Suppliers around the world offer a wide variety of goods that could suit your business. You might be able to find lower-priced supplies, giving you a competitive edge, or new supplies that allow you to sell a completely different product.
In February 2016, China was the second largest importer into the UK (behind Germany) worth £2.94 billion.
When importing there are a number of things you will have to consider. This may range from managing long-distance relationships to organising international transport and customs clearance.
If you are considering importing from China, read our top ten tips to help you get started.
1) Plan your import objectives
Before you start importing, it's a good idea to be clear about what you are trying to achieve. You might be looking at China to find a cheaper source of supplies, or to import products that aren't yet available in the UK to sell to your customers. At the same time importing should fit in with your overall business strategy.
Are you ready to import.
2) Identify a good, legitimate and reliable supplier
Check the supplier is creditworthy and can meet your quality standards. You should assess product quality and check that the goods you buy are suitable. You need to know whether the supplier outsources any work to subcontractors.
You will also need to understand the culture of the Chinese market to establish a successful relationship with your suppliers. Mandarin (the official language in China) is becoming an increasingly important language. It is spoken by over one billion people worldwide, outnumbering any other language. Making an effort to learn a few short phrases can help to establish mutual confidence.
Read about finding overseas suppliers.
3) Negotiate the right deal
Understanding your own strengths and weaknesses, and what your supplier's priorities are, helps you negotiate the best deal. For example, if you have a healthy cash position, you could offer to pay more promptly in return for a good price.
The Chinese believe that prospective business partners should build a relationship and, if successful, commercial transactions will follow. The objective of developing close relationships is to build what the Chinese call guanxi (pronounced gwan shee), which are essentially social or business connections based on mutual interest and benefit.
Read about negotiating the right import deal and building solid relationships with overseas suppliers.
4) Reduce risk by having a clear contract
It is important to have a clear contract setting out exactly what payment and delivery terms you have agreed. Using internationally agreed Incoterms (International Commercial Terms) helps reduce the risk of delivery problems or misunderstandings. The contract should also cover what payment is required, when and in what currency, and what payment method will be used.
International trade paperwork: the basics.
5) Choose which method of transportation you are going to use
When making your choice as to how you are going to import, you will need to decide whether to handle logistics by yourself, or outsource the work to a freight forwarder.
When importing from China your main options are air and sea. If your business needs to transport large quantities but there is no pressure to deliver quickly, shipping by sea may be suitable. However, if you require your items quickly and with higher levels of security, shipping by air might be more appropriate.
If you are importing smaller items you may want to look at importing by post. All goods arriving into the UK by post from China must be declared to HM Revenue & Customs. The sender must attach a completed declaration form CN22 or CN23. Goods worth more than £2,000 need a full Single Administrative Document declaration.
Read about International transport and distribution and Importing and exporting by post.
6) Declare your imports to HMRC
Imports from outside the European Union (EU) into the UK must be declared to HM Revenue & Customs (HMRC). This is usually done using the Single Administrative Document (SAD), also known as form C88.
Read about the UK's import and export processing system CHIEF
7) Familiarise yourself with the UK Trade Tariff
The Integrated Tariff of the United Kingdom, also known as the Tariff, is a guide that clarifies what you as an importer or exporter need to know and the rates of duty you should pay. You can use the Tariff to find the current duty and import VAT rates as well as to tell you whether your goods require a licence.
Introduction to the tariff.
8) Understand the importance of commodity codes
When trading with China, you will need to find the correct commodity code for your goods so you can fill out customs paperwork accurately. The code is a ten-digit number for imports from outside the EU. Once you know the commodity code, you can look up other important information such as duty rates and any import or export restrictions.
Read about Commodity codes and the TARIC.
9) Check if you need an import licence
You may need an import licence to import goods from China into the UK. There are import controls on a range of different goods including firearms, food and textiles.
Do you need an export or import licence?
10) Taxes and duties on imports
It is important that as a trader you know whether you have to pay import VAT and duty on your goods before they can be cleared for entry into the UK. Imports may be liable to import duty, depending on the classification of the goods and where they come from. VAT is charged on goods imported from outside the European Union at the same rate as if you bought the goods in the UK (currently 20%).
Read about import declarations.