You’ve found your supplier, gotten a sample of the product for your inspection, and are now to the point where you’re negotiating the shipping and the payment terms. We’ll continue with determining and understanding the terms of payment.
When making a purchase for import, it’s not uncommon to pay 30% up front with the remaining 70% to be paid when the product is shipped. This give the supplier the money that he needs to cover the productions costs. However, these terms can be negotiated.
In legal terms, you are considered the Importer. As the Importer, you bear the responsibility of being absolutely certain that whatever goods you are receiving meet the entire regulatory requirement for your destination nation. Anything that does not meet these requirements can be stopped at the border and can possibly result in one or more law suits against you or your company/corporation. Make sure you know what the requirements of the nation of destination regulators are and that they are being met by the supplier. For the United States, these regulators include US Customs and Border Protection, FDA, DOT, ATF, and USDA (these agencies have websites where you can learn what you need to know, where to register your information, and have forms ready for download).
Textile products have very specific regulations regarding their importation. Compliance regulations can be extremely intricate for some products, like textiles. Hiring a good customs house broker for consultation before you place any orders is highly recommended.
A forwarder is a person or company that organizes the shipment. They may also act as a carrier. A customs house broker is a person whose profession is involved in the clearing of goods through the maze of customs barriers. They prepare documents and/or electronic submissions. They calculate the payment for the client of the taxes, duties and excises. They also assist in communication between the importer/exporter and governmental authorities. In short, you need the services of both.
You can find a listing for both services at a local international trade organization or association in your area, as well as the customs office. If this is the first time you’re importing, go with a service that is more individualized. Don’t’ skimp here; you are going to need more assistance than you might realize. If you have imported before and know the ropes, you can use an online service, such as AsiaCalculator.
When you’ve got everything prepared in advance, you can place a trial order with a written purchase order attached. In the purchase order, type out the description of the product, including product requirements; packaging requirements; trade terms; list all required shipping documents; anything else that is necessary to ensure the supplier completely understands what he is supposed to ship.
Get an inspection company to check the product on site in the factory. They will send you a detailed report of what they find. Make sure you provide them clear details about what you want checked. If there are vital components that are assembled early in the manufacture of your product, have them begin inspections early in the process to avoid quality control issues. This may sound like a lot, but it can help avoid receiving defective goods, or product that doesn’t conform to standards.
Although your forwarder and customs broker will take care of the transport and clearance of customs, you need to be tracking these as well. Both your forwarder and customs broker will need additional product information and the endorsed bill of landing. You’ll also need to issue a power of attorney to broker and purchase customs bonds for your imported shipment.
You have finally received the product. Make certain you post and file your records.
Congratulations! You can now go and sell your products that you’ve imported from China.
Now that you know the process, you won’t be intimidated to become a regular importer from the Factory of the World!