieve for doing an import from China to UK. Getting credit terms from the Chinese manufacturer requires meeting specific criteria, such as contract history, credit checks, and trading history. These terms can basically only be earned through operating through a dedicated buying office like Easy Imex.
9) Quality Control
All purchases when you import goods from China to UK should have a quality control assessment. No matter the size of the Chinese manufacturer, it is wise to have good standards in place, as factories almost always have some degree of quality issues from time to time. These could vary a lot depending on the factory.
It is worth observing that no matter the amount of quality control, you cannot turn a bad Chinese manufacturer into a good one!
As an importer, whether you are importing a single container load of products or massive amount, the effect on your business can be severe if you miss a quality issue on any batch.
Once your goods have been imported from China to UK, they cannot be returned. Therefore, you the importer must either sell the stock as a second-hand product, apply some damage control means, or fix the mistakes/issues.
You could try to sort out highly defective and unsellable stock from that which is still sellable or make the decision to dispose of the stock because it cannot be sold as it would damage your brand. It is a tough decision that you hope you never have to make!
To avoid getting in that situation, each batch of the product should be quality checked! The following are various forms of quality control:
- Pre-shipment inspection – this is an inspection of the batch once production has finished.
- Online inspection – a Quality Inspector visits the factory every single day during the production process.
- Container load check – this method ensures that the shipping container is loaded correctly, and the right quantity of product is loaded. With fragile items such as glass this is especially crucial.
- Mid production inspection – making checks during the middle of production to make sure that the right colors/materials, etc., are used.
The simple rule of thumb is that the more quality control you do, the less risk you will have! That said, you must find a balance between the amount of quality control you practice and the cost of conducting that quality control.
Working through a sourcing service, such as Easy Imex, will give you a built-in quality control team that is already in place. They will assess each SKU (item) as well as assessing each manufacturer and put in place the right quality control plan for you. Easy Imex exports over 20 million USD worth of goods for businesses importing from China to UK.
In addition, the Quality Control team will help you create, control, and implement the plan. For example, if you are doing business with a new Chinese supplier, the first order will require a much higher level of inspection compared with a well-known Chinese manufacturer that has been in business for a while.
When you import from China to UK, the ideal way to ship these is ‘by the container load.’ Your product will be loaded into a container unless shipped by airfreight.
You can either import a ‘Less than a Container Load’ known as ‘LCL’ or a ‘Full Container Load’ known as ‘FCL’.
LCL (less than a container load) shipments
LCL shipments may be the only option of you have a small order or even a sample order. When your goods travel from the Chinese manufacturer to the port, they will be loaded into a ‘shared container’. When they arrive in your country, they will need to be unpacked from the container at the port so that your products can be delivered to you. This means that your products will be handled by a number of people before they are delivered, and those people may not treat your products with much care.
Because of this reality, LCL shipments are notorious for being damaged. If you are going to ship in this way, it is essential to ensure that your manufacturer has packed the product exceptionally well, something a sourcing agent can help with.
FCL (full container loads) shipments
If you order a full container load from a Chinese manufacturer, the actual container will be delivered to the factory, which will then load your goods into the container.
Once the container is all loaded and the doors closed, a seal is then put on the container. Only once the container arrives to the importer will the seal be broken. This means that no one else has handled the goods!
The chance of damage when the goods arrive with the importer is very little as long as the container has been correctly and carefully loaded.
At Easy Imex we recommend and offer Container Loading Inspections for all importers. This ensures:
- That as the container is being loaded, the laborers do so with utmost care.
- That the correct quantity is recorded/loaded.
- That cartons are stacked the right way, ensuring that as they load products on the top part of the container, they are not damaging other units of product by treading on boxes at the bottom of the container.
Best size of container to import from China to UK
In general, no matter what country you are in, you should always use standard sized containers, 20ft, 40ft, 40ft HQ (High Cube).
Larger containers equal lower cost per cubic meter, meaning your ultimate price on the imported product will be cheapest if you use a 40ft container.
The reason for this lower cost is that the majority of ports around the world charge the same or a very similar amount of money to handle either a 20ft or a 40ft container.
Because the total cubic meter volume is more than double in a 40ft HQ container vs a 20ft container, the ocean freight per cubic meter is less than half in a 40ft container compared with a 20ft container.
The haulage/trucking cost must also be factored in. Because there is a similar trucking charge for a 40ft HQ container compared with a normal 40ft container, there is more value and overall lower cost per cubic meter by going with a 40ft HQ container.
The majority of companies that import from China to UK choose to use a combination of a freight forwarding com