CHINA IMPORTING SECRETS - Perry Belcher€¦ · If a product has a lot of price elasticity, you could sell it for $5 online or you could spend the same product for $20, and spend

CHINA IMPORTING SECRETS

IMPORTING FROM CHINA____________________________

MY EXPERIENCE____________________________

PLAYING THE RISK____________________________

WHY IMPORT?

Marketing

The Consumable Market

Working With Retailers

Ensuring Your Margins____________________________

WHAT TO IMPORT

Commodity Products

Gifts And Decor

Niche Markets

Business To Business Goods

Lead Generation

Importing To Rent

Parts and Raw Materials

Services____________________________

THE IMPORTING PROCESS

Limiting Risk

Pre-Selling

Dry Testing

Samples

Stateside Prototyping

Sourcing

Online Sourcing

Finding An Agent

Going To China

Before the Fair

At the Trade Fair

Negotiation

Customization

Ordering

Money

Letters Of Credit

Time Of Transfer Payments

Shipping and Duties

What To Ask Your Freight Company

Harmonize Codes

Freight Forwarding

Trade-Free Zones

Partial Containers

Top Loading

Air Freight

Damaged Goods

eBay And Craigslist

Scratch-n-Dent Sales

Overstock Companies

Liquidation Auctions

Insurance

Recouping From The Factory____________________________

CONCLUSION

1

1

2

3

3

3

4

4

5

5

6

7

8

8

9

10

10

12

13

13

15

15

16

17

17

19

20

22

29

35

36

37

39

39

40

42

42

43

44

45

45

46

47

48

48

49

49

50

50

51

51

1 CHINA IMPORTING SECRETS

MY EXPERIENCEI started importing before I went to China. I had

a candle manufacturing company where we

manufactured a ton of those little inexpensive

candles. My company was partially bought by a

Chinese importer and we started importing the

glass that we put our candle wax into. At the time

we were paying about .60 cents a piece for glass.

We imported the glass for something like .16

cents a piece.

I saw the benefits immediately of importing, but

I had a partner who was a giant importer, so

I didn’t need to learn all the ins and outs of it.

A few years later, as I branched out into other

manufacturing businesses and got out of the can-

dle business, I needed equipment and supplies.

I started selling a lot on the Internet and was

thinking, “Man, it would be cool to direct import

some products and sell them online.” But I was

too big of a chicken to go to China by myself.

Finally, I talked a friend of mine into going with

me on that first trip. He had never been to China

IMPORTING FROM CHINA

We’re going to get into how to import from China.

Before we go any further, I want to make a

couple of quick disclaimers. First of all, I am

not an attorney and am not able to give any

sort of legal advice. If I describe past personal

experiences, don’t take these as legal ad-

vice. Everybody’s situation is different. If you

have a legal question, you need to seek out an

attorney and get their opinion and take their

advice. Secondly, I am not an accountant or tax

professional, so if I mention taxes or tariffs or

anything like that as far as goods coming in,

those laws and things change regularly. I am

sharing personal experiences from my importing

career. It doesn’t mean it applies to you.

What you really want is just the raw information;

you want to know what to do and how to avoid

mistakes when you begin to import from China.

Well: here it is.

CHINA IMPORTING SECRETS


PLAYING THE RISKThere is an inherent risk in importing, if you don’t

know what you’re doing. It comes from many

different directions. It comes from a tax and tariff

perspective; from agents and guys like that trying to

screw you; from buying incorrectly and buying for

too much. If you pay too much for the products you

import, they may be worthless when you get them

here. You have to take this seriously as a business.

The upside to the importing business is that I

have met very few importers who have been

importing for more than four or five years who

are not very, very successful. You don’t meet a lot

of people who have become importers without

becoming successful. You meet a lot of people

who become importers for a minute, lose all their

money, and then go away. It is a little bit like

stock brokerage or commodity brokerage: if you

don’t know the rules and how the game is played,

you can get beat up pretty good.

This book aims to give you a strong education in

importing; a strong education in how to reverse

risk and put it back on the sellers and other

people; and even how to use other people’s

money to start your importing business. Even

if you don’t have a lot of money to invest, if you

have the knowledge and connections, typically

speaking there is more money out there than

there are knowledgeable people to run a

business like this.

either, so I don’t know why I thought he was

going to help. The very first trip I went to China

I was there for three and a half weeks. I ended

up buying nothing, I was so doggone confused. I

was more confused when I left than when I got

there. I came back feeling really foolish after

having spent all that money and time, so I started

developing a little system: if I went back again,

what would I do?

My system involved how to get the best sources,

how to get the best prices, and things like shipping

and duties. I documented it all, so the next time

I went back to China, I had my homework done.

I began bringing in a few products that I was

using in my own business; I brought stuff in for

personal use and I brought stuff in to sell.

I eliminated products based on things like the

marketplace being too small or the competition

too big. Eventually, some patterns started to rise

and I developed a system for buying winners

predominantly. Everything I have purchased has

not been a winner, but I have figured out how to

make money from the losers.


new breed of people who know how to market. I

would venture that 20 years ago you could count

all the great marketers in America on two hands.

Now, there are hundreds of great marketers. It

takes marketing dollars to market, so you need

margin to be able to spend marketing dollars.

If a product has a lot of price elasticity, you could

sell it for $5 online or you could spend the same

product for $20, and spend $10 on marketing.

In this case, I would choose the higher price and

spend the money on marketing. I would absolutely

dominate the competitor; I would crush them.

There is no way on earth that they could get in

front of the eyeballs that I could get in front of. This

is the reason I love the import business so much.

The Consumable MarketThe import business consists of real merchandise

and with merchandise that is consumable, you

can often do the work one time and make money

for a long time. If you start selling consumable

things that come from China to the U.S., the same

customers will come back to you and buy month

after month after month after month.

Believe it or not, at some level most things are

WHY IMPORT?One word: MONEY.

Importing gives you an incredibly unfair

advantage. In the buy low/sell high business,

everybody knows that the money is made on

the buy side. If you could buy a new Mercedes

Benz for $5,000 a piece, could you make money?

Of course, you could because there is a market.

There is an established market for practically

everything. We find the established market price

and if we can buy that product for less than the

established market price and get it to market, in

front of the eyeballs of the people who are the

potential buyers, we pretty much win the game.

Old Navy is a good example of the benefits

of importing. Old Navy is a clothing retailer.

Most retailers sell a pair of jeans for $40 after

paying $20 for them from a designer, from a U.S.

company that had it made somewhere and gone

through all the steps. Old Navy figured out that

if they could import the jeans themselves for $2

or $3 a pair this would give them an amazing

amount of money to spend on marketing. This is

how they can run all those cool commercials and

run all those great, big stores in the really high

traffic locations. They have an unfair advantage

over the other clothing retailers as they have the

margin to market and the margin to advertise.

MarketingIf you don’t have a margin to market your

products, it is very difficult in today’s

marketplace to win. Everybody is marketing

very heavily. The Internet has created an entire


to them. They aren’t able to buy all of their stuff

themselves, and they never will be able to.

There is also another whole rung of wholesalers

and retailers out there that are not billion-dollar

a year retailers like Bass Pro Shops, Garden Ridge,

and multi-hundred-million-dollar companies.

They don’t have that ability and they’re stuck with

buying things at markets in the U.S. where they

can only make a 50% margin or so.

MarginsAs an importer, you are typically looking to buy

products at one-third of their U.S. wholesale

price. For instance, let’s say we’re selling a $40

pair of jeans. We have to wholesale that $40 paid

of jeans to the retailer for $20. We want to pay no

more than $6 and that is called FLC (First Landed

Cost). In other words, the $6 should include the

price of the materials, the initial warehousing,

the freight, and the duty. You want to be in at

about $6 on a $20 wholesale item as this gives

you the ability to do something.

The stores are paying $20 a pair for the jeans

and selling them for $40. If, for whatever reason,

this particular purchase doesn’t perform well or

there is a minor flaw in it or whatever, it gives

you the ability to sell it for two times your cost

to a liquidator. This means you still double your

money on a bad batch.

The other thing is that when you’re selling for $20,

you are typically going to have to wait to get your

money. You can use a factoring company who will

advance you money on your invoices. If you need

to find out about them, look up “invoice factoring”

at Google. There are some good invoice factoring

consumable. Spark plugs are consumable,

obviously; tires are consumable. Believe it or not,

to a distributor, to a wholesaler, microphones

are consumable. They’re not consumable to an

end use customer, sure: you buy one microphone

like we are talking on now and it will last you a

lifetime. However, for the music store where I

bought this, they sell 30, 40, 50, 100, 200, 500, or

1,000 microphones a month. This is a consumable

thing to them: they will run out and need more.

If you are importing correctly and choosing your

markets wisely, you will find markets where you

can set up a relationship one time, begin to bring

products in, establish customer relationships on the

U.S. side (or wherever you are), and then consistently,

every month, just deliver those wholesalers or

retailers more and more and more goods.

Working With RetailersThere is an absolute gazoodle of money in

importing when you get it right. There are

billion-dollar and multibillion-dollar importing

companies. The gentleman who bought my

company sold a billion dollars a year worth of

home décor, chachkis, stuff that you set around

your house. They had a 40-foot section inside

every Walmart store in the country.

A lot of retailers are there buying directly

now. Bass Pro Shops is one. You can’t be more

American than that: “Let’s go bass fishing.” Pick

up some of the Bass Pro Shop stuff and I challenge

you not to find “Made in China” on the back.

They have buying offices in Guangzhou and

Shanghai now and Hong Kong. The big retailers

are turning onto the fact that they can go over and

buy, but there is still a service you can provide


WHAT TO IMPORT It is not as simple as saying: “These are the best

things to import.” What is best for you to import

depends on your own particular skill set.

1: COMMODITY PRODUCTSCommodity products are things like lumber,

concrete blocks, carpeting, and whatever, things

that people use up and fundamentally buy based

on price, or things they buy a lot of at a season

period of time.

When I was in business with my Chinese partner,

one of the biggest items we brought in every year

was artificial Christmas trees. How many houses

in America have an artificial Christmas tree up

at Christmastime? Probably 95%, right? The

downer is that there is an established price for

those. An eight-foot Christmas tree is worth, say,

$47.20. There are so many of them out there and

they are fundamentally the same doggone thing;

companies that, as soon as you ship your product

to your customer, will go ahead and cut you a

check for 80% or 90% of the purchase price.

However: here’s the drag. They will charge you

2% to 3% per month interest on that money until

the retailer pays you. You have to realize that

when you are selling to the end use customer for

$20, you are going to have what we call “cost of

money.” You will have a cost of money expense;

you will have some returns unless you have a

ridiculous return policy. There are other costs

involved too that will not allow you to keep all of

that $20. The worst-case scenario, if you import

based on this rule I’m giving you, is that if you

had to you could sell the jeans for $6. You could

dump them to Big Lots or Dollar General Store,

flea market vendors, or somebody who would

give you $6 for them.

While the importing business is risky sort of, if

you understand the last part of the importing

business which is liquidation, there is not a lot of

risk in the business. If you’re going through all

the checkpoints, making sure you know how to

buy, what to buy, and you’re following the points

being laid out here, while you are risking your

money sometimes and sometimes other people’s

money, you do have that Plan B.

Buying at a third of U.S. wholesale will work in

most markets. You should try to make it work

everywhere you are, if you can. In some cases,

like the commodities business, for instance,

there is no way on earth that will happen. You

will bring in for .80 cents and sell for a dollar.

However, for the most part, if you are going to

end use, this is what you want to do.


time unless you are investing $1 million or $2

million at a time. It is hardly worth making 10%.

There is one way to make money in commodities

and a good friend of mine does this. He brings in

Freon for one of the largest automotive supply

companies in America. It is a commodity, but he

made the relationship with the factory and got

that locked down. He then went to the automotive

distributor and said, “Look, I can get you Freon

for $30,000 a container. If you are willing to

put up your letter of credit, your money, and

take the risk, I’ll go all the work for you for 8%

per container. I’ll handle all the importing for

you.” He had a track record of being a successful

importer. They wouldn’t just let Joe Anybody

do this. These containers come in and there is

$100,000 worth of Freon in a container. He makes

$8,000 per container and they bring in several of

them per month. This is zero risk to him.

There is a downer to that model: they could

decide to screw him out of the equation and go

directly to the source. However, if they’re smart,

they won’t do this. The importer does a lot for

quality control, and most of the retailers get

the benefits of using a good importer who has

a relationship with the factory. And of course,

they’re scared to lose their money, too.

2: GIFTS AND DÉCOR The gift and décor market is a huge market. It

could also include the fashion market. As far as

gifts, décor, and clothing go, basically you need

to have good taste or somebody with good taste,

possibly a designer.

one is not a whole lot different to the other. They

have that established price and the markets are

driven by price.

If you’re selling bamboo flooring, it will have an

established price of X dollars per square foot.

People buy it in massive bulk because tons of

people use it, and I would imagine the margins

in bamboo flooring are extremely tight. Does this

mean importing commodities is a bad idea? No,

it doesn’t. It means that if you are going to import

commodities you’re going to be a different kind

of importer. The kinds of people who import

commodities are typically people who look at

importing as if it’s a stock trade. They can go to

China, buy a million dollars worth of hardwood

flooring with practically no risk, knowing the

hardwood flooring is already sold by the time it

lands here for $1.2 million. They can make a 10%

or 20% return on their million dollars in 60 days.

If you trade stocks, that isn’t a bad return.

There is the ability to import like that, but here’s

the downer to that: in a commodities business

you have to have the best price possible. If you

buy wrong, you’re dead in the water. If you buy

for more than the market, it is a zero sum game.

It turns that profit margin upside down. Also,

if you have a quality control issue, you’re dead

in the water. If the boards are supposed to be 4

inches wide and they are 4.15 and it doesn’t fit

anybody’s blueprints or floor plans anymore, you

have a million dollars worth of firewood. The

commodities import business is not my favorite

kind of importing for these reasons. Also, you

make such a low margin that it is not worth your


builder and you know there is no real branded

track. Maybe the trains are branded, but the

tracks are not. I don’t know: I’m not a train guy.

I’m just making this up. You may decide that the

price you are paying for your model train track

is ridiculous. It is, say, $10 a foot and you may be

able to find it in China for .50 cents a foot. You

know you have a market there. You can bring

in the product knowing pretty much what the

market is based on your specialized knowledge.

One of the best examples I’ve seen of this is a

guy who used to work for Ford Motor Company.

He was one of the guys who designed the little

keyless clickers for locking and unlocking your

car. I used to have a building next to this guy and

every couple of days I’d see a 40-foot shipping

container back up to his back door and they

would unload it. The entire contents of those

containers were keyless door clickers for cars. He

sold them to car dealerships, to automotive parts

companies, and so on, as a replacement for when

you lose your car clicker.

Basically, these things sell for $150 to $200 a

piece from the car dealer. This guy would sell

the replacements to other people who would sell

them for $50 or $60. He got anywhere from $12

to $20 wholesale for them, and he was paying

$2 to $3 per clickie. He knew his market, and he

knew his product. He found all of these different

places, non-traditional places, to sell his goods.

He sold them to retailers and to parts suppliers.

He sold them to car washes, so when you’re

walking through the carwash watching your

car get washed and you go to check out there is

However, good taste to you may not be the good

taste that sells. I was working with a home décor

importer who sold all of his stuff to Walmart.

I think I have a pretty good eye for design, so

when we started working together I started

bringing him designs of all these really high

end candles and things I’d seen in New York at

Bloomingdale’s and Bergdorf Goodman and all

these high end department stores. Every time

I’d bring something in, he’d go, “No, no, no! It’s

all wrong.” I was getting all of my design ideas

from high-end magazines and going to very

expensive stores in New York, Europe. I’d bring

in these fantastic, and he’d say, “All wrong, all

wrong, all wrong.” Finally, I was so frustrated

that I said, “Look, they have this here, here, and

here,” and showed him the different stores. He

got frustrated with me and he said, “You don’t

understand. Only 5% of Americans have really

good taste. We sell to everybody else.”

He knew his market. He knew exactly who his

market was, and he knew they would buy the Jeff

Gordon NASCAR candle long before they would buy a

fancy, beautiful, frosted candle that looks like a cake.

The upside to home décor is that the margin

is sick; it is ridiculous. The margin is sick and

you’re probably looking at a purchase price of

anywhere from eight to ten times your money.

That is cost of retail.

3: NICHE MARKETSNiche markets might be hobbies. This is

something where you have specialized knowledge

of the industry. Maybe you are a model train


specialized need. We would bring in a piece of

equipment for $700 that we retailed for $3,700,

and that was a pretty normal market.

If I bought that same piece of equipment from the

States, I would have paid $3,400 for it. Imagine this

now. There are a lot of guys out there competing

with me. They’re paying $3,400 for a piece of

equipment and trying to sell it for $4,000. Well,

I’m beating their brains out at $3,700. Once I come

into the market at $3,700, they have to reduce their

price to match me or they won’t sell any. But they’re

already on a slim margin, so now they are making

$200 or $300. What can they spend on marketing to

get a customer? Practically nothing. I could spend

$1,000 per customer in marketing and still make

way more money than they do.

5: LEAD GENERATIONI never used to look at products that were low

dollar or very, very inexpensive little pieces, but

I’ve since been corrected.

In most businesses, if you’re not already selling

your products online, you will eventually be

selling your products online. This is where lead

generation tactics can come in.

One company I know imports guitar picks from

a guitar pick factory in China. Their guy buys

all the extra guitar picks they have that are

overruns. He sells bags of guitar picks on eBay

and he doesn’t make a lot of money on this, but

if you’re going to buy guitar picks, you really

want to buy them from him because he’s really

cheap. But who buys bags of 1,000 guitar picks

a rack of these little key clickies. He sold them

to locksmith companies. He’s getting anywhere

from $12 to $20 wholesale and he’s paying $2 to

$3, so there’s your margin difference.

4: BUSINESS TO BUSINESS GOODSI had a company for a while called Cleveland

Equipment Company. We had tapers

manufactured for us, which is a piece of

packaging equipment, and liquid fillers and heat-

sealing equipment to shrink-wrap products with.

All sorts of packaging equipment, which is real

niche B to B stuff. I was able to get my one-third

of wholesale buying price and still be ultra-

competitive in the market.

I was selling directly to end use consumers.

We did this via the Internet; we did it via trade

shows. We had a repping network that went out

and showed our products to other people. You

want to become prime: this is your ultimate goal.

This means you are the source for everybody

to get their products from. In heat sealers we

became a prime vendor, which meant we always

had the product in stock and our stock was good.

We had a lot of good quality control testing, we

had a lot of units out in the field, and we knew

that everything we had was good.

Here’s what happens when you’re prime: your

market becomes global. We sold equipment

to England, Germany, South America, Brazil,

Iceland, Canada, South Africa, Australia, New

Zealand, and all over the place, because we

had kind of odd products for which there was a


wants the customer more.

In China, you can often buy a piece of equipment

for about the same amount as a monthly rental in

the States. You get a company like Home Depot,

and they have a concrete finisher that rents for

$50 a day, let’s say, which is $1,500 a month. The

concrete finisher in China is probably $400. In less

than a month’s time, it’s paid for.

There are guys going over to China, buying

a piece of equipment, and then building a

business around it. They then sell it as a business

opportunity. They may go buy a power-plumbing

snake. Those things are usually $2,000 or $3,000

in the States, but in China they are $300 or $400.

So they package that plumbing snake along with

a business operations manual, some ad slicks,

and the use of a brand name, then they sell it

either as a business opportunity or a franchise

agreement to be ‘Mr. Super Rooter’ in their area.

There’s another company that goes over and

imports these floor steam cleaners that clean

grout floors. Instead of just selling the piece of

equipment, he sells the piece of equipment with

a Grout Genie franchise thing. He’s able to put

together all the pieces.

One of the cool things about importing things from

China is when you can take something you’ve

imported and add other things to it that add value.

Then your customer is not just comparing apples to

apples. You’re keeping them from saying, “This guy

has the same piece of equipment over here for $20

less.” It doesn’t matter at that point. They are more

buying into the business opportunity than the piece

at a time? People who own guitar stores. He has

used the picks to build a business of people and

now he wholesales strings to them. He brings in

guitars and musical instruments. He got them

as a customer and now he can sell them all sorts

of other stuff, so although he doesn’t make any

money to speak of on the picks, he makes a ton

of money from acquiring the customers. He’s

grouping people based on a certain need. He

is building a list of people that would probably

want something else he has. That’s smart.

6: IMPORTING TO RENTImporting to rent is another big market right

now. We met a gentleman in Canton Fair in China

who imports oxygen generators. A lot of people

who have problems breathing have this little

machine they can use that helps generate oxygen

for them. Social Security and a lot of medical

plans will pay a rental of a couple of hundred

dollars a month to rent the machine for the

patient, but they don’t want to buy them because

they are quite expensive, around $4,000 or

$5,000. This guy goes to China, buys the machines

for anywhere from $500 to $600 a piece, and

comes back to rent them for the same $200 a

month. In three months, he’s in the black.

Plus, guess what that gives him? It gives him

marketing money. It gives him much more

money to spend to acquire the customer than his

competitor. His competitor is 18 months down

the road before he breaks even. My guy breaks

even three months down the road. Who wants

the customer more? There is no question that he


and then he would tell them it would be six to

eight weeks to get delivery. They were fine with

that because they were saving half. All they have

to do is plan out a little bit more.

He would take the order, deliver it, and then they

would set up what’s called a JIT (Just In Time)

Inventory. After the first order, after they saw

everything, the quality was good and it was going

to be okay, he would say, “Okay, let’s set up a Just

In Time Inventory for you. How many extrusions

are you using and when do you want them?”

They’d figure out they were using one container

of extrusions every two weeks, so he would place

orders six weeks out, eight weeks out, whatever,

and every two weeks they were getting another

container of extrusions in the back door. Every

two weeks he was getting another check. You call

on that business one time, basically. The rest of

it is just maintenance. No one ever says, “Hey, I

really think I’d like to go back to paying $4.”

8: SERVICESAnother great area in the import trade is services.

Sometimes these are service and product tie-ins.

Sometimes it is a product matched with a service.

This is one of the coolest ways of importing I have

found in a long, long time.

I met a guy on an airplane going to China not

too long ago who was an importer of trophies.

I said, “Oh, you import trophy parts,” and he

said, “No, I import finished trophies.” This was

his business. If you have ever seen a trophy, the

parts came from China. Most of the time they

make the parts, but they assemble them and they

of equipment. It doesn’t even have to be a piece of

equipment. It could be that you have a wholesale

source of cell phone covers, and you get a pushcart

in a mall filled with cell phone covers. You’re the

direct importer. It gives you advantages. You’re

building continuity and residual building.

7: PARTS AND RAW MATERIALSChina does a massive business in materials like

chemicals, stone, and granite countertops. A

perfect example is a guy I know who imports

aluminum extrusions. This is a big word for

aluminum trim, the stuff that goes around a dry

erase board, for instance. They’re on almost

everything you pick up. Aluminum extrusions in

the States sell for an average of $3 or $4 a pound.

In China, they charge about $1.25 a pound

for extrusion. Well, this guy had the greatest

business in the whole wide world. You talk about

a risk-free importing business. He would go to

other manufacturing businesses and say:

“Hey, my name is Paul. I know you’re buying

a lot of aluminum extrusions right now and I

know you’re paying about $4 a pound for them

because I know where you are buying them from.

“What if I could get you all of your aluminum

extrusions for $2 a pound and cut your price in

half? Would you have any interest in that?”

He didn’t get a lot of nos. He would take their

samples, send them to China, and China would

send him back samples of the extrusions. He

would take their order at $2 a pound, have it

secured and locked down in a purchase order,


the motors. Once they’re rebuilt, they put them

back on a container and send them back to the

States. The labor to rebuild that engine in China

is something like $200 instead of $5000. Even

with the shipping there and the shipping back,

he is still saving money.

There is another place I’ve seen doing the same

thing lately: a dental laboratory here in the States

that is becoming very, very big in a lot of the

cities. When you get crown work, bridgework,

denture work, and all that, they take all the

molds that the dentists take, FedEx them to

China, and in a matter of two weeks or so they

are FedExed back to the States. The cost of raw

materials inside a crown or a denture is almost

nothing. It is almost all labor. They are able to

build crowns, bridges, and dental work in China

for .10 cents on the dollar versus the cost of a

wholesale dental lab here in the States.

The good news is that once you’ve secured the

vendor, you are virtually in a no-risk situation.

Most of it is prepaid. Importing doesn’t always

mean 40-foot containers and $100,000 worth

of stuff at a time. As a matter of fact, it is pretty

easy to buy almost anything in China $5,000 to

$10,000 at a time. You will have to wait because

your freight will be a little slower and your

freight expense will be a little higher because

once you start shipping less than container loads,

the freight goes up quite a lot. However, many

of the factories over there will sell you $5,000

to $10,000 worth of something. You don’t have

to go over there and buy a 40-foot container of

everything you look at.

do the engraving here in the States, then they

sell them. But this guy has a factory in China

that not only manufactures the trophy parts, but

will also have each one assembled and custom

engraved. He does this based on his orders that

he gets from big Fortune 500 companies. They

do a lot of plaques: a company like 3M may

give him an order for 10,000 plaques to go on

their distributors’ walls. The labor in China is

less than a dollar a day compared to labor here.

Figure in the equipment costs and the engraving

equipment: a lot of times, it will blow your mind.

We were asking about granite countertops one

time. The equipment you had to have to finish

out the granite countertops once you got them

here was going to cost something like a half a

million dollars. I had a client who was building

giant condos and every kitchen in every condo

was exactly the same size. We needed the same

piece of granite for 1,100 condos. I said, “What

would you guys charge us to finish out this edge,

cut the hole for the sink, and cut the hole for the

drain?” The guy looked at me and said, “Oh, no

charge.” They took the hole, they cut out a sink,

and they made marble cutting boards and sold

those as a separate product. The bottom line is

that they are laughing at me all the way. They’re

thinking, “What a dummy! We get a totally free

thing for cutting the hole out.” For me, it was a

matter of not having to invest a half a million

dollars into equipment and have everything sent

to me perfectly cut to go into the job.

I know another guy who exports truck engines to

China to use Chinese labor to completely rebuild


solete. We had to close out a bunch of heat

sealers and order new ones.

If you ever run across a situation like this,

the best thing to do is get rid of the product

you have as quickly as you can for whatever

you can get out of it. If there is a major

development in your technology market, it

will quickly become the industry standard.

2. SOURCING

The next thing to do is find a source of

quality manufacturing and get a sample from

them. You want to physically see an exact

representation of what you will get when you

get your order, the understanding being that

the sample is what will be in the container

when you get it.

3. NEGOTIATION

Next you want to get your quote for the

If you’re going to do this yourself and really

be in charge of the process, there is a way

you have to go about importing.

1. LIMITING RISK

First of all, you have to do your product

research. You have to know where your

market is. You need to do some price testing

and some elasticity testing and to how much

stretch there is in the amount of money

people charge. You need to know the high, the

low, the in-between.

You also need to research quality. What

features are needed, what features will

people just not live without? One time we

were bringing in shrink-wrap machines and

we didn’t have a knife that cut off the shrink-

wrap. People didn’t want our product. It was

a new feature that another manufacturer

added and it basically made our stuff ob-

THE IMPORTING PROCESS


your freight comes in damaged or unusable

for some reason?

1 : L I M I T I N G R I S K

My number one concern when importing is

limiting risk. This is everything to me. You can have

three or four good import deals and then have one

or two bad import deals and lose all your money. It

is really important that you begin with a mindset at

the start of the process of avoiding risk.

Pre-SellingMy first strategy for limiting risk is pre-selling. As

an importer, people will look at you like a three-

headed monkey. They say, “What do you mean?

You go all the way over there to China and you

deal with all these Chinese people?” Yeah, you do.

These people will never be importers: they are

scared of the process, they don’t understand it and

they’re not going to be part of it. For this reason,

it is usually easy, especially if you have a great

price, a great product, and great quality, to go out

and pre-sell, if not all of what you import, at least

enough of what you import to avoid any risk.

We import hand dryers that blow your hands

dry, such a romantic business… We got a quote

on them and it was a fantastic price: they sell for

about $400 each and we were buying them for

$50. The quality was outstanding. We had the

factory send them labeled and branded. Because

we were known as an importer, they went above

and beyond and actually branded the samples

they sent us to our brand. Oddly enough, next

door to the building we were in at the time was

product. You will negotiate this a couple of

times. You will get at least two quotes, probably

three quotes, during the negotiation process.

4. CUSTOMIZATION

Once you have done this, you want to

customize your product as much as

is allowed. If you are importing small

quantities, this is the downside: you typically

can’t get as much customization work done.

If you are importing a container of something

from China, you can get them to brand it for

you almost always for no additional charge.

5. ORDERING

Next you are going to actually place the order.

Write the spec, place the physical order, and

get all the paperwork in place.

6. MONEY

You need to decide how you’re going to pay

for your goods, and it’s going to take a little

guts to send your money out there.

7. FREIGHT FORWARDING

You will deal with freight-forwarders and

getting all the freight documents done. You

will deal with your documents. Everything is

done in China based on a bill of lading and a

set of documents you have to have in order to

receive your freight.

8. DAMAGE CONTROL

Lastly, we are going to talk about damage. At

the last step of the process, what do you do if


key cabinet business did okay. The thing was

that there was a lot of competition. There were

100 different sites online selling these big key

control boxes, and we were just one of them.

In this particular market, we had a ridiculously

good wholesale price. It was so good, in fact, that

we didn’t want to reduce our price down to just

become the cheapest in the market because it

would make our quality look poor. Here’s what we

did instead. We were selling a key box everybody

else was selling for $200 that we were buying

for about $12. We figured that all the other guys

were paying about $100 for that lockbox. It was

way smarter for us to not compete retail head-to-

head. It was better for us just to go out and sell

the lockboxes directly to all the other websites for

$55 apiece. I made my four- or five-times markup

– or at least my three-times markup – and I didn’t

have to ever mess with having to deal with retail

customers, selling individually.

The best part was that the product became much

more of a consumable product at that point.

Once you get that base established, now you can

direct mail all the locksmiths in the country,

which we did. You can go to the locksmith supply

companies and sell them wholesale. You can go

to trade shows for apartment complexes, for car

dealerships, and for big arenas, and we did all

that. You basically pick the low-hanging fruit

first. You’ve just got to find bulk customers, and

it’s not that hard to do.

If you have a few samples you can send out

to your bigger suppliers, that’s a risk-free

proposition. Even if you’re going to retail, it’s

this company called Sani-Clean. They basically go

in and clean toilets for a living. A very romantic

business as well. Anyway, they had 30 trucks

and they maintain a problem most people don’t

want to deal with, meaning the restrooms inside

their businesses. They maintained the restrooms

including the supplies. We knew they used

hand dryers and they were paying wholesale

anywhere from $250 to $350 for a hand dryer

and would sell to the retailer for $400 or $500

when somebody needed one. We went to them

knowing we were going to sell our hand dryers

for $295. We went to them and said,

“Hey, we have these hand dryers. We want to buy

a bunch of them. Would you be interested in co-

oping a shipment with us? We can get them for

you for $150 a piece.”

That was way less than half of what they

were paying for the hand dryers, so I got a

commitment from them to buy one-third of the

container at three times what I was paying. The

container came in, I dropped it at their place and

unloaded one- third of the hand dryers off the

container, they gave me a check. At that point, I

was absolutely even. The container moved over

and dropped behind my dock and dropped off

$65,000 worth of absolutely free merchandise

into my warehouse.

This is what I mean about pre-selling. This is the

number one way to eliminate risk in importing.

You have to find bulk users.

Another example: we wanted to be in the key

cabinet business, so we put up a website and the


When we get them in, we’ll put up a website, and

then we’ll see if they sell!”

That’s just dumb. The better way is to know that

you have a market before you ever get started.

SamplesOne of the things that I like to do is make sure

that I get more than one sample. I’ll ask for a

dozen or two dozen samples, and I’ll be willing

to pay extra for them if need be. A lot of the

time, I’ll have five or ten suppliers out there,

and I want to send them a sample along with a

letter. I want to get good photography. I want to

get everything together so that they’ll give me a

buying commitment, so I know whether or not

I want to import. It’s also a good way to check

consistency from a manufacturer. I’ve stumbled

across a couple of bad items when I did that

once, and that was just in the sample lot.

a great way to help get rid of some of your

slower-moving inventory. The only problem is

that if you’re retailing online and you’re selling

wholesale online, you’re sort of straddling the

fence a little bit, and the wholesalers may not

like you very much. You’re competing with your

clients and that sometimes ticks them off.

Dry TestingDry testing is another way to limit your risk. It is

basically seeing if a product is going to sell before

you buy it. There are two kinds of dry testing,

but we don’t do pure dry testing because I don’t

think it’s very ethical.

You can do this on the Internet very well. You

just go out, put up a website, and begin to sell

something. Some guys will do it and just be out of

stock of that thing, but I don’t think that’s a good

idea because you’re being deceptive when you do

that: you never really had it anyway.

Instead, for most things that you’re going to

import, there’s already a domestic supplier of that

thing. Let’s say that it’s lockboxes. I’m going to sell

lockboxes and I know I can buy lockboxes for $12.

To buy them wholesale in the States, they’re $100

apiece but everybody’s selling them for $200. I’ll

put up a Web site selling lockboxes for $125, just

to see how many I’ll sell. If I sell some, I’ll go buy

them from the other company for $100 wholesale

and fulfill my orders, but only until mine get here.

It’s a great way, rather than saying,

“I know what I think. I think these widgets are

going to sell. I’m going to go ahead and invest a

bunch of money, buy them, and bring them in.


in anywhere, look at an item, and tell you within

five or ten percent what that thing costs in China. It’s

a blessing and a curse. If you go shopping with your

wife, you’ll say, “I’m not buying that stupid thing! It’s

three dollars in China!” She’ll say, “Yeah, I know, but

this one’s $150 and it’s pink!”

The good thing though, is that once you learn

what stuff costs in China, you have this real big

advantage. The guy I worked with that was huge

in the home décor market would go to the Atlanta

market, which is a wholesale market selling to

other stores. He would go out into stores and find

a vase or a knick- knack that was at some store –

maybe even in the thrift shop – that was popular

30 years ago. He would just polish that thing up,

put it out on the shelf for sale, and take orders

from it. If a lot of people ordered, then he would

go buy it from China. If people didn’t order it, he

would write a letter back to the ones who did and

say, “You ordered this, but after some internal

testing, we realize it’s probably not going to be a

good seller.” He was seen as a hero for protecting

them from a bad seller. Also, though, he was able

to have a big display of stuff in his showroom.

This is what I call “the sticker method.” You can

actually scrape the other guy’s sticker off the

bottom of the product and set it. In order to do

that, you have to know your market and know

your business well.

Those are some ways that you can limit risk.

Limiting risk is a theme here, because the main part

of this is that you can make a lot of money. However,

if you don’t take some of these steps – or all of these

steps – to limit risk, you could really get caught with

your pants down and get broke real fast.

Stateside PrototypingAnother I which can save you a lot of time and

money, I call ‘Stateside prototyping’. A lot of

people try to get their prototypes made in China.

You try to draw a drawing or give them a spec if

you want something built a certain way in China.

You’re trying to explain it to them, and they’re

trying to understand what you want. I always joke

about it. I say, “If you send a drawing of a football

to China, they’ll send you back a baseball. If you

send them a baseball, they’ll send you a baseball.”

The best thing for you to do is to get designers to

build your prototypes in the States if that’s possible.

If you can’t build a prototype, then maybe there’s

one for sale already. You can buy one and send it to

them, and ask them to make one like it.

However, there are patent laws and trademark

laws that apply. One of the worst things that you

can do is get a container-load of something here

that violates a patent. If you get the merchandise

here, you just can’t sell it, and you have no

choice. If you start to sell it, you get is a Cease

and Desist. At that point, that merchandise is

absolutely the worst merchandise you can have

because you’re not even allowed to liquidate it.

You just have to destroy it, and you have to pay to

have it destroyed. It’s the worst possible problem

that you can run into.

What I suggest you do is build your prototypes

on the States side, send them to China, and say,

“Make me an absolute duplicate of this.” They’re

fantastic at duplicating things. They’re not very

good at creating things from concept.

Later on, as you get savvier, you’ll learn how to walk


APPROACHING A MANUFACTURER

We’re going to get into this in depth, but I want

to start talking to you about it here. Chinese

manufacturers will treat you a certain way based

on how good a businessperson they think you are.

If you seem like a chucklehead, they’re going to

treat you like a chucklehead. If you act like just the

blind idiot walking through the door, they’re going

to totally ignore you, because they assume you’re

just full of crap and aren’t going to buy anything.

You can bet that every one of these places gets

dozens of inquiries every day through Alibaba. They

look at a large majority of them and go, “That guy’s

an idiot. He’s not serious.” They don’t even reply. For

other ones, they’re going to say, “That guy’s an idiot,

but he looks like he’s an idiot with some money to

waste, so let’s sell him just a truckload of garbage.”

They’re going to assume you’re going to be out of

business in no time anyway. They’ve got nothing to

lose. Why not just take some money from you if they

can? They will tear you up.

Everybody thinks that the mentality of Chinese

business is long-term relationships and that’s

absolutely true, if they feel you’re worthy of a

long-term relationship. If they don’t feel you’re

worthy of a long-term relationship, they’re going

to try to skin you for as much money as they

can get out of you, as quickly as they can before

somebody else does. They see you as an idiot

walking around with your wallet hanging out

of your back pocket and eventually, somebody’s

going to take your money, so they might as well

be it. They’ll just send you a container of junk

and you’ll just be screwed. The beginning of this

process starts with you looking like a professional,

2 : S O U R C I N G Y O U R P R O D U C T

There are about three ways that you can really

go about sourcing products from China: online

sourcing, using an agent, or actually going to China.

ONLINE SOURCINGA lot of people approach me now and

talk about online sourcing, things like

http://www.Alibaba.com. This is probably the

biggest website for sourcing products from China.

Yahoo owns part of it and it’s sanctioned by the

Chinese government, so they have a lot of support.

Basically, a lot of the Chinese manufacturers

have their products on Alibaba, so you can view

them and send in any inquiry asking about the

product, the quality, samples, etc. Another is

http:// www.ttnet.net. It’s also one of the best.

There’s another one called Global Sources.

I don’t care for it as well, but you can go to

http:// www.GlobalSources.com if you choose to. I

think Global Sources is more of a Hong Kong based

company. I’ve never been able to get manufacturers

that have good pricing from Global Sources.

Let’s talk about Alibaba and ttnet first. They’re

going to have you sign up for an account. They’ll

tell you to send your inquiries in through their

system and you can do that. There’s nothing wrong

with you doing that. However, here’s a biggie:

when you make contact with a Chinese company,

I’ll bet you can send in ten inquiries through

Alibaba and probably only get back two or three

replies. It’s not one of the more traditional ways of

contact. Also, they get a lot of knuckleheads that

just go on with, “Hey, how much for this thing?”

You just can’t approach them that way.


whether or not they’re reputable. You should

ask them their factory location. Are they the

prime owner of the factory or a broker? Can they

send you a prospectus? What is their annual

turnover? That’s a big question which we don’t

use in the States at all.

A big pride issue in China is how much they

sell. Another good question is asking what

percent of their annual sales are in the country

you’re in. Also, ask them if they have a stateside

warehouse. If they do, you probably don’t

want to do business with them because they’re

probably going to become your competitor.

That’s not always true, it is a lot of the time.

These online tools are very self- explanatory: you

literally just search a name and you find it. One

little tip I’ll tell you is that you’ll miss searches

in Alibaba if you search in plural because most

Asian manufacturers and most Asian people

don’t use plurals. If you search for “tennis shoes”

you’ll get nothing, as they will advertise with:

“We manufacture tennis shoe.”

I’d say online is my least favorite source,

although I did use it a great deal in the

beginning. When I’m going to import, though, I’m

typically looking at importing a million dollars a

year or more worth of product from somebody,

so it’s worth a trip for me to go see. However,

I’ve got a friend right now that I talked to the

other day. He’s in an equipment business where

they’re doing three million dollars a year, and

he’s never been to China. He does 100% of his

importing online, so it definitely can be done.

because they judge you based on that.

METHODS OF APPROACH

I can remember in the 1980s there were still a

lot of older companies that wouldn’t do business

with you unless you would send them a letter on

letterhead, asking them to do business. We still

had traditional wholesale channels in the States

back then. China is still, today, very much like

that. If you want to get a quick response, go ahead

and send in the Alibaba form or the ttnet form if

you want to, but type up your request and fax it

on letterhead. If you’ve got to create letterhead in

Microsoft Word, that’s fine. Fax it on letterhead to

the supplied fax number for that company.

I don’t think I’ve hardly ever sent a fax to a

company that I haven’t gotten a response to

overnight. If you don’t have a fax machine,

you can use eFax. There’s a company called

http://www.eFax.com, you can go there for about

five dollars a month – or something like that – and

get a fax number where you can send and receive

faxes. They’ll send your faxes to your e-mail

account in a PDF form. You’re going to use faxing

for all of your orders. Every order you ever place is

going to be placed by fax, so you’re going to have to

have faxing in order to make it work long term.

WHAT TO ASK

When making online requests for information,

you don’t make the price the first and only

criteria that you want to know. You want to

ask them about quality, about their company’s

turnover. Ask them a lot of questions about


a fortune to live in Hong Kong. If you’re an agent

living in Hong Kong, I’d say that those guys are

making a minimum of anywhere from $500,000

to one million dollars a year brokering goods.

Unfortunately, based on their circumstances,

they have to make a lot of money on the front

and backend of you to make it work.

Shanghai is becoming the new Hong Kong. A

lot of guys are now moving from Hong Kong to

Shanghai, or they have an office now in Hong

Kong and Shanghai. Does that mean that every

Hong Kong broker and Shanghai broker is a bad

guy? Absolutely not, but the ones that I’ve had

experience with in the past have not been good.

If I were you and looking for an agent, I would look

up Trade Agents in Guangzhou. Guangzhou is more

“real China.” That’s what I call it anyway. When

you’re in Shanghai, it’s all pretty and shiny. It’s

westernized. Hong Kong is incredibly westernized,

too. However, when you’re in Guangzhou in

Southern China, you’re still really in China. A huge

percentage of what’s manufactured in China is

manufactured in the south, in Guangzhou. This is

because a lot of the raw materials are down there.

It’s in Southern China.

You can also go to a Stateside broker. If you use a

Stateside company you need to make sure that they

have an office in China. You need to get the address

and phone number of the office in China, and

be sure to call the office and make sure that they

aren’t full of crap. You’re going to have to do a little

due diligence here when it comes to your brokers.

FINDING AN AGENTThe second thing to do is to find an agent. Agents

used to be more popular than they are now. An

agent is just somebody who understands importing

better than you do. They’ll typically take a fee of

somewhere between eight and fifteen percent to

go out and put together your deal for you: to source

your product and to find your manufacturers.

There are a couple of problems with agents. One

problem with agents is that they typically don’t

want to mess with you if you’re not doing volume.

They claim to only take a small percentage, so they

don’t want to go through a lot of trouble. Did you

hear the key word in that phrase? It was “claim.”

They claim to take a small percentage. I have yet

to ever meet an agent – at least one on the Asian

side of the water, in Hong Kong or China - that

didn’t have a back door deal with a factory.

So they’re going to be charging you on your side.

They’ll swear to everybody on earth that they’re

not making any money on the back side and

that is bullshit; they’re all making money on the

back side, every single one of them. That’s just

something that you need to accept, deal with, and

get over. As long as they are a quality agent and

providing you some services, then that’s just the

nature of the beast.

There are basically three agents. I typically avoid

Hong Kong and Shanghai agents, especially Hong

Kong agents. I’ve never had a Hong Kong agent

quote me a reasonable price on anything – ever.

If you’ve not been to Hong Kong before, it’s an

incredibly international metropolitan city. It cost


down there. You can literally be at the factories

of a lot of the manufacturers that are at the

Canton Fair in an hour.

So, pick your trade show. There are a lot of new

shows that are starting in Beijing and Shanghai

– particularly Shanghai – right now. They are

new shows. You’re going to fly to China, get there,

go into a building, and there are going to be 100

vendors there. That is a real drag when you’ve

flown 14 hours to go to a show with a hundred

vendors; you’re done in two hours and didn’t

find anything that you were really interested in.

THE CANTON FAIR

The Canton Fair is quite the opposite. The Canton

Fair is now in three phases over a four-week

period in China. Each show holds about 2,000

booths. If you want to stay for the full ride it’s

about 6,000 booths of merchandise. They are

semi-categorized. One area of the show is apparel

and consumer goods; one area of the show is

business to business; another area is industrial.

However, it’s not unusual to see some guy sitting

outside who sells bulldozers and hair bows.

Basically they are categorized, but not very well.

GOING TO CHINAThe third way is the best way, but it’s scary as

hell for most people. It’s to get your oars out, get

in your rowboat, and row to China. Or you can

fly if you want, it’s more convenient.

I waited a long time before I went to China. I

turned down three or four invitations to go to

China. I’m not sure what freaked me out about

going to China; but it just scared the snot out of

me. I think that it scares a lot of people.

Honestly though, the only thing about China is

that it’s not a very convenient place. Things that

we’re used to being easy and simple are very

formal and systematic there. If there’s a line with

a hundred people in it waiting for a taxi, nobody

will cross the street and try to get a taxi on the

other side of the street. They’ll just stand in the

line even if it takes an hour and a half. They

don’t care. As a person from the U.S. – Western

– that will just drive you nuts. We’re used to

everything right now: fast, fast, fast, fast, fast.

Anyway, let’s assume that you decide to go to

China. I would say that you would want to focus

your trip around a trade show. There are a

number of trade shows in China. You can go to

the Guangzhou Fair Complex, which used to be

called the Canton Fair. It’s the biggest trade fair,

over one hundred years old.

TRADE FAIRS

There are trade shows in Guangzhou, Beijing,

and Shanghai. I know that the best trade shows

are in southern China – in Guangzhou. This is

because you’re very near to the manufacturers


want to stay around a long time.

When you go to the Canton Fair you have to be

prepared for incredible price gouging. Overall

China is an inexpensive country to travel in. It’s

inexpensive to stay, fly, and eat there. However,

when you go for Canton Fair week, they know that

you’re there to spend money and they pipe it to you.

The hotel rooms that are normally $30 to $50 a night

are $400 a night, depending on where you stay.

Whatever the bad sides, the Canton Fair is an

experience that every importer needs to take in to

actually understand how things work. There will be

an area in the Canton Fair where they have industrial

equipment. They’ll have entire manufacturing

plants set up in a trade show. You can watch all these

machines running, the kitchen equipment running.

All of this stuff is actually functioning while you’re

sitting there talking to the guy.

If you’re into equipment, he can show you

how the machine works. They have vehicles,

motorcycles, mini bikes, and other things that

you can ride. You can go out into the outdoor

yards. There will be complete school buses,

tour buses, tractors, giant heavy equipment, oil

wells, oil drills, all kinds of crazy stuff sitting

out in these lots. You can literally go up and buy

yourself an oil drilling rig if you want to – or, if

you have enough money, a dozen of them.

If you’re an entrepreneur – and I’m sure you are if

you’re listening to this – you go into entrepreneurial

overdose. You say, “Oh, I can make money with that.

Look at that, I can make money with that. That’s

crazy.” You’ll just go nuts. You’ll need to take it all in

and then have a refining process.

The longer that you can stay in China and see

more of the show, the better off you’ll be. This is

especially true for the first time that you go. You

come back breathing a little easier about the whole

process. You’ll come back with a little bit more

understanding, but also a little bit more confused!

At the Canton Fair there are basically three

different fairs that go on at the same time.

There are two centers: a downtown center and

an amazingly beautiful, brand new convention

center on the outskirts of town.

When you go to the Canton Fair it’s an amazing

thing. It’s a multi-cultural, international event.

The last time that I was there, they were

announcing some statistics. Only nine percent of

the buyers are from the United States of America.

There’s almost no one from China that attends.

They don’t let the Chinese people go into the

Canton Fair, unless they are a vendor. A Chinese

man and I went over there once from the United

States. He had a very difficult time getting into

the show because he was Chinese. Translators

are a pain in the neck to get in too.

So, there’s a show for a week. They break it down

for about five days. Then they have another show,

break that down for five days, and then have

another show. You can choose what you want to

do, but what I usually did was to go on factory tours

during the days that the shows were closed down.

Other times I would take a plane over to Thailand,

the Philippines, or Malaysia and just relax for four

or five days. I wanted to go somewhere where

people smile and speak English. China is great. It’s

a cultural experience, it really is, but if you have

gone a lot of times, it isn’t a place that you really


are booked. You usually have to check your bags

with the bellman and go ahead and go. Your

room isn’t going to be ready at eight AM in the

morning. This is China. Even if every room in

the place was empty and check-in time was three

o’clock, you’re going to get to check in at three

o’clock because they’re not going to break a rule.

WHERE TO STAY

If you’re on a budget, I would start out by

checking the Guangzhou Holiday Inn. There’s a

website called http:// www.AsiaRooms.com. It

isn’t too bad, I’ve stayed there before. It’s not my

favorite place, but it’s fairly clean and the rates

are probably going to be somewhere in the $150

to $180 range.

The second place that I like that I’ve had good

results with in the past has been the Ramada

Inn Pearl Hotel. The Ramada Pearl has one little

downside to it: it’s kind of in between the two show

arenas. You’re going to have to take transportation.

However, there are shuttle buses that run in

between all of these. It’s a reasonably priced hotel,

probably around the $200 per room rate.

The China Marriott Hotel is the oldest hotel

there. The rooms are pretty good, but this hotel is

fantastic because it sits directly in front of the old

trade center. The old trade center is one of the two

trade centers that they still do shows at. The rate

is going to be somewhere in the $300 price range.

The other cool thing is, they have the best dining

restaurant in Guangzhou. For the most part, the

food is American and it’s absolutely excellent food.

I’ve never eaten a meal there that made me sick.

BEFORE THE FAIR

TRAVEL TO CHINA

If I’m going to Guangzhou I fly on China Southern

Airlines. The reason that I fly on China Southern

Airlines is because I can fly China Southern out

of L.A. first class for not much more money than

flying coach. If I’m flying coach on domestic for

$1,200, I can usually fly business class on China

Southern for $1,700. Business class on a Chinese

airline is like domestic first class on an American

airline, but to be honest, it’s a little better than

domestic first class. Again, you need to remem-

ber that rates vary and things change.

For about $3,000 you can fly first class. The seat

makes into a bed; you get three really amazing

meals; total peace and quiet; slippers; cologne; and

toothbrush. They give you everything. I have made

a lot of really good business deals in first class.

Other people that are in the know also fly these,

the experienced players. If you can swing the three

grand ticket, it’s worth your while to fly first class.

China Southern flights leave late at night. They

usually leave at midnight. You’ll fly out at

midnight and arrive roughly at seven or eight

o’clock AM two days forward.. You’re going to lose

a day going over. If you’re planning on being there

on Wednesday, you have to leave Monday night

because you cross the International Date Line.

When I come off the plane, I check my bags in

my hotel and go directly to the trade show. I

would suggest that you do the same. You have

to understand: this is a huge trade show. Hotels


and be ready to walk into the show the next day.

TRANSPORTATION

I’m a little bit spoiled because I know that I’m

going to be spending money. I call and ask for the

hotel to send me a car and a driver. It will usually

cost you twice as much as a cab, okay? However,

in my opinion, it is money well spent. You’re

going to get a nice car. They’ll probably bring you

bottled water and a newspaper to read; they’re

going to treat you real nice. When you get there

there’s going to be a driver standing out in front of

the terminal holding up a sign with your name on

it. More importantly, if he comes from the hotel,

he probably knows how to get back to the hotel!

Another thing about cabs: even though they’re

expensive, during the Canton Fair there are lots

of hustlers around. There are guys asking, “Do

you need a ride? Do you need a ride?” Don’t ever

go with those guys. Only go in the red or blue

taxis. Those hustlers can take you anywhere.

They could tell you it’s going to be $500. If

you don’t want to go, they’ll just drop you off

There’s also the Asia International Hotel. The Asia

International is a five star hotel and one of the

nicest hotels in all of Guangzhou. The ninth and

tenth floor of the hotel is an amazing spa. They

do the best massage – foot massage, saunas – it’s

fantastic. They do an hour and a half long foot

massage for $20, and once you’ve walked those

shows, especially by the third day, your feet are

going to be pounding. Unfortunately, it’s not

centrally located. It’s about 10 or 15 minutes from

the old convention center and 45 minutes from

the new convention center. However, they do run

shuttles. That’s going to be $350 to $400 a night.

If price is no object, my number one favorite

recommendation – and where I stayed the last time

– is the Shangri-La Hotel. The food still sucked at

this place, but the hotel was amazing. It is brand

new and directly across the street from the brand

new convention center. It’s about $400 to $450 a

night and is truly a five star hotel. You’re going

to be directly across the street from the main

convention center. When you leave in the morning

you’re going to be two to three minutes to get to the

convention center versus a 45-minute ride.

The other thing that’s really good about all of

these is that they all have shuttle buses. They will

also allow you to register for the show at your

hotel. I absolutely recommend that you do this.

When you get to the show the next day you’ll

thank me for that, because usually the line to

register at the Canton Fair is about an hour and

a half to two hours long the first day of the show

and about an hour long every other day. You can

do it in your hotel in ten minutes, get your badge


for you very easily. This is not their first rodeo.

I like going to the old center the first time at the

Canton Fair because, typically speaking, there are

more translators down by the old center because

it’s near the university. There will be hundreds of

young men and women from the college holding

up signs that they translate. Some of them translate

into French, Spanish, and Russian. However, there

will be more English translators than anything else.

You need to go along and talk to them. Don’t just

pick one based on their looks or that they seem

nice. You need to ask them a few questions:

“Tell me how you’d order a cheeseburger for me

if I was going to McDonalds. I want a Big Mac

with cheese, no onions, two packs of fries, and a

coke. How would you say that?”

See what they say back: it might be surprising to

you. You need to speak relatively

slowly and give them a fair shot. For the most

part they’re going to be able to do all of this little

stuff that we’re talking about, like getting you a

cell phone and minutes.

When you’re at Canton Fair, the only food that you

want to eat is probably going to be McDonalds.

There’s a McDonalds there. Guess what? You

aren’t the only one with that idea. The lunch line

starts just a hair before they open for breakfast.

I usually send my translator at 10:30 to go to

McDonalds and stand in line. I’ll give her my

order and usually around noon she’ll give me a

cell phone text back to tell me that lunch is ready.

I usually use female translators. I’ve tried male

translators on two occasions. On two occasions

wherever you’re at. That would be a drag.

Keep your hotel room key with you at all times. It

usually has a logo on the front of it and a map on the

back. You can ask them to draw you a map back to

the hotel, too. You can be almost certain that the cab

driver that you get will not be able to speak English.

CHINESE CELL PHONES

One of the first things that I do when I go to

China is get a Chinese cell phone. Inexpensive

cell phones are less than $100 in China. It’s going

to be a pain to use, but on any budget you can go

get a phone and have some minutes. It gives you

credibility and some safety.

They’re just not going to treat you the same way

if you don’t know the game, if you don’t look

like you know where you’re going. With the cell

phone you can talk to your other people. You

need to exchange numbers if you’re going to go

in a group. I assume that you’re not going all by

your little lonesome, especially the first time. You

shouldn’t. So be sure to exchange numbers with

whoever you’re with.

Cell phones work differently in China than they do

in the United States. You can buy a cell phone and

minutes anywhere. There are little minute cards

that you buy and you scratch them off. If you can

communicate with the young lady wherever you

buy a minute card, you can ask them to enter your

minutes. It’s fundamentally a pre-paid cell phone.

FINDING A TRANSLATOR

The next important thing to do is find a translator.

You’re going to be able to find a translator to work


to a mall, get a suitcase, or a cell phone, they’re

very accommodating. They’re not too wigged out

about their time being over right at five or six

o’clock. They’re usually overly, overly helpful.

I will tell you that if you have a female student

translator, you need to be very proper in the

way that you communicate with her. They don’t

take romantic jokes or flirting very well. It’s

considered a taboo to do that. I think a lot of guys

go over there and want to flirt with this cute little

girl, but you’ll really offend them. They’ll end up

not doing a very good job for you, or just leaving

completely. So, please don’t do that.

So, translators can go and get food for you. They

can do anything that you need for them to do,

but the most important thing they’re going to be

doing is helping you to communicate with the

people in the booths and shows.

WHAT TO BRING

First of all, you’ll need to have a passport. You also

have to have a Visa. It’s not a big deal to get a Visa;

anybody can get a Visa in a day. I use a service in L.

A. called U.S. China Travel Services. Danny usually

handles all of my travel. I’ll send him my passport

– you have to send in your passport, so don’t get

freaked out by that – and he will get me a Visa the

next day along with my passport. Or, he can just

hold them with my other travel documents. Danny

can get the Visa really easily because he has an

arrangement with the government.

If you’re getting it some other way, you may

need to get a Chinese company to give you an

invitation to Canton Fair. You can also go onto the

Canton Fair’s website and ask for an invitation.

I’ve been sorry that I did. Again, you may find a

male translator that’s absolutely fantastic for you.

However, we’ve always done better with young

ladies. They’re usually nicer. They’ll usually have

friends, too, and people are nicer to them.

Your translator is usually going to charge you $30 a

day for their services. That’s pretty much a set rate.

However, the Canton Fair is going to charge you

$50 a day to bring them into the fair. You’re going

to have to go and get them early. Even though you

have a badge, you can’t register your translator.

The translator can only register at the show. You’re

going to have to stand in line with them, show your

passport, and show that they’re your translator.

They’re going to get badges. If you’re pretty sure

that your translator is who you want, go ahead

and get them a three or four day badge – or as

long as you’re going to be there, otherwise you

have to get them another badge every day. At the

end of the day, when the time is over though, you

need to make sure and take their badge back. It’s

one of the little tricks you need to know about.

They can come back the next day – they have

a very unique selling proposition for getting a

different client. They can say, “Hey, take me. I’ve

already got a badge.” I’ve never had that happen

to me; but I’ve heard of other people who have

had that happen to so I usually just take their

badge with me at the end of the day.

The translators get time off of school and credit

for doing this. Typically speaking, they’re just

amazed with the culture that you’re from. They’ll

be willing to stay with you in the afternoons or

early evenings as long as you want. If you want

them to take you somewhere to get good food,


relatively cool. I’ll usually go in khaki slacks,

button down short sleeve shirt, and black tennis

shoes. The reason that I wear black tennis shoes

is because they kind of look like dress shoes.

Also, they’re rubber soled and comfortable; pick

something with a lot of arch support. I would guess

you’re going to walk somewhere between five

and seven miles a day. If you’re not used to a lot of

walking, it’s going to absolutely wear you out.

I definitely don’t want to be in shorts. When

you’re in shorts over there, it looks like you’re

a very junior player. I don’t usually go over

in a suit and tie because I would get very

uncomfortable. It’s a long day. On the other

hand, you don’t want to go over there in shorts

and a Pink Floyd t-shirt either, as you’d look like

a goober. So, try to dress in between those two.

I like to take a Flip HD video camera with me. It’s a

pocket size video camera, about the size of a pack

of cigarettes. You can shoot really high quality

video. Always ask permission before you shoot

video in a booth, as it’s considered extremely rude

to shoot video without their permission.

I also carry a voice recorder with me. That way

when I’m walking through a booth and want to go

back later, I can record the booth number, name

of the company, what they had to sell, and a note

to remind myself why I want to go back there. For

example, the booth may be real busy the first time

I’m there so I just plan on returning later.

The key is running through this thing with

incredible speed. What you’re going to try and

do the first day of the Canton Fair is to see as

much as you can see, as quickly as you can see it.

You have four or five days for each of these legs.

They’ll send you one by email, then you can send

it in with your Visa application.

You will also need at least 1,000 business cards.

Business cards are the weirdest thing in China

ever. You can’t get anything done without a

business card. They won’t talk to you in the

booths, they won’t give you a price or do anything

for you, unless you give them a business card. It

needs your company name, your name and email

address. Don’t put an email address on there that

you use all of the time because they are going

to email you pretty heavily. You might want a

special email address for that card. You also want

a fax number on it and your Skype ID. You want

everything on there that makes it look like you’re

a legitimate business.

If you have a cute card or a card with your picture

on it, they’re going to look at you like a goof ball.

You want a very professional looking card. It

should also have your company logo on it. If you

don’t have a logo, make the card black text on

white cardstock. The heavier the cardstock, the

more seriously you’ll be taken. You need to think,

“How can I look the most established?” When you

walk up to a booth, one of the first things they’re

going to ask you for is a card.

If you take any sort of prescription medicines,

you need to make sure that you have an adequate

supply of them with you. To get pharmaceuticals

over there is the very next thing to impossible.

You can go get pharmaceuticals or almost

anything that you want at a pharmaceutical

window, believe me, but God knows what’s in it.

In terms of clothing, if you’re going to the Canton

Fair you’re going to want to wear something that’s


card to the top of that page in the notebook. Then

they’re going to begin to take notes about you

and what you discussed.

If they give you a quote or a price, you can bet your

bottom dollar that they know what it is. So, if you

go back to them and say, “You told me that you’d

sell that for two dollars.” They will pull out that

piece of paper and show you, “No, I told you right

here it was two dollars and 75 cents. You’re full

of bull.” You want to be able to go into the show

handling yourself, your business and any leads

the same way that they do. That is what’s going to

make you look like a professional in their eyes.

You’re going to want samples, so if you have

a particular product that’s small and portable

enough to carry around that you’re sourcing in

particular, you should bring one with you from

the States. That way you can just go into the

booths, hold out your tool and say, “What would

it cost for you to make this for me?” You can take

those samples too, and compare them to their

version for quality.

You’re also going to want a laptop computer with

you. If you don’t have one, for whatever reason,

hotels like Asia International have a computer

center. You can go and use one of their computers

but it’s very expensive. They charge so much

a minute for every minute that you’re on the

computer. What you’re going to want to do is go

online and find out what the things that you’re

looking at are selling for. You’re going to need to

have research for that first couple of days to help

determine who you’re going to go back and see.

Typically speaking, the first day or two of the

show is wicked hard work. When you get back to

So, the first day or two you can make a quick

run through, then you have three more days

to go back to the things that you were the most

interested in and really hone down on them.

When you’re going through the first ones, you’re

going to be running and gunning.

You also need to be prepared to walk your butt

off. I’ve got a little kit that I prepare before I go

into the trade show. I’ve got a roller bag that rolls

behind me and a smaller shoulder bag, like a tote

bag, for my assistant. Basically, you’re going to be

picking up a ton of catalogs, materials, and things

like that. I’ve shipped back a 65-pound box of

catalogs from China before: that’s not unusual to

do. In fact, there’s a place in Canton Fair where

you can go and put all of your catalogs in a box,

and ship them directly from home, if you want to

and if you have a FedEx account number.

You also are going to need your badge to go in

and out of the show. You’re going to definitely

need your hotel room key, so you know which

hotel van to go back to. There are literally 150

vans sitting in a parking that take people back

and forth to hotels when you come out of the

Canton Fair Show. You can either try to find

yours among the 150 in the baking heat, or you

can hold your room key out and ask the lady and

she’s going to tell you exactly where to go.

The next thing is the simplest little thing in the

world, but you want a spiral notebook and a

stapler. This shows that you’re a serious buyer

who knows what he’s doing. When you walk

into a trade booth over there, they almost all do

it the same way. You give them a business card,

they open up a spiral notebook and staple your


GETTING SAMPLES

As an importer, you need samples. Getting sam-

ples in Guangzhou is relatively easy. If you carry

yourself well at Canton Fair, you look like you’re

a professional. They realize that you’ve flown 15

hours and probably spent thousands of dollars

to be there. They’re not going to be wigged out

about sending you samples.

If they have any problem with sending samples,

the problem will be the shipping price. If they

say no, the one word that will get you all the

samples you want is FedEx: “Here is my FedEx

account number.”

If you’re willing to give them your FedEx account

number to ship the sample from, nine times out

of ten they’ll give you the sample. If it’s less than

$50, they’re almost always going to give you a

sample for free – as long as you’re willing to pay

the FedEx to ship it home.

A lot of times I have cash with me when I’m

at Canton Fair. I’ll give somebody cash for the

shipping. They’ll call and get the shipping price,

then I’ll just give them the cash at the show. If I lose

$50, so what? So far I don’t think I’ve ever had a

single person that I’ve given FedEx money to send

me samples not send me the samples. For the most

part, Chinese people are incredibly honorable

people. They’re not cheats by nature. However,

they’re not going to waste a lot of time or effort

to do a quality job for you if they don’t feel like

you’re going to be around as a customer for them.

If you’re not worthy of a relationship, they’re not

going to treat you with relationship potential.

the hotel room, it’s time to open up the computer,

start going through the catalogs, and start doing

pricing research. If you’re going with a group of

people, you can sit down in a circle and compare.

You then see all different kinds of things because

everyone got different stuff. There just is no way

on earth that you’re going to see everything. I’ve

had people that have walked down the same

aisles with me – right behind me in a show – and

we’ll get back to the hotel and they’ll show me all

kinds of stuff that I never saw.

Another thing to do online while in China is find

the factories in Guangzhou so that you can go

and tour the factories while you’re there. One of

the best deals that we ever found on a product

came when we were buying stanchions – the

little stands you find in airports. We got an okay

price at the fair, maybe $18, but we had a little

extra time in China so we started searching

for stanchions. We found a supplier – the one

that we have now – that just happened to be in

Guangzhou, about 15 minutes away from our

hotel. We called them up, took a cab right out to

their place, and toured the factory. We ended up

buying stanchions better than the ones that we

had for $12.40 a piece. Not only that, but they

had two other lines of totally different products

that we were able to pick up.

Importantly, when you’re in China at the

Guangzhou Fair, you’re going to see items

that you’re looking for and see what they’re

classifying them as. Now you can go back to

http://www.AliBaba.com and search with the

proper search reference. You’re going to find a

ton of factories that you didn’t find before.


your boss. When would that be possible?”

It might be possible right then. There’s an

extremely high likelihood that the person who

runs the company will not speak English. The

younger people – the assistants, the hostesses,

and the ones working the booths – speak pretty

good English but a lot of the time, the big bosses

speak absolutely no English at all. This is where

your interpreter and their interpreter are going

to really come in handy. However, it’s a good

chance to meet them.

At that point, you can present them with your

business card directly, if you want, even if you’ve

given one to the assistant. You should ask for a

prospectus on their company. Pretty much every

manufacturing company in China has a prospectus

– like stock companies do in the U.S. – that tells

you what their turnover is. It has picture of their

factory and bios on their executives. Although a lot

of times these are in Chinese and you can’t read

them, it’s a good idea to ask for them.

If you look like you know what you’re doing,

they’re going to treat you like you know what

you’re doing. If you look like a chump, they’re

going to treat you like a chump. They would

never do business with a company that they

didn’t thoroughly investigate first. They’re

assuming that if you’re not going to investigate

them, you’re not doing your due diligence; you’re

probably not a very viable person. So, you want

to ask for a prospectus for their company.

AT THE TRADE FAIR

HOW TO ACT

How you act and how you approach this – your

positioning in China – is gigantic. I’m going to

give you a few tips here, but you’ll learn more as

you go along.

You should immediately give your business cards

to your assistant or translator when you get into

the show. You don’t need to have any of them on

you, as that way you’re not tempted to reach in

your pocket and give somebody one. When you

walk into a trade booth in China, the person who

is the most important person in that company

is probably in the far left or far right corner of

the booth, sitting in a corner, reading a book

or newspaper. They’re going to have a number

of people in the front of the booth waiting on

people. They’re going to immediately ask you

for a name card. When they go to give you a

business card, ask them to please give it to your

assistant. Don’t take their business card and

don’t give them your business card. Have your

assistant exchange cards with them.

The vast majority of the conversation needs

to be between you and your assistant. In a lot

of cases now, the person at the booth speaks

very good English; still, it’s not a good to talk to

those assistants. In China, if you’re talking to

the assistant, you’re assumed to be at the level

of their assistant. It’s a class system. It’s better

to have your assistant speak to theirs. Then, if

you’re more interested, have your assistant ask,

“My boss would like to set up a meeting with


a commodities market – if you’re buying blank

CDs and they’re nine cents each – no, you’re not

going to buy them for four- and-a-half cents. You

might be able to shave a penny off or something.

However, if you’re buying something that’s

unusual, you should usually get somewhere 30-

50% less than that by the time you’re ready to buy.

I might not get that on my first order, though, and

that’s a big deal: I don’t try to win the war on the

first order. A lot of times, if a guy quotes me $20,

and I like the company and I like the quality, I may

offer him $17 or $18 for an initial offer for an initial

sale to get the first container in. Once you’ve got a

first container in, and you’ve sold it fairly quickly,

now is a wonderful time to renegotiate. Now they

know that you’re a customer. They know that

you can probably burn through a full container

of goods every two or three weeks. That’s a time

where you can go back to them and say,

“It looks like this is going to work out. I really

like the quality of your product. However,

WHAT TO ASK

When you want to request a price, don’t make

that the first question you ask. You can ask for

a price – that’s fine – and they’re going to give

you a price in the show. However, ask for some

more information before you just ask for a price.

The bottom line is that the price is going to be

what you want it to be if you do a good enough

job negotiating. For the most part, though, if

something costs $100 in the States, it’s $15 or $20

in China. It runs along those lines. That “three

times at wholesale” is a pretty standard thing

(unless you’re in commodities). So, you know

what the price is going to be.

However, you don’t want to just to compare

things by walking down the aisles and asking,

“How much is yours? How much is yours? How

much is yours?” without knowing the quality,

the manufacturer, the terms, or any of that stuff.

That just makes you look stupid. Don’t make

everything about the price. At the end, after

you’ve asked a few more intelligent questions,

you can say, “Can you please give me an opening

quote on this product?” There’s a reason you

want to say “opening quote.” You’re telling them,

“Give me your book price. Obviously, I’m a

savvy businessperson, and I’m not going to pay

anywhere near that, but go ahead and tell me

what it is anyway.” You’re starting the game.

They’re going to give you a ballpark. You can use

that just to make sure that they’re not insane

before you waste any more time with them.

I usually expect to work somewhere 30-50%

under the initial price quote. Again, if you’re in


One of the things I really always try to do is read

the prospectus of the company. I want to see that

they have a turnover of at least the equivalent

of a million U.S. dollars per year. I think that,

without that, there are way better places to go.

Then I ask to go to their factory. I don’t care

what you do at the trade show – I don’t care if

you stand on your head or if you come in with a

Wal-Mart badge on – you will not get as good a

price as you’ll get if you go touring that factory.

When you’re in there, you need to be turning

those products upside down and on their sides,

and looking at them from the bottom. You need

to be basically dissecting the product. You want

to show them that you’re not an idiot; that you’re

only going to buy exactly what you want.

Don’t ask them to quote 5,000 things. Choose

the things that you’re really interested in then,

basically, pick them apart. Pick them apart before

you ask for a quote, by the way. You want to look

at the quality of the product as it compares to an

American product, and see where the weaknesses

are: whether or not people are going to be able to

tell that it’s a Chinese product.

BRANDING AND VALUE ADDING

There are a whole lot of products in American that

have a little “Made in China” sticker on the bottom

of them somewhere, but that most people assume

were made in the States or were made somewhere

else. You can brand a product. When you’re touring

the factories, it’s a great time to bring it up. You can

typically have any product you buy customized to

your liking and most of the time it’s totally free.

financially, I just can’t make it work at this

price. I can make it work at $14. If you’ll give

me $14, I’ll promise to not shop anymore, not

ask you for any more discounts, not ask you for

any more concessions, and give you 100% of my

business in this product.”

Usually, if you’re willing to do that and if it’s

within their power to do it, then they will.

They’re typically working on a one-third product

cost when they’re dealing with you. If they’re

charging you $20, their real cost is about six

bucks, so they’ve got a lot of room to wiggle.

They’ve got the same amount of room to wiggle

that you’ll have when you go to wholesale the

product to somebody else.

RESEARCHING YOUR PRODUCT

So always let them know that you’re going to give

in to them for now, and then follow up. You want

to do your online research. You want to take a

look at the quality and the market.

When I go to China, I’ll look at 200 opportunities

while I’m there. I’ll hone that down to five or ten,

and really try to get down to two or three. For the

two or three I’m the most interested in, I’ll ask to go

to their factory while I’m there. You will never get as

good a price as you’ll get if you go to their factory.

You can buy there at the show: I’ve bought at the

show before. You can’t exchange money but you

can write a purchase order. Then when you get

back home, you’ll send in a proper order along

with payment and everything will get arranged.


a product, this is the mindset that I have. I don’t

want to buy anything that you can buy at Wal-

Mart, Kmart, Home Depot, Target, or anywhere

like that, unless I plan on selling it to them. The

reason for it is because you’re going to walk

through and you’re going to see some amazingly

cool things. You’re going to say, “Wow. That’s an

awesome little $20 consumer product. How much

is it?” They’re going to say, “It’s five dollars.”

You’re going to go, “Wow! That’s the coolest thing

I’ve ever seen. I’ll sell a million of them!” So, you

buy a container of them for five dollars.

Guess what? You ain’t the only cowboy there that

notices the cool thing. There’s no more disgusting

a feeling in the world – ask me how I know – than

going and buying a container-load of five-dollar

widgets, sending your money to China, waiting for

your container to get here and three weeks later

you’re walking through Walgreens and they’ve

got the widget you paid five dollars for in China

on sale at Walgreens’ end cap for $4.99. They

walked in there and said, “Okay, we’ll take two

million of them. We’ll pay you two dollars each,”

and the factory said, “Okay.” So, I run away from

new mass-market widgety, cool items because the

chances are somebody else will pick up that thing.

Those guys have infinite buying power.

We used to buy candles from a factory that sold

them to all these other retailers. However, when

we got our candle in, we put it in a little pot and

had a wrapper on it, we had the bamboo thing

around it, and we had the tie on it. All that only

cost about 20 cents a candle to do but it meant

that nobody else had what we had. It’s called

Little customizations that don’t require retooling,

typically speaking, are absolutely free if you’re

willing to buy a container, or sometimes less than a

container-load of something.

A couple of years ago, when I was in the equipment

business, we brought in heat sealers. Everybody

in the world brings in these little heat sealers from

one company in China. They’re an aqua blue color

and they’ve got a silver chrome piece across the top

of them. Everybody has the same ones. They just

scream, “I’m a Chinese heat sealer.”

Our company name was Cleveland Equipment,

which is a very American-sounding name. We

had a Cleveland Equipment logo that was very old

school. It looked like it was 50 years old. We asked

that all of our heat sealers be painted a darker red

color, because we wanted to go the polar opposite

of the blue. We were able to command a higher

price in the market for exactly the same heat

sealer, just based on the fact that our heat sealers

were branded to our company, and that they were

boldly different in color.

Another thing that you can do is value add. When

I was in the home décor business, we used to buy

candles from one factory, and then have them

shipped to another factory where they would put

a bamboo wrap around them, shrink wrap them,

tie them with a bow, and put a tag on the side

of them. The two factories worked together: you

shipped from one factory to the other. That way,

there was nobody else selling the same kind of

product when it got to the States.

When I’m walking through the Canton Fair to buy


watches only cost about three dollars apiece. And

guess where they make them? China!

AVOIDING TRADEMARKS AND PATENTS

I’m very risk averse in the importing business,

but there is one area in importing where you

can really lose all your money. This is with

trademarks and trade regulations. You can go

out and bring in a product from China that just

looks like the most awesome product in the whole

wide world. We almost did. We were going to

buy a container of big luggage carts for hotels. In

the midst of it, we were sending out a couple of

feelers to our customers, sending them a picture

of the luggage carts. We had Harrah’s Casinos

and a bunch of other people that were customers

of ours. Evidently, one of them had a good

relationship with a guy that owns this company

here in the States that makes luggage carts, and

happens to have a patent on this particular type

of luggage cart. Before we could even buy the

container we got a Cease and Desist letter from

the manufacturer of the patent holders. They said,

“We have a patent on this. You can’t sell them.”

The Chinese factory would have never told us

that. All the Chinese factory did was buy one of

this guy’s luggage carts in the States, bring it to

China, and knock it off. They don’t care about

trademarks, patents, and all that. In a lot of

cases, it doesn’t apply there. They would have

very easily sold us those. We could have gotten

them here, we would have paid for them, and we

would have gotten them to our warehouse and

paid the freight. The day we went to sell them…

the “blue ocean theory.” You want to have the

only one of your widgets that there is. We had

the only one around and it allowed us to go into

places where nobody could say, “Oh, I’m already

buying that for a dollar.” No, you’re not. You’re

buying a stripped-down, ugly version of it for a

dollar. You could buy my beautiful one that sells

three times better for $1.50, and you’ll get more

money for it. That way, you’re comparing apples

to apples and oranges to oranges.

Another thing you can do with branding is

establish a name brand. We had a product we

were bringing – a stanchion product – some

time back and we branded it. So, we own our

own brand name of those. If you go to the brand

name site for that product, they’re $170 apiece.

It’s a very corporate-looking Web site. Guess

how many get sold from there? Practically none,

because we don’t promote that site.

We’ve got a discount site that sells other people’s

stanchions and our stanchion. On that site, we

sell our stanchions, discounted 60% off, for $77

apiece. If they don’t believe our 60%-off price,

all they’ve got to do is go over and look at the

corporate Web site that lists how much they are.

It’s called “decoy pricing.” Basically, it really

works well, and a lot of companies do it. There’s

nothing odd about it. It’s the way the outlet

mall business works. You’ve got Kenneth Cole

selling a watch in a department store for $200

so he’s establishing the value of that watch at

$200. When you go into the Kenneth Cole Factory

Outlet and that watch is $60, you snatch it up,

no questions asked. For what it’s worth, those


not too long ago, and there’s a plural to the domain

name already registered. I didn’t see it, so we bought

this domain name and paid a lot of money for it.

Now I own a domain name I can’t use.

With products, once you’ve printed them

you’d have to label over that name or do some

remediation work to be able to use it. We were

bringing in products for a big retailer one time.

I won’t say the name of the retailer, but you’d

know it if I told you. They asked that on this

candle they were bringing in that they have a

topper put on a candle with their company name

printed in the corner. They were buying three

or four million of them a year from us. We said,

“Okay, sure. We’ll do whatever you want. Just

tell us what you want to do.” That’s what you do

when somebody wants to spend several million

dollars a year with you. So, we made all these

candles. One day, the new planogram came out

and they said, “We’re not going to buy candles

from you anymore.” We said, “Wow. That sucks.

We’ve got 200,000 candles on the floor right now

with your name on them.” They said, “We don’t

want them, but if you sell them to anybody else,

we’ll sue the snot out of you.”

We literally had to take each one of those can-

dles, open the top of the candle, and replace it

with a different topper. The labor to do it was

almost more than the candle was worth. Just

remember that anytime you’re printing bar code

tags, price tags, or special brand label tags for

retailers or stores, you really could have an issue

with that.

If you get a Cease and Desist letter and if you’re

violating a patent, you can’t even liquidate those

good at that point. They are boat anchors. As

a matter of fact, you typically will have to pay

a company to destroy them, in addition to the

legal costs and all the crap that’s associated with

that. The same is true with trademark issues.

Right now, you can go over to China and buy

an iPod knockoff that is an absolute duplicate

in every way to an iPod Shuffle for about three

dollars. There are people doing it and selling it

in the States. I wouldn’t touch those with a ten-

foot pole. You could bring in a container of those

things, and it could get stopped at the border and

Customs not even release it. Then Customs sends

you a bill for destroying it.

So, you need to be keenly aware of those two things.

Trademark and patent issues are really big deals

when it comes to bringing in products. If you’ve

got something that you have a big question about,

send it to a patent attorney and get their opinion on

it. Also, ask in China if they pattern the thing after

something else. That’s usually where these things

will come into play, and it does happen all the time.

As far as trademarks go, you can go to the U.S. Patent

and Trademark Office http://www.USPTO.gov. If

you’re planning on using a particular trademark

name, you can go there to search. That’s not the

most thorough search, though. If you’re really go-

ing to use a trademark name you plan on investing

a lot of money in, I would get a lawyer to do a full

trademark search for you. On the website, you

can search the direct name exactly as it is, but that

doesn’t always cover you. We got a domain name


They’re good negotiators, they know a lot of their

competitors locally. They’re going to know when

you’re full of bull and when you’re not.

Sometimes I will write them a buyer’s order and just

state a price. I don’t like to do that in a live negotiation,

but I’ll do that after I get back home. If I’m getting close

to where I want to be – if they got close to my $15, $12,

or $10 – I’ll literally enter a buyer’s order at $10 and fax

it into the factory and ask them for wiring information

of where to send the deposit. Sometimes they take it

and sometimes they don’t.

You’ve got to remember this: these Chinese facto-

ries are all about paperwork. Words don’t mean

anything. They can walk into their boss and

say, “Boss, look. I got an order for 1,000 of these

things, but they want them for $12.” Now, in

their mind, they have a bird in the hand. Before,

they were just talking numbers back and forth.

It really didn’t matter: it wasn’t real math. Now

they have a bird in the hand. So, when you’re just

orally communicating and negotiating, you’re

probably not going to get your best price there.

It’s probably never going to happen.

Let’s assume, now, that we’re ready to make the offer.

If you’re going to do it there live, I want you to say,

“Okay. I’m going to give you the terms you want

on this first order, and I’m going to try to make

money with it. If it doesn’t make money for me,

then we’ll have to talk about whether we’re

going to continue our relationship or not by the

time we place the next order.”

Let them know right up front that if the price

doesn’t work out, you’re going to go elsewhere.

Just don’t let them think that you’re agreeing to

the price they’re giving you forever.

3 : N E G O T I AT I O N S

So, you’ve toured the factory, you’ve checked out

the quality, and you’ve reviewed the prospectus.

You’re ready now to absolutely get down to your

price for your first order.

I always say that take-its-or-leave- its don’t work

when it comes to China importing. At this point,

you can start to request the real price. You’ve

been to the factory, you’ve really checked the

quality, you’ve really checked the prospectus,

and they’ve given you a quote already. You can

sit down with them now and just begin to explain

that you like the product and you like the quality.

You compliment them a lot. Tell them how well

their product is built. Tell them how much you

like their factory and the professionalism of their

staff. Give them a lot of compliments. Then say, “I

would love to buy from you. However, I can’t pay

more than $15 a unit. The math just doesn’t work

for me.” That will start the negotiation process.

Don’t expect to buy for $15 if you start at $15.

You’re going to meet the ground somewhere in

between. You already know about what their

hard cost is, though. It goes from the first quote

that they give you. They’re going to give you a

quote at roughly three times their hard cost. If

it’s $20, that means they have about six bucks in

it. So, offering them $15 is not an insult.

As a matter of fact, in a situation like that, you

can tell them easily, “I’ve gotten quotes on similar

products as low as $12,” if you’ve got legitimate

quotes. Sometimes they’ll ask you who the company

is. If you can reach in your bag and pull out one and

really show them, most of the time, they’ll meet it,

almost every time. However, if you’re just B.S.ing

your way through, they’re not going to buy that.


sell. We’ve had experience with heat sealers

with that. When we were importing these heat

sealers, they had a heating element. Over time,

the heating element would go out. It’s normal. It

wasn’t anything that was specific to our brand

or the company that we imported from. That’s

just what happens to these particular items.

They were a cheap item, from a manufacturing

standpoint. It was almost considered a

throwaway cost item.

It was about $4-20, our cost and we sold

them for $20 to $70. From a manufacturing

standpoint, it didn’t cost a whole lot of money.

Typically, people would throw them away and

buy another one. However, we started getting a

ton of calls asking for replacement elements in

these particular items. What we were able to do

here was to go back to the factory and negotiate

individual kits of three or four additional

elements in the package. We just complained to

the factory that the elements were burning out.

They said, “Okay. Next time, we’ll just put four

extra elements in.” I said, “How much is that

going to be?” They said, “No charge.” They cost

two or three cents apiece.

Here’s what we’d do. When we would sell one,

we would ask the customer, either on the phone

or on the Internet, “You’re buying the heat sealer.

It’s $29.95. Is that right?” They’d say, “Yeah, that’s

right.” We’d say, “Sometimes the heat elements

burn out in them. You can get four extra heat

elements for them so it will last a whole lot

4 : C U S T O M I Z AT I O N A N D E X T R A S

Here’s what you can do now. Once they’ve

agreed to the price, then we want to go back

and work on the specs. These are some of the

coolest things that you would probably never

think to do in a million years when it comes

to importing. Number one is to ask for special

packaging. You can usually get them to print

you a box, full color, with your images, your

pictures, or whatever on the outside of the box

for your product to go in. It will usually cost you

nothing or very near nothing to have that done.

You’ve been in Wal-Mart before and picked up

a ceiling fan. You see the whole side of the box

is full-color graphics. That stuff in China costs

almost nothing. It costs a couple pennies more

than a regular box. They’ll just give it to you.

It’s almost no sweat off their back at all, but it

can make a huge difference for you when you

go to sell. Remember this: if they agree to that,

you’re going to have to get artwork over there in

enough time for them to get your box printed.

I also always request double boxing. I want my

product boxed, then I want it put inside another

box. That will eliminate as much as 90% of your

damage in freight. Typically speaking, again,

they’ll do that for free or very close to free. If

you’re talking about a dollar item, they may not

do it for free. If you’re talking about a $20 or $30

item, they’ll almost always do it for free because

it costs practically nothing.

Then ask for free add-ons that you can then


5 : O R D E R I N G P O L I C Y

When you write your specs, here’s something you

really need to remember. If you have a contractor

friend, you might have them come over and help

you write your first order. The bottom line is this.

I believe if you ordered a car from China and

you didn’t tell them in the spec that it needed a

steering wheel, I don’t think it would have one

when it got here. They literally are going to go by

the order to the letter of the order.

If you have a contractor buddy, they’re used to

that. They’re using to dealing with subcontractors.

Subcontractors are the same way. They’ll brick

your house without mortar if you don’t ask for

it. They’ll just stack the bricks up along the wall.

Those contractors know they have to write very,

very, very, very specific instructions with that

letter. When you’re writing that order, you need

to be ultra-specific. You need to talk about what’s

included. You need to talk about the gauge of the

metal that’s used. The quality of everything needs

to be totally gone through.

Another thing: you need to absolutely get hard

completion dates, along with penalties. Typically

speaking the standard manufacturing time in

China for most everything is 20 days. You need to

have is an automatic cancel, or financial penalty,

or something built into that order to make sure.

That is what the big guys do. The big guys say,

“Look, you want $10,000 for this order, okay. I’ll give

you $10,000 and it has to be delivered on the 20th.

For every day that you’re late there is a $100 penalty

that we will take off of the rest of the invoice.”

longer, and you’ll never be out of heat elements,

for another $9.95.” We’d say, “Most people,”

and this is big piece of verbiage you need to

remember. The vast majority – almost 70% of

people – would say “Yes.” You’ve got to imagine

this. We took something we got for free, and sold

it for $9.95, along with the $30 item. Guess how

much the $30 item cost? It cost us four bucks. The

up-sell alone paid for the entire purchase and, in

most cases, the shipping of the doggone item. We

made 100% of the purchase price. If that doesn’t

turn you on, I don’t know what’ll turn you on.

That’s hot stuff.

You can do that in a lot of cases. We did it

with rubber stamps. Through a rubber stamp

manufacturing company, we were making

rubber stamps. We’d sell people a rubber

stamp for $12.95 or $13.95 that cost us about

two dollars. We got bottles of refill ink from the

factory and we would offer the refill ink for the

rubber stamp for $4.95. Almost everybody took

the refill ink, which paid 100% for the cost of the

rubber stamp and the refill ink. If you grasp that

concept from consumer goods, you will go very

far in importing. I don’t care if you’re a little bit

slow, but if you can sell products and make 100%

of the money, you’re going to do okay.

It’s like a house builder: they don’t want to give

you the home at a drastic discount because

they’ve got other people who are basing

their price somewhat off what you’re paying.

However, they’ll be willing to throw in upgrades.


something in writing most of the time they will

follow through with it. If they don’t agree to

something in writing and you get damages, well,

there you go. “Sorry about that. You never said

anything about that. You mean you want it to

work? You never mentioned that part.”

You definitely want to have a damage policy that

says “In case the freight comes in damaged or

not as described the factory agrees to remediate,

send new merchandise, pay for return shipping,

or replacement,” whatever the case may be.

When I’ve had problems with factories in the

past, for the most part they try to make it right.

It’s not like Wal-Mart. You’re never going to be

able to walk into the store and return it with

no questions asked without the packaging or

the original receipt. You’re going to end up

communicating in the middle of the night when

you’re not very excited about communicating

because the time is so different. It’s much, much

easier to deal with the situation if you deal with

it right up front in the beginning. Clearly spell

out what happens if this product is poor quality,

or is not as described, or doesn’t work, or is

damaged. The reason you want to have a contract

with them is you can’t go to the freight carrier

and get satisfaction. They have to get satisfaction

from the freight carrier and they reimburse you.

The factory is packing your container, too, that

is something to keep in mind. We’ve argued

with people before, “Oh, you can fit more in that

container.” Sometimes you can, and sometimes

What happens is if your order is sitting there and

a big guys order is sitting there and they have

a penalty for his order and they don’t have a

penalty for your order, guess which one they’re

going to do first?

The thing is, you’re going to pay some money

down when you place your order and you have a

cost of money that starts ticking that day. When

you pay your money your biggest objective is

getting it made and getting it across the water.

Pre-selling it across the water. You definitely

want hard completion dates if everybody agrees

to it and signs off on it.

Finally, you want an established written damage

policy with the factory and you also want that

with your freight company, or you may want to

choose freight insurance. The truth, between

you, me, and the fence post, if they tell you to

go p--- off there is not a whole lot you can do

about it, but for the most part if they agree to


6 : M O N E Y

I’ll tell you, importing from China is not a

business for the faint of heart. You have to have

a little gut on you. There are basically two ways

that money is sent to China: letters of credit and

LETTERS OF CREDIT This is a simple document where you go to your

bank or a bank that does letters of credit. It has

to be a credible bank that is known in China. If

you’re at the Bank of Schlockdaw, Mississippi,

they might not be willing to take a letter of credit

from you, but any national bank: Chase Bank,

Citicorp, Wells Fargo, any of those guys.

If you are an incredibly creditworthy individual

with tons of assets and the banker is in love with

you, then perhaps they will give you a letter of credit

to let you go buy goods in China without putting up

money. I have never had that particular experience.

Typically what you do is you go in and say, “I want

to buy a container of products that is $30,000 and

I need a letter of credit for $30,000.” Your banker

will say, “That’s fantastic. I’m happy to do it. All I

need is $30,000.” They’ll put the $30,000 into an

account that you don’t have control of anymore,

although the money is still there in your local

bank. They’ll issue the letter of credit to the fac-

tory and the factory will take it to a Chinese bank

and that bank will give them a loan on your letter

of credit so they get the money to buy the raw

materials to build your order. They will build your

order and it will ship to the United States.

When the order gets to the States you can’t

you can’t. I tell people that if they don’t have

quality control on the China side, don’t go into

the import business period.

One of the ways that you’re going to avoid a

lot of problems with that is, if you don’t know

somebody in China that you’re already dealing

with, you need to hire a third party company. A

good one is SGS Testing Laboratories. They are

in all the major ports in China. You can have

your sample sent to them so they can go to the

factory, make sure that it works, they’ll bring

a 110V generator to plug in electrical things to

make sure they work, they’ll go to the factory as

the product is being built, they’ll mike the metal,

they’ll check the paint, they’ll send you photos

and videos. They’ll actually go there while the

container is being loaded to make sure that it

is being loaded safely and tightly so that there

won’t be any damage in the sea vessel. They’ll

watch the container being sealed off with the

proper count of product on it, All that is going

to cost you maybe 20% of your shipping costs. It

is the best money that you will ever spend. And

when you tell your people in your order that

quality control will be handled by SGS Testing

Laboratories, guess what? They know you’re no

joke. They’re not going to mess with you at that

point. You’ve done everything throughout the

entire process to show that you’re a professional,

all the way down to having a reputable company

coming out to do quality control.


your stuff. That’s why I know how much money

they have in it. They’ll take the $10,000 and start

building your product.

When it’s built, they load it on the container

in China, put the lock on and seal it, and the

document is created that it is coming to the States,

and at that point you’re required to send them

another third, another $10,000. You’re sending

them $10,000 today, and if they perform in the

proper time another $10,000 in 20 days. I like this

form a lot better because they don’t get all the

money up front. They’re not as slow. They want

the next $10,000 so they’ll hurry up and get the

order made. Then the order is on the ocean on its

way to the US or Canada or Australia or Europe

or wherever you are. It’s on the ship coming to

you. While it’s on the ship coming to you the

vessel company has your documents. When the

container arrives at your port it’s frozen until you

have the documents to go take possession of the

container: the original bill of lading.

In order to get your documents released you’re

going to have to pay the final payment of $10,000.

At that point the shipping company will release

your documents and the container is yours.

You still have to deal with customs. I’ve had one

container of goods inspected by customs. It’s not

really a big deal. That’s the way that most people

buy. After you’ve established some purchases

with Chinese factories, a lot of times you can

start negotiating those credit terms.

I have good friends that have 30-day net terms

from time of landing in the United States. It

open the container until the documents have

been released to you to open the container and

take ownership of it. The letter of credit has to

transfer at that time. The container lands in

the States, the letter of credit transfers and is

converted to cash, and the factory in China gets

their money and you have your merchandise. It’s

sort of like an escrow service, for lack of a better

term. You still haven’t opened that container yet.

It could be filled with marshmallows, but for the

most part it’s not. They would be committing a

pretty big fraud against their bank at home in

China and all of that. It’s not going to happen.

TIME OF TRANSFER PAYMENTSIn truth, the first way is for chickens! For what

it’s worth, the second way is the way I do all

my business in China. As a matter of fact,

almost everybody I know that does business in

China does business this way now. It’s called

TT Payments: Time of Transfer Payments. That

means that I’m going to wire some money to a cat

in China and hope that he sends me something.

If you’re wondering why you would want to do

that, there is an inherent reason: they make it

advantageous for you to do that. Why wouldn’t

they? What they do is allow you to have terms

at that point. Let’s say you’re buying that same

$30,000 container of equipment. You would TT

or wire transfer the money, the factory or the

broker – and I don’t like dealing with brokers

because I trust the factories more than I trust

the brokers - $10,000. They’re going to take that

$10,000 and go buy the raw materials to make


doing millions of dollars in exporting a year and

importing a year, it’s really worth doing though

there is quite a bit of paperwork involved. It’s for

an advanced importer.

If you’re savvy enough sometimes you can find

trade partners. If you can find a broker or agents

almost all of them are set up with these rebates

and it is another way they are making money on

you. Tell the agent, “Tell you what. I would like to

use you but let’s split the rebates.” At first they’re

going to say, “I don’t know what you’re talking

about. What do you mean rebates?”

The way it works in China is when you go to

manufacture something, every time you buy a part

or raw material the factory pays sales tax on it. We

don’t do that in the States. Over there they all pay

sales tax on that stuff when they build the product.

When they go to sell it, basically the money they are

getting back from the government is money they

paid in. If they export those good out of China they

get a refund for 100% of all of that tax. If they sell

it domestically they don’t get that refund, but the

trading company does. The trading company can

export and then get the refund for eight to 15% of

the full-face amount. That’s a big deal.

If you’re dealing with an agent say, “Hey, look.

Why don’t you split the VATs with me? Let’s split

the VATs. If you want my business you’ll split VATs

with me.” A lot of times they will. I didn’t get that

little piece of data right there until I had been to

China at least six or seven times. This could save

you tens of thousands of dollars, or even millions

of dollars over time if you’re a big importer.

depends on how big a percentage that Chinese

factory’s business you become. They will do

anything they can to keep you as a customer.

They won’t do so much to get you as a customer.

They’re more interested in keeping their

customers, keeping their customer base, and

keeping their turnover up.

Chinese factories don’t make any money through

the year. Most of them don’t work on much of

a profit. What they do is at the end of the year

for every dollar of merchandise that they sell,

the owner of the factory gets a rebate from the

government. It’s anywhere from eight to 15%

of his total gross sales. They don’t really care a

whole lot about how much money they made

selling to you. They care a whole lot more about

how much volume they do. That’s the reason that

their export business is so robust. They reward

their factories and their companies for exporting.

They know import dollars coming in is what will

make their economy grow like a weed. That is the

reason for the mentality they have. They’re really

interested in volume and if you’re producing

volume with them it is really easy to go back and

negotiate further terms.

One more codicil for you if you get really big in the

importing business: if you have a licensed Chinese

company like a Hong Kong trading company, or a

Shanghai trading company, you can get a rebate

from the government for your own exporting.

In other words, you would buy your products

domestically by having your Chinese company buy

the products domestically in China and you pay the

price the factory wants. When you export the goods

out of China to the States you can apply for those

government rebates at the end of the year. If you’re


have offices in L. A., in Memphis, Tennessee, where

all the rails meet because most freight travels by

rail once it’s in the States. They also have offices

in China. They have a quality control arm and

also a consolidating warehouse in Shanghai and

Guangzhou, which means if you’re using HYC they

can pick up a pallet of something for you, put it on

one of their containers, and bring it to the States.

There is going to be an additional fee for that, and

it’s going to be more expensive, but at least they

have the capability of doing that.

What To Ask Your Freight Company

WHAT PORT DO YOU SHIP FROM?

You want to order from their FOB-VAT port. If

you order from their factory, a lot of times the

inland freight in China can be more than the sea

freight to get something to you. China is a very

mountainous country and you can have a remote

factory that is 500 miles away from a port and it

has to go by train through a mountain, around

a branch, and up and down here all just to get

7 : S H I P P I N G A N D D U T I E S

When you get into shipping you’re going to have

to deal with a couple of things. When you have

your product ready to go you’re going to have

to determine who is going to be your freight

forwarder. They are the companies that handle

your documents for you. They clear customs

for you, they shuffle all of the product and

paperwork around and all of that. You do not

want to do any of that yourself: it is a paperwork

nightmare. The companies that do it are really

good at it, and they’re very inexpensive.

One trick that we learned on buying a bond. It

was about $500 a year where you avoided paying

a $200 per import fee. As an importer you have

to have a bond. The government makes you

buy a bond which is basically insurance in case

they have to destroy the container or charge you

more duty because you didn’t tell the truth. If

you fly the coop and they can’t find you, then

the insurance company that sold you the bond is

on the hook. Like Richard said, we were paying

several hundred dollars for bond every time we

brought in a container. Once they realized we

were bringing in multiple containers a year they

said, “Hey, why don’t you just buy your bond one

time for the year?” Five hundred dollars a year to

buy our bond and if we brought in 500 containers

it would cover us on all of them. You’re going to

need a bond, and freight forwarders are going to

help you with that. The best thing you can do is

talk to a freight forwarder.

The one we like the most is HYC Logistics. They


huge duty put on something. The candle business

is good example of that. For a while because of

safety and other things, there was a 70% duty

on candles. If I bought a candle from China

for one dollar I had to pay seventy cents to the

government for the privilege of bringing it into

the country. Believe it or not, it was still cheaper

than making the candle in this country, but a lot

of the time it’s not.

Harmonize CodesAll products that come from China (or anywhere else)

have something called a harmonize code. There is an

online service from customs where you can find a

harmonize number for your particular goods.

When I started bringing wax from China to

make my candles with, I brought in a couple of

containers of wax and the duty was zero. So I’m

bringing in one container of candles and I’m

paying 70% duty, and I’m bringing in another

container of wax and I’m paying zero duty. I ain’t

the smartest guy in the world, but believe it or not

I did that for a year. One day I’m waking up in the

morning and this ding went off in my head and I

said, “What is a candle?” I called up customs and I

said, “Can you tell me, when you’re looking at the

classification of the harmonize code for a candle,

what constitutes a candle?” “The definition of a

candle is wax with a wick in it.” I said, “So you’re

telling me that if I brought in candles that had no

wick then those would be wax, right?” “Absolutely.”

This is a big deal. You have to ask them for a

binding letter when they give you a ruling like

to the port. You may pay $500-600 just to get the

product moved from the factory to the port. You

want to make sure you have your prices quoted

FOB their nearest port. The fees to ship products

in China are going to be different based on the

port, so you’re going to want to look at a Chinese

map and see where ports are available. Usually

this is something your freight forwarder can

help you with. It costs more to ship from the

Guangzhou port than it does from the Shanghai

port; at least it used to. You want to make sure

you get the most advantageous port.

WHAT ARE THE DUTIES ON THIS?

Almost every product coming into the United

States has some sort of a duty on it. A duty or

tariff is the same thing. It’s a tax. It’s saying,

if you’re bringing this product from China we

charge a percentage of the total invoice amount

as a duty. You’re freight forwarder is going to

pay it and you’ll pay them back. That is another

thing that they will handle for you. Once you

go to China and you get ready to buy, you’re not

going to finalize anything until you talk to your

freight forwarder. If you want to get the duty

charges call the freight forwarder and say, “What

are the duties going to be on this?” There are

some things that you can bring from China at

different times that have extremely high duties.

Those are things that have a high duty on them

as a penalty. Meaning that there is strong lobby

or labor union here in the States, and maybe in

your country, that has lobbied Congress to get a


dealing with a lower profit margin, so every

penny counts. We used a third party auditing

service that was recommended to us by our

freight forwarder, HYC Logistics, to come in and

go over everything we were importing, look at the

harmonization codes we were using, and suggest

any changes. They told us we could classify them

as empty storage containers, which took us from

a 23-24% duty all the way down to three or four

percent. It was a huge difference. We didn’t have

to get any binding ruling. We brought in so many

of these: there were 160,000 DVD cases on a

container and we brought in multiple, multiple,

multiple containers of them. We saved a nickel

apiece. That’s a whole bunch of nickels.

Freight ForwardingSo, the freight comes in and you get a call from

your freight forwarding company. They will

say, “Hey, you’re container is in port. Have you

made your last payment yet?” You’ll make your

payment and the documents will release to the

freight forwarder. The freight forwarder is going

to move your container over to customs and

ask them, “Do you want to take a look at this?”

Customs only looks at about 1:200 containers.

It’s pretty random. If they say no, usually the

container will clear customs in two to three days.

Then the freight forwarder is going to arrange

your inland transportation. How do you want to

get the container from where it is to where you

need it to be? We’re in Texas and they would

arrange freight for that container to go from

that. They may tell you anything on the phone

and if you go do it you can get really screwed.

You want a binding letter from customs that that

is indeed the case, so you write a confirming

letter saying, “This is a confirming letter that the

conversation I had this morning with Agent ____

that I understand it this way. Will you please

confirm this and send me a binding ruling.” They

sent me back a binding ruling so from then on

I would have them drill a hole in every candle I

got and on the end of the container, guess what

I had? Boxes of wicks. I would bring the candles

into my factory here in the States, we would

unload the container, open the boxes, and my

staff would drop a wick in every one of the holes

and seal the box back up. My duty was zero

dollars. That saved me $14,000 per container

of candles. I had an absolutely unbeatable

advantage in the candle business. In the import

candle business I killed them. I killed them for

two or three years. It was forever before people

figured out what I was doing.

What you have to understand is that

harmonization codes are somewhat open

to interpretation. That doesn’t mean your

interpretation. It means that items can be

classified most of the time under different codes.

We were importing DVD media storage cases,

which were classed as “blank DVD cases”. It was

an inexpensive item and on a $.20 item it was four

cents duty, almost a quarter of the value. This is

another commodity type item so already you’re


Carolina and then have somebody place an

order in L.A. They aren’t going to ship the freight

back to L.A., right? What a lot of people will do

is have stocking warehouses, which are public

warehouses that will rent you space and they

will do fulfillment for you. It’s call Pick, Pack, and

Ship. One of the biggest in the industry is Federal

Express. You can contact Federal Express. They

have warehouses in Los Angeles where they will

break a container up by individual boxes and

ship one to everyone in North America if you

want them to. And if you’re willing to pay for it! I

believe HYC Logistics also has fulfillment services

in L.A. If they don’t they can put you in contact

with people in L.A. that can do fulfillment

services and public warehousing for you.

Trade-Free ZonesThe port of L.A. has a lot of warehouses that have

something called a “trade-free” zone. When you

bring a container of merchandise into the US that

is an asset at that point. You own that and you

could owe taxes on that depending on where you

are. In a trade-free zone, the government allows

you to leave that merchandise in the trade-free

zone without any taxes until you ship it out of the

trade-free zone. In other words, you don’t have

to pay tax on inventory that is just sitting there.

A lot of times it’s the duties as well. So instead of

paying on an entire container, you only pay on

the part that moves out.

Partial ContainersIf you go with someone like HYC, they will have

Los Angeles to Texas. Nine times out of ten they

aren’t going to truck that container and if they

do, you’re going to pay through the nose for it.

Instead, they’re going to put it on the rail and

send it to you via railroad.

In the port of L.A. they have these giant cranes.

If you get into the importing business going to

the port of L.A. is a lot of fun. They literally are

pulling off thousands and thousands of these

containers off ships each day like they’re tinker

toys. They’re moving them from the ship to the

train. They’re able to move that container all that

way from California to Texas for $500-600 by rail.

If I had that done by truck it would cost me at

least $2000. They’ll put it on the rail, bring it to

me here, and then they’ll back it up to the dock.

There is going to be a “diberge time.” Usually it’s

two hours per 40 foot. You have a bus to move.

You have to have people ready. They’re going to

drop that container off, and when they drop it off

you have a couple of hours to get that container

unloaded. You can pay for a couple of extra hours

but it’s pretty expensive. If you have a truck stop

near you, go to the truck stop and ask if there are

any “lumpers” that want to do any work. They

usually have some guys hanging around truck

stops that do nothing but load and unload trucks.

You can get some lumpers to help you come and

unload your container into your warehouse.

If you choose coastal distribution, you may have

warehouses all over the country. It really sucks

to move all your freight from California to North


Top LoadingAlternatively, you can put your goods on a long

40-foot container and do something called “top

loading.” Let’s say that you have 40, 000 pounds of

stuff that you could put on a 20 foot container, but

instead you put it on a 40-foot container because

you have 8,000 pounds more you can put on. You

might fill that with feather pillows, or something

that is lightweight. We used to bring in stanchions

that always weighted out. We could have brought

them in on a 20-foot container, but we also

brought in these key control boxes that are big

hollow metal boxes for holding keys. They don’t

weigh anything. We would top load the container

with the empty, hollow boxes, and the bottom

would be loaded with the heavy metal bases and

the container would come in chock full.

The bottom line is you have a certain amount

of cubic feet and you’re going to have a certain

amount of that on a container and you’re going

to try to fill every inch of that cubic feet that you

can, for two reasons. One is efficiency. You want

to get the most for your money. You’re paying for

it you might as well use it. Two (and this one is

almost as important if not more so) you want that

container packed, jammed up, and jelly tight.

You don’t want any room for movement inside

the container as that is where damage happens.

Look at the way movers pack houses. When you

get professional movers to move you from one

city to another they won’t use the whole truck.

They’ll push everything to the front of the truck

and they’ll have everything so squished in there

you think it’s going to turn into one big blob of

a consolidation service for you on the China

side where you can have freight brought in by

the pallet load. When it gets into the States you

can have it shipped back out by the pallet load.

You can stack pallets very high on a shipping

container although you want to make sure that

you don’t stack the pallets so high that they won’t

fit on a truck when they come to the States. Ask

me how I know!

There are several kinds of containers. When

you’re shipping something into the US from

China, 99.9% of the time you’re going to have

three different kinds of containers to ship on.

You’re going to have a 20-foot standard con-

tainer, which holds small lots of stuff like the

guy that brings in key fobs. He may not want to

bring in a whole 40-foot container. Usually what

you use short containers for are things that are

very, very heavy. The reason you do that is be-

cause no matter how big the container is it can’t

weigh over 56,000 pounds. If you have a 40-foot

container and you’re bringing in car batteries, a

huge percentage of the container is going to be

wasted because you’re going to have more car

batteries in weight than you fill in space. There

is a way around that where you can make that

work for you if you’re pretty savvy, but for the

most part what people will do if they’re bringing

in something really heavy is they’ll bring them

in on 20-foot containers. The 20-foot container

is about 2/3 of the cost of a 40-foot container. It’s

not an even half. You’re going to pay more for the

20-footer, but it’s still cheaper.


airfreight products in.

There are two ways to get airfreight done: first,

through your freight forwarder. Sometimes they

can get you a discount on airfreight. Federal

Express is probably going to be your most

expensive solution, but it’s going to get there. If

you have to use FedEx you’re going to pay four to

five dollars per kilo depending on where you are

coming from to most of the destinations in the

States You have to have something that is pretty

valuable and pretty light. If you’re importing

feather quills this will probably work out.

If you go to a normal airline, and the Chinese

airlines are particularly good about this – China

Southern, Air China, China Eastern – they all have

cargo freight departments and you can call them

up and get a quote on a per kilo basis. They’ll give

you a decent quote, but they’ll give you better

and better quotes depending on how much of a

contract you want to give them, how long you plan

to use their services, and how long you guarantee

you’ll use their services. You can get airfreight

down to around two dollars and change per kilo

if you’re willing to sign a contract with one of the

major airlines saying “I’ll guarantee to bring in so

many pounds of air cargo per month.”

I’ve seen a lot of businesses that have made that

work. The company I mentioned before that does

the dental work, they get all the molds taken for

dentures or crowns, and literally box those up in a

FedEx box and FedEx them to China. China makes

the dental work in a matter of 10 days or so, and

then ships it back in a FedEx box. Can you imagine

something. The reason they do that is because

they know that if they have stuff packed in tight

that it can’t move around and can’t shift a lot.

Partial containers can go in, in China, and we

can consolidate them anywhere and come out in

the US the same way. There are a couple of good

freight lines that carry less than truckloads that

can ship these pallets. They typically don’t go by

rail. They typically go by truck. We’re in Texas

and we paid about $350 per pallet from California

using ABF Truck Lines, or Yellow Freight.

If you’re dealing with trucking companies, don’t

ever call them up and ask for a quote. Call and

ask what your freight discount is because freight

is typically automatically discounted 60% from

trucking companies. If they give you a book

rate just say, “What’s my discount rate?” and by

saying that they will typically take 60% off the

original quote. Don’t ever pay normal quote fees.

Your freight forwarder can act like a broker on

that as well. That’s what they are there for.

Air FreightThere is a lot of freight now that is being done

by air. Sometimes it’s better to airfreight stuff

than it is for ground transportation to bring it. It

depends on what you’re bringing in. The guy that

does the key fobs is an example. If he’s buying

key fobs for three dollars and selling them for

$20, rather than be out and not be able to sell

any I would start air freighting boxes in rather

than waiting on a container. You just have to

do the math in your head. You’re going to pay

somewhere around four dollars per kilogram to


8 : D A M A G E D G O O D S

You are going to have damage in your container.

What do you do? Do you just throw it away?

As a matter of fact, I’ve made a lot of money on

damaged goods before. Sometimes I’ve made

more money on damaged goods than I’ve made

on “good” goods. You’d be surprised. If people

get into a bidding war in an auction situation,

sometimes they will pay more for stuff you don’t

want than you would have ever gotten anyway.

A friend of mine has a site and he imports

tapestries, really nice tapestries from China. He

does a lot of business. People return them, or

he’ll overstock in one that he thinks is going to

sell and it doesn’t sell as well as the others do.

Sometimes you’ll liquidate just to balance

inventory. We’ve had three models of something

and one model will sell out in two weeks, but the

other two will take forever. You’re just willing to

sell them out so you can reorder. The next time

you reorder you’ll know to go heavier on the

model that sold the most, but you didn’t know

that the first time out so you just liquidate out

these others as quickly as possible to give you the

capital to reorder.

eBay And CraigslistWhat I will do is take a look at a lot of my

damaged goods or overstocked goods and I’ll

determine what the best strategy is to liquidate

the product. Number one, I go to eBay. You’re

not going to get any more out of the product that

you’re liquidating then you are going to get out of

how many thousands of dollars worth of dentures

and crown molds you can get in a 10-kilo box? A

lot. It costs them a couple hundred dollars to send

a box and they have $10,000 worth of dental work

in the box. Air freight is worth it then.

There are some things you just don’t want to

bring in and ship if you can help it. Big pieces of

framed art are a pain in the neck. Dry erase and

chalkboards are a pain in the neck. I’ve sold all of

these things and imported them from China. The

damage is almost more than the actual worth of

the goods. It seems like the bigger the product,

the more broad and narrow that the product is,

the more difficult it is to bring in

If you’re bringing in a piece of equipment that

is more than $400-500 I would definitely de-

mand that it be put in a crate. When you get it

here have someone else un-crate it. We found

bugs and all kinds of crap in those crates, and

throw that wood away because sometimes it just

plain stinks. The wood crates have to go through

fumigation which kills the bugs that are in there

but it doesn’t vacuum them out, it just kills them.

Just be sure to be careful. If you’re going to have

something brought in that’s worth at least $400-

500 then have it crated.

I’m not going to go into the duties on this and

the duties on that and get into real detail. To be

honest, the freight forwarder handles all of that. I

never had to learn it. I’ve brought more products

into the States than most people have and if I’ve

never had to learn about duties and all that, you

shouldn’t have to either. It’s not really a big deal.


expensive piece of equipment and guess what I’m

still making? Money. My first cost is one third of

my sale price? I’m still making a 40 margin. I was

able to go out and liquidate at half price all of the

additional fillers that I didn’t want in one day just

by going back to my core list.

Here’s the thing. You can’t just go in and say I’m

going to give them to you at half price. There has

to be a reason why. “I’m closing my warehouse.”

“I’m consolidating shelving.” “They’re scratch-

n-dent.” “I’m overstocked.” You have to have a

reason why or you’re just discounting the prod-

uct. One thing you have to be aware of when

you do that: if you’re selling to customers who

consistently buy from you each month, and you

give them a deal to come in and buy a bunch

of your overstock or a bunch of your damaged

goods or a bunch of your scratch-n-dent, you’re

going to take them out of the market for a while.

That sucks. That’s exactly what happened here.

We had a guy in South America that was buying

about four fillers from us every month. He was

paying us $3500-3700 a filler. We offered him

these scratch-n-dent fillers for $2000. He bought

them all, but then he didn’t buy anything from

me for five months. You have to be sure you want

to do that when you do it.

Overstock CompaniesAnother thing is to go to retailers like Big Lots

and Overstock.com. Overstock.com will give you

a bid on practically anything. You can send them

a photo and some specs of what you have and

they’ll give you a bid on it. Many times Overstock

will not even move the merchandise. They’ll

it on eBay. You’re going straight to the consumer

at that point. The same is true with Craigslist.

The friend of mine that does tapestries is

fortunate because he has 1000 tapestries. When

he gets returns back that are overstocks or

damaged, he has one or two of this one and one

or two of that one and he can have 100 auctions

going on eBay for 100 different tapestries and

that works for him. If you have 100 of exactly

the same thing you can’t put 100 auctions up

on eBay for it because you’ll destroy the market

and nobody will buy it. It’s a slow going process,

but if you want the most money out of your

additional freight eBay does a good job.

Scratch-n-Dent SalesThe second thing is scratch-n-dent sales. If you

have a customer base, in most cases you’re going

to have a list. We did this with equipment one

time. We had a list of customers and we got in

a shipment of fillers that we didn’t sell a lot of.

We, or the factory, had made a mistake on the

order. We meant to order five of one filler and

20 of another because we already a bunch of the

one we had just ordered five of, but they in-

verted the order and we ended up getting almost

none of the ones we needed and a whole bunch

of the ones we didn’t. We just went to our best

customers and said, “We’re having a scratch-n-

dent sale,” everything coming in gets a scratch or

a dent on it somewhere, “and we have these 20

fillers, and if you want one we’ll sell it to you for

half price right now.”

Remember, I can dock up to half price on an


Asset Recovery Auctions, or Asset Reduction

Auctions. You can bring in your container of

stuff and let somebody bid on it at an auction

and sell it right there. Again, you might not get

everything that you want out of it.

Insurance I told you before that sometimes I would make

more money. This is pretty interesting. If you

get freight insurance on a product, particularly

inland freight, and it gets damaged between

California and wherever you are, you are going

to get a claim with the inland company, the

trucking company, or the rail company that

brought it in. If you can show that that is the

case, they’ll usually make you two offers. “We’ll

give you $20,000 and we keep the freight, or

we’ll give you $17,000 and you keep the freight.”

I’m pretty good at liquidating so if I can do it

I’ll take the lower amount from the insurance

just pay you to pack it and ship it for them. Big

Lots, if it’s a reasonable good, a consumer good,

this type of company will make a bid on it. They

will make you an embarrassing bid but they’ll

make you a bid. Here’s the deal with them. When

you’re starting to deal with guys like them and

brokers, they’re like us, they’re going to look at

that and say, “He made about a dollar for that.

Let’s give him $.80.” They’re going to make you

bleed a little bit. But I would much rather lose

$.20 on the dollar and turn over my cash than let

it set there and ride that train all the way into the

ground. I’d rather turn it and burn it while I can.

Liquidation AuctionsTry local brokers and local discount people.

There are a lot of them around and if you want to

find them here is a really great tip: make friends

with some trucking company managers in town,

and people who handle damaged freight for

trucking companies. When the trucking company

have a damaged load they pay an insurance

claim to whoever the damaged claim was going

to and they keep the goods. Then they try to

recoup some of their money is by calling surplus

brokers and saying, “Hey, this is Jimmy over at

Passville Truck Lines, and I have a truck load of

light switches. What will you give me for them?”

The guys who run the trucking company docks

know all the liquidation dealers in town.

Most cities, or most larger cities have liquidation

auctions. They’ll usually have them once a week

or at least once a month. They are often called


CONCLUSION

So: that was the whole process. Sourcing.

How to get your samples. How to get a great

quote and a great price. Customizing your

products and value-adding and getting the most

apples to oranges comparisons that you could

possibly get. How to place your final orders, how

to get proper quality control, how to negotiate

great terms with the factories, how to work with

freight forwarders, and how to deal with shipping,

customs, and tariff issues. Even what you can do if

you happen to get damaged goods.

That is everything you need to know to be an importer,

and that’s assuming you probably want to go to China.

Good documentation, talk to the right people, and

negotiate fairly and I think you’ll do just fine.

I love, love, love being an importer. It’s a cool

business to be in, first of all. It is sexy. You never

run out of stuff to talk about at parties. You do

have some damn interesting stories if you do this

enough times. Some weird stuff is going to happen

to you. I had a friend of mine that got locked in a

Chinese toilet for almost an hour once.

Why do I do it? Complete, 100%, market

domination. I don’t like to play on an even field,

bottom line. I’m an importer. I don’t care who you

are for the most part, you can’t beat me. If you

want to manufacture against me I will beat your

brains in. I have no labor costs to speak of. The

factories that we use in China and the factories

that are mine in China, we can just kill anybody

as far as manufacturing goes. If you’re going to

import against me you’re probably not going to be

as good as I am. You’re not going to know all the

claim and then I’ll sell off the scratch-n-dent

merchandise, which in a lot of cases there isn’t

a whole lot wrong with it. I’ve had situations

where I’ve actually made more money from a

losing container than I’ve made from a winning

container because I have $.90 on the dollar for

the goods and got a $17,000, $18,000, or $25,000

check from the freight company. There is a

possibility that can happen. Is that a business

model? Hell, no. It doesn’t happen most of the

time, but occasionally it will happen.

Recouping From The FactoryWith damaged goods though, your number one

avenue is to try to get the factory to make it right.

Most of the time they will do their very best to

make it right if there is any possible way that

they can. If I get damaged goods in and I am able

to overcome it, when I place my reorder I will

ask the factory for a credit for whatever it was

that it cost me. “I’ll tell you what. You guys really

messed me up on that last order.” They’re going

to start calling and emailing you, “Are you ready

for another order?” “No, you really messed me

up on the last order. It cost me $10,000 to get that

crap fixed. If you want to give me a $10,000 credit

on that last order I might try you again. I might.”

Don’t ever give them a sure thing. “Oh, okay,

okay.” Normally they will do it and they’ll cover

whatever it was that cost you to remediate on

your side of the fence. That is another way that

you can make money on damaged freight.


time and say, “What should

I do? Should I be a retailer,

a wholesaler, a broker? The

answer is, yes. You do all three.

If you do it smart and handle it

the right way, you have different

brand names, different compa-

nies, and different sites and you

can retail, wholesale, and help

people. With brokering you’re

selling your connections. The

bottom line is that there are

people that badly need those

connections, and badly need

to know how to handle the

paperwork, cross the t-s and dot

the i-s because they don’t know

how to do it and they’re too

damn scared to ever try.

You can just be a service-based

provider like the guy we talked

about that does the aluminum

extrusions. That’s the easiest

thing. I don’t see how you can’t

win with that. You literally walk

in the door and say, “Hey, would

you like to pay half for that?”

“No, I like paying full price.” It’s

aluminum! My aluminum is

aluminum too. It’s pretty simple.

This business has an unlimited

amount of opportunities. The

other reason that I absolutely

love it is because I get bored

really easily. I’m an importer,

but this week I’m importing

something else, and next week

I’m importing something else. I

buy and sell companies, I create

things I’ve learned in the last 10

or 11 years doing this. I love that.

If you’re trying to retail against

me, again, I’m going to kill you.

You’re buying up a supply chain.

I am the supply chain. I get to be

ultra prime all the time.

I can make money all the way

up the list. I can decide that I’m

just going to rep containers for

people and make five percent of

the profit and take no risk. I can

decide that I’m going to bring the

products in and be a wholesale

distributor and make 50% profit,

take some risk, and know that I’m

feeding a supply chain where I’m

still cheap and I can liquidate. I

can decide to be the retailer.

Look at Old Navy stores, for

example. Old Navy, Kohl’s,

Ashley Furniture, some of the

biggest retailers in America

right now are giant direct

importers. IKEA, everything

they sell fundamentally comes

from China, but they sell it

direct in their own retail stores.

You can’t touch them. They are

selling a couch for $499 that

they have $60 into. The guy

down the street selling a $400

couch paid $350 for it. You can

just absolutely slaughter your

competition. There is just no

way they can possibly compete

with you on the consumer end.

People come up to me all the

companies, I create brands, and

I’m never, ever, ever bored. I

could be selling blow dryers

one day and condoms the next.

I don’t know what I’m going

to be selling, right. I never get

bored in this business because

there is always something

different about it.

The other thing that has some

real intrinsic value is selling

private label to other companies.

We’re able to come in and

source products and brand

them to their stores. We’ve

talked before about bringing

in a piece of equipment or

merchandise or whatever that

turns into a business in a box

where a person can go and put

somebody into business.

Right now we’re considering

beginning to buy hair salon

equipment because Richard has

experience in the hair salon

business. We can bring in an

entire salon of equipment for

under $4000. We could just

sell the equipment, and there

are people out there that do

that. I personally think that is

stupid. What we will do in-

stead is create a brand name,

get an industry expert to write

us a guide, create a special-

ized pallet of colors, bring a

designer in to design a store,

and we’ll sell them a design

package, a brand name, all the


What do you think those brands

are worth? They are worth a ton.

I built a brand name company not

too long ago and ran the brand

for less than a year and sold the

brand name off for $350,000.

It was just a brand name of a

product that I was bringing

in from China. I didn’t sell the

inventory, I just sold the brand

name. That’s pretty remarkable.

People buy these businesses.

The exit strategy for an import

business is establishing product

in the market as the product in

the market, or one of the top three

or four products in the market.

You don’t have to be number

one. Being number two or three

would be pretty cool. Being one of

the top brands in the market for

whatever it is that you sell, and

literally just selling your company

and your brand. Do you know

who is going to buy you? Probably

the guy that is number one.

Somebody is going to buy you and

envelope you into what they’re

doing especially if you become

enough of a fly in the ointment.

I’ll never forget when I started

importing and I was working

really hard. This was years

ago and I was down in Destin,

Florida, where I took my family

on vacation. We went into the

grocery store that night to get

art work for their signage and

for the embroidery and all of

that, and all their equipment for

$9999.95. You can get a Beauty

Shop-in-a-Box.

Let’s say I can buy this for

$3800. Guess what I’m going to

do? I’m going to charge them

$3800 down and the balance

on delivery. Duh! Their other

alternative is dropping $30,000-

40,000 in equipment. With me

they give me $3000-4000 and I

pay for 100% of the equipment.

It gets here and drops off at

their door. Guess how much of

that second check I get before

they get their stuff? All of it.

Other people’s money. No risk.

In those situations we tell them,

“We build it out for you in our

factory in China and it takes six

to eight weeks.” Tell them right

up front. What are they going to

do, go to China? I don’t think so.

They’re cutting hair. That is their

business. That is what they do.

If you think about every big brand

of consumer goods in America

right now: Eureka vacuum

cleaners, RCA telephones, double

computer monitors, whatever you

have in your home or business,

guess where they’re made? China.

Those brands have been built

based on Chinese manufacturing.

food for the condo, and we

went into the discount store

next door and we were going

to get some floating toys and

stuff for the kids. I walked by

and did a double-take when I

looked down on the shelf at this

store in Florida and there was

my product. I thought, “I’ll be

damned. That’s cool.” I didn’t

know anything about this store.

They had bought from one of my

distributors. The whole time I

was in Florida every time I went

into a store I would look for my

product. In about eight out of

every ten stores I had product

on the shelf. That was probably

the coolest feeling I’ve ever had

in my entire life. There was a

store out there that I had never

even heard of selling my stuff

with my product sitting on the

shelf. They’re actually pushing

my stuff making me money

every day while I’m somewhere

else asleep and I don’t even

know they exist. That was a

really, really, really wicked cool

thing about importing.

Anyway, that’s pretty much it.

Get out there and get started

and get your feet wet. Let me

know how you do. I’m dying to

hear about your success and

what you’re able to accomplish.

Have fun importing.

Documents

CHINA IMPORTING SECRETS - Perry Belcher€¦ · If a product has a lot of price elasticity, you could sell it for $5 online or you could spend the same product for $20, and spend