How To Import From China To USA?
As China is the largest producers of consumer durables in the world at the current economic scenario, every nation including the USA depends on this country for various goods and services. The reason behind this is the cost at which the USA can import these goods from China is drastically lesser than what it would cost them to manufacture the same products in the USA. So, being an entrepreneur from the USA looking for importing goods from China and selling it in the markets of the USA, then you must keep reading the article as this would explain how you can import products from the Chinese market and sell in the USA.
Steps and Legal Procedures or Requirement to be followed
Registration of Business
If you are seeking opportunities to trade with China by importing their goods and supplying into the USA markets, then you have to register your company in the USA for the export-import purpose. You can form a sole proprietorship firm or a partnership firm as well and even a private corporation depending on the number of people and amount of capital you have. You have to determine how much money you want invests in the first go, and that will be your authorized capital and if you have shareholders then the division of the capital into shares. You need to decide whether it will be a limited liability company or unlimited liability firm and if limited liability then how the partners are liable for the business as well. You need to register the business for company taxes and other tax requirements according to the guidelines of the USA government. Prepare a business plan and financial model of your business.
Obtain Business Identification Number
Internal Revenue Service or IRS, USA will assign a business identification number to your business which you need to get mandatorily for taxes and other business regulations. You can apply for the same on the website of IRS, and it takes almost no time to generate the ID and then you can get your work started.
Identify the goods to be imported
Being a trader from the USA, you need to understand the market of the USA and the demands of its people. Then survey the Chinese market and its products and identify which products can be sellable in USA and people will require the same or not. Next, you need to check for the Product safety regulations, and that are Federal Regulations and State Regulations as well.
Federal Regulations: This rules and regulations apply to all the states of USA.
- CPSIA: This regulatory framework is for the safety of the children’s products. This regulates whether the product is suitable for the children under the age 12 or less. So, if you are dealing in these products, you need to take care of this regulations and standards.
- FCC: This stands for Federal Commission of Communications which regulates every communication devices to be sold in the United States.
- FFA: This is the Flammable Fabrics Act which shall be governed by CPSC in the USA that sets standards and requirements for the flammability of the materials and thus for importing fabrics and similar products, you need to follow and abide by its guidelines.
You should always deal with the products which you like and have in-depth knowledge. Besides analyzing the market of the product in the USA and its cost in China, you also need to determine the shipping charges. If the expense of the product increases than the estimated selling price in the USA after including the shipping costs, then there would be no profit left, and thus you must not deal with such products. You should always think of something unique but demandable in the market, and that is how you can grow and establish your import business.
Classification of Goods For Import From China
Classification or labeling of products according to its nature or functionality is essential in case of import from China to the USA. You need to abide by the rules and regulations of the labeling requirements of the government, and this is mandatory.
- For the products of the children’s: For these products, you need a warning label, CPSIA tracking label and also the country of origin of the product.
- For electronic goods: For these products, country of origin is mandatory as well as the FCC mark mostly for the communication devices imported and up for sale.
- For Apparels: The composition of the fiber, how to take care of the apparel and warning for protecting it from fire or flammable objects and finally the country of origin has to be mention on the label of the clothing to abide by the compliance of USA to import from China.
- For Packaging Products: These products also require the country of origin and the warning label.
Country of Origin is mandatory for all the goods imported from China to the USA and you cannot miss it on the label of the product.
Choosing Suppliers in China and cracking Deals
The next step is one of the crucial steps in importing business, and that is procuring providers in the China for manufacturing and supply of your products that you will sell in the USA. You must look for –
- Reliable vendors who can provide you with the client testimonials and reference copies in their support of real business terms and ethics and practices.
- Whether they hold a license or not for their activities as your country USA is very particular about the legalities of businesses and thus going wrong can cost you huge.
- You should always obtain the details of the production process and the staff and employees working on the same.
- You should always have the details of the manufacturing site and the name of the concerns manufacturing your product in China. It is important to know how the production is going and where it is getting produced and rather than just leaving it to the exporter.
- You must ask for sample products from every lot or so after manufacturing is done to confirm the quality of the product before it is shipped to the USA.
- With Chinese exporters, you need to be familiar and create a bond to crack the deals as they won’t just do business for the sake of it. It has been observed that they would know you first as a person and not an employee or executive representing a company. So, you need your best of communication skills to impress the exporters and crack the deals.
- It has also been observed that Chinese business delegates believe more in moral effect than in the legalities but you being a trader from the USA need to balance both.
- Finally, hierarchy matters the most to the Chinese executives. While you are about to crack a deal with them, always keep this in mind that you need to take proper care and respect their thoughts about hierarchy and communicate accordingly.
Shipping Products From China
For shipping purposes, you need to avail the carriers available from China to the United States, and here you might face two significant challenges which are
- ISPM 15 – All the wooden materials packaging has to be in accordance of the ISPM 15 unless it is exempted on any particular product or so.
- Lithium Batteries: As this product are highly dangerous and prone to fire hazards, the packaging of these has to be done according to the required standard of the USA and all the documentation for the products and its shipping has to be duly done.
For the large shipments, you might need warehouses till the customs clear all the goods. For the same, you need to contact the dock and book the stores beforehand.
For the USA based traders and importers, it is mandatory to have a customs agent. The role that customs agents play is to make the entries as well as submission of the documents of the shipment and other products related documents to the US customs office on your behalf. The freight forwarders sometimes also work as customs brokers, but you only hire the genuine and reliable ones and make a customs bond before importing the goods from China to the USA. As the broker for duty will submit the documents for the products and shipment on behalf of the importing company, the company needs to give a power of attorney to the agent for duty. It is also required as the customs agent will also clear the cargo on behalf of yours from the dock.
Customs bonds are required while hiring a customs broker and there are two types of the same.
- Single Entry Customs Bond is for single shipment only, and then the bond gets nullified.
- Continuous Entry Customs Bond is for multiple shipments within a specified period of one year or so.
Customs bonds are only required when the goods getting imported from the ports of China to USA value more than US$2500 and above. You need to purchase this bond before the cargo gets departed from the Chinese ports (port of loading). For buying the custom bonds from the customs brokers, you would need the
- Tax Identification Number of your Business.
- The Signed copy of a power of attorney.
Release of goods
Finally, when the shipment has arrived and cleared by the customs, you can avail the same by producing the documents of procurement of goods and the invoices and other legal documents. Make sure you have your warehouses and other places ready to keep the products intact. For products which are not sold for a long duration of time, you must contact few of the resellers in the USA so that you can avoid the loss.