In this new series, we break down the process of how to import goods into Australia from various countries. The second post in the series focuses on China, the world's biggest exporter.
Located in East Asia near key trading partners including Japan, South Korea, Vietnam, India and Singapore, the People’s Republic of China shipped US$2.272 trillion worth of goods around the globe in 2017. That dollar amount reflects a 2.8% gain since 2013 and an 8.3% increase from 2016 to 2017.
China’s top 10 exports accounted for about two-thirds (67.7%) of the overall value of its global shipments. From January to March 2018, China’s exported goods were valued at $544.7 billion.
Based on estimates from the Central Intelligence Agency’s World Factbook, China’s exported goods and services represent 19.6% of total Chinese economic output or Gross Domestic Product. The analysis below focuses on exported products only.
The following export product groups represent the highest dollar value in Chinese global shipments during 2017. Also shown is the percentage share each export category represents in terms of overall exports from China.
- Electrical machinery, equipment: US$599 billion (26.4% of total exports)
- Machinery including computers: $382.9 billion (16.9%)
- Furniture, bedding, lighting, signs, prefab buildings: $89.8 billion (4%)
- Clothing, accessories (not knit or crochet): $73.6 billion (3.2%)
- Knit or crochet clothing, accessories: $72 billion (3.2%)
- Optical, technical, medical apparatus: $70.6 billion (3.1%)
- Plastics, plastic articles: $70.6 billion (3.1%)
- Vehicles: $67.4 billion (3%)
- Articles of iron or steel: $57.3 billion (2.5%)
- Toys, games: $55.3 billion (2.4%)
From a continental perspective, about half (48.5%) of Chinese exports by value were delivered to fellow Asian countries while 22% were sold to North American importers. China shipped another 18.9% worth to clients in Europe, 4.2% to Latin America (excluding Mexico) plus the Caribbean with 4.1% of China’s total exported goods arriving in Africa.
Source: World Top Exports
How to import goods from China to Australia
1. Product sourcing & validation
You may have an idea for a product that you would like to be made and/or imported from China, but have no idea on how you will be able to find a supplier that is suitable, nor do you know everything involved with buying from a supplier in China. Your best bet is to either approach a procurement company, or do your research on supplier sites such as Alibaba. Keep in mind the few things below:
- Australian requirements for importers: Australia has very strict biosecurity laws surrounding certain products. You must keep track of the product safety standards, labelling requirements, and laws surrounding import permits.
- Product development costs: China has an advantage over other exporting countries from cheaper labour and being a manufacturing country. However, China suppliers are (most cases) better at 'copying' than at deriving at an entire product from scratch. It may be more efficient to develop a prototype in Australia, then producing en-mass in China.
- Minimum order requirements: Almost all China suppliers require high MOQs in the thousands of units, as any less than this is unprofitable. If you are a small business or start-up, this may not be feasible for you, and you may have to look to import elsewhere, where there is higher price per unit but lower minimum quantity requirements.
Product validation is always a necessary step before importing any goods into Australia. If you are a new business, make sure your product or business idea is well and truly marketable and sellable in Australia. Do not over-commit to a big order before doing this step.
2. Discuss terms of trading with your supplier
Your terms of trading could determine how much responsibility you may have with your cargo. Read about our Incoterms and why this is so important to establish from the get-go with your secured supplier. Once your product and contract is signed, it is much harder to renegotiate these terms. On the other hand, if your supplier are unable to extend logistical help, find an exporting agent or freight forwarder that can help you navigate the clearance procedures for each type of incoterm.
3. Understand the various regulations, tariffs, and licenses you need to export.
Importing from China to Australia is relatively easy with the Free Trade Agreement established in 2015. With this FTA, your product may be able to be exempt of any tariffs (duties or taxes).
To determine whether or not your product is eligible for a duty refund, you will need to know your product's HS Code and do some research on the Department of Foreign Affairs and Trade website. Alternatively, you can also approach a freight forwarder or customs broker and consult with them to see what type of duty refunds and tax exemption programs you are eligible for.
Australia has strict product safety standards. For instance, any products deriving from wood must be fumigated and treated before being released at the border. More often than not this is done in China as Australian customs will charge you far more. Make sure your product is compliant with Australian safety standards before importing. A list of regulated products is available on Productsafety.gov.au. However, this site does not include electronic product standards and regulations.
If you are importing milk products, animal-derived or food products, you will also require an import permit. This guide from the Department of Agriculture and Water Resources will help you determine whether you need an import permit and how to get one.
4. Arranging transport for your cargo ahead of time.
Transporting your goods from China can go much more smoothly if you deal with a courier or freight forwarder. Use the guide below as to who to go to when dealing with China-Australia logistics:
If you are importing in peak season (October - January), it is important that you arrange for your cargo transport well ahead of time. Read this blog post for more tips to prepare for peak season trading.
Depending on the nature of your goods, many options may be available for transporting your cargo. As a rule of thumb, if you are a beginner importer, it is best to go with a reliable courier such as DHL, TNT, etc. while you build your market volume. If you are a seasoned importer, freight forwarders and 3PL are a great way to improve your profitability and reduce freight costs by pooling the 3PL's resources and leveraging their economies of scale.
To determine what type of transport is best for your cargo, download our Beginners to Freight Forwarding guide.
While speaking to your freight forwarder, it is important to give them the right information so they can arrange the best route and transport options for you. For instance, seafood importers must be able to obtain an import permit and will undergo strict inspection procedures in Australia, therefore this information must be obtained before approaching a freight forwarder.
5. Distribute and market your product in Australia
In order to have a success import venture to Australia, your goods must reach the hands of the consumers in the right place, under the right circumstances. Finding retailers and stockists of your products to get your products in the hands of Australians will be crucial to your business plan. Do your research into the target market and where they are hanging out in order to effectively market your product.
Having a 3PL to deal with warehousing and distribution can save huge headaches when it comes to distributing your goods. As seasoned freight forwarders, we also find having the same 3PL as your customs clearance effectively streamlines your entire process and improve your bottom line, and also frees up your time to deal with important business stuff.
Final words for importers from China to Australia
As China is a mature manufacturing and export country, it is important to be vigilant of your responsibilities and potential issues when importing from China. Particularly, quality control, intellectual property protection and transport risks are often overlooked. It is important to plan and mitigate for these issues should they arise.
However, importing from China can be a wonderful experience once you have established a long term relationship with your suppliers. Relationship (guanxi) in China can often allow you to be ahead of competition and foresee the risks in your supply chain. At Whale, 80% of our imports into Australia is from China, so we understand deeply about the China import/export landscape and have experts with over 30 years experience in the area, with a network of over 180+ offices worldwide, helping you navigate the complexities of international trade.
As an award-winning freight forwarder and company, we are able to offer our clients a full freight service that includes import/export, customs clearance, 3PL, and warehousing and distribution. We are proud to be Australian-owned, service-focused, translating to highly satisfied clients. We have been named Excellence in Business, Business of the Year, Employer of the Year, to name a few.
Your import journey from China to Australia starts here. Contact one of our friendly Customer Success Managers to see how we can help to transform your business.