By Renaud Anjoran
Do you need to send samples to China, or to get small orders out of China? Do you want to avoid headaches and high costs? My colleague Fabien wrote some advice that will probably be helpful.
1. Sending samples into mainland China
Sending samples or small packages into China is not cheap but you can save money by avoiding mistakes and multiple sendings. We have seen several small importers giving up their projects because they could not send their sample to China!!
There are mainly two options.
The first option is safe but expensive — using international courier services such as DHL, UPS, FedEx or TNT. They have experience of delivery in China and cover most of the country. You can use their worldwide tracking system.
The second option is using a government’s post office — for example USPS, Canada post, Deutsch Post, Chronopost, etc. They tend to be cheaper but you should be aware of their downsides:
• They give their customers a tracking number which, unfortunately, is usually not “converted” once the package hits China. It means you can’t track your package all along the way.
• Chinese characters are a problem. When sending something to an English address in mainland China, it might not be received because the Chinese post office might not understand it and might discard the whole package. Since tracking is (usually) no longer working, you will never hear about your package again! The safest way is to write the address in Chinese characters somewhere in order to ensure it can be delivered to the destination.
One last piece of advice is to decrease the commercial value you declare to the lowest reasonable amount. In some cases, if the real value is used for the customs clearance, China’s VAT (17%) and import duty (which depends on the product’s HS code) are much higher than the package value!
2. Sending small orders out of China
When you request samples from a new Chinese supplier, they can be shipped through DHL/UPS/FedEx/TNT either at the supplier’ expense, or by using your company account. There are issues with both options:
• If the supplier pays for the sending, they will always add a markup on the real cost since they think you have no choice.
• If they use your account, you cannot be sure your supplier will not use it for future shipments (without asking for your permission).
There is, however, a better and cheaper option — using a third party logistics provider. There are thousands of them in China and they are easy to find on B2B sites or Google (and some have probably sent you emails).
They reduce costs by consolidating your goods with many other customers and sending them at a discounted price through DHL/UPS/FedEx/TNT.
How much cheaper can they get? Often in the 50% to 70% range (compared to above-mentioned companies’ full price). The lead time rises by 1-2 days on average.
However, we noticed that most logistics providers give a very good price at the beginning, and increase the price regularly (shipment by shipment). By the end they are pretty close to the full price! This is a constant with Chinese logistics companies across all modes of transportations, as per our observations.
How to find a good provider that can be trusted? It can take time. We can give two pieces of advice:
• Using a large company is usually better, even if the price is sightly higher, because some of them provide official rates in function of the volume, weight, and destination.
• A sourcing agent can also take care of this directly. But then you need to trust that agent, which is another story.
How to control your logistics provider and ensure they keep doing a good job?
First, you need to understand the general rules courier companies for their quotations — they are based either on volume or on weight, and they need to get both pieces of information:
• The volume is in cubic centimeters (cm3). If your carton is deformed, the volume will be calculated by taking the longest dimensions, including the deformation.
• The weight is in kilograms (kg).
Then the logistics provider determines the highest of these 2 values: the volume/5000 and the weight. The result is compared to the price list and you get a quotation. For example, regular prices for shipments from China to the USA will be 6 to 7 USD per kg (or volume equivalent).
Another method to control the logistics provider is to use their online calculators — you can see an example on parcelfromchina.com. (Note: this does not constitute advice to use this company’s service — we don’t know them.) One benefit is the ability to challenge your current provider if their price is higher.
What to do in case of doubt? If you suspect you are being gouged, don’t hesitate to ask for the volume and the weight of your package. Make sure to record these values on your side and to take photos of the packaging.
Generally speaking, when should you use courier services? It makes sense up to 100kg (and up to 300kg in many cases) since it offers the following advantages:
• It is door to door;
• Is it fast — 2 to 5 days, 10 days in the worst case;
• In the USA, no customs clearance and duty fees under $2,500.
Which international courier is better?
This is a very hard question and it depends on the destination. Here is what we have observed:
• DHL is often a bit more expensive, hassle free and more reliable (faster), but not very good for delivering in remote locations;
• Fedex is good if you are not in hurry, since delays often happen (by the way, don’t expect a refund for late delivery).
• UPS is “in between”.
PS: here are a few extra elements in response to a few emails we got.
A reader wrote “I have found that when I provide my account number the shipper always seems to choose the fastest and therefore the most expensive service, regardless of my initial request.” This is a classic. Why would the supplier care about costs if you give them your account number?
Another reason for not providing your account number is as follows. Sending with FedEx/DHL in economy mode FROM CHINA is much cheaper than sending with FedEx/DHL in economy WITH AN IMPORTER’S ACCOUNT.
Another reader asked about the reliability of Chinese third party logistics companies (3PL).
Most of them are fine (apart from the schemes we described in the article above). They allow an importer to save money, in exchange for a little extra delay (1-2 days). Reliability is generally not a problem, relative to some of the well-known international companies (we got quite a few problems with one of them).
Renaud Anjoran has been managing his quality assurance agency (Sofeast Ltd) since 2006. In addition, a passion for improving the way people work has pushed him to launch a consultancy to improve factories and a web application to manage the purchasing process. He writes advice for importers on qualityinspection.org.