Guide: How to Import From China

Importing products from China—commonly called “the factory of the world” due to its enormous manufacturing infrastructure, skilled population, and wealth of industry experience—can boost your store’s profitability by increasing your margins and making customized products more accessible.

This guide gives all of the information you need to get started importing from China—finding products, choosing and negotiating with suppliers, purchasing, and figuring out the best way to ship your items. We also discuss common shipping terms you need to know and give an overview on import costs from China—duties, taxes, and other fees.

To get started:

Here’s everything you need to know about importing products from China in six steps.

Sourcing Chinese goods for your retail business gives you access to a wider range of products at significantly lower costs. But it is imperative to select your offerings wisely. If you’re developing a new concept or aren’t sure what to sell, read our guide to the best products to import from China.

From a profitability standpoint, the products you choose to import should have:

◆Consistent and sufficient demand

◆Profit margins of at least 30%–50%

◆Reliability (creating a low possibility for warranty cases)

◆Low maintenance requirements in transit, warehousing, and/or storage (i.e., no need for climate control or special handling needs)

◆No laws prohibiting them for sale in your state or country

◆Aside from those basic attributes, consider the following factors when selecting goods to import:

There are laws and regulations implemented by the U.S Customs and Border Protection (CBP) that prohibit or restrict some product categories to safeguard consumer health. Failure to comply with these regulations can result in fines, delays, confiscated merchandise, and even legal penalties.

It’s important to know if these stipulations apply to any of the goods you plan to import before partnering with suppliers and making your first purchase.

Some examples of import regulations include:

◆Commercial equipment: Products such as air conditioners, water heaters, and furnaces must have energy efficiency labels.

◆Fruits, vegetables, and nuts: Many varieties must meet size, quantity, and maturity requirements. An inspection certificate must be issued by the FDA.

◆Meat, poultry, and egg products: All varieties must include government-issued inspection certificates from the origin country, and are reinspected by the USDA upon entry.

◆Seeds: Shipments containing seeds are detained pending the drawing and testing of samples upon entry.

◆Wood packing materials: Pallets, crates, boxes, and dunnage must be heat-treated or fumigated and marked to certify treatment.

◆Toys: Children’s articles must comply with safety regulations under the Federal Hazardous Substances Act and be inspected to define hazardous sharp edges and points.

For a full list of commodity regulations and restrictions, refer to the CBP’s Importing Guide. Try searching the document for keywords that relate to your selected product(s).

If you have questions, contact your local port of entry.

The US is one of the most import-friendly countries in the world, and in most cases, individuals and businesses do not need a license to import.

That being said, importing certain commodities require a special permit or license issued by one of the government agencies that works with the CBP. These categories include:

Agricultural commodities, such as plants and plant products

Arms and ammunition

Certain foods, such as cheese, milk, and dairy products

Livestock, animals, and insects

Tobacco and alcohol

Medical equipment and supplements

For a full list of license and permit requirements, refer to the CBP’s Importing Guide.

If you have questions or need help with permits and licensing, the CBP recommends hiring a customs broker. The basic role of customs brokers is to assist importers in meeting federal requirements—but we’ll cover their services in-depth down below.

Use the CBP’s free tool to find a customs broker near your local port of entry.

Nearly every product imported from China are subject to import taxes (often called tariffs or duty) that are charged in addition to federal and local sales and use taxes. If you plan on importing a more valuable shipment, tariffs should be a consideration when sourcing your products. The average US duty on imports from China is currently 19.3%, but certain products are taxed at different rates. We talk more about import taxes in the sections below.

Trading Companies: 

Factories:

Business model: Factories primarily manufactures goods from raw materials.

Best for: Sourcing custom products

Minimum Order Quantity (MOQ): High MOQ requirements, usually starts at 250 to 500, depending on product

Customer service and sales support: Average to poor

The platform operates similarly to Alibaba but is geared toward the sourcing manufacturer in industry product and equipment. It is strictly a B2B wholesale directory and employs a much more involved vetting process for its suppliers.

CHIS Fair: hand tools,power tools,air tools equipment and hardware products

Automechanick Shanghai: car parts&tools&equipment

Yiwu Wholesale Marketplace:Cosmetics&Electronics&Toys & Children’s Products&Medical Devices

You can also check which supplier your competition is working with by checking public import records.

When imported shipments enter the US, the government retains a copy of the bill of lading—which includes the importer’s name, the supplier’s name, and shipment details—and makes it available for public access. This information is limited to shipments that have arrived via boat, but that still accounts for roughly 10 million records per year.

Obtaining these import records is perfectly legal but it’s that easy. To get it from the customs bureau, you have to request the information, pay a fee, and wait multiple weeks for processing.

As an alternative, you can use these third-party tools to eliminate the waiting period and simplify the process:

Port Examiner is a free tool that allows you to search through archived import records instantly. It is functional on a small scale but lacks the features needed to aggregate raw data and export it as a CSV or Excel file.

ImportGenius is a global trade database that allows users to download aggregate import data in spreadsheet format. You can sign up for a one-month free trial, and continue as a paid user—its starter plan costs $149/month.

Panjiva is a more robust but expensive tool. Its platform includes advanced search functions to find relevant import data by HS number, item category, location, and more. It also expands many import records into full company profiles and provides contact information. Membership costs aren’t disclosed, but a one-month trial is available for $400.

These documents should clearly define all details of the transaction without leaving any room for misinterpretation. This includes basics (like item specifications, unit quantities, pricing, and packaging) but should also cover shipping terms (also called Incoterms) and payment terms.

Incoterms (International Commerce Terms) are 11 standardized freight terms that must be agreed in writing between the supplier and buyer, or no air or ocean carrier will accept the shipment.

According to the International Trade Administration, the Incoterms® 2020 rules have been updated and grouped into two categories reflecting modes of transport—seven for any transport method and four for sea or land or inland waterway transport.

When importing from China to the USA, these Incoterms are commonly used:

◆EXW (Ex Works ): You take full responsibility and liability upon factory pickup of your order—from arranging, paying, to following up if there are any problems. Remember to add a clause to your purchase agreement that the supplier must help load the truck.

◆FCA (Free To Carrier): You take responsibility and liability once the shipment is handed over to the carrier, typically near the port.

◆FOB (Free On Board): You take responsibility and liability once the shipment crosses the ship’s rail. You will have to pay for the local charges between delivery to the carrier and loading on the vessel.

Although the International Chamber of Commerce (ICC) recommends using Incoterms® 2020 beginning January 1, 2020, vendors and buyers can agree to use any version of Incoterms after 2020, they just need to clearly specify the chosen version of Incoterms being used (such as Incoterms® 2010, Incoterms® 2020, or any earlier version).

Chinese suppliers typically require a 30% deposit prior to shipping, with the remaining 70% is paid once the goods are received. This helps to mitigate the risk of theft on both sides. You don’t need to worry about currency conversion, as U.S dollars (USD) is the primary global currency, and majority of Chinese suppliers accept it.

You can send payments through the following methods:

Telegraphic transfer (TT) payments are a standard electronic transfer of funds between banks, incur a smaller fee than other options, and are accepted by all Chinese suppliers. TT payments lack protection against theft but is still most recommended by import professionals, saying security can be better assured by doing your homework and personally vetting new suppliers.

A Letter of Credit (LC or LOC) is fund transfer that includes a level of insurance. You pay your bank, which then issues an assurance to the supplier. After your bank confirms that the exact quantity of items in your order has arrived at the correct destination, the vendor is paid.

The added security is helpful but might not be worth it because of the sizable fees. It’s very unlikely that a vetted supplier will take your money and run—the bigger risks that importers face are problems with item quality and shipping delays. An LC provides no protection against either of these possibilities, so it’s commonly used for very large transactions only.

Alibaba offers a payment processing option that works similarly to getting an LC from your bank. You submit the payment to a designated Alibaba account (with the Singapore City Bank), then it’s released to the supplier once shipping is confirmed.

Unlike LC payments, Alibaba Trade Assurance will refund your money if the shipment is delayed beyond a specified date or if the quality of the goods is not compliant with the agreed product specifications.

This method requires both parties to have an Alibaba account, but it is free to use. The only fee that incurs is the cost of processing your initial payment to the Alibaba account.

This option is secure and straightforward—but not commonly used by importers. PayPal charges very high transaction fees, and many suppliers don’t have PayPal accounts to accept the payment.

When it is used, PayPal is usually reserved for small, introductory purchases—such as samples and trial orders.

Unlike domestic US dealings, having a hard-and-fast purchase contract isn’t particularly helpful when importing from China. As mentioned earlier, contracts don’t carry the same weight that they do in the US.

It does, however, help to include clearly defined product specifications that your supplier signs and agrees to. This document isn’t legally binding, but it greatly decreases your chances of winding up with a batch of low-quality, misrepresented products.

Along with your purchase order and invoice, submit a checklist or spreadsheet stating the product’s specs—such as weight, dimensions, color, material type, fabric thickness, component manufacturer, and labeling requirements. It also helps to create visual references when applicable (the more clear and straightforward you can be, the better). Here’s an example.

Showing dimensions of jeans.

Images, illustrations, and visual representations of product specs help to avoid any miscommunicated expectations. (Source: Medium)

Here’s a breakdown of each of these factors.

Duties—also called tariffs—are paid at the time of import by the importer of record—which can be you, the exporter, or another party that you designate (like a customs broker). Import duties are to be paid to the port of entry, prior to release of your cargo. Accepted forms of payment include US currency, personal checks, government checks, money orders, and travelers’ checks. Some ports also accept Visa and Mastercard.

Imported cargo valued at $800 or more (as according to the order’s commercial invoice) is subject to duties and other taxes.

Shipments below the United States’ de minimis value of $800 are duty-free.

To calculate your import taxes, identify your products’ Harmonized Tariff System (or HTS) classification. Once you find their corresponding HS codes, you will know the tariff rate associated with that product. The code will then be listed on the commercial invoice.

Refer to the government’s Harmonized Tariff Schedule to estimate duties for your shipment. For the most accurate information on what tariffs to expect, contact your local port of entry or hire a customs broker (which is an option we’ll explore below).

Duty rates are organized in the Harmonized Tariff System (or HTS), which classifies imports by category and assigns a taxation percentage. The U.S. International Trade Commission hosts an interactive database that can help you find the HS (Harmonized System) code and estimate the duty rate for any product you’re considering.

An HTS/HS code indicates whether or not the U.S. has a trade relationship with any country for specific product imports. The U.S. International Trade Commission (USITC) classified tariff rates into three categories:

General (Normal Trade Relations or Most Favored Nation)

Special (Free Trade Agreement)

No Trade Relationship

China falls under the “General” category, meaning the countries do not have a trade agreement in place. As such, no special treatment is given on imports of goods from China to the U.S.A.

As your merchandise reaches the United States, it will need to be filed for either informal or formal entry.

Shipments valued at less than $2500 don’t require formal entry—they are processed through informal entry, which can be done on the spot.

The shipping company can clear them through customs on your behalf—although it often incurs a charge. Alternatively, you can process the entry at the port yourself or authorize another party to do so for you. For more info on these options, contact your carrier company, or refer to the CBP’s website.

To speed up the customs process and ensure things go smoothly, work with your supplier on the following tips:

Be sure that all information on the provided invoice is legible, clear, organized, and well-translated.

Submit a packing list along with other documentation.

Mark or number the outside of each package in your shipment with corresponding designations on your invoice or packing list. This will help customs officials identify particular items in your shipment.

Assure compliance with government regulations in your country before export.

If your shipment is a formal entry, you’ll also need a customs bond.

◆A customs bond is a legal contract between you (the principal), a surety company, and CBP. Its purpose is to guarantee that the importer complies with customs regulations and that CBP is paid for applicable import duties, taxes, fines, and penalties.

◆If the principal doesn’t pay up, the CBP will collect from the surety company that issued the bond. From there, the surety company can use legal means to collect what is owed to them. When a bond is required, Customs will not release the goods until the bond is posted and regulatory requirements are met.

To obtain a customs bond, you must go through a surety licensed by the U.S. Department of the Treasury—which includes many customs brokers. To get more information and a full list of sureties, visit the CBP’s webpage on customs bonds.

Using a customs broker is not legally required during import shipments. It is, however, strongly recommended by both CBP and industry pros when importing formal entries.

◆Customs brokers assist importers in meeting Federal requirements for entry. These import/export professionals are licensed by the CBP but are not government employees—they usually work for freight forwarders, independent businesses, shipping lines, or dedicated customs brokerage firms.

◆Customs brokers work as liaisons between you and relevant agencies, preparing and submitting necessary documents, properly classifying goods, and providing personalized consulting. Plus, many customs brokers sell bonds and are also agents for sureties.

Overall, customs brokers are extremely savvy in import and export laws and are actively regulated by the government agencies they work with. This makes them a vital resource to have while navigating your first formal entry.

The cost of customs brokerage varies depending on the agent and shipment, but expect to spend somewhere around $100–$200 for their services. Alternatively, many brokers are available for consulting on an hourly basis.

Use the CBP’s free tool to find a customs broker near your local port of entry. You can also contact the CBP Broker Management Branch by emailing brokermanagement@cbp.dhs.gov.

In an effort to improve the security of the supply chain, CBP can select certain shipments to examine during customs. This results in delays, and the responsible party is charged an examination fee.

Highly confidential algorithms are used to evaluate the degree of risk for each shipment entering the United States. If your cargo is flagged as potentially risky for any reason, it may be selected for a customs exam.

While it’s impossible to know what exactly goes into the CBP’s algorithms, it’s accepted that these factors increase your chances of being selected for an exam:

◇Lack of shipment history

◇Infrequency of shipments

◇Questionable chain of custody

◇High-risk products or materials

◇Problematic packaging or labeling

◇High-risk country of origin

◇Incomplete paperwork

◇Consolidation with other shipments that have high-risk attributes

Ultimately, even if your shipment is totally benign and you follow every precaution, your cargo may still be included in the 1%–3% that are randomly chosen for examination.

Multiple types of exams may be done. The least invasive is an x-ray that takes two to three days and costs around $300. “Tail Gate Exam,” another possibility, will break the seal of your container or packaging to inspect its contents visually; this takes five to six days and generally incurs a $350 charge.

The most dreaded and intrusive exam requires your shipment to be transported to a Customs Examination Station, where it is thoroughly inspected and sometimes laboratory-tested. This process takes anywhere from a week to 30 days or longer and incurs thousands of dollars in fees (including drayage charges).

The best way you can avoid being selected for customs holds and examinations is to ensure your paperwork is complete, provide accurate valuations of your goods, and work with well-vetted suppliers.

Once your goods have been cleared through customs and all parties have been paid, the cargo needs to either be retrieved or transported to its final destination.

◆If you shipped LCL (Less than Container Load), your goods would arrive in a container with a variety of other shipments. Typically, after customs clearance, this container will be transported to a separate location for destuffing. In these cases, you (or your freight forwarder) will be provided with a secondary location near the original port.

◆If you shipped FCL (Full Container Load), the port of entry would be the location to use.

You’ll also be provided with a Cargo Control Number that serves as a unique identifier for your shipment. These details can then be used to pick up or ship the imported goods.

Hiring a freight forwarder is the most common way to handle transport to your final warehouse, office, or retail space. Depending on the distance, this can require delivery by train, air, truck, or a combination of modes. Expect to pay $100 or more for this inland shipping. Alternatively, you can use a broker such as NTG to book inland freight.

If you choose to retrieve your goods personally rather than have them delivered, you can bring your vehicle to the port or warehouse. Be sure to carry a small amount of cash ($25–$75) to pay potential parking, loading, and/or dock fees.

When your imported goods reach the end of their journey at your warehouse, store, or office, the final step is to process them for sale like you would any other merchandise. This usually involves:

◆◆Pricing products profitably

◆◆Creating product listings with product descriptions and photos that sell

◆◆Managing inventory

◆◆Fulfilling orders in-house or through a third-party service like ShipBob

Selling imported goods requires a few slight differences in your operation. Be sure to consider these final and ongoing tasks when importing goods from China:

Product quality is a common pain point importers struggle with when buying from new suppliers, and it’s always best to detect discrepancies early on.

When you first receive an imported shipment, check the order against its invoice to verify that the quantity is correct. Then, thoroughly evaluate the goods you received against your agreed-upon specification checklist.

If the product you received is not what you expected, start by identifying who is at fault. Did you accidentally overlook a crucial detail in your specifications or design illustrations? Or did the vendor simply deliver a misrepresented product?

◆◆If the supplier is at fault, there are a few courses of action you can take.

◆◆If you opted for Alibaba’s Trade Assurance option or used PayPal for the transaction, there’s a high chance of getting your money back through those companies.

Try contacting the supplier to request some form of resolution—be it a replacement order or a complete (or partial) refund.

◆◆If the loss is great enough, you may consider litigation. You would need to carry out any legal action in China because the country’s courts do not enforce judgments from those in foreign countries. Needless to say, this process is resource-intensive—and it comes without any sort of assurance that you’ll come out on top.

◆◆When all else fails, you can discourage others from using crooked suppliers through social media, industry forums, and sites like SupplierBlacklist.com.