Small Business Guide on How to Import from China to Australia
As the main global manufacturer of low-cost goods, China is an obvious choice when you want to source new products. In this article, we’ll guide you through what you need to do to identify, source, and import goods from China to sell them in Australia.
As an Australian-based business, you’ve undoubtedly thought about expanding your national appeal. The things is, manufacturing in Australia can be very expensive, especially if you’re doing it yourself. Specialised tooling, custom design, prototyping and more can be costly — and that’s risky if you don’t completely understand the market for your product.
In many cases, a better solution is to import unusual or inexpensive products from elsewhere. That way you’re not spending enormous amounts of money at once and you can test the market before making a larger commitment. As one of the biggest global manufacturer of low-cost goods, China is a good country of choice if you want to source new products. But how do you import goods from China? Keep reading this article to find out.
How to import from China
Here’s what you need to do if you want to import from China.
- You understand the types of goods you could import and carry out market research.
- You explore the various online marketplaces of manufacturers and suppliers to source the goods you want.
- You carry out due diligence on your supplier and sign a contract with them.
- You arrange for shipping and logistics from China to Australia.
- You understand the various regulations, tariffs, and licenses you need to export.
- On arrival of your goods in Australia you pay the necessary duty, tariffs, and any other fees.
- You market your goods for sale in Australia.
Dealing with importing, international shipping, tariffs, licenses and more can be tricky. We strongly recommend bringing someone into your business who has experience and knowledge in the field.
Understanding the type of goods you could import from China
The first thing you’ll need to do is identify what you want to import. Do some market research, ask your existing customers, and explore trends in Australia’s domestic market. Go to trade shows, see what your peers and competitors are selling, research online market reports, and find a type of product you’re interested in.
Here are some hints and tips:
- Avoid food and perishables — It’s very expensive to import goods that can be spoiled, as you’ll need specialised containers. Additionally, Australia has strict regulations on importing produce.
- Avoid importing products that are widely available already — It’s likely those types of items are purchased in bulk by big importers, and you’ll never be able to match them on price.
- Source items based on your prospective market, not the other way around — Find out what prospective customers want and source items from China based on that. Don’t source items hoping you’ll then find an audience (you probably won’t).
- Understand your margins and pricing — Importing can make your margins thinner. Take time to understand all of your costs (variable and fixed) so you can incorporate them into your pricing strategy and make a profit.
Sourcing goods from China
There are hundreds of thousands of manufacturers in China, and looking at all of them individually would need more time than any of us have. Fortunately, there’s a solution. There are several major websites that let you share through the vast array of goods Chinese suppliers and manufacturers offer.
These marketplaces include:
Once you know the types of products you’re after, make a shortlist of suppliers. Next, you’ll want to:
- Read reviews on the suppliers including their customer service, the quality of the goods they provide, and any issues others have had with them.
- Contact the suppliers and request a sample of the goods you’re interested in. When you receive the sample have it independently appraised to make sure you’re getting what you pay for.
- Ask the supplier about their terms for payment, how long it will take them to send the product to you, what protections and guarantees you have, and what their policies are on returns.
- Complete any other due diligence, and if you’re satisfied, sign a contract with them.
Typical container costs — shipping from China to Australia
If you’re only purchasing a small quantity or your items aren’t too heavy or bulky, consider air freighting them back to Australia. If you’re buying larger quantities, you’ll probably have to use a shipping container.
The Sea Freight Calculator lists the cost of renting a full container China to Australia as approximately:
- 20 ft container — $1,700 USD
- 40 ft container — $2,200 USD
And according to Australia Trade, renting part of a container will cost you between $150 and $250 AUD per cubic meter or 1,000 kilos, whichever is greater.
However, these are purely the costs to ship goods from China to Australia. Once you get them here you’ll need to pay for getting your goods to a warehouse, storage, insurance, duties, and other fees.
Government regulations on imported goods from China into Australia
There are a number of regulations you’ll have to follow when you’re importing goods. For a comprehensive guide, please read our in-depth article for everything you’ll need to be aware of.
Here are a few high-level tips:
- Some types of goods will require you to get a special permit to import them. This includes some chemicals, pharmaceuticals, produce, and more.
- Importing plant and animal goods could mean they need to be quarantined.
- You may need to pay tariffs, duties, and taxes — More on that below.
- Some importers may be due for concessions from the government.
- Some free trade agreements could work to your advantage.
- There are several other costs you’ll need to be aware of.
- Your goods must be labeled correctly.
For full details, please do check out our guide to importing into Australia.
Understand costs to import from China
When you’re importing, it’s vital to understand your overall costs. These include:
- The cost of buying the product.
- Shipping, logistics, and distribution costs.
- Tariffs and duties due to China on export and Australia on import.
- Taxes and tariffs on your imported goods.
If your goods are valued at over $1,000 AUD, you will almost certainly have to pay import duty and GST on them.
- Import entry costs and processing charges – Customs will charge you a fee (typically under $200 AUD) for processing your goods.
- Customs import duty is calculated as a percentage of the price you paid for the goods. The duty rate can range from 0% to 10%, but the rate for most goods is 5%.
- Goods and services sales tax (GST) will also be charged based on the following:
- The valuation of the goods plus;
- The customs import duty amount plus;
- The cost of insuring the goods and transporting them to Australia.
- GST is charged at 10% of the final amount.
This is just intended as a general guide – These charges can be influenced by what you’re bringing in, excise taxes, free trade agreements, and many other factors. Please do check with customs for your individual circumstances.
Some types of goods are eligible for concessions (reducing the amount of duty you need to pay). You can find a factsheet through this page, just look for “List of current tariff concession orders.” You’ll also find additional details on concession schemes here.
Sell your products
Once you’ve received your goods from China, market them and offer them for sale. Continue to research your markets, source goods, and sell them onwards at a profit, Good luck!
Paying for your goods in foreign currency
Doing import business from China is usually done in US dollars or Chinese Yuan.
If you are bringing goods in from China, consider using OFX. They specialise in international payments and receipts for Australian businesses. Each client has a personal manager and access to a range of useful products like Forward Exchange Contracts, Options, Limit Orders and Currency Options.
OFX is a trusted partner of The Currency Shop. Click on this link , sign up and never pay a transfer fee for your international money transfers. Ever.
OFX charges no transaction fees. Minimum transfer A$250. Third party intermediary fees may still apply.
Learn more about OFX
What about receiving money in foreign currency?
Until recently, Australian businesses had 3 options to receive money from overseas customers:
- Get paid into a local Australian based, Australian dollar account.
- Open a Foreign Currency Account, usually with a bank
- Use a payment gateway like PayPal, Braintree or Stripe
Unfortunately, these options are usually filled with fees, balance requirements or massive exchange rate mark-ups.
In October 2017, TransferWise released the Borderless account in Australia and it’s really impressive. It allows you to receive, hold and transfer 27 different currencies.
A unique feature that is particularly useful for businesses, is the ability to have local bank account details in USD, EUR, GBP or AUD. This makes receiving money from overseas customers exceptionally easy.