• Factors Which Affect The Final Decision On Whether To Import Goods From China


    Importing goods from China and promoting them in the U.S. or abroad continues to be an attractive product sourcing alternative for retailers, from the small business model to the giants like Wal-Mart. The relatively low-cost labor and production costs in China can result in a much greater profit margin than what a retailer might get if he sourced his goods in the U.S. (wholesale and even directly from the producer).

    However, retailers must understand that the lesser the production costs of your products, the higher your risks. This goes along with the old saying "you get what you pay for." Chinese manufacturers are recognized to be satisfied with rock-bottom pricing for their services, but what they won't tell you is that quality will need to be compromised, in the form of inferior quality of raw materials and/or level of craftsmanship. There is a trade-off between reducing your costs at any rate, and the overall risks you are taking. Determining the best medium is the most primary challenge in the import export business.

    Maybe you've heard of good and bad aspects about the import export business, like being able to get goods manufactured at 1/10th the cost as in the U.S.; high quality items like handbags which could easily be marked up to 500% in the U.S.; and top notch producers with quality control comparable to U.S. factories; but also evaporating containers, stolen intellectual property, substandard products. The negative incidents could be avoided completely by doing your due diligence: mentoring under a professional importer; reading books and trade journals on the subject; taking classes in your local community college; and talking to an import export business advisor that has experience on how to import goods from China.

    The main benefits of outsourcing your products to China are making charges are much lower than in the USA; Chinese manufacturers are often very creative and adaptive; and if you're successful, you can ultimately own your own factory, providing you with the lowest production costs possible.

    The main challenges of having your goods sourced in China are that lifestyle, language and business practices are quite different from those in the U.S. and are not easy to understand and implement; so as to achieve the price point you desire,

    You might be needed to order a higher quantity of merchandise than you would from a US supplier; not to mention, importing and also any other new venture, requires a solid, well thought out business plan.

    Your ultimate decision on whether or not to source your products in China has to take into consideration these four points: (1) The real charges of importing your items ; (2) An accurate monthly sales forecast; (3) Cash Flow forecasts; and (4) Profit

    Margin Assessment; and (5) if your business can manage the time lags involved in importing, as you may find yourself out of stock for a few products that your customers want.

    If you calculate that the overall savings realized if you import goods from china are 35-45%, then it is truly worth going for it. If you are not obtaining more than 30% savings compared to your current costs, first go back to your current provider(s) or dealer(s) and see if you can negotiate a better deal. It will save you time, energy and money. You may always reconsider importing later. Important thing: if you calculate that the savings from outsourcing your products to China absolutely justifies the price, the truth is that if you do not do it, your competition will (or is already doing it) and will ultimately dominate your market. Generally, the overall savings are worth going for it. If you find this to be the case, make importing from China a top goal.

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