Are you looking to import goods or services from China? The UK imports over £2.7bn GBP of goods and services from China each month. The UK is a net importer of goods from China (meaning it imports more than it exports to China) – this guide is for established or early stage businesses looking to trade in China.
Importing from China
China can be a great place for small UK businesses to source cheaper products, goods or services with a fast production time.
Why import from China?
The Chinese are able to produce goods (e.g., electronic hardware, toys and equipment) at competitive market prices, quickly and in large volumes.
With a population of 1.3 bn and being the UKs third largest import partner, China is a global powerhouse which opens up great opportunities for British businesses.
Since its economic reforms in the 1970s, China has grown to be the worlds largest economy by GDP, and the worlds largest exporter by volume and amount (exporting $2.4 tn USD in 2014).
Trade in The People’s Republic of China remains dispersed due to a dispersed infrastructure network: the areas of trade which are most significant are in the coastal areas in the southeast, based around the Pearl River Delta (particularly in the Guangdong Province).
Sourcing goods from China to import is often one of the bigger challenges when importing. With hundreds of wholesalers and large variances in quality of product, it can be time consuming and expensive to find the most appropriate product for the business. Being specific to a niche that the business is comfortable operating in, and choosing products which are labour extensive to produce can often be a good starting point.
What does China export?
China is a global manufacturing hub, exporting electrical machinery, data processing equipment and textiles the most.
The average transit time for shipping goods is on 3.5 days for non-duty goods and 5.5 days for dutiable goods.
How much does it cost to import from China?
Importing goods can be expensive for a business – often requiring up front cash to purchase the items, costs to ship and transport the goods, as well as storage costs when they arrive into the UK.
The main costs can be broken down as follows:
- Cost of the product from the supplier (and funding this using trade finance)
- Transportation costs – by air or sea
- Possible costs for import licenses
- VAT or duty costs for goods imported from outside of the EU
- Storage costs once the products have arrived into the country
Top tips for businesses looking to import from China
Understanding why importing a particular product from China is important and how this fits in with the business plan is crucial. If you know what niche your serving and the customer market, then it can help you answer questions should you face challenges in the future.
Identify a supplier
Reliable and reputable suppliers are necessary to form a good working relationship when importing. Knowing the suppliers’ credit status, rating and to know that they are reliable will save time and money throughout the trade.
Declare your goods to HMRC
When trading in China (and outside of the UK) it is a legislative requirement to declare imports to the HM Revenue & Customs (HMRC). This can be done through a Single Administrative Document (SAD) electronically, but we’d recommend checking out the HMRC website for more information. When declaring your goods to customs, you’ll be required to provide a commodity code, which is a ten digit number that is given to customs when importing.
Know if you need a license
Some goods require an import license, such as firearms, textiles and food. More information can be found on the Gov.uk website.
Looking to import from China? Contact Trade Finance Global
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Currency: Renminbi (RMB). Unit: Yuan
Population: 1,367,485,388 (July 2015 est.)
Labour Force: 787.6 million
Fiscal Year: 1st January to 31st December
GDP: $17.62tn Source: CIA
Area: 9,596,960 sq km