When we start thinking about importing, we think anything goes. Asia in general and China in particular seem to us to be such cheap markets that anything we bring from there is going to be a bargain. Nothing could be further from the truth!
From this very moment, we tell you that any product does not have to be profitable because it comes from China. The fact that the product is cheap at origin does not have to be at odds with a significant increase in expenditure due to other factors.
And yes, we can find all kinds of qualities and prices in China, but the fact that it is profitable to import to our country depends basically on logistics costs and tariffs.
What are these expenses? I am not going to go into details because each one is different, but basically we could include them in three sections:
Origin:
- Dispatch: Fixed handling fee, about US$100
2. Transportation:
- Cost of container: Fixed costs (although they fluctuate depending on the time of year)
- Groupage: If your cargo is small, you share container with others. It is more expensive.
3. Destination
- Tariffs: This is a percentage that depends on the type of product, as well as the countries of origin and destination (for example, Chile and China have a Free Trade Agreement).
- Management: Fixed costs, between $500-2000. This variation will depend on the country and the freight forwarder used.
- Taxes: VAT ( in other countries VAT, ITBMS, IV, ITBIS, IGV, etc). Percentages that depend on each country.
On other occasions we will go into much more detail on each of these points, but now let’s get down to the nitty-gritty. When will it be profitable to import your product:
a) By importing sufficient quantity to fill a container (or almost).
b) By importing small quantities of a very expensive product.
Which products to import or not?
When importing any product from China, profitability can be based on two basic logistical issues to make it profitable.
1- Importing in large quantities if the profit margin is minimal because any unforeseen event may mean losing this margin. It will never be profitable to import small quantities of low-cost goods from China, even if you find a wonderful supplier who gives you much cheaper prices than in your home country.
2- Import in small quantities only if they are products with a high profit margin. In this case, the best example we have is, of course, technology-related products.
Example (with invented costs):
We want to import 1000 T-shirts from China, for a total value of US$1000. Occupy 3m cubic meters (m3)
Expenses at origin = US$100
Groupage and transportation: US$120 per m3 = US$360
Tariffs: Assume 30% (over CIF price) = US$ 453
Destination management = US$500
TOTAL= US$2463 (to which VAT or other existing taxes would have to be added)
Importing, yes, but make sure it’s worth it and above all… contactus!
