How to Import Furniture from China

Importing furniture can be a lucrative business. And it’s an easier business to crack into than you might first imagine.

For one, there are few well-known brands in furniture.  Just think about how many furniture brands come to mind compared with clothing companies. Even where a company has established a good brand, like Herman Miller or Crate & Barrel, they rarely place the logo in a prominent place on the furniture itself. This creates a huge opportunity for importers to bring in furniture that looks similar to the big name stuff but sells for half the price or less.

Another reason the furniture industry is compelling for a first-time importer is the relative lack of tech support and after sales service.  When was the last time you called the company that makes your kitchen table to ask for a spare part? Even IKEA, whose furniture is notorious for falling part after a few months of normal use, generally gets away with it just because they sell the stuff so cheaply.

The downside of importing furniture, of course, is that it’s bulky. Furniture costs a lot to store and especially to ship. This fundamental quality of the goods has caused the furniture industry to be a much more regional game. It makes a lot of sense to ship a whole container of furniture to a city, and then sell that furniture out of a store, rather than delivering the items nationwide from a single distribution point.

As with any importing business, the key to a successful furniture operation is getting distribution.  How are you going to get your items in front of customers? The big furniture retailers tend to sell only their own brands, so if you want to go that route, you have to be connected into their buying departments and ready to sell at an extreme discount–why else would they buy from you, the middleman, instead of going direct to the factory. Often you’ll need to give them onerous payment terms, which can cause major cash flow problems for a start-up too.

Fortunately the Internet is giving furniture importers a new mode of reaching customers that gives you many advantages over those same retail outlets. You don’t have to maintain the high rent storefronts that they do.  Low cost e-commerce software, search engines, viral marketing and social media are creating new ways to get your name out there like never before.  You can sell through eBay, Amazon, Shopzilla, Google Product Search and any number of other online outlets that let you list your products right alongside the big name brands.

In fact, these same online outlets are the perfect place to start planning your furniture importing venture. Browse their catalogs, and as you find products that you like selling for relatively high prices, make a note of both the types of furniture you’re seeing, the name of the importer and if possible their address as well.

As you do this, you’re going to be simultaneously looking up suppliers of similar (or the same!) products on the major B2B sourcing marketplaces.  You’ll find suppliers on sites like Alibaba.com, GlobalSources.com and Made-In-China.com who sell almost the exact same stuff you find on the major e-commerce portals at a fraction of the cost.  Your job is to find the best arbitrage opportunities between the prices paid on U.S. e-commerce sites and the overseas B2B marketplaces.

Trade fairs like the Canton Fair or more furniture specific events in China can also present a tremendous opportunity to meet and build relationships with furniture suppliers. If you’re ready to invest a few thousand dollars in a trip to Guangzhou, you should not only be able to attend the fair, but also visit the actual factories to verify working conditions and ensure these are the kinds of people you want to do business with.  The learning experience alone will repay you many fold.

Insider’s Sourcing Tip: As a shortcut to finding reliable suppliers, you can actually purchase a report on any furniture importers that you respect from ImportGenius.com.  Import Genius has collected over 50 million ocean freight shipping manifests in a searchable index, so you can look up any company to see a list of all their shipments, including the names of their actual suppliers.  Just use Import Genius to look up any furniture company using their name and/or address and you’ll soon have a list of all their real suppliers.  Contact the suppliers, negotiate terms, and boom, you’re in the furniture industry.  A quick search for “Crate & Barrel” reveals one Chinese supplier SHANGHAI AOSEN FURNITURE CO.,LTD., and a general product search for “furniture” reveals PACIFIC TRADERS & MANUFACTURING as a supplier for ETHAN ALLEN.

Import Genius data can also be useful for evaluating suppliers you find independently through B2B sites or trade shows to ensure they really are selling to customers in the U.S.  Those sites are full of trading companies posing as factories, and a quick look at their trading history will let you know instantly which one you’re dealing with.  A trading company will have exports in a range of diverse products, while a genuine manufacturer will be much more tightly focused around the types of furniture products you’re interested in.

Once you’ve found the arbitrage opportunity you were looking for and contact the factory, you’ll next need to arrange payment terms.  The two most common ways that furniture importers handle this are through a letter of credit from a U.S. bank or via a cash down payment.

Most U.S. banks have a trade finance department that will issue a letter of credit in exchange for payment in full on the goods plus some nominal transaction fee. They give the letter of credit to your supplier as a guarantee of payment once the goods are shipped, however they hold the cash until you have certified receipt of the merchandise per the terms of your contract.

A lot of importers feel that it’s better to leave out this extra step and instead work to keep things simple and hassle free. These importers will prefer to place a down payment of 20-30% of the total purchase price upon placing the order, with the balance due once the goods are loaded on the ship at the foreign port.  If you’ve done your homework and built a solid relationship with the manufacturer, then you’re not risking much by putting down the 30%.  And you can save yourself valuable time dealing with the bank and transferring the letter of credit to the supplier.

Once you’ve placed your down payment, the factory will commence production of your order. Most of the time you can expect a 30-day lead time, so the goods will actually be finished about a month after your initial order.  It’s a good idea to spend some of this time developing marketing materials for the new products you’ve ordered.  A big problem when you import anything from China is the lack of high quality photographs suitable for use in brochures and web sites.  Start lining up contacts, so if the factory can’t provide these, you’ll at least have everything ready to go for a big photo shoot when the goods arrive.

While the goods are being produced you should also set up ocean freight and customs clearance for the container.  This is where we put in the shameless plug for CustomsHQ.com services. We can help make this process much easier for first time importers.   You’ll want to have all your documents and information in order before the goods are loaded on the container, as the new Importer Security Filing requires 12 key pieces of data 24 hours before the goods are loaded on the container. A good customs broker can make this painless.

Important note about furniture imports: Furniture containing wood products–even if its only in the packing crates–requires a fumigation certificate proving that the items have been treated to prevent the introduction of foreign insects into U.S. territory. If your supplier has any experience exporting to the U.S., they will be familiar with this requirement and it should not pose any problems. If they have not, you may have to hold their hand through this process.  An inspections company like www.asiainspections.com should be able to help you if you exhaust your options for getting the fumigation certificate on your own.

Once the goods have been loaded on the ship, you’ll make the payment of the 70-80% balance due. In exchange, the supplier will release the goods to your possession by notifying the carrier that you have made payment. They can do this either by sending you an original bill of lading, which serves as proof of ownership in the shipping industry and before U.S. Customs, or you can get them to release the goods by Telex wire.  This latter option is much faster and simpler from the importers standpoint, but often requires considerable coaxing of the supplier to make it happen.  Be persistent, its not that big a deal for them to do this for you.

You’ll need several key documents to get your furniture shipment cleared through U.S. Customs. These are the bill of lading, the commercial invoice, the arrival notice, the packing list and the fumigation certificate. Armed with those documents, plus a customs power of attorney and customs bond, your customs broker will have no problem filing the right customs forms and wiring any duty payments required on your behalf.  Their release from Customs should be secured almost instantly as a matter of routine.

Now that your goods have arrived, you’ll need a drayage partner to come pick up the goods from the port and deliver them to your warehouse.  Drayage companies are just trucking firms that specialize in picking up goods from ports and doing short-haul deliveries to distribution centers nearby.  If you don’t have one already, your customs broker should be able to recommend a reliable drayage firm nearby. Similarly, if you don’t have a 3rd party warehouse to handle your goods for you at a low cost of storage and handling, your broker should be able to match you up with someone.

The process of actually finding suppliers and importing the goods is not a big challenge in this connected day and age.  A much bigger challenge is building a brand and getting distribution so that customers will want to buy from you.  In other words, you should spend much more time building a web site, developing traffic and forming distribution partnerships than you do actually sourcing products or managing freight.

At CustomsHQ.com we pride ourselves on taking the hassle out of importing goods, so you can get back to focusing on what matters–finding great suppliers and developing relationships to help you move your product.