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Sourcing Product from China

Sourcing Product from China. Collaborative Knowledge Development Project. Did you know…?. How do you find and select a Chinese manufacturer?. Sourcing Options. Shipping. Distribution. Manufacture New. Domestic Customs. Warehouse Retail. FOB. Logistics. Source existing. Shenzhen

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Sourcing Product from China

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  1. Sourcing Product from China Collaborative Knowledge Development Project

  2. Did you know…?

  3. How do you find and select a Chinese manufacturer? Sourcing Options Shipping Distribution Manufacture New Domestic Customs Warehouse Retail FOB Logistics Source existing • Shenzhen • Shanghai • Agent • Manufacturer Wal-Mart Approach

  4. Think of Sourcing a Chinese manufacturer as a three-stage process. 1 Assess Identify & Select 2 Manage 3 Asses Cost-Benefit: China or Domestic? Manage Shipping Identify & Select Manufacturers

  5. Which product do you want to source?

  6. Step 1: Assess cost-benefit of manufacturing in China vs. domestically. • Key questions: • Do you have adequate knowledge of the product specifications? • What kind of volume do you anticipate? For example: Smashpong –A fun variation on ping-pong

  7. Step 2: Identify and select manufacturers. • Key Considerations: • Use a Sourcing Agent (ask : 5% of shipments) • Websites – Alibaba.com (agent or factory) • Fairs (e.g., Canton, Vegas) • Relationships “Guanxi” • Domestic-only Chinese manufacturers (+ courier) Identify

  8. Step 2: Identify and select manufacturers. Select Key Criteria: Specs (leather, durability, materials); domain knowledge required Price (per unit, FOB); payment terms: • 30% upfront • 70% release factory • Per unit $ Time to FOB

  9. Step 3: Manage shipping. • Pricing - % of container • $1,500 - $3,000; 20’ container • $3,000 - $5,000; 40’ container (Hi-Q); less restrictive • Logistics companies (i.e., Alibaba) • Criteria: quality of service, time, price • FOB: • Shenzhen • Shanghai Warehouse / Retail • Logistics • Agents • Transport • Manifest • Tax forms • Retail • DC • Domestic Customs: • Physical/self • Agent • Note: Manufacturer must produce Manifest

  10. Step 3: Manage Shipping. • The Harmonized Tariff Schedule of the United States (HTSUS) is the primary resource for determining tariff classifications for goods imported into the United States.[1] • The Harmonized Tariff Schedule is based on the international Harmonized Commodity Coding and Classification System (Harmonized System), which has been established by the World Customs Organization. Virtually all countries base their tariff schedules on the Harmonized System, making it easier to conduct international trade. • The U.S. Harmonized Tariff Schedule, like Harmonized System tariff schedules generally, classifies a good (assigns it a ten-digit tariff classification number) based on such things as its name, use, and/or the material used in its construction…There are over 17,000 unique ten-digit HTS classification code numbers. • Source: http://en.wikipedia.org/wiki/Harmonized_Tariff_Schedule_for_the_United_States

  11. Key Take-Aways • What did you learn that you didn’t know before?

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