Many groups in both small scale and large scale businesses have preferred to outsource most of their products abroad. Out of all the nations in the trade industry, China is the most preferred because of its wide range of available labor workers and cost efficiency. Nowadays, importers should be able to take their pick of high quality, bargain-priced goods. This business undertaking is very profitable as attested by a lot of businessmen.
If you’re inexperienced, you might wonder, how much does it cost to import from China? Since China joined the World Trade Organization (WTO) in 2001, it has opened its doors to international buy and sell. Even if it adheres to the rules and trade policies of the organization, you must also bear in mind that it has intricate local policies as well. Venturing into the importation business requires a level of expertise and knowledge of all the expenses you may incur to ensure maximum profitability.
The Cost of Imported Product
It is imperative that as a businessperson you view and know and make sure you have a proper flow of the goods you import. Negotiating the final price of the product is not sufficient. Every detail of the transaction process should be mapped out no matter what.
This is so you can avoid undetected costs that may arise within the whole process. The price of the items is more often than not based on your order's quantity. The larger number you are going to order improves the tendency for the cost amount to lessen.
Import Tax and VAT
When you import products from China, it is expected that you pay import tax. This is also known as import duty or import tariff. This is collected by the customs authority or any other regulating body involved in the trade between two countries. Not only is this another form of income for your government, this is also an excellent way to control the import of certain goods. The taxes they charge are dependent on the point of origination and the classification of the items involved. Document and properly classify your items, not doing so could lead to getting overcharged by customs. Using the United States Harmonized Tariff Schedule can help calculate the proper import taxes for every item involved. Every country has its own list of corresponding tax rates for every imported product.
Meanwhile, there is also another fee called VAT, which is usually assessed on items that are imported into Europe and other countries having a VAT system. However, VAT is refundable. Euro VAT can also assist in determining the VAT charge and then identify the appropriate method to successfully reclaim the VAT.
Quality Checking Done by a Local Inspection Company You Hired
Hire a local inspection team to check on your products on site. You can then request for a detailed report regarding the quality of the products if it is exactly what you expected. Provide a detailed quality check system to the inspection team. This is a crucial step to ensure that the quality of your products is not compromised in any way.
You may also consider having inspections done during assembly early in the process. This helps prevent any last minute quality problems. Inspection should be done a few days before shipping in order to really try to avoid receiving unsatisfactory commodities. This prevents receiving any defective or non conforming goods.
The quality of your goods is dependent on your vigilance. Make sure your supplier complies with all the rules and regulations imposed in their respective area. Otherwise, the imported goods may be held by the customs and will not be given clearance.
Cost of Shipping
Search for the best discounts when it comes to freight and handling. You can easily hire a customs broker who could help you with this task. Suppliers usually have a contract with freight forwarders. With this, you may be able to avail of cheaper shipping rates for your bulky volume of goods.
Familiarize yourself with all the shipping options available to you. The FOB or Free on Board states that you are responsible for the welfare of your items. In other words, your responsibility comes in once the goods are onboard. The FOB includes the purchase price cost of goods, transportation, insurance and loading into the ship. There is also the CIF or Cost, Insurance and Freight which effectively hands all responsibility to you. Therefore, you will pay the Cost and freight for your goods to allow them to be delivered to you.
As a recap, this is for the Cost of goods, shipping freight and insurance. Cost and freight is the last on the list. Adding the value of the goods with the costs and freight determines your c&f. The value includes the Cost of goods and shipping freight.