Re: China importing and interntl business info. requested
First of all it would be very helpful to know volume in both the physical and financial sense.
Are you going to import enough to fill a container? A partial container? Or is it more of a UPS type of quantity?
What are some balpark figures on the invoice amount? As you may expect, an invoice of a few hundred or a few thousand is very different from a 30,000 invoice in every way.
If you also tell us about the warehousing and distribution stateside this can be relevant, as you may be able to leverage the distribution logistics to help you negotiate better terms with the import logistics.
Anywho, I no longer work in logistics (as of this week, my new job is in an area where I have more expertise: web development) but I can give you some pointers based on my work as a logistics manager.
But the volume you are dealing with makes a world of a difference.
I am very serious about importing a product and selling it retail (home decoration, glass, collectables). China is the first country I've looked at for production. If you know of others I should check - please let me know. BTW - I will be shipping to Colo.
Ohh, glass sounds like it can be tricky. One thing to get from your prospective manufacturers )if they know this) is what freight class you are dealing with.
Understanding how the nature of freight works will help you negotitate your rates.
For example, something like computers is great. It has high value for the weight and volume.
Something like glass and such may make the freight more complicated, as it can complicate handling.
Knowing as much as you can about the frieght specifics will help you when you start negotiating.
You need to know the cube (cubic volume), weight etc. Fragile stuff can also be a concern and you may need to look into insurance (heck, I was importing gloves in boxes, hardly fragile but damage was a concern).
Knowing more about the product and shipping it is important. Don't count on the shipper (manufacturer usually) to know, in my experience even some experienced shippers pack their cargo improperly and cause you damage.
If your terms are such that you take ownership when the freight hits the water, you will need to be on top of this kind of thing.
I would even go so far as giving the supplier packing instructions.
Of course, if you can get different terms, you can avoid some of the complexities.
Here is a quick run-down of frieght terms. You may want to research INCOTERMS
(International Commercial Terms) to get a better understanding of the implications of each, and the options available to you.
Some of them may not be available to you, depending on the supplier.
: This means Ex Works and means you are responsible for picking it up at the factory (or whatever). The term will be negotiated something like this EXW Shanghai. And you need to look into the location (some places are better to export from than others, ask a freight forwarder) and the specifics (e.g. will they load it at the factory for free? Or will you need to handle this?).
This shipping term represents just about the most responsibility (and risk) on your part.
The benefit is usually in cost, having others assume the logistics risks usually comes at a small markup. Thing is, it may only be economical for you to assume these risks if you have experience and volume.
If not, you are probably better off with less logistics responsibility, and you may even save money if the party you are dealing with has enough shipment volume to get better deals than you can.
Volume is a key to nearly all freight negotiations.
I'm going to skip some local terms and get to other common ocean terms. Again, I am making assumptions because I do not know what weight/volume we are talking about. It may not even be ocean freight we are talking and may be air (much much more expensive, but if time is important Air may be the ticket).
: Free Alongside Ship. These terms mean the manufacturer gets it to a port, and you are responsible for getting it loaded etc.
I don't recommend this for you, as a simple matter of getting cargo loaded can be a headache if you are across the globe and if you do not have experience the mistakes can be costly (one thing to familiarize yourself with is demurrage, as the cargo can only sit at any port for a specific amount of time, after which you will be charged exorbitant fees).
Free on Board. This is one of the most common ones and is probably the most responsibility/risk you should even consider. There is some confusion about this term so make sure that it's understood.
The standard meaning is that you take ownership (and assume the risks) on board a ship at the port of origin.
You are responsible for the freight costs and all, and you take ownership when the cargo is on board the vessel.
Cost and freight. Basically, you take ownership at the port of destination, and you pay the seller the cost of the good and the freight costs. You are responsible for getting insurance and any other costs.
Cost, Insurance and freight. Same as the above, except insurance is included.
I'm skipping a host of other variations of terms and gettinf to the easiest:
delivered duty paid. Basically, you take ownership at your location if you negotiate DDP <your location>
. The seller assumes all risk and responsibility (including damage risk, customs and all) and your price is a delivered, headache-free price.
In an ideal world DDP is the easiest. But your supplier may not have the infrastructure to do so, and may not agree to it. Alternatively, they may not have the infrastructure to do so, and agree to it! This means they will probably just mark it up and make sure to cover the costs by charging you a premium for shirking the risk.
But if you get DDP terms, it is basically like buying the product in the USA. You have no import logistics headaches but the downside is that you may lose some savings from passing on the risk.
First, if you have more broker names that you were pleased with, please let me know.
First of all, brokers are about as localized as taxi drivers. So you need a broker at your point of clearance.
You will probably want your customs entry point close to you, and you need a broker in that vicinity.
So recommendations I can give you are larger networks of brokers, and if you really want to shop it well, you need to look locally (e.g. phone book etc) in the point of customs entry.
You don't need to clear customs in the frontier, for example, I have had a product enter the west coast and clear in Chicago.
Nailing down a good customs clearance point is important. I recommend you get it as close to you as possible, but also be ready to clear at the point of entry (entry to the US) if needed.
My favorite brokers (we used many) were from M.E. Dey. You can call Kathy at 414-747-7010 and get info.
Note that they are based out of Milwaukee, and though they may be able to clear for you in any location through their network you may be better off with a local broker.
M.E. Dey is also a freight forwarder, and that was a big attraction for me, to consolidate the freight brokerage and customs clearance.
So far I have not gotten any serious interest from brokers since my first shipment will be somewhat small. (Can't risk that much $ on an unknown). Do you know of any way to generate interest on their part for small shipments?
This is odd for a customs broker, as the fees are usually per-shipment.
The volume of the shipment means little, it's still the same amount of work for them. One shipment, one customs clearance.
The only variable would be the duty.
Also, I don't understand what the difference between a customs broker and a shipping broker is, do I need one of each?
A customs broker basically just clears the shipment through customs (and FDA etc depending on the product). Think of it as basically someone who's sole job is to handle red-tape with the US government.
They basically just take the documents and handle the headache of getting a customs clearance. Because they do it in volume it's cheaper than it would cost you. And they usually charge around or less than 100 dollars a shipment.
They can also handle the duty etc for you and bill that to you.
A freight broker can mean several things. With a shipment from China to the US the cargo may pass through several companies and a freight forwarder
is someone who consolidates it all.
You pay them, and they broker out the freight to the steamshipline (who would probably not deal with you anyway), the railyards, truckers etc.
You should shop this, and go with the best rates. I usually shopped it between many. I usually ended up going with M.E. Dey for my ocean freight even if they were not the best deal sometimes (sometimes another broker gets a better deal) because my logistics issues were more complicated than mere cost.
But when I had atypical shipments (e.g. an emergency air load) I'd shop it around, and I'd often shop the trucking around myself, and involve a few brokers and see who got the best deal.
So basically, you probably want a freight forwarder for ocean imports, as they will consolidate steamship, rail and truck. To do it yourself can range from impossible (some steamship lines will not deal with individuals) to a mere headache.
You probably won't get savings by doing it yourself.
You asked how to pique the customs broker's interest. Well, try consolidating customs and freight brokers.
The customs broker handles an important function, but the typical fees don't inspire a lot of responsibility (think of how much effort you'd put into a job you'd make 50 bucks for). They can do their best, but remember that it is 50-100 bucks to them, while the cargo may mean a lot more to you.
I've had custom brokers make mistakes that cost us 13,000 dollars. That they make so little in the deal means that there is little leverage to solve it (on the other hand, a freight forwarder who screwed up paid the costs of their mistake because our future business was more significant).
So consolidating it can help, and that is one reason I settled for M.E. Dey.
What resources do you know of on legal matters...the one that concerns me now is I will be making a significant initial order with a company in another country whom I know hardly anything about. What if they are a scam, or if they loose the product, or make total crap? Do I have any rights, and how can I find out what they are?
Is there a way to check on businesses in china - to assure they are legit? (inexpensively of course).
I don't know how you can investigate foreign companies, as I bought from companies that owned our company (we were actually a subsidary of our main supplier) and when we bought from other suppliers the type of legitimacy we needed was ISO certification and such. Much bigger fry.
So I can't say much about how to pick your supplier, but remember that if you settle for DDP terms, it doesn't matter. It's like COD terms.
Does door to door shipping always include the unloading on the receiving end? Do I need any manpower or forklifts or will they supply them if I've specified door to door?
The delivery almost always means a trucker just showing up at a destination. Heck, if you take more than an hour or two to unload it they may charge a "detention fee" of about 40-60 bucks an hour.
So make sure this is sorted before the trucker shows up, in all likelihood you need to be ready to unload it.
Of course, if you are warehousing it with a commercial warehouse, this will be part of their job and they will charge you for unloading, palletizing etc.
Where does one get insurance for import transactions, or is there such a thing (I would want to insure against anything that would cause the shipment to not arrive in saleable condition - if possible).
The freight forwarder can book it with insurance.
Thing is, the insurance is usually for catastrophic stuff (e.g. the ship sinks) and if you want that kind of insurance it may be costly.
I had insurance on alll my freight but routinely had to eat small damage losses simply on the basis of the insurance terms we used.
Again, if you get DDP terms, you have none of this risk.
About timing, is there any typical contract clauses for late shipments when dealing out of country (ie. my big shipment doesn't get here until AFTER xmas...even if promised in Oct).
Well.. you don't pay them. ;-)
Seriously, you negotiate a "ready date" and don't pay before then at the very least. From that point on, the cargo transit is dictated by the medium.
For example, from China to the West Coast will be around 20 days with maybe an extra week to clear customs and get to the final inland destination.
Some manufacturers require 1/2 cost up front, others 100%. What is typical?
Depends on the supplier. We usually paid when we felt like it, and if the supplier was feeling frisky they'd demand COD type terms.
We'd have to pay them before they sent the bill of lading
(without which the steamship line would not release our product).
So they'd make it, ship it and when it was in Chicago we'd pay and they'd Fed Ex the docs.
How should I handle money, does this mean I need a relationship with a chinese or international bank?
No, you just make a wire transfer. It's easy stuff and your bank should handle it easily.
Some suppliers may demand a letter of credit, which basically means the bank acts as an escrow and certified (and holds) that you have said funds available.
The terms you negotiate are contingient on your history with the supplier, your volume and their production cycle.
I did not work with "on demand" manufacturing, and placing an order just had to be coordinated with their line capacity.
So it didn't cost the manufacturers any extra, and they didn't need any assurances for the production.
Again, if you get DDP terms this too is a non-issue.
Thank you in advance for all your help!