Many of you have heard about the China importation business. We have all seen different adverts from the self acclaimed Gurus, telling us how lucrative the business is. Well! Its actually a lucrative business for those that knows the Nitty-Gritty of the business. It’s of high importance to know how the importation business works, before delving into it. What products can you import? What are the ones that are prohibited? What extra costs are involved? How do I handle custom issue? what about the delivery time frame? e.t.c.
For newbies, importation sounds like a rocket science. But in the actual sense, its not hard or complicated as you view it provided you understands the basic things involved in the importation process – Shipping, Taxes, Customs, Prohibition goods, Payment methods e.t.c. In this write-up, I’ll make effort to explain most of the important aspects of importing goods from China.
First of all ( Did I hear you say go down low? Lolz!) What does importation mean?
Basically, Importation means buying goods from other countries and bringing them into your own country. For most of us, buying goods from China is our major aim (as we believe they offer the best prices), so were going to look at the processes involved. Shall we start? Lets go then…
Shipping costs is the major cost that can drive up your total product cost. Therefore, it’s essential to minimize them as much as possible at all times. The general rule of trade states that the bigger your order, the lower your shipping cost would be (when calculated per item). It makes no sense to buy a pair of unbranded footwear from China just because its cheap, the shipping costs will be more expensive than the product itself. Volume is the key to success when importing from China. But does that mean, I have to start with with full container loads, Wale? Absolutely No!
Lets take a look at the 4 most popular methods you can us to import goods from China:
1. Regular China post:
This is a normal shipping service which can take up to 7 weeks before receiving your goods here in Nigeria. This shipping method doesn’t offer online tracking facility and its majorly used for parcels under 4 KG. Normally, suppliers use this to send samples to their customers and also make available this shipping method so as to drive down the cost of their products which will in turn encourage customers to order from them. You will see a lot of suppliers offering you free shipping of the products purchased from them on Aliexpress
, this is just a means to encourage you to buy from them. China post is not absolutely reliable as your goods can get lost or stolen while in transit. i always avoid using the China mail service, not only because it takes long to receive my package but also because of the fear of my goods getting lost/stolen.
2. Courier Service: This is the most reliable and suitable method for people starting with small and light weight goods. There are several reliable courier companies available for use: DHL, TNT, Fedex, UPS e.t.c. You pay them a premium fee for each KG of goods, and they provide online tracking facility so that you can monitor your goods; and did I tell you that you get your goods here in Nigeria as fast as possible, usually within 3-5 days. It will be delivered to your door step.
3. Sea Freight: this remains the most popular shipping method used by big importers. the cost is very low (Like $100 or less per pallet). The downside of this however, is the time it takes to get your goods delivered. Depending on the location where you imported the goods, it can take between 30-90 days to get your goods here in Nigeria.
Have this at the back of your mind that you’ll have to take care of the documentation, the custom clearance and getting the goods to its final destination (Your home or office). Sincerely speaking, Its not really hard as you think, its quite a simple process. But i understand that as a newbie, you have to be careful so as not to get your fingers burnt or get ripped off, which is why I recommend using sea freight forwarding company. They will take care of all the process and deliver the goods to your door step. Also, when using Sea Freight, it is important to know about all the extra costs involved once the goods gets to Nigeria. Your supplier will give you the FOB price (meaning, the goods are loaded on to the ship). However, that’s not all, once your goods touches down at the sea port, there are all sort of charges that would be incurred:
- Port Fees
- Docking Fees
- Storage Fees
- Unloading Fees
- Clearance Charges E.T.C
All these are extra charges you need to know about, and they can run into tens or hundreds of thousand Naira. Before ordering any product, you need to know exactly the final product cost.
Like I said earlier, the easiest way to get it down and keep all the costs under control is by using a Freight Forwarding Company. you can ask them to tell you all the expenses involved. though, with all the extra expenses, sea freight remains the cheapest method of importing from China. However, that’s if your order is big enough.
Generally, Sea Freight is good for bulky goods or if you are not really in a hurry to get your goods.
4. Air Freight: This is like a combination of courier shipping and sea freight. The time duration in this shipping method ranges from company to company. But, generally should be between 5-10 days, which I believe is fair enough. Air Freight is cheaper when compared with courier services but there are extra works when the goods arrive here in Nigeria. you will have to deal with documentation and custom clearance on your own which many newbies might find tedious. But you can always outsource to a freight forwarding company at an extra cost.
Making payment for your goods can be a tricky task. When transacting with any merchant for the very 1st time, you have to be extremely careful. A lot of scammers exists in the wholesale industry, so you have to make sure you do some background checks on the supplier you are dealing with to make sure He/She is legit, before sending money to him/her. And even then, make sure you start with little order before going big, this will afford you the opportunity of evaluating the supplier. So when you have done all your checks and verify the supplier, you can now go ahead to make payment for your order. There are several payment methods accepted in the business but not all are available to Nigerians, So I will just highlight the ones you can use:
1. WIRE TRANSFER: This means sending money to someone oversea. It remains the most common payment method used in B2B transaction. There is something you need to understand in Wire transfer. Though, there is no protection for your money, you only use the service with trade partners you trust 100%. The whole transaction takes up to 5 working days
Transfer fees to be paid would depend on your bank, as this varies from bank to bank.
By Default, Chinese suppliers accepts wire transfer option. Any supplier that refuse to accept wire transfer signifies that there is something fishy. Also make sure you send money to a registered company name account and not personal account. The person you’ve been in contact with might be an employee of the company and not the real owner.
3. ESCROW SERVICE: Genuine suppliers knows how important safe payment is to buyers and even to themselves, that’s why all suppliers embraced the Escrow payment system made available by Alibaba.
So, what is Escrow? Escrow is a service whereby you make payment to Alibaba directly, instead of the supplier. Alibaba will hold the money till you confirm the receipt of your goods and satisfy with it,, then Alibaba will release the money to the supplier. but if otherwise, Alibaba will refund your money. It is by far the safest method of making payment to suppliers.
There are 2 types of tax you pay when importing goods of large order:
- Import Duty
- Value Added Tax
The current VAT rate in Nigeria is 5%. Import duty on the other hand depends on the products you are importing. You use this free online calculator to check the accurate rate:
Import duty will usually be between 2%-5%, but it can also be as high as 10% for some products. for some products however, you don’t have to pay import duty, so always check the online calculator to know which product you are paying for and what rate, and also those you are not paying for.
Know that, its not all goods that can be imported o the country. there are some products that has been placed on the prohibition list as goods that are not welcomed from oversea. Goods like Fruit Juice, Water, bagged Cement, Live or Dead Chicken e.t.c are examples of goods you can’t import, unless you want to donate your money to the “Custom Charity”. You can view the list of of the prohibited goods here.
COPYRIGHT AND PATENT
You need to be really careful about copyright issue. You’ll eliminate copyright issues, so far you stay away from branded goods. Brands such as ipad, ipod, iphone, Nike Shoes, Psp are not available for purchase from China, where you see a supplier offering you this products means you are infringing on the copyrights of the manufacturers of these products and it can land you in big trouble.
Patents on the other hand, is somehow tricky as there is no easy way to find out the items that breached any registered patents. The best thing to do is to ask the supplier about the patent issue relating to the product before placing order.
Let me congratulate for reading this far. So, do you believe you can go into the importation business now? Yes you can! Infact, you should start now…… But start Small!
Importation business is not as hard as it looks, especially when you use courier services, you don’t have to worry about shipping delays and custom clearance, they will take care of everything.
take it slowly, start small by placing order on Aliexpress and have a feel of how it works. You are protected by Aliexpress escrow payment service, so you can be rest assured of getting your money back if things go wrong.