The UK imports a significant amount from China which has been increasing over the years as the trade between the two nations increases. According to Statista, in 2019, UK imported around 65.5 billion US dollars’ worth of trade goods which was a 3.31% increase over 2018. Importing from China allows many benefits that businesses enjoy, and moreover, due to easier access to Chinese suppliers through platforms such as Alibaba, we can expect such consistent increases in the trade between UK and China.
Importing from China offers a range of benefits to the importers in the United Kingdom. One of the major benefits is that the prices of the goods offered is relatively cheaper than other suppliers. This means that, you as a business, are able to attain higher profit margins. In addition, you can also undercut your competitors by offering a lower price for your product and capture a higher market share.
Another benefit is that the quality of the goods is also solid, although this is largely dependent on the supplier you choose. As such, China offers suppliers which are a good combination of a reasonable price and solid quality. Your business will, hence, be more competitive and may achieve better business performance overall.
Moreover, Chinese suppliers offer lead times which are less than other suppliers. Lead time is the time between initiation and completion of a production process. This means that you will be able to receive your goods within time and earlier than other similar suppliers. This is primarily because the Chinese suppliers are extremely efficient and better organised, even than their Western competitors.
Overall, importing from China is a very smart decision because of the number of benefits one obtains from doing so. These benefits are even more magnified because of increasing accessibility to top Chinese suppliers as aforementioned through a platform called Alibaba.
Alibaba is one of the world’s largest eCommerce platforms based in China. It offers the ability for retailers all around the world to purchase goods in bulk at wholesale rates directly from suppliers in China. These prices are significantly discounted due to bulk buying and no middle-agents in the value delivery chain. Therefore, Alibaba has grown to be one of the largest eCommerce platforms in the world due to the benefits it offers.
In light of this introduction, we shall—in this article—discuss the steps of importing from China primarily focusing on finding a supplier through Alibaba and guide you through this process in significant detail and provide an overall conclusion of the six steps covered in the process of importing from China to UK.
Steps of importing from China to UK
We will cover six different steps of importing from China. However, the heart of this section and the article will be the Alibaba part where we will walk you through the entire process from A to Z on Alibaba supplier selection.
Step 1 — Deciding the Product & Protectionist Measures
It is very imperative for you to completely be decisive about what products you are going to import from China and exactly know different details about it. This is because many import duties, quotas, and other protectionist measures dependent on your product. Therefore, once you have decided on a profitable niche i.e. product, you must then move onto deciding the what protectionist measures are levied on your product.
In order to know about what import duties, quotas, and VAT is imposed on your product, you must know the commodity code of your product which is a code assigned to your product by the Her Majesty’s Revenue & Customs, UK. You can get this information from the UK Government’s trade tariff tool here.
You must add the name of your product in the search bar given.
For example, my product is “dress” so I search for dress on the UK Trade Tariff Tool shown above.
Now, there will be different categories of the product called “dress” as it is quite vast. So, my product is knitted women’s suits as shown below.
You must now choose the heading within the category you choose in the previous page. You must be very careful here and know as much detail about your product as possible so that you do not get the incorrect commodity code.
Let’s assume it is dresses. Then you must choose the type of the product’s material, in this example, let’s go with cotton.
This is the breakup of your product in terms of categorisation of the UK Customs Authority.
Now you must click on import and enter China into the country search bar.
After this, you will find all the different details about your product including commodity code and the different measures and restrictions including quotas, import duties, and VAT.
Step 2 — Other Import Charges
There is a list of other import charges you will face when importing from China to UK using Alibaba apart from import duty and VAT as aforementioned.
These include:
- Product Cost: varies — this depends on many factors including the product itself, your supplier, and type of services received from the supplier. The most common quotation you will get from your Chinese supplier will be the FOB price. Free on Board Price includes the price of the product itself and all the costs incurred prior to shipping out the product (including cost of delivering to the nearest port).
- Freight Charges: varies — this again depends on different factors including choice of freight, weight & size of shipment, and the distance between origin and destination. It also depends on the type of container you book (LCL or FCL).
- Quality Control Charges: $199 to $500 / day — the exact amount depends on the quality inspection agency you choose, the package, and other factors. It is imperative that you get a pre-shipment inspection in order to avoid issues in the future especially if the shipment value is large.
- Freight Insurance Fee: 0.3% to 1% — the exact % depends on the riskiness of your products, potential liability, and other factors such as insurance agency chosen.
- Customs Clearance Agent Fee: $200 – $600 — you will need a customs clearance agent when your goods arrive in the UK in order to expediate the process and so that you do not face any unnecessary delays. However, for this, you must get an EORI number from the UK Government as your forwarder will need it. For this, you can contact us for further help.
- Warehouse Fee: $50 – $200 — this fee will be charged to you if the warehousing facilities were not included in the freight package. This fee depends on factors such as shipment weight, volume, and value. You are required to pick up your goods otherwise you will face additional charges.
- Domestic Transportation Charges: varies — this will be the cost of transporting the goods inland i.e. within the United Kingdom. This depends on the volume and size of your shipment, freight type chosen, agency chosen, and the distance among many other factors.
Step 3 — Finding a supplier through Alibaba
What is Alibaba?
Alibaba is one of the world’s largest eCommerce platforms where buyers and sellers of different goods can interact and conduct transactions up to millions of dollars. It is part of the Alibaba group formed in 1999 and is based in China but serves customers from all around the world.
It is a business to business platform which means manufacturers are selling their products to retailers who re-sell the product or private label the products, this happens directly without the need for intermediaries in between these two businesses. Due to this B2B model, buyers are offered discounted prices as they buy bulk quantities.
Alibaba streamlines the entire process of purchasing directly from Chinese manufacturers as it enables accessibility to these suppliers which was previously a tough task. It offers many different features which makes this process more trustworthy, efficient, and cost-effective.
How safe is Alibaba?
Considering the amount of transactions being conducted on Alibaba and its popularity, it is a rather safe and trustworthy place for both sellers and buyers. Alibaba offers a system of verification called Trade Assurance which certifies a set of suppliers so that your payment to these suppliers remains guarded through the company’s own payment platform and is a free service by the company.
If the order contracted deviates in its quality or shipment timing, the Trade Assurance program can assist you reaching a desired result or refunding your money.
There are several benefits of using the Trade Assurance of Alibaba:
- Flexible payment: this program allows many different ways to pay which includes credit/debit cards, Wire Transfer, Apple Pay, Google Pay, and many others which therefore allow flexibility in paying for your goods.
- Security: your payment will be secure as this program allows a transaction centre which allows you to track your payments and take up any issues that occur.
- Support: under this program, you will be eligible for support even 30 days after delivery if things are not up to the par you expected such as product quality. Alibaba will act on your behalf and defend your money and act as a mediator between you and the other party so that you can get such issues resolved and even get the money refunded.
In order to take the benefits of this program as aforementioned, you should then conduct business with suppliers that are participants of this Trade Assurance scheme and pay through Alibaba’s payment platform.
There are other methods to protect your payment on Alibaba.com. Following are some ways to do so:
Work with verified suppliers: Alibaba offers different supplier verifications including A&V check, onsite check, and supplier assessment in ascending order of scrutiny. Each supplier will have badge of the verification on their profiles or product pages. The more verified the supplier is, the more chances of your payment being secure. It is not to say that a verified supplier is completely safe.
Moreover, you can employ 3rd party inspection services that will audit the supplier and verify it. However, these can be costly depending on the type of services you go for and if your order value is quite high then such 3rd party agencies can be worth it.
- Research about your suppliers: There are many different suppliers on Alibaba offering the same product line, therefore in order to narrow down your suppliers and go with the best ones, you can research about them. This can include obtaining contact information, factory location, reviews, and other information.
In addition, you should ask the supplier as many questions as you require to become fully satisfied; for example, you can ask them for export and business operation licenses and other official documents as conclusive proof. You can also ask for photos of different things such as factory and products so that you are completely satisfied.
- Request Samples: before you get into a contract of a high value order, it is advisable that you should request samples so that you completely are aware of the product features and the quality. This will ensure that any expectations you hold are therefore then met and future issues are avoided.
- Have a wide range of suppliers: do not get stuck on a single supplier, you should have a range of backup suppliers. If a supplier seems to be suspicious, for example offering prices that are too good to be true or some other similar offers that seem out of line, then you should back off and not get into an order contract. It is better to be safe than sorry.
You should try using WeChat as this is a popular chat platform for Chinese supplier. This will improve communication between you and the supplier, and any issues can be avoided.
Pros and Cons of Alibaba
Buying from Alibaba offers various advantages, but it also comes with several disadvantages. In this section, we list the pros and cons of buying from Alibaba.
Pros:
- Discounted bulk prices
- No intermediaries i.e., direct contact with the manufacturer
- Wide range of suppliers in different categories
- Flexibility in products i.e., custom-made.
- One-stop solution for your business.
Cons:
- Deviation between expected quality and actual quality
- Minimum order quantities (MOQ) to attain any discounts
- Miscommunication with suppliers due to a language barrier
- Potentially longer lead times
- Customs and import procedures
- Potential unethical and non-green manufacturing standards
Tips and Tricks for buying from Alibaba
Some tips and tricks adhered to when buying from Alibaba can make your overall experience much better and potentially even lead to better business performance & better achievement of your business goals.
Searching
On Alibaba, you can search a keyword either for products or suppliers which are the two options when searching. It is very imperative that you begin your search properly because it is the beginning of the entire supplier or product sourcing process, and if the start is on the wrong foot, then the entire process can be amiss.
In this example, I search for candles under products. If you search for suppliers, you will find a list of different manufacturers supplying this exact product.
There are further filters under search which are on the left of the page which can be very useful for you if you wish to narrow down your list of products or suppliers so that it is more efficient, and you find the most suitable product or supplier as per your search keyword.
Product Pages
The product pages are perhaps the most important part of this entire product or supplier searching process. These pages offer a lot of details that is very crucial and there are some details you must pay attention to. In this example, we have a product page of a candle and we focus on the product description.
Unit Price
We can see that the price of the candle is FOB and is from $2.00 to $6.00 per piece of the candle. As aforementioned in the article, Free on Board (FOB) Price includes the price of the product itself and all the costs incurred prior to shipping out the product (including cost of delivering to the nearest port).
MOQ
Minimum order quantity or MOQ is the lowest order quantity a supplier will serve or entertain. However, it is pertinent to note here that such MOQs are mostly negotiable upon contact with the suppliers.
We see that the minimum order quantity for this candle is 500 pieces. We can determine a rough idea of the minimum working capital (investment/money) needed to buy inventory of this candle. By taking the highest price per unit of $6 and multiplying by the MOQ, we see that we will need $3,000 at most to purchase this candle’s inventory.
You can add other costs such as shipping, customs clearance, and domestic logistics to get an overall idea about the cost per unit for you and then determine the selling price. You can use it in your negotiations as well with the supplier.
Payment Options
This supplier offers a range of different payment options which you can see at the bottom, this is also usually the case with most suppliers on Alibaba which is one of the chief advantages as well. However, each has its own merits, demerits and risks associated.
- Full T/T Payment
The supplier receives the full payment of the order through a bank transfer. Although simple and straightforward, it is inherently very risky and especially if you are working with a supplier that you have previously not. Therefore, it is a high-risk payment method.
- L/C
A Letter of Credit is generally safer for the buyer and the supplier. In compensation for this, it is more complicated and is more suitable for high-amount orders i.e., $15,000 or above. Therefore, it is a medium-risk payment method.
- Western Union
If your payment is protected by escrow, this is a risky payment method because there is no return or refund of the money should things go south. As such, you should not pay through this method if you are acquainted or have not worked with a supplier before. Therefore, it is a high-risk payment method.
- PayPal
PayPal is a well-known online payment service. As such, it is less risky, easier to use, and offers good protection. The problem with this is that it is not very attractive for suppliers because there are issues of high fee of withdrawal, complex approvals, and time consuming. Therefore, it is a low-risk payment method.
- Escrow
Under this method, your payment is sent to a 3rd party and is transferred to the supplier only and only once you confirm that you have received the delivery and are satisfied with it. As such, it is a safe method for honest suppliers and buyers. Therefore, it is a low-risk payment method.
Overall, you should try to use the low-risk payment methods with the suppliers when you are starting out because any payment issues can be relatively large dent for you and your business.
Contacting Suppliers
Once you are covered all the previous tips, you now must contact the suppliers. Suppliers use two primary communication channels which are WeChat and email. Because Chinese suppliers are generally not very fluent in English, there exists a language barrier. It is imperative this barrier is surpassed properly in order to avoid any miscommunication and potential harm to your business.
As such, we recommend that your emails and any communications with your suppliers follow the 7 Cs model of effective communication. These include clear, concise, concrete, correct, coherent, complete, and courteous. Please keep in mind that many suppliers may use translators that might produce incorrect or insensible results so compose your messages with this in your mind such as numbering your questions so that they are addressed.
Quotations
Quotations are perhaps the deciding factor of the entire order process because most businesses’ decisions hinge on the price being quoted. These quotations are also referred to as RFQ (request for quote), although it is a simple process, it is crucial that is properly strategized so that no issues arise.
Some things you should keep in mind when requesting a quote:
- MOQ: as we mentioned above, most suppliers on Alibaba have negotiable MOQs because not all MOQs mentioned are affordable by everyone. As such, you should express your affordability and what MOQ you think would be suitable for you. Following this, you can negotiate a MOQ that is the best for you.
- Sample Prices: we see that in the example that the supplier is offering samples and the size of the sample is same as the actual product. However, the price of the sample is significantly high at $30, this reflects the lack of bulk purchase and other factors. However, samples as mentioned above, are indispensable in determining whether the standard set for the quality of the product is met or not, remember the importance of product’s quality cannot be overemphasized.
- Pricing: as we see in the example, suppliers usually provide a range for the FOB price for a product which implies that is negotiable. For accurate costing and rational decision-making, you must know the exact price. So, you must ask your suppliers for the exact unit price.
- Lead times: depending on your requirements, you may need the product as soon as possible or within a certain time range. You can discuss this with the supplier and determine how long will it take for the product to be initialized, completed, and shipped to you. Remember, time may be critical for your business to prosper.
- Payment terms: we discussed the different payment methods and terms; many suppliers require certain methods, and many allow flexibility. Discuss with your supplier the suitable one for you and remember to choose the one consistent with your risk appetite.
Negotiations
As aforementioned, negotiations are very important in different areas of this entire process with the suppliers and the suppliers are usually flexible e.g., MOQs and unit prices. Once you have collected all the quotations, you can start negotiating with the different suppliers and obtain the deal you think is suitable for you. You should remember that if you do not ask, you do not get and therefore do not be afraid of negotiating.
Cost-benefit analysis
After considering all the different suppliers with their different terms such as unit prices, MOQs, lead times, and samples, you should evaluate the alternatives. Not only should unit prices, MOQs and such generic factors be included in this analysis, but your analysis should also include other factors such as language fluency, communication and how quick the supplier replies because you want to establish a long-term relationship with a good supplier which causes no issues in the future.
Step 4 — Shipping from China to The UK
There are different shipping methods when importing from China to UK using Alibaba which include land, air, railway, and sea. Your business objectives, requirements, and resources will determine what shipping method you will use. You can contact us for more detailed analysis.
Step 5 — quality checks
In order to avoid any surprises on arrival of your product when importing from China to UK using Alibaba, we recommend that you get quality checks conducted on your products through a pre-shipment quality check. You can hire a 3rd party as mentioned above in the article to conduct this quality check. Moreover, you can request a sample from the actual product lot as the samples sent before may misleading as there may suppliers who are not.
Step 6 — Customs clearance in UK
Although you can clear your own products from the HRMC—the customs authority, UK—it is recommended that you hire a customs clearance agent when importing from China to UK using Alibaba so that the entire process is expediated. The agents are equipped with the required local knowledge of laws and regulations and can get around the tons of paperwork required.
You will save cost by doing this clearance on your own however the amount of time invested will not be worth it doing it yourself. Therefore, we at Uniway Sourcing, recommend that you hire a customs clearance agent so that this entire process is smooth and efficient.
Conclusion
The process of importing from China to the UK using Alibaba is although lengthy but is rewarding for businesses that properly follow the tips and tricks given in this guide and others. You can save on cost and achieve your business performance objectives more efficiently.
Please remember that everything expressed in this article is our opinion and we do not guarantee anything or are not liable for any adverse consequences produced out of the process of importing from China to UK using Alibaba.