Import from China is quite a complicated process; novice importers have to ensure they take care of many things. Starting from finding the right supplier in China, verifying the company, signing the contract, getting to know the EU standards like CE certification, organizing transport, and finally carrying out customs clearance in the destination country. These are just some of the importer’s obligations. In the following guide, “Import from China to the EU step by step,” you get to know how to import goods from China to Europe from A to Z.
Import from China to the EU step by step: how to start?
Import from China done professionally involves familiarizing yourself with many regulations and obligations imposed on the importer.
First, it is worth mentioning that goods imported from China that are intended to be placed on the EU market should not be sourced from AliExpress in the long term. Products from AliExpress and other similar platforms usually do not have the required documents that enable the importer to introduce them onto the market. If you want to import goods from a B2C (Business to Customer) platform, ensure that you have all the required documents.
What is most important when importing from China? We will guide you step by step through the entire import process.
1. Setting up a business to import from China
First and foremost, you have to set up a business. By and large, the type of the enterprise does not matter. You can register as a sole proprietorship or a private limited company. Import from China can be carried out under various types of business entities.
2. EORI number for import
After registering a company and having a tax identification number attributed, you should apply for an EORI number. EORI is necessary to import from China to the European Union’s Member States and place the goods to the market. Obtaining an EORI number is easy and without charge. The entire procedure can be carried out online – it usually takes a few days to obtain an EORI number.
3. Import from China – obligations related to waste production
As an importer in the European Union, you must comply with the regulations related to waste production and waste management. All packaging placed on the EU market must meet basic requirements regarding recoverability and composition. In addition, if you, for example, import electrical and electronic equipment or batteries, you fall under the mandatory obligations of the WEEE and Battery Directive. But the overall requirements are imposed on every importer.
Member States have their measures concerning environmental aspects of packaging and packaging waste. Some of them have their waste database that the importer registers into and keeps records. Germany has its LUCID Register, Poland – a BDO system. Not complying with your legal obligations can result in the prohibition of sales or fines.
4. How to find a supplier from China?
After meeting the formal requirements, you should search for a suitable contractor from China. The largest selection of suppliers is available on B2B (business to business) platforms.
The most popular portals where you can find a supplier are: Alibaba, GlobalSources, Made-in-China, and DHgate. The popular AliExpress is more about retail rather than wholesale. It may only serve as a starting point to get familiar with Chinese products. Read more about the B2B platforms in China.
If you, like the Chinese, value direct contact with a business partner, we recommend participation in trade fairs organized in China if possible. Relationships built face-to-face are stronger and long-lasting, not to mention that the offers are far more profitable. Furthermore, more and more trade fairs in China are organized virtually, which allows you to participate and contact many Chinese suppliers without the need to travel to China.
Another way to find a supplier is to organize a trip to the production area. A trip to China allows you to compare offers from different manufacturers and to inspect factories in person.
5. Import from China step by step – supplier verification
It not that unlikely that you come across a scammer. The supplier must be verified as some suppliers, and factories may turn out to be a “letterbox company.” These types of “companies” terminate its business relationship with the importer after receiving payment for the order, which is not uncommon when importing from China.
It should be remembered that on B2B platforms, most companies are intermediaries and agents who impose a sales commission. The importer should be aware of who he is importing the goods from. Aside from money, verifying a Chinese partner will save you also time. The verification will confirm not only the authenticity and credibility of the potential business partner, but in the report, you will also get additional information whether the factory in China has an export license, what certificates it has, and, most importantly, whether it is actually the manufacturer of the products you are looking for.
After the supplier’s positive verification, do not forget to also protect yourself by signing a contract with the Chinese party.
6. Import from China – ordering samples
If you decide to build cooperation with a Chinese partner, it is always recommended to order samples before importing a larger quantity of goods. Through ordering samples, you can make sure that the product comes up to your expectations. Only then you should make a bulk order.
Although samples from China do not need to have certificates because they are not placed on the market and sold further, the goods released for free circulation must meet the target market’s requirements. Usually, samples are exempt from customs duties and VAT.
7. Quality control of goods from China
Even though the supplier you choose seems reliable, there can always be mistakes or mishaps happen with your production in China. Inspecting the goods, preferably at various stages, minimizes the risk of possible fraud and financial losses. Such control will ensure that the goods from China will meet all the required quality and safety standards in the EU. There are four stages of product inspection:
- Pre-production Inspection, i.e., if the factory is prepared to manufacture your product
- During Production Inspection (DUPRO) or Inline Product Inspection (IPI) to check the quality of a manufactured batch of goods
- Pre-shipment Inspection (PSI), i.e., checking random pieces before shipment
- Container Loading Supervision (CLS) is a factory inspection that checks transport preparation and documents
Product inspections are carried out, for example, on the basis of the AQL standard (Acceptance Quality Limit). After the AQL sampling, the importer can decide whether to accept the goods or reject it.
8. What are the payment methods when importing from China?
There are several methods of transferring funds to a Chinese counterparty:
- Western Union (and similar) – many companies offer money transfers. Payment through such portals is not recommended because each registered, legal Chinese company should have its business account. There is a high probability that the money will be transferred to a scammer’s account
- PayPal – the transfer is sent to a specific bank account verified by PayPal. It is useful for transactions of a smaller amount, but it is always worth asking the counterparty to confirm their identity
- Letter of credit (L/C) is a document binding three parties: the seller, the buyer, and the bank. It provides a guarantee of payment for the goods and protects against the risk if one party does not comply with their contractual obligations. You can choose the L/C payment for orders over 30,000 USD
- T/T – telegraphic transfer, a usual wire transfer between banks. You have to pay handling fees. Payment is usually split into installments
- Make sure you transfer money to a business account in mainland China. Transferring funds into an account in a “tax haven” has an increased risk of fraud
The Chinese party usually request payment in US dollars. If you often conduct such transactions, it is worth setting up a foreign currency account in USD to avoid currency conversion or using an online currency exchange platform.
Be careful with any type of money transfer. If something seems suspicious, it is best not to finalize the transaction.
9. Import from China step by step. Transportation of goods from China
One particular question is always bugging novice importers: how to ship goods from China? By and large, the method depends on the shipment, the expected delivery time, and the available means for this purpose.
The possibilities of transportation from China to the EU are:
- sea transport, as less than container load (LCL) or full container (FCL). The transit time from China to Europe is approximately 30 days. It is the cheapest mode of transport. Depending on the contract, the unloading will take place in the port of Rotterdam, Gdansk, and alike
- air transport has the fastest delivery time, only 3-7 days. However, air freight is the most expensive method of transportation. Fragile, valuable, and perishable items are shipped by cargo plane
- rail transport – thanks to the constantly developing New Silk Road, more and more railway routes from China to Europe are available. Like in sea freight, you can import goods in containers. The cargo arrives in about 14-17 days
- by courier service – such courier companies offer shipping from China as UPS, DPD, DHL, GLS, TNT, and FedEx. They offer a wide range of door-to-door transport services and can perform customs clearance on your behalf
If you come across low-cost transportation services, chances are very high that it is a scam. You can compare the offers of reliable forwarders on ShipHub.
Sometimes the suppliers themselves offer to arrange the transport. However, it is not always profitable, especially considering that the counterparty may impose its commission. In addition, there is a need to cover additional costs, for example, at the port of destination.
As an importer, you must also familiarize yourself with Incoterms and choose the most suitable one for your shipment (mode of transport, type of goods). We recommend that you avoid imports on DDP and CIF and choose FOB or EXW. On a FOB or EXW basis, you will have control over what happens with the goods through different transportation stages.
10. Customs clearance when importing from China. What documents are required?
To place the product on the market, it must go through customs clearance. Here is a short list of documents to be presented when clearing goods from China:
- a commercial invoice provided by the exporter
- Packing List (P/L), if the net and gross weight is not included in the invoice
- Bill of Lading (B/L, BOL) from the shipping company or Sea Waybill (SWB)
- or, in the case of air freight, the Air Waybill (AWB)
- for rail transport: CIM/SMGS
Together with the aforementioned mandatory documents, a SAD document is declared.
Additional documents required depending on the type of goods:
- a certificate of origin from the exporter, especially if there are customs allowances
- in the case of goods covered by New Approach Directives – so-called CE certificate, test reports, declaration of conformity
- a fumigation certificate issued by customs or sanitary authorities (e.g., for wooden pallets, grains)
- if you are importing specimens of fauna and flora – a CITES certificate
- Administrative Accompanying Document (AAD), a document required when moving excise goods
- other licenses, certifications, and documents.
Import from China – customs and VAT
When placing goods on the market imported from a third country (non-EU country), customs duties and taxes must be paid.
Customs duties are calculated based on the sum of the customs value and the transport of the goods outside the European Union. In other words, the duty rate for a chosen good is multiplied by the sum of the order value and shipping costs.
The basis for calculating value-added tax (VAT) is the customs value, the calculated customs duties, and freight, both outside the EU and within the EU. The sum of these values is multiplied by the amount of VAT. Check the VAT rates applied in the Member States of the European Union. When clearing the goods through customs, you are obliged to pay the customs duties, additional duties, and other fees.
The duty rates are available in the European Union’s tariff system TARIC. Domestic tariff systems, like, for example, Poland’s ISZTAR, have VAT and excise duty rates.
Import from China to the EU step by step: a summary
Thus, we have reached the end. In simple ten steps, we presented the process of importing from China, starting with setting up a business to customs clearance of goods and placing the goods on the market. Now that you know the order of steps of importing in order, you can put the theory into practice. Be mindful that the requirements and regulations in each Member State may vary.
In case of doubt, our experts will do their best to resolve them. Suppose you want to go deeper into importing from China and consult experts – simply contact us. We also encourage you to participate in an online masterclass, during which we discuss in detail all issues related to the safe import of goods from China.
The post Import from China to the EU step by step appeared first on ExamineChina.com Blog.