5 Mistakes New Importers Make When Importing Products from China

Hi guys. It's me, Sarah, the video editor here at Wholesale Ted. And in this video, I'm going to give you the five big

mistakes

that people first

make

when

they start

importing

products

from China. Now, some of these are

mistakes

I've made personally and some are mistakes my friends have made. In fact, a friend of mine recently made mistake number 3 and it cost him a lot of money in unexpected fees that greatly reduced his profit margin. In fact, it was this incident that inspired me to

make

this video. Now, just a quick disclaimer. Most of my subscribers here at Wholesale Ted are looking to import

products

from China to the US.

There will be a lot of US-specific advice in this video. But I'll do my best to give everything a global context as well. And another disclaimer, this video can get a little technical at times, but I'll do my best to explain everything as completely as possible. So to find out what these mistakes are and how to avoid making them, keep watching this video. Mistake #1, assuming that shipping by sea will be the cheapest option. This is a classic mistake I see many new sellers make. They assume that if they ship by sea, they will get an advantage over their competition.

And they often tell me this, as if they've cracked some super-secret code: "Ooh, I'm going to be different. I'm going to be better. I'm going to ship by sea. I've found the secret! I'll be very rich!" Yeah, it doesn't work that way. The truth is, unless you are shipping in large quantities outside of China, it is usually cheaper to ship by air. Now, sea freight is apparently cheaper than air freight. You see, if you ship by sea it will typically cost you around 60 cents per kilogram, while shipping by air will typically cost you around $7 per kilogram, so that's a big difference.

And I imagine you're sitting behind your computer thinking, "Sarah, what are you talking about? You just said shipping by sea is cheaper. How can shipping by air be cheaper?" Well, the thing is that in order to get it at that low price, you have to ship it in a container, and the containers are very large. This means you will be shipping hundreds of kilograms. And if you can't fill a container at least 60% to 70%, then again it will usually be cheaper to ship it by air than by sea. Now, many of my subscribers here at Wholesale Ted who are interested in

importing

products from China will be private label manufacturers for Amazon FBA.

And for most of you, you won't be shipping in large enough quantities to make it worth shipping in containers. Now, let's talk about shipping by air. When it comes to air shipping, you have two options: one, air freight; and two, airline company. Many people hear this and get confused. I mean, aren't they the same thing? Well, they're not. The carrier is door to door shipping. Some shipping companies you probably recognize are FedEx, UPS, and DHL. These companies have their own fleet of cargo planes that ship items around the world. Freight forwarders will pick up your items from your supplier and then drop them off at a location of your choice.

Again, for many of my subscribers here at Wholesale Ted, this will be an Amazon warehouse. On the other hand, air transportation is

when

cargo is simply transported from one airport to another. You see, airlines like Air China don't just carry cargo for their passengers. They also transport commercial cargo. And sometimes this can be almost half the price of transporting your items by freight. But as with everything in life, there is a problem. You'll still need to pay someone to pick up your cargo from your Chinese supplier and then drop it off at the airport. And you will need to hire an independent customs broker to handle the paperwork at the border.

And you will also need to arrange cargo transportation so that your cargo can be picked up at the port and delivered to the location of your choice. And again, for my subscribers here at Wholesale Ted, it will probably be an Amazon warehouse. Unfortunately, there are often hidden fees in this that aren't taken into account the first time, so if you're importing for the first time and you're doing this, you should allow for a buffer. Now this all probably sounds a little expensive, and yes, it can be, but it gets a lot better in larger quantities. The reason is that when it comes to transportation and air freight companies, there are much more fixed rates.

And obviously, these fees increase as you send larger amounts. Ultimately, if your shipment is 50kg or less, it is certainly cheaper to ship by carrier than by freight. And believe it or not, depending on the item you're shipping, it may still be cheaper or comparable to use a carrier instead of freight. The most important thing you can do to avoid this mistake is to do your research ahead of time. There is a website called Freightos that allows you to compare freight rates from different companies. I'll have a link in the video description below. Please note this is an affiliate link.

Here at Wholesale Ted, all of our YouTube videos are free and affiliate links help us keep our videos free. Mistake number 2: not using the metric system when working with Chinese suppliers. Now this is just a quick note for my subscribers here at Wholesale Ted who haven't evolved to use the metric system like we have here in New Zealand. In China the metric system is also used and not the imperial system. So when working with your supplier, make sure you use kg instead of pounds, and make sure you use centimeters instead of inches. And this is just a general note for anyone who wants to work with Chinese suppliers.

When you work with a Chinese supplier, you should be aware that they expect you to work on their terms and not on their terms. This means working on your deadlines and schedules. As a foreigner, it is not culturally acceptable to be late for a meeting. But it is culturally acceptable for them to be late for a meeting. Now, is this fair? No, but you're getting your items ridiculously cheap, so I honestly wouldn't complain too much. Make things easy. Work with them, instead of against them. Mistake #3: Using less than a container load as a shipping option. Now, unfortunately, making this can be a very costly mistake.

And like I said at the beginning of this video, I have a friend who made this mistake and again it cost him a lot of money. So, remember that I told you before that if you ship by sea, then you must ship using a full container. Well, a quick and boring fact: this is called FCL, which means full container load. The truth is that this is not the only option. You can also ship by basically renting part of a container. And this is called LCL, which means less than container load. You and other

importers

rent a portion of a container to make it collectively worth shipping by sea.

My friend discovered this and thought, "Yes! This is great! This is my solution. I can still ship by sea, with a small shipment, and I have rock-bottom prices. It's [inaudible 00:06:40] fantastic." plan." He was going to ship half of his cargo by air, to get it to Amazon's warehouse as quickly as possible so he could start selling very quickly. And then he would ship the rest of his cargo by sea, using LCL, to save a lot of money and make even more profits. A perfect plan, right? Until I got a phone call for him, "So, Sarah, I bought my inventory and shipped half by air and half by sea." “Oh.” And he said, “So the half I sent by air, well, that was fine.” And I said, “Well, no surprises.” “But the half I sent by sea has racked up huge charges at the port.” "Unfortunately, he wanted me to help him find a solution, but I really didn't have one.

The thing about these companies that offer LCL shipping is that they usually They do not make money from the shipping process. Instead, they make money at the port. This is because you have to pay high fees at the port as a result of shipping with them. The reason for this is again that these companies do not make money during the shipping process. Instead, they do it at the port in the form of commissions and bribes for the additional fees that you, the importer, have to pay there. It is very dirty and takes advantage of new

importers

.

You see, each port has its own destination service charges. In the United States, these typically cost between $500 and $1,000 per container. So, you would assume that because you are only renting part of the container, you would be paying fees relative to the part you were using, right? Well, that's not the case. When you ship via LCL, they typically charge you a huge fee that, instead of being based on the size of the container, is based on your share of the container in cubic meters. Basically, you end up paying hundreds of dollars in charges at the port. And this can often be comparable to if you had shipped a full container yourself.

And then the company makes money through commissions and kickbacks which are called rebates. And so, as my friend discovered, if he had shipped by air, he would have saved a lot more money and his inventory would have arrived much faster than if he had shipped by LCL. It's a slimy business. Don't fall into the trap. Don't fall for something that is too good to be true. Mistake #4, not checking what fees you have to pay. First of all, I want you not to worry. There is a simple solution to a seemingly complicated problem. And it's worth doing so you don't receive an unexpected bill.

This was a mistake another friend of mine made. They did not correctly calculate what their duties would be. So when they received the bill, they were in for a surprise. In their case, they had not set aside the correct amount of money, so they had to scramble to raise it so the inventory could be liquidated at the border. Now, homework can be a little complicated. For example, let's say you are importing wool jackets to the US. Well, there is not a single tax on all wool jackets. There are other factors to consider when determining what your tax rate would be.

For example, was the wool used for the jackets imported from Israel? Well, if so, Israel has a duty-free agreement with the United States regarding wool. So if the wool used for your jackets comes from Israel, then your tax rate will be cheaper. And here's another question. Do your wool jackets contain synthetic fibers or are they pure wool? If they contain synthetic fibers, then their tariff rate would be higher, due to the fact that in the US, higher tariffs are applied to products made from synthetic fibers due to the additives used during the creation of synthetic fibers.

But as an importer, you are unlikely to know the answers to all of these questions. But luckily you don't have to because your provider most likely does. All items imported into the US have what is called an HTS code. And a type of duty is applied to this HTS code. These codes take into account all the strange quirks, such as the type of fabrics that were used. HTS stands for Harmonized Tax System. This is a huge manual containing over 17,000 codes. People spend their entire lives studying this. They get PhDs in this. Luckily, it's not necessary. You just need to know what the HTS code is for the item you are importing and most Chinese suppliers will give it to you.

When they do, just look it up and find out what their tax rate is. Now, an interesting fact is that the system for classifying items is actually universal. So chances are that even if you're not importing items into the US, your local country of residence also has something similar. See, I told you there's a simple solution to a seemingly complicated problem, which brings me to my final mistake. Mistake #5: Being afraid to import because you are afraid of making mistakes. I understand that it is easy to listen to this video and be afraid and put off importing because you are afraid of making mistakes like the people I mentioned and also losing money.

Because after all, if you make a mistake, it will cost you money and no one wants to lose money. And I'm going to be honest with you. Even if you follow a step-by-step system, there is a reasonable chance that you will still lose money due to some unexpected fee that you didn't know you were going to have to pay. And well, honestly, that's life. And unfortunately, like my friend from mistake #3, this could greatly impact your profit margins. Well, here's the thing, my friend, you made that mistake, but now you know. He has learned from his mistake.

Next time, you will use air freight for all your cargo, which will save a lot of money and greatly increase your profit margins. Sure, he lost some money the first time, but since he did it once, he knows what to expect now and how to avoid the same mistakes he made the first time. And of course, next time he will make a lot of money. If he hadn't gone out and tried, he would be stuck in the same place, doing the same old job, making no progress. The only way to guarantee theFailure is honestly, not trying at all.

But instead, he went out and tried, knowing that it wasn't perfect, but next time, he sends things to have great success. Mistakes are part of entrepreneurship. Sure, learn from other people's mistakes and don't make the same ones, but don't be afraid to make your own. Thanks for watching this video. If you liked it, I would appreciate it if you would approve us and subscribe here at Wholesale Ted for more great videos on how to make money selling online. And if you have any questions, be sure to ask them in the comments section below. It's true that here at Wholesale Ted we get a lot of questions.

But we try to answer as many as we can. And if he wants to start his online business, but doesn't know how, be sure to download our free eBook, "How to Make $10,000 a Month Online Through Dropshipping." You will find a link on how to download this amazing, life-changing eBook in the video description below.