Hi everybody. I am in the business of corporate gifting. We are planning to work with some suppliers from China and getting in small novelty items like toys, electronics and stuff that can be branded with the customer company’s logo to be distributed among their customers / employees or at events.

But after I got the loan approved for my expansion plan, people have been advising me that importing from China to the USA can be fraught with risk. What should I be worried about in specific – are there any major hurdles I should be aware of?

Since you have already got the funding loan cleared, I will assume that you are aware of the basic financials involved in importing from China to the USA. The import duties, customs delays and costs as well as shipping charges. Apart from these obvious costs, I can tip you off on the risks as well as what you need to know about importing from China to the USA.

1. Quality of the goods in question: This can spell trouble in three ways. Chinese goods, the unbranded items are almost always stopped at customs since there is a chance that they will be resold under some big brand name as counterfeits. Second, they are often underpriced as compared to American goods and are often hit by an anti-dumping charge arbitrarily which can prove expensive. Thirdly, many a time the quality of these goods are suspect and this can often lead to requests for additional tests or authentication proofs which can work out very expensive. All this basically translates to loss of `control’ as well as financial overruns, both of which can be very troubling for most businessmen.

2. Language Barrier: Chinese language is tough and their cultural nuances are even tougher. When your Chinese supplier says something, they often mean something else. So the great price that tempted you to place the large order in the first place, comes to you without some important part of the certificate and ends up putting you in the red. It is important to ask as many times as it takes for you and your supplier to be on the same page. Hire an interpreter, get a contract in two languages, carry a Chinese dictionary but make sure you do not misunderstand.

3. Fraud: Overseas deals especially those involving importing from China to the USA are always fraught with more risk as Chinese suppliers do not come under the ambit of US law. Chinese or non-US laws are somehow more lenient, more open to interpretations which allow a lot of people to commit fraud. Corruption is rampant in these countries and there is always a risk that you may end up dealing with the wrong kind of supplier.

I personally think that importing from China into USA is a great opportunity provided you keep your eyes wide open and double check at every step. The costs should be the real costs inclusive of everything and not something you have been led to believe; the quality should be acceptable to the American public – third world countries can have a crazy concepts of what they think is quality.

Also think hard when it comes to matters related to money transfer. Do not pay the full amount till you get your stuff. If the guy runs off with your money, where will you go chasing them in China? Use an import agent whenever possible.

When importing from china to the USA, the prices are low because the product quality is far from what the American public is used to. These products are created in dingy by lanes by poor underpaid workers in not the best of light. These people have no concept of safety standards and only very large companies have the quality controls to get decent products out.

Fly and buy is the best approach when importing from China for sale in the USA. You cannot afford to be sitting around and importing from China into the USA. I suggest you personally go and pick up what you need and factor in the travel costs into your elaborate plans.

China is not what it was. Things are changing and there are a lot of genuine suppliers that are in it for the long haul. The trick is to meet a reliable supplier right in the beginning. Once you start your business, you will begin meeting a lot of people that you wish you had met right in the beginning.

As for getting tricked with substandard goods, that can happen in USA as well. Just try buying something from eBay – you’ll be lucky if you don’t get robbed.

My advice for importing from China would be to focus on the specifics of getting the goods from China past the US customs. They are especially hard on imports from China and that is the biggest hurdle that you will have to face. But once you start doing this regularly, you will understand the loopholes and the pitfalls and be better positioned to clear them. Hire an agency or expert if you can afford it.

Also, make sure that you have all the required documentation in place and submit them on time. Goods are not deemed to have entered the US till the papers come through.

Are there any precautions that I can take? I’m already in way to deep to get out of this now.

There is no reason to give up importing from China. Almost all large companies are outsourcing their manufacturing operations to China due to cheaper labor costs. There is no way for the smaller seller to compete unless we become competitive as well. It is necessary to know the risks involved and be careful. You may want to consider the below tips:

• You should ideally work with suppliers referred by some kind of association or industry body. Since you have already tied up with someone, try and check out their credentials through third party verification sites like globalverification.com or even going back to Chinese industry bodies.
• Back up suppliers: Customers don’t care what happened to your supplier. Once you have won a corporate order, you will need to deliver. Having only one supplier can put you at his mercy. Be sure to scout around for back up sources in case this partnership does not work out for some reason.
• Sample order: I don’t know how far you have checked the reliability, the goods quality or for that matter, the consistency of the supplies. Place a small sample order BEFORE you get a confirmed time bound customer order. See the time it takes, the total cost of the operation and other specifics. You may not agree with the color, packaging or some other detail which you can then negotiate well in advance.
• Payment terms: Most fraud occurs on account on paying before receiving goods and inspecting them. You need to play the advance money card very carefully or else you could end up getting scammed.
• Also ask for all necessary paperwork support for customs clearance. An established supplier, whose goods are being imported into other countries, should have all the necessary tests and results. Keep a list handy after checking the customs sites for what is required.
• A factory inspection is warranted at least the first time. See the working conditions and be sure that all US laws are complied with. It is not just a legal matter – if some information of human suffering leaks through, there is sure to be a public outcry against you. You are ultimately accountable for everything you bring in.

I have heard horror stories of novelty items being used to smuggle all sorts of things. Just be sure to check by taking one or two pieces apart. It’s common people like you and me that get conned like this.

You could ask your supplier for a few customer references. That is usually an accepted practice that he will not mind. Just make sure that names given are genuine customers and not employees or family members under assumed names.