First, Plan Your Strategy
- Source the products. A good place to start is Alibaba. This Internet portal was established to facilitate the trade of Chinese manufacturers with the world. While the majority of suppliers are from mainland China, Alibaba lists businesses from Hong Kong, Taiwan, United States, India, etc. It is also useful to visit trade shows and establish direct contact with prospective suppliers.
Here is Alibaba search box to help you:
- Make a list of the products you would like to import. Contact Kenyan Customs and Excise to see whether the products you have chosen are subject to any duties (ad valorem or custom duties). The duties can go from zero to over forty percent and will have to be calculated into the cost of sale of the products
- Find out if the products you want to import require an import license from Kenyan authorities. Only some products require such a license (for example, medications). Read more on the SARS page dedicated to importers.
- All importers and exporters in Kenya are required to register with the Kenyan Revenue Services (SARS). The registration process is relatively easy and fast, and the form can be found online. You should quote your importer code on all your import documentation (this is usually done by your forwarding / clearing agent for you).
- Find out if your chosen items require a permit to be exported from China. Your supplier should handle this aspect. However, it is better to have too much information than too little!
- Choose a forwarding and a clearing agent. Many bigger companies will act as both forwarding and clearing agents. The forwarding agent handles the shipping of goods from the port of embarkment to the destination. It is advisable to choose a forwarding agent that has offices in the country from which you intend to import goods. You pay to the forwarding agent the shipping fees, agency fees, fuel surcharge fees, currency fluctuation fees and possibly some other smaller fees. The clearing agent is responsible for getting the cargo through customs and paying the customs VAT, customs excise and duties (if any), and the customs inspection if applicable). You as importer will, of course, be liable to reimburse the clearing agent for all these costs, plus other fees (agency fee, for example). As you can see, the forwarding and clearing agent(s) have a very important role in the chain of imports – choose them wisely!
- Decide how you want to insure the goods in transit. Your forwarding / clearing agent will probably be able to offer you cover under their insurance, which may or may not be more favourable than insurance you are able to procure yourself.
Getting to the Gist
- Now that you know what products you want to import and how to go about it, learn more about the potential suppliers. Dealing directly with the manufacturer is most often not a viable option, unless you plan to import enormous quantities made in a single factory. An agent stationed in the country from which you are importing is usually a better choice. In any case, conduct a thorough background research. Request a copy of the business license. Check the authenticity of the address and phone number. Request a copy of the company’s certificate of import / export authority. Verify the company’s international trade experience. Seek references and verify them.
- Order a sample. (Note: you will have to pay for it.) Do a quality test.
- Once you are quite confident of both the supplier and the product, make an order and get an invoice and a packing list from the supplier. Obtain a quote from your forwarding and clearing agent. They will need to know the weight and the volume of the shipment, as well as the value in US dollars in order to be able to quote you.
- Pay the supplier. By this point, you should have arranged with the supplier about the method of payment. For first-time larger imports it is customary to involve the banks and pay with a letter of credit that stipulates that the supplier is to receive the payment only after the goods are on board in the port of embarkment. Always expect that you will need to pay in advance. Payments after 30 or 60 days of statement may come into play after years of importing from the same supplier or agent.
- Send the documents and instructions to your forwarding and clearing agent.
- When the goods are delivered, check that the container seal is intact (in case of sea shipments) or that each and every parcel has been received without any visible damage. Then check carefully what is inside and compare it with the supplier’s invoice
Lastly, Do the Costing – and Start Selling!
- Everything that you had to pay for the imported goods goes into the cost of sale of those goods. Usually, you will need to add up:
– The supplier’s invoice prices
– The agent’s handling charges
– The agent’s commission fee
– Ocean or air freight costs
– Other forwarder’s charges
– Customs excise, duties and inspection
– Customs VAT (Note: Customs VAT is refundable to you if you are a registered VAT vendor; in that case, do not calculate the customs VAT into your cost of goods. However, if you are a VAT vendor, also remember that 14 percent of your selling price is not yours; it belongs to SARS).
- List you items on bidorbuy.
Alibaba.com has an excellent and vast database of Chinese manufacturers; be sure to visit the Alibaba SuperDeals page regularly.
You may import practically anything from China, from cheap T-shirts to laptop computers. Some importers swear by the motto: import cheap, sell cheap, and watch the money add up. Others prefer to go for higher-end products, because they can make more profit on them and because they allow them a greater peace of mind. Whichever way you choose to go, keep in mind two pet peeves of experienced importers: the abundance of the red tape and the deficiencies in the consistency of quality. China is a vast industrial powerhouse which can be immensely rewarding for fledgling importers. However, as an emerging market it is susceptible to growing pains and warrants extra prudence in choosing suppliers and evaluating products. It is up to you to do your research well. You need to be confident that everything is well and above board before any money changes hands.