Episode 8: China Trade Show Trip Details

Today I’m flying solo again, but I have a great email to share with you. Jay from New Jersey sent me some questions about my recent trip to China. For those who didn’t know I have covered this extensively in our blog and the last episode. But today I’m going to answer Jay’s questions and hopefully encourage other listeners to send in more feedback.

We went to China to check out both the Canton Fair and the Hong Kong Mega Show. It was a great experience and even though I was a little disappointed in one of my niche market searches I still found some great deals for some of our other brands.

Jay asked some awesome questions. Here are some of the topics I covered in today’s episode:

1. How did I get a visa?
2. What did I buy?
3. What did I buy at the show that excited me?
4. Did I save money on products? 
5. How long will shipments take? 
6. What currency was I asked for?

These questioned opened the door to some deeper discussion and I tried to answer them to the fullest I could and still be comfortable, These are some of the tips I have:

• When you purchase a Chinese visa, go ahead and pay for a 10 year pass.
• Why projected shipment times are never accurate.
• Why I always pay my first payment with Paypal.

If you are still curious about my trip to China, you can read more on our blog at ecomcrew.com. Also check us out on iTunes and leave an honest review of the show. We want to know if our content helps you and your honesty is the only way to know. Next time Grant should be back to discuss the inspection process with me. Until then, special thanks to Jay from New Jersey for today’s questions!

Full Audio Transcript

Mike:   Hi, this is Mike Jackness.  I’m here with this week’s edition of the EcomCrew podcast.  Welcome back, everybody.  This week I was planning on having Grant as a co-host again.  We’re missed him.  But we actually got a really good email in this week from a listener in New Jersey asking some questions about our podcast that we just did this last week on my China trip.  So I thought it’d be pretty cool to do our first listener shout out (thanks, Jay in New Jersey) and read his email here and answer the questions that he asked.  Actually a lot of really good stuff here.  I think everybody will enjoy.  It kind of gets into some of the nitty gritty of what we actually looked at in China, what we were looking to buy and additional things that might be good if you’re looking to go out there.

So the first question he had here was exactly how did I get visas?  Where do we get them?  How long do they take?  So it turns out, in order to get a visa to China, you have to actually go to the closest Chinese consulate, and for us, that was Los Angeles.  So I mean if you live in a more remote part of the country, chances are, you know, it’s going to be pretty darn far away from you.  And even though Los Angeles is only like 90 minutes by car for us, we still used a service to help us get our visas.  And I’m not sure the exact cost.  I’d have to actually go back and ask Michelle, who helped get those for us, but I believe it was a couple hundred bucks for both of us and that included them driving, literally taking the passports up to L.A. in a car and obviously it’s a travel agency so then they had several other passports and stuff that they drive up there every week, and they turned it around in about two weeks.  So again, you don’t want to wait until the last second; otherwise, you’ll have to pay some hefty expediting fees, which I think, you know, got into the hundreds of dollars.

So it was a couple hundred bucks and because we used that agency, I mean they were able to navigate, you know, the pitfalls of trying to go up to the consulate and figure out what the heck to do and also get us that 10-year multi-entry visa.  And that’s something that I really encourage you, even if you don’t have any plans on going back, you never know.  I mean 10 years is a really long time and the visa’s the same price I believe for the multi-entry versus just a regular so why not just do it once?  And from what I understand, those were really hard to get in past years but they relaxed on the qualifications.  They really want businesses or purchasers and stuff like that to go to China and buy Chinese products, so I think that’s what they kind of marked on my application.

And one thing I did have to do is preregister for the Canton Fair and have that to take to the travel agency and give to them.  So just talk to the travel agency or whoever you use to get the visa.  There’ll be someone local in your town that does Chinese visas, or if you live in a really remote town, I’m sure within a half an hour, you can drive to a travel agency that can help you with this stuff.  So that was the thing on the visas.

The next part of this question here was, “What did you go there to buy?”  Now, most sellers are, you know, taken aback or don’t really like to talk about specific products and I’m somewhat in the same boat but I kind of flirt around the edges of specifically, you know, what I’m into.  You know, my feeling is that is someone wants to copy me, go ahead I guess.  I mean there’s lots of people out there that copy what we do already and that’s something I’ve kind of gotten used to in our past businesses and I really just focus on what I’m doing and try to make great quality products and brands.  And, you know, what we do is hard.  I mean we’re not looking to make a quick buck, I mean we’re thinking longer-term and, you know, so we’re pretty open about what we do.

So as most of you know, if you listen to this podcast, you know, one of the sites that we own is IceWraps.com.  We’ve been created our own branded products for that site now for, you know, about a year now and they’re doing quite well.  So we went to China really looking to expand that line more than anything just because that was our first, you know, tippy toe into developing our own branded products and it’s no longer tippy toe; we have a full-fledged line of products, and actually just got 10 more SKUs in this week to launch under that brand.  So, you know, we were looking for medical type products there mostly, you know, for that brand.  You know, something like a shoulder ice wrap or a knee ice wrap or something of that nature and realistically just didn’t find what we were looking for.  I mean it was the biggest disappointment of the show, was going out there and not really finding good products in that niche.  I’m not sure, you know, exactly why that niche wasn’t well-represented there.

I mean there was a huge haul of medical products, but they were, you know, diabetes testers or something like that or they’d be, you know, these crazy models of a human anatomy.  I mean it was things you can think of like all over the spectrum, things that would be used in a hospital, dialysis machines and things of this nature.  I mean it was all over the place and it was always a couple people there that really had these health products that we were looking for, the gel packs or shoulder packs or knee packs, and the ones that were there just weren’t that high a quality so we just kind of moved on.  I mean I did get their catalog and all that, but I mean our focus always is developing products that are better than anything else that’s on the marketplace and we just did not find that level of quality stuff there.  So that was really the one bust for us at the show.

The other thing that we were there looking for was for our coloring book brand.  So, you know, we’re looking to expand that brand and not just do coloring books but, you know, journals and coloring pencils and markers and greeting cards; anything you can think of that would fit into that brand.  And, you know, that certainly was not a bust at the show in China.  You know, between the Canton Fair and the Hong Kong Mega Show, you know, gifts and premiums and stationary and all these things that all those previous products I mentioned, you know, categories that those fall into, there was definitely no shortfall of those products out there.  So we ended up spending most of our time on that stuff, and there was also a huge cases and bag section, which allowed us to find some cases for our coloring pencils and markers that I mentioned.

So we’re definitely pretty happy with some of the stuff that we found there in those categories and there’s a couple other brands that we’re looking to develop that are so in the early stages right now that I don’t feel comfortable talking about them on the podcast yet, but it’s definitely something that I’ll mention, you know, a few weeks from now or a couple of months from now when they’re a little bit more, you know, cemented.

But we were also out there, you know, really looking for ideas in general.  So we had our things in mind like I mentioned, the healthcare kind of products and the coloring products, some of the things that we already kind of went into the show for but, you know, just walking up and down the aisles, I was hoping that that would have an a-ha moment of other brands that we might want to get into.  And obviously that didn’t really happen out there.  I mean we were so overwhelmed with, you know, the four brands that we came to the show in mind to come there with.  Even though we were underwhelmed with one of the brand’s stuff, the other three, we found so many leads and so many things, so many products that, you know, we would have to have millions upon millions of dollars in cash to just buy the things that we found in just one trip to China.

So, you know, pretty much anything that you’re looking for can be found out there.  There’s probably some exceptions but if you look back on EcomCrew.com, there’s a really in-depth blog post that I put up about the China trip and in that blog post, I break out what each phase of the Canton Fair and Hong Kong show has so you can double check and make sure that the products you’re looking for are going to find you.

The next question here was what did I find that excited me?  You know, again, I try to kind of stay away from specific products.  You know, it’s just kind of a thing in ecommerce and this Amazon-branded world that most people are a little reluctant to talk about specific products.  What I can say that excited me was just the landscape of the show.  And I mean being able to just walk down an aisle and see a dozen or two dozen, whatever would fit in the aisle, manufacturers and, you know, walking to their booth and see the product, that excited me.  You know, bypassing the months upon months of misery of sending samples and emails back and forth from China and doing all that in a matter of hours really, really was awesome.  And, you know, I cannot tell you like what a relief going out there was.  It’s definitely something that we’re going to do again, you know, sometime in 2016, if not twice in 2016.  Most likely once just because, like I mentioned, I mean we already found what we’ll represent millions of dollars’ worth of products if we had that much cash.  And it might be two years before we need to go back to China to find more contacts, but it really just depends on how things go in the first couple quarters of 2016, if we’re going to go back out to China again this year.

So the next part of the question here was did I save any money on products?  And I can say without a doubt yes.  You know, obviously I’m already buying stuff from China.  We were saving lots of money on these Chinese products.  You know, we had been importing dozens of products already from China before actually making a trip to China and, you know, I’ll give you an example of this – call it Product A, if you will – that we were paying $10.30 all in [FOB? 10:22].  And, you know, we thought that that was an amazing price.  It was less than half of what we could purchase it for in the United States, still a really high quality product and we sent lots of samples back and forth and we got a really high quality product put together almost, you know, to an extreme.  In fact, some people were like, you know, “This is too high quality,” and my thing is that there’s just no such thing.  And we’re going to make really good margins on it nonetheless, even though it’s high quality, but even still, by going to China – now, use the company out there that made one particular aspect of the product.

So, you know, it was actually a case.  So they made the cases and they source from other companies to get the box and other, you know, contents inside of the case.  And by going and finding three different manufacturers in China and realizing that we can buy the individual pieces for it, we’re going to end up paying 30% to 50% less all in for the same products.  So we’re going to be paying somewhere before $5 and $7 when we reorder this product through a different manufacturer.  So that’s really exciting.  I mean the margins are going to get even better for us.  Obviously it’ll be a little bit more complicated because we’ll have to do three inspections instead of one when the products are done and we’ll have to do some logistics getting products from Manufacturer A and B in China, and Manufacturer C to assemble it, but the cost savings is so astronomical that it’s obviously definitely worth it.  And the cool think about it is that, you know, we’ll have the relationship with the disparate manufacturers and be able to put together an even better product in the end.

So the next question here is, “How long will shipments take?”  So, you know, it seems to be the same song and dance from anyone that you order from in China.  You know, they typically quote 30 to 45 days to manufacture a product.  Now, that’s just in general.  There’s certainly manufacturers there we’ve got a 90-day quote from or even 120-day quote from, which is staggering if you think about, you know, just how long it takes to develop each product.  And, you know, it’s something that you just have to be ready for.  You know, I’ve been talking to lots of people in this space, you know, people that are looking to get into this and they’re just really overwhelmed with the timelines and that’s something that you just have to absolutely plan for, and here’s what I’m talking about.

I mean let’s say you’re developing a product and, you know, it takes let’s say 45 days for the manufacturer to actually create it.  You know, you’re going to have to put down a 30% deposit (that’s pretty standard) to get the manufacturer started on your order.  So 30% of your cash, let’s say it’s $100,000 order just to use a round number, so you’ve got to send $30,000.  And it just sits there, you know, waiting for 30 to 45 days before you can move the ball along if you will.  And the reality is that that 30- to 45-day number they quote you is never right.  It’s kind of like a contractor working on your home.  You know, they quote you two weeks and then it takes four.  We’ve been pretty lucky.  I mean most of the stuff that we’ve ordered so far is usually not more than a couple of weeks late, but let’s just say it’s at 60 days and then, you know, let’s say you have 30% of your cash, that $30,000, is locked up for 60 days and then when the products are ready, you’ve got to pay for an inspection, which is typically, you know, around the $300 range, maybe $600 range depending on the size of the shipment.  So that’s more cash outright.

And then once you get, you know, final inspection, you’re happy and you’re ready to have it sent off to the port, now you’ve got to spend your other $70,000.  So now you’re in for $100,500 let’s say and you don’t have the product yet.  Now it’s got to get on a boat and travel across the ocean, go through customs.  I mean that’s another two to three weeks.  Realistically, you know, it’s a 90day timeline before you actually have the product in your warehouse and your cash is locked up for a very long portion of that and if you’re selling on Amazon or you’re going to put it on your website, it’s a new product, you have a couple of more weeks to get the products, you know, into Amazon’s warehouses and get your reviews seeded and all that stuff.  I mean it really can be a full 120- to 180-day process from start to finish.  And obviously, you know, if it’s your first order, you’re not going to be placing $100,000 orders.  You might be thinking of doing a $5,000 or $10,000 order, but the numbers are all the same.  And then you obviously have to pay for shipping and you’re paying for the shipping as soon as it leaves the port so, you know, on $100,000 order, that could be another $5,000 to $10,000 – probably closer to $10,000.  And then you’re going to have customs fees that you’re going to pay when it hits the US.  So all in all, you have a lot of cash locked up ahead of time and it’s something you definitely will not want to plan for.

So the last part of the question here was, “What currency do they accept?”  You know, I haven’t met anyone yet that will take anything but US dollars, which is probably good for us.  I mean we’re in a US dollar world and I want my product pricing to be the same, be consistent.  I don’t want to have to worry about currency fluctuations changing pricing.  So yeah, everyone seems to take US dollars.  Almost all the money seems to be going into a Hong Kong bank but we do have manufacturers that the banks are in Guangzhou or Shenzhen or something like that, closer to where they’re at.  But it does seem like a lot of these companies are using a Hong Kong bank account.  All of them are US dollars.

So what we typically try to do when we’re talking to new manufacturers, number one, we never pay for samples anymore.  That’s something that we’ve kind of learned along the way.  If someone wants us to pay for a sample, I just tell them no.  if they aren’t willing to give it to us for free, then I just move on.  We do pay for shipping.  We have a DHL account so we just give them our DHL import number and they send it on its way.

What I do try to do – I can’t get every manufacturer to do this but I try to pay the initial deposit with a manufacturer I’m working with for the first time with PayPal.  A lot of them will balk at this and, you know, it depends on the level of comfort I have.  Sometimes I’ll send out the inspection company to just do an audit of their factory and make sure that they’re real and that obviously gives me more comfort, but I really like to pay my first deposit through PayPal.  And the reason is that I have total recourse there.  If they never make the product, if the product’s complete crap, you know, I can reverse the charge through PayPal and not lose all that money.  So basically, the point where I’m sending a wire transfer is after I’ve done the inspection on the actual product before it’s about ready to get on the boat and come here, and at that point, I’m pretty comfortable.  I haven’t had anybody pulling strings at that point yet.  Although I have certainly heard horror stories out there, which are kind of scary.

And then, you know, obviously you’re going to send a wire transfer once the product’s ready.  So they’re all in US dollar and, you know, obviously there’s some risk involved there, which is why I try to do PayPal to start with and then I actually will pay the fee (there’s typically about a 3% fee to do the PayPal), which I’m more than comfortable with.  That’s great insurance for me.  And then I do the wire transfer.  I use American Express International, AMEX, to do the wire transfer.  It saves me a trip to the bank.  They charge $35 to do a wire transfer.  So does my bank, but I don’t have to spend 45 minutes driving to the bank, watching someone type my information into a computer, and then drive back.  So it’s worth it for me to use American Express International payments.  Now, if you are paying people in another currency, they don’t charge you a fee, they make their money on the currency trading.  So there are situations – we have some people that we work with in Brazil and Italy for some of the cutting board products that are using either Euros or whatever they use down in Brazil, and then, you know, in those wire transfers we actually will pay with a different currency.  But in China, most manufacturers are all using US dollars.  So hopefully that answers that question.

And that was the email from Jay in New Jersey.  So thank you so much for sending that in.  if anybody else out there has questions, feel free to go to Ecom Crew and hit the Contact Us button and send us an email.  We’d be happy to read your questions on the air or even dedicate, you know, an entire episode like this one if it’s a really good in-depth question, and I definitely appreciate the input.  You know, I think that this is really good information for everybody out there.  It kind of expands upon our China trip journey and our manufacturer journey.

And Grant and I probably – it might be the next episode, or very soon – are going to be talking about more importing stuff and some of the [inaudible 18:55] and wins that we’ve had and there’s been some funny stories that Grant has and I certainly have.  But just really some cautionary tales really specifically about the inspection process and how to deal with some of that.  And I don’t want to get too in-depth on that right now because I think Grant would be a great cohost for that.  So until next time, thanks a lot, everybody, and I think this is going to be our second-to-last episode of 2015 so almost New Year’s and Christmas and all that good stuff, so Happy Holidays, everybody, and we’ll talk to you next week.  Thanks so much.