4/4/2018 A beginner’s guide to starting an import/export business with China.

Import/export guide: China

11 December 2017

If you’re a people person and love interacting with the Chinese culture, an
import/export business could be for you.

Do you speak Mandarin or another Chinese dialect? Do you have connections in Shenzhen? Have you lived in
the Pearl River Delta? Maybe you simply love the Chinese culture.In the import/export industry, you can use
your individual competitive advantages to serve as a matchmaker for Chinese companies — matching
product manufacturers with markets that want and need to purchase the goods they produce.

If Chinese businesses want to export their goods, you help them find buyers. And if they’re looking for
specific merchandise, you help them find sellers.

With dedication and this guide, you can become a part of the estimated $659.4 billion in goods and services
traded between the US and China.

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What's in this guide?

Jump to…
Types of import/export businesses (#types)
Startup costs (#startup)
Narrowing your market (#narrow)
Registering your business (#register)
Charging for your services (#charging)

Which business model should you choose? (#model)

International billing and payments (#billing)
Shipping the goods (#ship)
Risks and how to avoid them (#risks)
Frequently asked questions (#faq)

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Types of import/export businesses

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There are three basic types of import/export businesses. Starting out, it’s a good idea to pursue the one that
interests you most.

Export management company

Let’s say a company in China wants to export electronic equipment. That’s where an export management
company (EMC) can help.

An EMC handles all of the details for the company to ship goods overseas. This could include hiring
distributors, creating marketing materials and preparing shipping logistics.

Export trading company

An export trading company (ETC) finds out what foreign buyers want and then locates domestic companies
that can export the goods.

Import/export merchant (or free agent)

Import/export merchants buy merchandise from a manufacturer — foreign or domestic — then resell that
merchandise around the world. There’s heavier risk involved in being a free agent — but with fewer
middlemen, the potential for higher profits as well.

LEARN MORE How to set up a business entity in China

Startup costs

You can start your own import/export business with little upfront costs.

At a minimum, you need a phone and a reliable Internet connection. You’ll also want to invest in business
cards, a website and a fax machine. And it doesn’t hurt to hire somebody for your branding, including a
unique business logo.

Narrowing your market

Once you’ve decided on the type of import/export business you want to run and calculated your startup
costs, it’s time to narrow your market focus.

By niching down, you can focus your attention on a market you can serve best. Think about:

Customers you want to serve.

Areas of the world you’ll target.
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Types of goods you’ll o er.

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Take your time to dig deep with your research. The extra time you spend finding profitable niches will pay o
in the long run.

Your customer

Your target customer will be someone who wants to trade globally. They’ll either want to sell goods overseas
or buy goods from international sources.

Beyond that, you can choose any type of customer you wish. Maybe you’ll cater to companies that sell
China’s No. 1 export, electronics. Or medical and technical equipment. Or plastic goods.

If you can identify a need, you can target a group of companies as customers.

CHINA’S TOP 10 EXPORTS

1. Electronic equipment
2. Oil
3. Machines, engines and pumps
4. Medical and technical equipment
5. Ores, slag and ash
6. Vehicles
7. Plastics
8. Organic chemicals
9. Oil seed
10. Copper

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Registering your business

To register your import/export business, you need to fill out the US Department of State’s SNAP-R company
registration (https://snapr.bis.doc.gov/registration/Register.do).

A er you submit your information, the Department of State will send you an email about how to get a
company identification number (CIN). A CIN is used for tax purposes and for registering with the US
Department of Commerce.

Import and export licenses

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Typically, the US Customs and Border Protection (CBP) doesn’t require a license to import goods to or export
goods from the United States. However, other government agencies or departments (https://www.usa.gov/federal-
agencies/a) or local governments (https://www.usa.gov/state-tribal-governments) may require them.

If you’re exporting goods, you can find out which licenses may be required by asking your local port of entry
(https://www.cbp.gov/contact/ports).

A NOTE ABOUT IMPORTING GOODS INTO CHINA

For many years, the Chinese government limited the number of companies able to import goods into
the country. Since China’s acceptance to the WTO, you need only register with the Chinese Ministry of
Commerce.

Contact a professional to learn more about registration, tari s and special trade zones that could a ect
your business.

Incorporating and forming an LLC

You don’t have to incorporate in the United States in order to start an import/export business.

However, incorporating or creating an LLC can provide key benefits, including:

Benefit  Separation of personal and business assets.

Description  Creating a corporation or a limited liability company (LLC)

can help you protect your personal assets. For example,
you’ll have less personal liability for business debts.

Benefit  Expense deduction.

Description  Through a corporation or LLC, you can deduct business

expenses before income is forwarded to you.

Benefit  Enhanced credibility.

Description  Clients o en prefer working with incorporated

businesses, seeing them as more legitimate.

Charging for your services

Import/export
Feedback business typically charge based on commission or retainer.

Commission structure
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With a commission structure, you’re paid a percentage of any trade deal you close — usually around 10%. For
example, if you sell a manufacturer’s smartphone for $300, you’ll make a $30 commission. On top of your
commission, you’ll also want to charge for expenses like packaging and shipping.

Retainer model

On a retainer model, your client pays you a monthly fee to be on call when they need your services.

To find the right amount for your retainer, consider your costs — these may include labor, supplies and
overhead.

An alternative model

Beyond a commission or retainer structure, you can simply buy goods and sell them. In this case, your
revenue will come from the profit you make from selling merchandise.

Which business model should you

choose?

A rule of thumb is to pick a commission model if you think a product will be easy to sell. If you think a
product will be di icult to sell, however, price your business based on a retainer.

The thinking is based on this: If you’ll sell a lot of product, you want to be paid based on performance. On the
other hand, if you believe sales will be slow, using a retainer model could ensure that you’ll be paid even in
the downtime.

Finally, if you’re confident in your ability to sell products you acquire, you don’t have to negotiate a payment
structure with manufacturers. All you’ll have to negotiate is how much you’ll buy product for and then find a
way to profit from the merchandise.

International billing and payments

Your new business will require you to make and receive international payments
(https://www.finder.com/international-money-transfers/business-transfers) , which means you’ll make transactions
between currencies and across borders.

You can safely and a ordably manage your business payments — with lower fees and stronger exchange
rates — by comparing the services of a money transfer specialist (https://www.finder.com/international-money-
transfers).

LEARN MORE How to Send Money to China Cheaply

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Shipping the goods

You need to send and receive goods from other countries, so you’ll need to arrange shipping details.

First, contact a freight forwarder — a company that helps you transport goods safely and e iciently. They
will help you handle the logistics of completing shipping documents, finding cargo space and securing cargo
insurance.

Find a freight forwarder by looking in state-specific business directories.

A er you’ve hired a freight forwarder, read our shipping guides to learn how to ship merchandise.

Risks and how to avoid them

Unpredictable shipping logistics

Needless to say, your success hinges on whether you can ship goods safely and e iciently. If you’re exporting
goods, for example, you’re responsible for ensuring they leave your local port and arrive at the correct
destination on time.

You’ll also need to account for anything else that could go wrong, such as damage to the cargo. Staying
organized and partnering with a reputable freight forwarder will help you ship goods without a hitch.

Not knowing enough about markets

It’s a good idea to thoroughly research a market before entering into this business, though even that may not
be enough.

Consider hiring experts who understand the tastes and cultures of your specific markets. You’ll need to sell
products that resonate in countries you’re unfamiliar with.

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Running into problems at the border

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Customs rules aren’t uniform throughout the world. Instead, you’ll encounter a mass of di erent regulations
while transporting goods. To avoid drowning in a swamp of border regulations, hire experts in customs law
and trade compliance.

Bottom line

The import/export business is for people who love building relationships in other countries. But it also
requires an organized mind that can handle logistics.

If you have those qualities, take the plunge into creating a thriving import/export business.

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Frequently asked questions

Which type of import/export business should I choose?

There’s no “best” type of import/export business — each can be profitable, if managed properly. Pick the one
that interests you most, and then research it thoroughly before starting a business around it.

What other factors should I consider when choosing a niche?

Are there services that will help me incorporate or start an LLC?

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