Factors Which Affect The Decision On Whether To Import Products From China
Importing goods from China and selling them in the U.S. or abroad has been an attractive product sourcing option for merchants, from the small business model to the titans like Wal-Mart. The relatively cheap labor and production expenses in China can result in a much larger profit margin as compared to what a retailer might get if he sourced his products in the U.S. (wholesale and even directly from the manufacturer).
However, merchants must understand that the lower the manufacturing costs of your products, the more your risks. This goes along with the old saying "you get what you pay for." Chinese manufacturers are recognized to settle for rock-bottom pricing for their products and services, but what they won't tell you is that quality will have to be compromised, in the form of substandard quality of raw materials and/or level of craftsmanship. There is a trade-off between reducing your prices at any rate, and the overall risks you are taking. Determining the best medium is the most basic challenge in the import export business.
Maybe you've heard about good and bad things regarding the import export business, like being able to obtain goods manufactured at 1/10th the price as in the U.S.; high quality products like handbags that can easily be marked up to 500% in the U.S.; and first-rate producers with quality control similar to U.S. factories; but also evaporating containers, stolen intellectual property, defective products. The adverse incidents can be averted completely by carrying out your due diligence: mentoring under a professional importer; consuming books and trade journals on the subject; taking classes in your local community university; and talking to an import export consultant who has experience on how to import goods from China.
The main advantages of outsourcing your products to China are making costs are much lower as compared to in the USA; Chinese manufacturers are generally very creative and adaptive; and if you're successful, you may ultimately own your own factory, offering you the lowest production costs possible.
The primary challenges of getting your goods sourced in China are that culture, language and business tactics are quite different from those in the U.S. and so are not easy to understand and implement; in order to achieve the price point you wish,
You might be required to buy a higher quantity of products than you would from a US supplier; not to mention, importing as well as any other new venture, demands a solid, well thought out business plan.
Your final decision on whether or not to supply your products in China has to take into account these four points: (1) The real charges of importing your products ; (2) An accurate monthly sales projection; (3) Cash Flow projections; and (4) Profit
Margin Assessment; and (5) if your business could manage the time lags involved in importing, since you may find yourself out of stock for a few items that your customers demand.
If you calculate that the overall savings realized if you import goods from china are 35-45%, then it is worth deciding on it. If you are not obtaining more than 30% savings in comparison to your current costs, first go back to your current provider(s) or supplier(s) and see if you can negotiate a better offer. It will save you time, energy and money. You can always reconsider importing in the future. Important thing: if you determine that the savings from outsourcing your products to China absolutely justifies the costs, the truth is that if you do not undertake it, your competition will (or is already doing it) and will eventually take control of your market. Generally, the overall savings are worth deciding on it. If you find this to be the case, make importing from China a top goal.
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