If you’re a business in India thinking of importing goods from China to India, chances are that you are not alone.
In fact, it was reported that India imported nearly $89.66 billion USD worth of goods from China – just in the first nine months of 2022. This is the highest on record, despite India trying to reduce its reliance on China and indeed underlines India’s continued demand for Chinese machinery and intermediate goods.
However, there is always a risk associated when purchasing goods from factories in China, and the costs associated with these risks can quickly become expensive. So, let’s take a look at how you can minimise risks and costs.
What Products Does India Import From China?
India imports a variety of products from China. In many ways, India relies on the import of Chinese raw materials, products and goods to help bolster its wider manufacturing industry in the country.
The top Chinese products imported to India include:
- Electrical and electronic equipment – $26.39B
- Machinery, nuclear reactors and boilers – $18.80B
- Organic chemicals – $11.86B
- Plastics – $4.17B
- Fertilisers – $2.69B
- Optical, photo, technical, and medical apparatus – $2.43B
How to Reduce Costs When Importing Products From China to India?
Although the import duty rates on many Chinese products to India have increased considerably over the past few years, Indian businesses often find it beneficial to source from China due to their lower cost and quality than their neighbouring countries.
But having said that, sourcing from China isn’t always easy. Mistakes – either by the importer or the Chinese factory – can occur and is often very costly. To help you avoid these mistakes, below are five tips you can follow when importing from China.
Tips 1: Follow Indian Import Regulations
Before you even start, you must ensure that you comply with Indian regulations to avoid penalties, fines, or the shipment being returned. The main requirements when importing from India include the following:
- Have a registered business as a legal entity (e.g. a sole proprietorship, partnership, private limited company, one-person company etc.).
- Apply for tax registration on your goods and get a Taxpayer Identification Number (TIN), Value Added Tax (VAT)/Central Sales Tax (CST) number.
- Apply for an Importer-Exporter Code (IEC) issued by the Director-General of Foreign Trade in India.
Tips 2: Find the Best Manufacturer in China
China is known as the “world’s factory”, but it is worthwhile noting that all of the manufacturers or suppliers you encounter will not have the same standard. One integral part of the country’s manufacturing success is its industrial cluster hubs scattered across the country.
What makes industrial clusters so special is that they often have a complete supporting system and the factories there are surrounded by like-minded businesses. As a result, it is here that Indian businesses may have an easier chance to find a supplier with the right competence to produce products to their specifications.
Today, most of China’s exports to India are from Guangdong, Zhejiang, Jiangsu, Shangdong, and Shanghai, which also have more than 80% of China’s industrial clusters.
Below are some of the key industrial clusters for the respective product category.
- Electronics Manufacturer China – Most Chinese electronic product factories are situated in Shenzhen, Guangzhou and Dongguan.
- China Clothing Manufacturers – The provinces of Shandong, Jiangsu, Zhejiang, Fujian and Guangdong have nearly all textile factories.
- China Toys Manufacturers – The toy factories are primarily concentrated in Guangzhou, Jiangsu, and Zhejiang provinces.
- China Shoes Manufacturer – The main manufacturing hubs for shoes in China include Guangdong (Guangzhou and Dongguan), Fujian (Quanzhou and Jinjiang), and Wenzhou (which primarily produces leather shoes).
Tips 3: Verify the Chinese Manufacturer
It is important to do your due diligence before you make any deposits to a Chinese factory. For most Indian importers, it is difficult to audit the Chinese factory as they often don’t meet with the company in person.
A good practice to verify the Chinese manufacturer is to do a background check. A background check will tell you whether or not the business is legitimate or not. Occasionally Chinese trading companies try to pass themselves off as a factory. While it is not a bad thing to work with trading companies, it is important to keep in mind that Chinese trading companies have:
- Little to no control over factory products and any quality issues that may arise.
- Likely to be less specialised in the field of your product.
Many businesses use third-party inspection agencies and supplier- and factory audits to mitigate this risk. The supplier audits will help you check whether the company has adequate business licenses and experience and will collect the intended factory’s base information. Meanwhile, the factory audits will help you assess the manufacturer’s facilities and processes in-depth. Below is a sample of an audit report that we’ve carried out, click here to get access to the complete factory audit report.
Tips 4: Check the Quality of the Products in China
Poor quality issues will get costlier further down the supply chain they go – and receiving goods with poor quality is one of the worst-case scenarios. It is, in most cases, very costly to return products from India to China.
Checking the quality of the products before shipment is one way to prevent this from happening to you. The 4 quality control inspection types are pre-production inspection, during-production inspection, pre-shipment inspection, and container loading/unloading inspections. Each of these inspections is performed at different stages in the supply chain and has its own advantages. Click here to see a sample of a quality inspection report.
Tips 5: Ensure Product Compliance
Last but not least, manufacturers and importers have a legal obligation not to sell or supply products that could cause damage and injury. Any problems with the product will often come down to you, the importer, especially if the product is intended for direct consumers.
As an importer, you must ensure that the products you import comply with local regulations governing that product and applicable product standards. For example, products subject to mandatory Indian Standards must comply with the quality requirements specified in the Standards. Read more about the IBS certification scheme here.
Furthermore, ensure that the factory in China has all the applicable certifications and tests for mandatory product standards in India.
Conclusion: How to Import from China to India: 5 Tips to Avoid Costly Mistakes
It can often be a daunting task to purchase goods from a new factory. In this article, we’ve outlined five tips to avoid costly mistakes when exporting products from China to India.
At AQM BD, we are one of the world’s leading third-party quality control companies. We have a regional quality control office in Delhi, India, where we help our Indian clients prevent quality issues when importing products from China. We have internationally-recognised product testing laboratories in China and are accredited by ISO17020:2012 for inspections and ISO17025:2005 for testing by the China National Accreditation Service for Conformity Assessment (CNAS). Contact us today to learn more.
