China is considered by many importers from other countries to be the most suitable country of origin for imported goods based on its large population base, rapidly developing manufacturing industry and relatively mature management system. In 2019, trade between China and Saudi Arabia reached US$61.4 billion, up 32% year-on-year. Whether it is traditional B2B import and export trade or B2C cross-border e-commerce, more Saudi importers, especially SMEs began to pour in. If you are new to importing as a Saudi local, to import goods from China needs to understand the whole process from several aspects such as choosing the right import goods, finding a quality supplier, establishing an order contract with the supplier, shipping the goods back to Saudi Arabia and operating the import customs clearance process. Take the example of importing electrical accessories products, which is not difficult but needs to be read carefully.

Quick guide.

I. How to choose the correct goods to import?

II. How to find a quality supplier?

III. How to establish an order contract with the supplier?

IV. How to shipping the imported goods back to Saudi Arabia?

V. How to operate the import clearance process?

I. How to choose the right imported goods?

Electrical accessories are the name of a large category of products, including wall switches, lamp holders, plugs, sockets, cables, junction boxes and so on. As a new importer, it is certainly not possible to import the whole series of products at the beginning. The same is not suitable for importing those products with very strong characteristics and low applicability, which will cause hoarding. So it is necessary to find the most common, but most popular products by the following means.

1. Through the Google Search Engine

Google, as the largest search platform, has a wide range of data integration capabilities and powerful user behaviour analysis capabilities, using it is a good way to analyse user needs.

For example, opening Google and typing in the keyword 'electrical accessories', you will get more precise targeting and more ideas for keywords for this product.

2. Through Amazon Best Seller Categories Tree

The rise of the cross-border e-commerce industry has led many small sellers to become loyal to the model of importing goods from China and selling them on Amazon. The Amazon Best Seller Categories Tree is also a way to identify hot selling products.

3. Through Google Trends

Once you have initially selected the products you plan to import, Google Trends will allow you to see whether the product is trending up or down and to confirm whether the product is popular enough in all your markets. For example, open trends.google.com and compare three products: extension socket, wall switch and lamp holder.

II. How to find quality suppliers?

1. Find suppliers through online platforms

 Wholesale websites

There are many international wholesale platforms that connect suppliers with global buyers, such as Alibaba International, Global Selling, etc. There are many international wholesale platforms that connect suppliers with global buyers, such as Alibaba International, AliExpress, etc. Take Alibaba International for example, the world's largest B2B platform and the largest trading site for Chinese products. You can find the best match for your supplier by searching for keywords for your target product and narrowing down the restrictions. Or you can submit a Request for Quotation (RFQ) and suppliers will come to you to negotiate.

 Search engines

Again, with Google as the most resourceful search engine, you can search for a number of matching suppliers using the product keys, domain restrictions, ad filters, etc. You can browse their websites for further information, or contact them directly.

 Social media platforms

LinkedIn, Facebook, Twitter and other social media platforms are not only a way to communicate your ideas, but also a way for buyers and sellers to find opportunities to work together. Take SQM (Saudi Quality Mark), which is currently the most widely discussed topic in the electrical accessories industry, as an example. If you search with SQM as the keyword, you can find information about some Chinese manufacturers and products certified by Saudi Quality Mark (SQM). Checking their homepages and you will find a number of suppliers who regularly update their product information and industry-related information on social media platforms.

2. Find suppliers through offline platforms

 Attend trade shows

Attending trade shows in China is a more costly, time-consuming but more secure option than communicate on networking. You can communicate directly with thousands of suppliers and see the quality of the actual products. This more direct but most traditional way of doing business is very important for developing business relationships. At the various fairs, you have the opportunity to see many new products and get the most competitive prices, which could become the best-selling products in your country.

Top 9 Recommended Trade Fairs in China

China Import and Export Fair (The Canton Fair)

China Yiwu International Commodities (Standards) Fair

CHINA SHOP (The China Retail Trade Fair)

China Stationery Fair (CSF)

East China Fair (ECF)

Hong Kong Electronics Fair

Asia Outdoor Trade Show

China Electronics Fair (CEF)

China Daily-use Articles Trade Fair (CDATF)

 Appointing an agent

As a new importer, if you don't want to spend a lot of money contacting dozens of suppliers, or if you don't know the local market for your industry in China, importing through a trusted agent is another option. The agent you choose can be local to China or local to your own country, but the agent must be familiar with the local market for the target product in China and have extensive supply chain resources and experience in sourcing and negotiating, so that you can make a significant profit after paying the commission.

 Go deeper into industry clusters

Attending trade fairs and appointing agents is more for new importers, and some importers with years of sourcing experience can choose to go deeper into the industry cluster. After all, the more direct your source of supply, the more you can save on the amount of difference earned by middlemen and get lower prices. If you find a manufacturer that does not participate in any trade shows and does not conduct foreign trade business itself, but only sells products to trading companies, other foreign trade factories, then you may get a better price than anywhere else if you work directly with that factory.

 Partner recommendations

If you already have some experience in the import trade and are looking for a more competitive price and better quality supplier for your current product line, then in addition to the above you can also consult a third-party conformity assessment body that you have previously worked with. They are often the most knowledgeable about each supplier's factory qualifications, internal management system, product quality and cooperation philosophy. Or if you want to expand your existing product line and purchase other kinds of products, you can also ask the suppliers you are currently working with, to help you find local resources, which will not only reflect your mutual trust but also promote further cooperation.

III. How to establish order contracts with suppliers?

1. Supplier confirmation

Once you have made initial contact with some good suppliers, you need to learn more about them, including production qualifications, system compliance, quality control processes, product quotations, etc., to prevent supplier fraud and encounter bad suppliers. In China, manufacturers who have passed the ISO 9001 quality management system certification standard are the basis for cooperation. When choosing the 1-3 suppliers you plan to work with and comparing product quotations, it is generally not recommended to work with suppliers whose prices are significantly below average, as there is no lowest price in China, only increasingly lower prices. The lowest price is always accompanied by a high risk, which could be quality, quantity or reputation. Compare multiple aspects to find a trustworthy supplier for the next step.

2. Sample confirmation

Once you have found a supplier you want to work with, you can ask them for samples of interest. Normally, you will need to pay for the sample or at least the shipping costs. This is a necessary expense as the samples need to be carefully checked for material and quality before you set up a bulk order with the supplier. And of course, it includes some necessary testing to ensure that the product complies with the local technical regulations and certification requirements of the market in which it is sold. If you are not sure about the regulations in your sales market, you can also look for similar products in local shops and see how they are packaged and printed on the market, in addition to consulting safety regulations and consulting a number of agencies. Of course, it would be good if your supplier already has many years of experience exporting to that market. Samples need to be communicated in detail and reviewed to ensure that your supplier has fully confirmed every specification of your target product, including the packaging.

3. Trade term confirmation

The choice of trade terms is related to the product quotation and risk transfer issues. Common trade terms used in shipping are as follows.

 EXW

EXW means EX Works, where the seller is responsible for delivering ready goods to the buyer at his premises, i.e. workshop, factory, warehouse, etc., but is usually not responsible for loading the goods onto the vehicle prepared by the buyer or for customs clearance of the goods. The buyer bears all the costs and risks of transporting the goods from the seller's premises to their intended destination. This means that EXW gives the buyer a clearer idea of the costs involved in advance. The buyer will also control the entire shipment, thus preventing the seller from increasing his local costs.

 FOB

FOB is Free On Board and delivery is complete once the seller has handed over the goods to the carrier appointed by the buyer at the named location and has cleared the export customs. FOB is currently the most common trade term in trade with China, where the buyer is responsible for booking the ship to take delivery of the goods and has more control over the route, sailing time and costs.

 CFR

CFR means Cost and Freight, delivery on board at the port of shipment and the seller is required to pay for the cost of transporting the goods to the designated port of destination. However, the risk of the goods is transferred at the time of delivery on board the vessel at the port of shipment. Transportation is arranged by the seller and insurance is handled by the buyer. If the seller does not give notice of shipment in time, the buyer will not be able to handle the freight insurance in time, and there is even a risk of missing the insurance. When a transaction is concluded on CFR terms, the product quotation will include the cost of sea freight.

 CIF

CIF means Cost Insurance and Freight, delivery at the port of destination, the seller has the same obligations as the CFR term, but also for the buyer to handle insurance, pay the insurance premium, according to general international trade practice, the seller should be insured by at least 10% of the CIF price plus the amount of insurance. Under this trade term, the product quotation will include freight and insurance from the port of shipment to the port of destination.

In general, the product quotation, the degree of risk borne by the importer and the degree of control of the goods under the four trade terms are compared as follows.

Product price: EXW<FOB<CFR<CIF

Degree of risk: CIF<CFR<FOB<EXW

Degree of control: CIF<CFR<FOB<EXW

4. Confirmation of payment term

 Wire transfer

For parties who have established long term cooperation, it is common to pay a part of the deposit by wire transfer after the order is signed and the remaining balance after the goods are loaded onboard the ship, the seller needs to provide proof of loading such as a scanned copy of the bill of lading. The percentage of deposit and final payment maybe 30% and 70% or other, which needs to be negotiated between the parties before the contract is signed. Wire transfers allow for quicker overseas transfers, but there is a risk for the buyer in paying this way, as you cannot confirm the quality of the goods until the ship arrives in port. But generally, we encourage you to trust the supplier you are working with. After all, trust is the basis for mutual cooperation and long term development, and we will mention how to control the quality of the goods in other ways.

 Letter of Credit

A written document is issued by a bank to a seller at the request of the buyer, guaranteeing the liability to pay for the goods. It guarantees that the supplier will receive the correct amount of payment from the buyer on time, provided that the goods are delivered in accordance with the letter of credit and that the required shipping documents are submitted. The buyer is required to pay a deposit or provide other guarantees to his local bank in order to apply for the L/C.

 Documents against payment

A form of settlement in which the collecting bank must pay the buyer in full before it can hand over the shipping documents and documents of title to the buyer. It is usually used for large order transactions. Whether it is a sight payment or a forward payment order, there is a risk that the buyer will abandon the goods and not pay. The risk to the supplier is much greater, so 99% of Chinese suppliers will not agree to enter into this form of payment with a new customer.

In addition to the above three relatively common payment terms, many suppliers have started to accept PayPal, MoneyGram and other convenient payment methods, but due to withdrawal and transfer rates, most are still only used for small orders.

Of course, the confirmation of the trade contract is not only limited to the qualification of the supplier, sample details, trade terms and payment terms of these important aspects of the confirmation but also contains the order delivery date, mode of shipment, loading and unloading locations, etc., all may be involved in the terms can be well specified in the contract.

IV. How to ship the imported goods to Saudi Arabia?

1. Pre-shipment inspection of large shipments

Before the supplier ships the goods according to the agreed delivery date, you also need to carry out an important step in the operation is the bulk goods sampling inspection. This has little to do with whether there is sufficient trust between the suppliers but is simply a further step to ensure that the final bulk product still meets the sample standards after multiple production processes and further confirmation of the physical product by both parties. The samples confirmed in advance is the standard for the sampling of the bulk goods. The sampling can be carried out by you personally on-site, or by appointing a professional third party qualified verification agency, or by the supplier issuing sampling data and reports. Only after you have confirmed that the sampling report is correct will the goods be released and arranged to leave the factory. In addition, goods loading monitoring is a step you can choose to take if you want it or not. If you supervise the shipment, you will have better control over the condition of the goods leaving the factory and ensure that the shipment is efficient and accurate. If not, the supplier will provide you with some photos of the shipment afterwards to ensure that the shipment is safe.

2. Choosing a mode of transport

There are three common modes of transport in international trade: express, airfreight and sea. The choice of transport mode depends on the volume of the goods, the requirements of time efficiency and price control.

 Express delivery

If your products are small volume, lightweight and in small quantities, then transport by courier is most appropriate. and establish long-term relations of cooperation with some large courier companies such as FedEx, DHL, UPS, etc, then although you will have to pay relatively high shipping costs, the timeliness of shipping is high and you will receive your goods in about 3-5 working days on average, and you can track the status of your goods at any time. The door-to-door service also reduces the hassle of customs clearance and transportation.

 Airfreight

If your goods are relatively large but you need them urgently, then you can choose airfreight as a shipping method. The cost of airfreight is significantly lower than courier transport, and the transport time is basically around 5-10, but there will be flight delays. And relatively speaking, the operation process of airfreight will be relatively complicated. The supplier needs to send the goods to the designated warehouse, along with the relevant customs declaration documents, and once the goods arrive at the destination country. You need to handle the customs clearance process and terminal transportation by yourself or entrust freight forwarding company. You will need to submit a series of test reports if your product contains hazardous materials such as batteries.

 Sea freight

Sea freight is the most common and cheapest mode of transport for general trade orders, but it has the longest delivery time (approximately 4-5 weeks from China to Saudi Arabia) and it largely reduces the potential for damage caused by multiple loading and unloading of goods and is used by most importers. Depending on the volume of your goods, you can choose between LCL shipment or FCL shipment. Generally speaking, if the total volume of the product exceeds 20 cubic metres, it is not recommended to ship it in LCL. The overall ocean freight costs, handling costs etc. are no less than a 20 GP container and there is a greater possibility of damage to the goods. If sea freight is used, your supplier will usually try to sell to you on CFR / CIF terms, which include transport costs, but we prefer to work together on FOB terms and you will need to work out a freight forwarder in your own country that can get a more favourable sea freight rate. ‘shipping companies commonly used by Middle East importers and their advantages’

3. Finding a reliable freight forwarder

Whichever mode of transport you choose, it is unlikely that you will be able to handle the entire import process on your own, so you will need to find a professional freight forwarding company. Generally speaking, for small and medium-sized importers, you also need to fix 1-2 freight forwarding companies, you can always compare their prices, transport efficiency, quality of service, etc. They can help you to contact suppliers, airlines, shipping companies, customs, transport companies, insurance companies, warehouses, etc. You need to pay a certain fee, but you can save a lot of trouble. You can choose a local freight forwarder in your destination country or a local freight forwarder in China, just balance the price and quality of service. Of course, if you are not familiar with the industry, you can also use a freight forwarder that your supplier works with, but you will need to gauge whether the price is right. By choosing your own appointed freight forwarder, you can have greater control over the costs of all aspects of the process and understand the status of the shipment.

4. Accounting for transport costs

Accounting for transportation costs is a very important step in import trade. Your profit will not only depend on the product quotation provided by your supplier, but often for low-value products, the cost of transport may be an important factor in determining whether your order is profitable or not. Accounting for transport costs needs to be based on your choice of trade terms and mode of transport.

Take for example the pairing FOB and sea freight that most importers will choose, the price you are given by the supplier only includes the price of the goods and the cost of transporting them to the loading port. In addition to ocean freight and insurance, you will also need to pay additional costs such as unloading charges at the destination port, port handling charges, storage charges, customs clearance charges, documentation charges, pallet charges etc. These costs combined can sometimes not be a small amount, so before ordering any goods, it is vital to take these costs into account so that you know exactly how much your final product will cost. This is a tedious process, so again the easier way is to use a professional freight forwarder, you can get them to quote prices for home delivery including all the costs associated with shipping because they are professionals.

V. How to operate the import clearance process?

1. Clear customs on request

 Customs clearance documents

Saudi Arabia is known as one of the most difficult countries in the world to clear customs. No matter which mode of transport you choose, as an importer you have to assist the courier company or freight forwarding company to complete import clearance. Taking the most complex sea freight clearance as an example, even if you have entrusted a third party freight forwarder with the customs clearance process, you will still need to submit the relevant customs clearance documents to them.

a. Certificate of origin, which must be certified by the local Chamber of Commerce and translated into Arabic;

b. Commercial invoice, indicating the country of origin, name of the carrier, brand, the number of goods, description of goods (including weight and value);

c. Packing list, which needs to contain a description of the goods, gross weight, net weight, volume, number of packages and the way they are packed, container number, seal number, letter of credit number, etc.

d. Bill of lading, which should be consistent with the commercial invoice and packing list;

e. Shipping company certificate indicating the name of the vessel, nationality, owner, port of call of the route

f. SASO (Saudi Arabian Standards Organization) Certificate of Conformity, Lot Shipment Certificate of Conformity (SCOC) issued by the SABER system;

More detailed customs clearance requirements are listed in the article " A More Convenient Customs Clearance Process for Saudi Arabia Importers " and on the official website of the Ministry of Commerce and Investment of Saudi Arabia to obtain the latest information on customs clearance requirements. (https://mci.gov.sa/en/Pages/default.aspx)

 SABER system Certificate of Conformity

The batch shipment conformity certificate mentioned in the above clearance document relates to a new policy in Saudi Arabia. The new Saudi product safety programme called SALEEM, which started in January 2019. The SALEEM programme ensures the safety of products imported into the Saudi market. The SALEEM programme is implemented through an online system called SABER, a platform that allows manufacturers and importers to register with the system to obtain the required Product Certificate of Conformity (PCOC) and Shipment Certificate of Conformity (SCOC). Currently, many categories of products within the scope of some technical regulations (including most electrical accessories) require specific conformity documentation, such as test reports, risk assessment reports, etc., in order to obtain a Certificate of Conformity.

Products under the control of technical regulations are subject to the progressive implementation of SABER requirements, which can be found on the website: https://saber.sa/home/regulations

 Prohibited goods

It is important to note that throughout the clearance process, goods are inspected and classified by Customs based on the content of the goods registration declaration and clearance documents submitted by the importer. Some items are restricted/prohibited by Saudi Arabian Customs and, if detected, may not only incur fines but may even be returned to the country of export.

The following are some examples of prohibited items: antiques (fragile and/or breakable), asbestos furs, hazardous or flammable materials (IATA regulations), alcoholic beverages, gambling devices, ivory, postal envelopes, soil samples, etc.

2. Calculation of import duty

Saudi Customs will classify the goods according to its own method of classifying goods according to their type and characteristics. After classification, the value of the goods is reassessed and calculated. There are only two types of duties on goods imported into Saudi Arabia, customs duty and Value-added Tax, which are payable by individuals and commercial entities alike when importing goods into Saudi Arabia.

Saudi Arabia's import duty rates range from 0% to 50% and the average tariff on products is 4.58%. In the face of the COVID-19 crisis and the global recession it has triggered, Saudi Arabia has announced a plan to triple the Saudi Value Added Tax (VAT) directly from 5% to 15% with effect from 1 July. All import duties and taxes are calculated on the value of the goods, i.e. the CIF (CIF) price. There is no starting point for import duties and taxes in Saudi Arabia and they are levied regardless of the value of the imported goods. The importer is only required to pay VAT once the import has been officially cleared with KSA Customs.

To start importing electrical accessories or other products from China to Saudi Arabia, choosing the right goods to import, finding a quality supplier, establishing an order contract with the supplier, shipping the goods back to Saudi Arabia and operating the import clearance process are just a few of the important steps in the process, and there may be many more details and circumstances involved in the actual import trade. But we encourage everyone who wants to import to give it a go, even if it starts with a sample order. HOMEBEST (LANDLINK) has 20 years of experience in exporting to the Middle East market and works closely with local customers to understand local import requirements. www.hbsocket.com