Importing from China

Okay, here we go on another Magical Mystery Tour.

Apparently China has somehow become a place that defies the general rules of Economics. Products are made at Amazing Low Prices, sold at Amazing Low Prices, and you can get them to your garage, your basement or a Convenient Storage Unit Near You at Amazing Low Prices.

(Sigh).

A while back, I sent one of my business partners and several of my employees TO China for two weeks. Guangzhou Province, to be specific, which is a port area where a LOT of manufacturing goes on. Their mission was to determine whether it would be reasonable for us to begin large scale (not small-scale home-based business level) importing from China.

We were looking at several product lines, but I'll just use one product line and one specific product as an example.

You know those camping chairs with the aluminum legs and canvas seats that you can fold up and slide into a nylon bag and take with you wherever you go? Those were selling for $12 to $14 per unit retail in the US at the time.

If we bought them in bulk in China, we could get them for $3.12. Sounds like a pretty good deal, right? But wait...there's more. To get them at that price, we would have to buy at least a container load of them. A "container" is a railroad car. That's a lot of chairs.

Before we even bought anything at all, we would have to hire an Agent in China that we could trust (good luck) to look after our sourcing interests there.

Then the order would have to be placed, and we would have to wait 2 to 3 months for the order to be manufactured. Manufacturers in China do not make all kinds of stuff ahead of time, store it in warehouses and then sell it. They don't lay out that kind of effort and capital expense ahead of time. It's made to order, and that takes time.

Then our trusty Agent in China (good luck) would have to inspect the product, and then get it to a shipping port to be transported to the US.
That's ocean shipping, as in big ships that travel over the ocean. You can't FedEx a railroad car.

Then we'd have to consult the US Harmonized Tariff Schedule to determine how much we're going to pay in Import Taxes to bring our chairs into the US.
Then we'd pay Customs Fees at our Port of Entry into the US, then hire a trucking company to transport our chairs to whatever warehouse we would be paying for in order to store all those camping chairs.

Once we added up all those costs, it turned out that it would actually cost us more than $9.00 per unit to buy those chairs in China, get them to the US and store them so that we could (hopefully) sell them all.

Now, I'm no theoretical mathematician, but to me it sounds like $9.00 is a whole lot more than $3.12.

On top of that, it turned out that we could actually buy those chairs already imported into the US by other really big existing importers for about $7.00. So what would be the point? We'd be better off buying them in the US.

All the (expensive) steps I described above that come after "this costs $3.12 in China" are the steps that Slippery Dan and the band conveniently LEAVE OUT of the information they sell you for thousands of dollars. Their #1 chart-topping hit only has one verse..."This costs $3.12 in China!" It's just not the whole lyric, not by a long shot.

What you need to know is that there are already lots and lots of very large import companies in the US that have the money and the infrastructure to import billions of dollars in Chinese-made products into the US at VERY low prices (because they buy HUGE quantity) and then sell them to you at wholesale for less than it would cost you to deal with China directly on a small-business scale.

So please, for the sake of your kids' college fund, DO NOT buy in to the fantasy that you're going to get tons of dirt-cheap products if you buy direct from China. The chuckleheads who tell you that are just trying to make you think business is EASY to they can upsell you on their 'Amazing Systems' and 'Foolproof Tools' In some cases, they're actually trying to get you to pay them thousands of dollars to TAKE YOU ON A TRIP to China with so you feel like you've accomplished something.

They're going to pocket most of that money while they slow-boat you there and leave you in a seedy hotel with a couple of trips to a trade show.

On a home-based business scale, buying from China successfully is just a flat-out lie.