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Thursday, November 24, 2016
Monday, November 7, 2016
Importing Leather Goods from China: A Complete Guide
- Posted on November 6, 2016
- in Product Guides
Leather is used to make everything from shoes and wallets, to furniture cover and handbags. In this article, we explain what Importers of leather goods must know about different types and qualities of leather, labeling requirements and chemical regulations.
We also explain why you need to be skeptical about the origin of certain leather types, and why you need to steer clear of materials that contain Phthalates and lead.
Leather Types & Qualities
There four main types of leather:
- Full grain
- Top grain
- Split leather
- Corrected grain
Most suppliers tend to provide domestic cow leather, with calf leather as an upgraded option. Some suppliers can also offer more exclusive forms of leather, for example from crocodiles and other animals.
There are also various textures to choose from, as as the following:
- Smooth / plain
- Suede
- Crocodile (texture)
When it comes to colors, you have the following options:
- Option A: Standard color
- Option B: Custom color (Pantone or RAL)
Most suppliers have standard colors, for which the minimum order quantity (MOQ) is relatively lower. You can, of course, get a leather with a specific Pantone color, but this normally results in an increased MOQ.
Don’t rely on your Manufacturer’s expertise when it comes to leather quality
We work a lot with buyers, and their mostly Shenzhen based manufacturers, in the Watch industry. Most ‘fashion’ Watches today, at least in the mid price segment, come with a leather strap.
Watch manufacturers are essentially component procurement and assembly houses. Little manufacturing of the components are made ‘in house’.
Instead, all components, leather straps included, are made by specialized subcontractors. This is how industrial clusters function, and it’s neither bad nor exclusive to the Watch industry.
So where am I going here?
It would be reasonable to assume that the supplier knows a thing or two about leather qualities. In fact, one could even think they would offer guidance on different leather types and qualities.
However, that is not the case.
In fact, many suppliers – be it in the Watch industry or even those making bags and luggage – are oftentimes not experts in different leather types and qualities.
They expect the Buyer to provide them with clear instructions, which are then forwarded to the raw materials suppliers.
Without a clear specification of the type and quality, they may use a leather that is not matching your quality requirements.
Selecting leather from a sample catalog
Many manufacturers let their customers choose from leather sample catalogs. Normally, each sample has an ID, quality and origin specified.
Notice that it may be hard to verify the actual origin, as I will go into very soon. However, if your only choice is to select from a sample catalog, you should get a sample with you.
This ensures that you have some sort of quality reference for the final production.
Imported leather from Italy (and elsewhere)
Many suppliers tend to quote leather qualities entirely based on the origin. While it is not that simple, it often looks like this:
- Italy (High cost)
- Hong Kong (Medium cost)
- Mainland China (Lower cost)
Can you trust that ‘Italian leather’ is actually from Italy? Not unless they can, at a minimum, show you a Country of origin certificate.
I can tell from experience that many suppliers cannot provide such documentation. Even if they do, it’s still far from being a guarantee for the origin of the leather.
Product Safety Standards
Leather products are not subject to regulations that target leather goods specifically. There are, however, regulations that cover consumer goods as a whole. Below follows an overview:
a. REACH
Restricts substances, such as lead and AZO dyes, in all consumer goods sold in the European Union. This includes leather goods, such as wallets, handbags and watch straps.
b. California Proposition 65
California Proposition 65 restricts more than 800 substances in consumer goods, including leather products. As an Importer, you may either ensure compliance by submitting your leather product to a third party testing company – or attach a warning label.
c. Leather for furniture and home products
Leather covered furniture must normally comply with fire safety regulations, in the target market. Notice that this may require the leather to be treated.
d. Leather products for Children
Leather goods made for kids are subject to CPSIA in the United States, and EN 71 in the European Union. Notice that these regulations are not only applicable to toys, or ‘traditional’ Children’s products – but also wallets and bags.
If you intend to market your products as ‘suitable’ for children, you need to ensure compliance with the children’s product safety regulations in your market.
Case Study: Watch leather straps containing excessive amounts of Phthalates and other restricted substances
What is the real risk of importing leather products? Well, higher than I first thought myself.
In late 2014, a client in (again) the Watch industry submitted batch samples to a product testing laboratory in Hong Kong.
Much to our surprise, the test failed the CA Prop 65 testing. According to the test result, the Watch strap contained excessive amounts of Phthalates:
Phthalates are a group of chemicals used to soften and increase the flexibility of plastic and vinyl. Polyvinyl chloride is made softer and more flexible by the addition of phthalates. Phthalates are used in hundreds of consumer products
[…]
Current levels of seven phthalates studied by the National Institute of Environmental Health Sciences posed “minimal” concern for causing reproductive effects.
However, the National Toxicology Program concluded that high levels of one phthalate, di-n-butyl phthalate, may adversely affect human reproduction or development.
Source: U.S. National Library of Medicine (Link)
However, phthalates are restricted by CA Prop 65, meaning that this product could not legally be imported and sold in the US. Well, at least not without a warning label such as this one:
WARNING: This product will expose you to phthalates, a group of chemical known to the State of California to cause reproductive harm.
That will surely not make your products fly off the shelves any faster.
So, how come a plastic softening chemical was found in a leather strap? For the record, this was not a PU leather product, but as authentic as leather can be.
Most likely, the phthalates came from the coating.
Many leather products are coated with different types of chemicals. In this case, the strap had a glossy surface, which essentially is a sheet of plastic.
This is just speculation on my part, but the most logic conclusion.
Now why didn’t the supplier sort this out earlier? Well, I explained earlier in this article that you cannot assume that your supplier is an expert in leather products, as long as they are not the raw material supplier themselves.
In this specific case, the supplier was primarily focused on the domestic market. Hence, they had no, or at least extremely limited, knowledge of American and European chemical regulations.
This is not exclusive to the Watch industry. In fact, this is widespread in all industries.
Phthalates is not the only substance found in leather. Lead is also found in many leather products.
Labeling Requirements
In the United States, the Federal Trade Commission (FTC) administers labeling regulations for leather and imitation leather products, such as PU leather.
For example, the correct leather type and description must be present in the product, and in all marketing material. Some products, for examples shoes, may consist of differ
Friday, November 4, 2016
Importing Small Volumes from China – The Ultimate Guide
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Posted on February 3, 2014 by ChinaImportal in Small Volumes
Buying products in small quantities from China can be challenging to say the least. It’s hard to reach the minimum order quantities and product certification testing can cost thousands of dollars. But that’s not all. The market is already crowded and even global corporations struggle to maintain decent profit margins. In this article we take a look into the key factors that makes the difference between success and failure when importing small volumes from China.
Why small volume importers still should buy from manufacturers
To begin with I want to make it clear that a small volume buyer should forget about stocking up a whole store or e-commerce site with custom made products imported from China. You can’t reach the required minimum order quantity requirements (I’ll get to that in a bit) and managing the whole purchasing process for as few as one or two products is already very demanding and time consuming for small businesses.
However, this doesn’t mean that you should buy products from sites like Aliexpress instead of going straight to a manufacturer. While you cannot stock up a full range of products directly from a manufacturer, you can still buy one or two. Preferably these should be the products that you expect to sell the most of.
Yet, a store or a product catalog with one or two products won’t impress anyone. This is when small volume sites like Aliexpress can actually make sense. Since the MOQ requirements are really low (you can often buy one unit per product), Aliexpress can be a good platform for buying “filler products”. However, exclusively buying generic and Unbranded products “off shelf” in small quantities is not a sound business strategy. I’ll get to that later.
Products to avoid when buying small volumes
Certain product are not viable for small volume importing. Among these products I tend to include electronics, toys, cosmetics and chemical products. While these products may still be possible to purchase in Small Volumes from sites like Aliexpress. However, those “off shelf” products are manufactured for the domestic Chinese market and are not in compliance with US and EU product certification requirements.
Importing non-compliant items is illegal, and may result in confiscation by the customs authorities, or even a lawsuit in case a customer is injured by your product. Ensuring compliance with product standards, such as CE and FCC, costs money. Quality inspections and lab testing is not free, and I strongly suggest that you spend money on products to sell rather than lab testing and expensive consultants.
In the end, all products are regulated by one or more directives. That being said, certain products, such as cosmetics and medical devices, are more strictly regulated than others. In many cases, it’s also quite complicated to determine which regulation and/or directive is applicable to a certain product. But there’s help to get. When you order a Starter Package on Chinaimportal.com, we both confirm applicable product regulations and source suppliers able to show previous compliance. Click here to read more.
How to lower the MOQ requirement
A major issue for small volume importers is the MOQ requirement. Many Chinese suppliers require a minimum order of 500 to 1000 pieces per product. If it would’ve been for the total order, it could’ve been quite acceptable for a small business. However, 500 pieces per product times a few different products in various shapes and colors equals a huge minimum order quantity.
So, should you order 500 green T-shirts of the same size? No, that’s economic suicide. There are a few workarounds that still allow the supplier to manufacture a certain quantity products, while you can buy products in various shapes and colors – without raising the MOQ requirement.
The MOQ requirement is not a matter of negotiation. The supplier will lose money if they produce less, so you need to come up with something else. I call this “streamlining usage of components and materials”. Basically, this means that you should reuse materials and components on as many products as possible, and thereby create variation.
I’ve done this a few times. In 2012 I had a client coming over to Shanghai to visit a supplier of bathroom rugs. The problem was that their budget barely allowed them to reach the suppliers MOQ requirement for one product. Buying 500 pieces of bathroom rugs in the same color is not really viable for a small store such as theirs.
While the supplier refused to sell anything less than 500 pieces, they offered the client to cut the product in up to four shapes and provide the rugs in up to three different colors. While the rugs were to be delivered in the same material, the client still managed to get a range of 12 different products without adding anything to the MOQ requirement.
Branding your product
While I discourage small buyers to import highly customized products, I consider branding to be one of the most important factors of the whole strategy. Many small business owners assume that a brand is useless, unless it’s famous. That’s a paradox, because a brand cannot instantly become well known.
While it can take years for a brand to gain some recognition, it is certain to add value to your business from day one. A brand gives the product, and therefore the company behind it, an identity. In the long term you might also be able to put a price tag on your business, something that I’d say is almost impossible for a company trading in generic Unbranded products.
But branding costs a ton of money, right? No, it doesn’t and that’s why it’s so great. Getting your product branded doesn’t require more than a logo print on the product itself, on the product packing or both. It’s not only simple, but the price difference between a non-branded product and a branded product is minimal. Most suppliers won’t ask for than a few cents to print your very own logo on an existing product design.
Branding can be much more than a printed logo. There’s no real limits here. You can get your product in a customized color or ask your supplier to make a small design modification in order to differentiate yourself from other companies in your market.
Invest in product quality and don’t attempt to compete on pricing
This one should be fairly obvious, but small volume importers still tend to make this mistake over and over again. Forget about competing on price with giant corporations such as Wal Mart. No matter which product you plan to import from China, you won’t get the same price as they do.
Small volumes and razor thin profit margins is like oil and water. They don’t mix. Low profit margins results in huge risks. A small mistake or a late delivery can erase months of profit in a whim. It’s a dead end.
This means that you need to find a way to increase your profit margins. However, your buyers are not idiots. They won’t pay premium price for a below average product. Making a supplier and product selection primarily based on price is one of the most common mistakes made by small volume importers. The cheapest product is certainly not the best product, and you won’t be able to motivate a high price. Instead, you need to make a supplier and product selection based on quality.
Buying a quality product doesn’t mean that you have to invest millions of dollars. In fact, the price difference between a “low end product” and a “high end product” is often rather slim. Let me give you a sound example: Watch cases can be made in Zinc alloy and Stainless steel. When buying from a Chinese manufacturer, a Zinc alloy watch can be as cheap as US$5 while the stainless steel version costs three times as much. However, potential mark up on a Zinc alloy watch is slim. You can’t sell one for more than US$30. This is certainly not the case for a Stainless steel watch that can fetch up to US$250 (well, ten times that if you happen to own a brand named Rolex).
Do you get the point? A small additional investment can make a drastic quality improvement that in turn results in even more drastic improvements of your profit margins.
Summary
There are quite a few things to take into consideration if you wish to import small volumes and still make a worthwhile profit. That’s why I’ve prepared a summary list of all the factors that makes a major impact on your bottom line:
- Focus your investment on one or two main product lines
- Only use small volume sites like Aliexpress for “filler products”
- Avoid products that require compliance with certification standards
- Ask your supplier how they can offer a variation to your product without raising the. MOQ requirement
- Brand your products with a custom logo print and/or product packing
- Invest a bit into product quality in order to allow better profit margins
- Never compete on pricing
Yiwu Wholesale Markets – Your Guide to Buying Small Volumes from China
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Yiwu is a city in the eastern Zhejiang province that has made a name for itself as a center for small commodity trading. In fact, it’s among the top destinations in the world for small buyers. While Yiwu is not a financial powerhouse like Shanghai or a world class manufacturing hub like Shenzhen, it’s still got something that other cities in China doesn’t – ready made products that can be purchased in small volumes.
“What is Off shelf?”
In this article I’m referring a lot to “off shelf” products, a topic that is highly related to the city of Yiwu. It’s in fact its main attraction and the biggest reasons for small businesses to make a visit. An off shelf product is a ready made item ready to be picked up by a buyer. Isn’t this the case everywhere in China? No, while many importers assume that buying from China is about the same thing as walking into a warehouse and pick this and that, it’s very far from the truth.
Chinese suppliers are almost always using a “make to order” approach. This means that they manufacture a product only upon receiving an order and a down payment. The Chinese supplier don’t even keep components and material in stock, it’s also purchased as soon as the order is confirmed – and in a quantity that is matching the buyer volume.
Yiwu is an exception. Here you can actually walk into a wholesale market and see the products for yourself. Basically, you buy what you see. Now that being explained, let’s move on.
Why Yiwu makes sense for small buyers
Yiwu is famous for its traders and they are in general quite friendly towards small buyers. If you want to find “off shelf” products ready to purchase in fairly small quantities from China, then this is the place.
While Yiwu is not a one stop solution for every product (I’ll get to that in a bit), it can be perfect as a destination to purchase products such as watches, accessories, textiles and bags. An Yiwu based supplier can also act as a complement to your existing suppliers in China. Many small businesses, especially e-commerce companies, are in dire need of filler products to not make their stores empty. That’s one example of when Yiwu might be well worth a visit.
Yiwu wholesale markets and trade fairs
You can get in touch with Yiwu based traders right away. There are plenty of them on B2B sites like Alibaba.com. However, since you’re probably going to buy “off shelf”, I suggest that you visit the place and make product selection on site. Apart from the obvious benefit of knowing what you buy, visiting an Yiwu wholesale market also enables you to visit a large number of vendors under the same roof.
The largest wholesale market in Yiwu is the China Commodity City. It’s sprawls over 4 million square meters and is attended by more than 60,000 wholesalers. Unlike Trade Fairs, such as the Canton Fair in Guangzhou, the China Commodity City is a permanent fair that is open all year around (well, apart from the Chinese New Year). You can read more about it here.
Yiwu agents and their function
It’s one thing to find a supplier with interesting products. It’s a completely different thing to negotiate prices, settle the payment and ship the products back home. This is when an Yiwu agent might make sense. An Yiwu agent acts as your purchasing manager and accompanies you while visiting suppliers.
After you’ve made a product selection and decided the quantity of your purchase, the Yiwu agent coordinates the procurement process and makes sure that all the cargo is collected in one single shipment. This is especially important when buying from multiple suppliers since several small shipments can cost a lot more than one large shipment.
Apart from that, an Yiwu agent should also ensure that the wholesalers provide you with the right products and in the right quantity. This is not as obvious as it might seem to certain Chinese wholesalers.
Most Yiwu agents work on a commission rate. This means that they charge a percentage based on the order value. This usually ranges from 2 to 8%, depending on your order value. For natural reasons, the commission as a percentage is smaller the more you buy.
Based in the US, Europe or Australia? Read this!
Yiwu is not a recommended destination for importing all kinds of products. For Europeans and Americans, product certification regulations put a lot of restrictions on the type of products that can be purchased off shelf in China. Why? Because the products are mass produced and sold in Yiwu are in general intended for the domestic Chinese market. While some of these products reach a decent quality standard and are already sold in the west, they are not in compliance with US and EU product certification regulations.
Importing non-compliant items from China is illegal and may result in a forced recall or even a lawsuit, in case anyone is injured by your product. While all imported products fall within the scope of regulations, certain products are more strictly regulated than others. This includes, but is not limited to the following:
- Toys
- Children’s products
- Furniture
- Cosmetics
- Electronics
Transportation and hotels
There are no international flights heading to Yiwu. The easiest way to get here is by flying to Shanghai and then take the high speed train. It takes roughly 2.5 hours and the train tickets can be purchased at the Hongqiao railway station.
While in Yiwu, there are a number of hotels in various price ranges. Go to Motel 168 if you’re on a low budget. If you want something more upscale, then you might want to consider the Crowne Plaza or the Tian Heng International Hotel.
Getting around in Yiwu is quite easy. There are taxis, but don’t expect them to understand a single word of English or any other language than Chinese. If you’ve hired an Yiwu agent, it’s customary that they pick you up and drive you around to visit various wholesalers.
One more thing, look up to the sky while you’re in Yiwu. There’s a military airbase close to the train station. Those fighter jets can be really cool to watch when they make a fly by at low altitude.
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