Q. What is included in my Quote?
A. Our quote includes a per unit price for the final product including the production costs, all charges for freight from the Chinese Factory to the sea or air port in China, Chinese Export Taxes and Documentation Fees and the cost of shipping the product to the closest sea or air port for our customer. If you would prefer to use your existing logistics service or freight forwarder we are more than happy to quote your project FOB at the nearest sea or air port closest to the factory making your product.
Q. Are duty and taxes included in my Quote?
A. Yes and no…we can only estimate the Duty Rate for your product based on what our analysis of the final product determines the HTS Code to be, please note that slight variations in a product can actually cause the product to be classified differently, for example baby clothes are typically duty free but the same product in a larger size sold to young children may have a small duty of 3 or 5%. Many products from China do not have a duty charge or the charge is very low due to China being part of the World Trade Organization and the fact they have Most Favored Nation Status with the United States, this is why so many customers choose Chinese Factories to supply their products.
Q. What is an HTS Code?
A. An HTS Code is short for Harmonized Trade Schedule Number, this value is used to determine the applicable duty rate to apply to the product at time of import. The HTS Code is determined by referencing a database maintained by the US International Trade Commission. Once an HTS Code, sometimes called an HTC Number, is determined, the duty rate, if any, is found and it is this rate that is multiplied by the value of the shipment to determine the amount of duty applied to the shipment. We will handle this for you and provide you our estimate of the HTS Number and the applicable Duty Rate prior to entering into a production.
Q. Who determines which factory will be used?
A. Our customer’s requirements generally indicate which factory/type of factory is required to manufacture or supply their product. We will provide as much information about different options as we can uncover so that we can collectively come to the best solution. If you want us to make all the decisions we are comfortable doing that as well. Many customers are only concerned with final outcome whereas a limited number wish to be deeply involved in the decision making process. We are happy to help out either way. We work to select the most qualified source to ensure that all of our customers’ requirements are met. We can arrange factory visits for your staff or management to assess the target factories as well as provide people to help make your travel around China more productive, this includes translation at the factory. We can arrange your entire itinerary if needed.
Q. Do you have a minimum order quantity?
A. We have no minimum order quantities but Chinese Factories often do not quote very low volumes at great prices because of the time investment involved in taking on new customers and their individual volume requirements to make sure the project is profitable for them. We recommend that China only be used for very small production runs if the project requires assembly, packaging, and other labor intensive functions.
A typical minimum starting order is $20,000 or more and we strive to build long term relationships with our customers and factory partners with business ultimately reaching $100,000+ per year in orders.
Q. How do you charge for your services?
A. We typically charge a retainer for our services and then charge a % based on the FOB China amount (total value of the shipment at the port in China) against this retainer. The typical retainer payment is $1200 USD for sourcing projects that require finding and managing factories to supply products that are already being made in China. This money is used to ship your samples to various factories, to source and communicate with different factories and to travel to factories if needed in order to perform inspections or negotiate in person. This amount is then subtracted from the money we charge on the actual shipments out of the factory. For example, if we source 3, four color printed 32 oz water bottles for you that each cost $1.80 each and you purchase 5,000 units of each bottle, the total ‘FOB’ China cost of the project is $27,000 (5,000 x 3 x $1.80), we typically charge between 7-10% of the FOB amount so that your final cost would be $27,000 + ($27,000 x 7%) = $28, 890 for a per unit price of $1.926 before shipping. Since you have already paid us a $1200 retainer, your bill from us would be for the balance which is $690. For this project, we would have collected a total of $1890 ($1200 retainer + $690) for our services. We are very transparent in charging for our services and revealing the true costs of the products in China even though this has cost us customers in the past, we feel that being open and transparent is the best way to create long lasting relationships both in the US and in China.
A second option that we offer is to not ask for a retainer but to add our fee into the per unit price of the product and to bill you directly for all shipping and travel expenses related to your project. Because this option is riskier to us, some customers decide not to change their supply chain and fail to place any orders in China; we typically charge 10% of the FOB China price for this option. This means that in the example above, your per unit FOB Price would be $1.80 + ($1.80 X 10%) or $1.98
For more complex projects or projects requiring many factories and/or custom products, we may ask for a monthly retainer to offset our ongoing costs as some projects take a long time to get to the point of placing actual orders. For example, one custom packaging project that we did required the use of 3 different factories and 7 custom moulds. Developing this project took more than 6 months to complete and during that time we traveled to all of the factories on more than one occasion in addition to spending hundreds of hours working with the various factories to ensure the customer received the right products the first time. In the end, the customer was able to place the orders and receive packaging that differentiated them from others in their marketplace.
Please e-mail us or give us a call and we can discuss your project and our service fees more accurately.
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What does FOB mean?
FOB simply means, “Free on Board”. This commonly used term in shipping refers to who pays loading and transportation costs and the point at which responsibility and ownership of goods transfers from us to you. We quote all projects initially as FOB Los Angeles, CA meaning we take responsibility for the shipment and pay all transportation costs from the printer or manufacturer to Los Angeles, CA. At that point, the buyer (you) takes responsibility for the shipment and are liable for all loading and transportation costs.
Most all printers or factories in the US provide quotes FOB somewhere, typically the location of their factory or distribution center. We use FOB Los Angeles, CA because most of our freight is shipped via Ocean Vessel to the Port at Long Beach, CA.
Q. Do you recommend that all potential customer source their products in China?
A. NO – we often find that many products can be cost effectively produced in the US through vendor sourcing or supply chain reorganization. In addition to this, there are countries like Mexico and even Canada that can provide cost savings depending on the project. China is not a ‘one size’ fits all proposition. Upon learning your project’s requirements, we will let you know if we feel that sourcing or reorganizing your Supply Chain in China is practical given our experience. We of course would like to do business with you but our intention is not to gain business at any cost but rather to form long term relationships where we can help add value to our organization. By incorrectly focusing on China for products that shouldn’t be sourced there, we are not doing that. Contact us via e-mail or give us a call to discuss your project and we’ll assess if China is right for you. Projects requiring highly specialized labor and/or machinery or projects with closely held intellectual property are not projects we recommend outsourcing to China unless you are willing to form joint venture partnerships with counterparts in China.
Q. Do I have to provide an L/C to do business in China?
A. No, most business in China is done by wire transfer and/or in limited amounts, trade credit. For new customers and large orders, we and/or the factory may require a letter of credit or an escrow account be set up to ensure payment but we typically only ask for 50% of the final production cost down to start a production on a custom project, 30% on an existing product, and the balance paid once the production has left the factory. After a relationship has been developed we will review the terms and we may, at our discretion, extend trade credit
Q. What do you like to see in the quote package from prospective customers?
A. Ideally, your quote package would include the following but we can start with as little as a picture and a description
- Detailed drawings
- A written description along with product specifications
- 3+ samples of the product
- Estimated annual volume and lot sizes
- Target costs
- Estimated ‘required by’ date
- Potential manufacturing concerns or special considerations for factory / vendor selection.
Q. Why should we choose your company over other Sourcing Agencies?
A. You should choose Affordable Quality Sourcing for your China Factory Sourcing needs because we are a full-service company that can handle all of the difficulties of dealing with Chinese Factories so you can focus on your business and selling to and supporting your customers. We do all the work. Our best customers are often those who have tried to navigate the process of outsourcing to China on their own and found the experience too difficult and time consuming to manage and had given up. We have experienced professionals in China with years of experience dealing with Chinese Factories, Chinese Shipping Companies, Chinese Government Agencies, Chinese Trading Companies, Chinese Banks and all other entities required to successfully navigate sourcing and production in China. We can often provide substantial cost savings over your current supply chain which makes the effort worthwhile and you get the added benefit of dealing directly with a U.S. company that makes China transparent to you and has your company’s short and long term interest at heart. References available upon request.
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