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Factors That Influence The Decision On Whether Or Not To Import Goods From China
Importing goods from China and marketing them in the U.S. or abroad has been a full blooming product sourcing option for merchants, from the small mom and pop shop to the giants such as Wal-Mart. The comparatively low-cost labor and production expenses in China may result in a much larger profit margin as compared to what a retailer could get if he sourced his goods in the U.S. (wholesale as well as straight from the company).
However, merchants should be aware that the lower the manufacturing costs of your goods, the higher your risks. This goes along with the old saying "you receive what you pay for." Chinese manufacturers are known to accept rock-bottom pricing for their products and services, but what they won't let you know 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 lowering your costs anyway, and the overall risks you are taking. Finding the right medium is the most primary challenge in the import export business.
Maybe you've heard about negative and positive things regarding the import export business, such as being able to get products made at 1/10th the cost as in the U.S.; high quality products like bags that can easily be marked up to 500% in the U.S.; and highly rated factories with quality control comparable to U.S. factories; and also vanishing containers, stolen intellectual property, substandard products. The adverse occurrences can be averted altogether by doing your research: mentoring under an experienced importer; reading books and trade journals on the subject; taking classes in your local community university; and speaking with an import export consultant who has experience on how to import goods from China.
The primary benefits of outsourcing your goods to China are manufacturing charges are much lower as compared to in the USA; Chinese companies are generally very creative and adaptive; and if you're successful, you may eventually own your own factory, providing you with the cheapest manufacturing costs possible.
The main challenges of getting your items sourced in China are that culture, language and business procedures are very different from those in the U.S. and are not simple to understand and learn; so as to achieve the price point you wish,
You could be required to purchase a higher volume of merchandise than you would from a US dealer; and of course, importing and also any other new venture, demands a good, well thought out business plan.
Your final decision on whether or not to supply your goods in China has to take into consideration these four points: (1) The actual costs of importing your goods ; (2) An accurate monthly sales projection; (3) Net income projections; and (4) Profit
Margin Assessment; and (5) if your business could handle the time lags involved in importing, as you may get out of stock for some products that your customers demand.
If you estimate 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 getting more than 30% savings compared to your current costs, first get back to your current distributor(s) or dealer(s) and see if you can negotiate a better offer. You will save time, energy and money. You can always reconsider importing later on. Bottom line: if you calculate that the savings from outsourcing your items to China definitely justifies the price, the truth is that if you do not undertake it, your competitors will (or is already doing it) and will eventually lead your market. In most cases, the overall savings are worth going for it. If you find this to be the case, make importing from China a premier priority.
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