Global Sources
Ready to import from China? Find verified suppliers on Global Sources.
Share / Recommend:

Budgeting for a China sourcing project

by Mike Bellamy in the book "The Essential Reference Guide to China Sourcing”

While the quote from a supplier is a major part of the cost to buyers, there are also other important cost considerations which they should be aware of as they prepare a proper budget and profit forecast. Not all items are applicable for all projects and some items specific to your project may need to be added, but this basic chart should at least get you thinking in terms of an “all in - landed cost” rather than just production costs.

Fixed costs

ProductionFOB China per unit priceInclude packaging and master packaging
3rd party Support Services per unitAre any outside parties needed to help coordinate vendors, inspect quality of product or organize logistics?
FinanceCost associated with business loans, 3rd party finance and letter of credit if needed.
Post-ProductionShipping per unit priceInclude shipping + duties + all port charges


Variable costs

Pre-productionIntellectual propertyConfirming your concept does not infringe on someone else’s and registering your IP in China and at home.
Design engineeringAre material specs and dimensional tolerances well defined?
Are material specs and dimensional tolerances well defined?Is the product safe and fit for function?
Tooling & set upAny one-off charges for building tooling, molds, jigs and other equipment for your project?
Sample feesDoes your sampling plan require multiple samples be made available?
Shipping of samplesVery important if your product is heavy, bulky and/or needs to ship express.
3rd party support servicesOutside parties are often needed to help find and coordinate vendors during the pre-production phase.
Quality system and social auditsBefore production starts, do you wish to have the supplier’s quality system audited and checked for social compliance?
China tripDo you plan to visit China to interview potential suppliers or sign off on a selected supplier?
Production3rd party support servicesAre any outside service providers needed to help coordinate vendors during the production phase?
Quality system and social auditsDo you wish to periodically have the supplier’s quality system re-audited and ensure continued social compliance?
China tripDo you need to visit China to review production before the goods ship out from the factory?
Post-productionProduct liabilityIs product liability insurance needed?
Replacement planDo you expect a certain percentage of returns or rejects? If yes, this should be built into your cost structure.
Various phasesCommunicationsMinimal costs assuming you are set up with one of the free internet conference services.
China tripsCost of flights to China can be significant if you need to visit your supplier on multiple occasions as the product moves from concept to delivery.
Other 3rd party support servicesIf needed, cost depends on how much support is needed which can range from a short consulting session to day-to-day project management of the entire process.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center. He is also the author of "The Essential Reference Guide to China Sourcing" and founder of PassageMaker Sourcing Solutions.

Add comment

Security code

Stay Connected

Get Import from China Headlines by E-mail

Attend the Global Sources Summit

  • For online & Amazon sellers
  • Interactive training led by sourcing & Amazon experts
  • Learn how to source profitably, avoid pitfalls
  • April 17 - 19, 2017 in Hong Kong
  • Co-located with Mobile Electronics and
    Gifts & Home shows

Learn More

Join the Smart China Sourcing Facebook Group
  • Connect with other buyers
  • Ask questions
  • Get advice from experts

Join Group

Join Global Sources on Facebook

Be our fan now for the latest sourcing news, practical sourcing guides and expert advice.

Follow Global Sources on Twitter

We'll keep you updated with tweets on sourcing news, trade resources & more.