Economic activities between Asia and Africa are definitely booming! Different businesses between the two continents are not new. That is why Africa is now poised to economic growth and development. With a young, yet fastest growing youth population across the world and a considerable amount of natural resources at disposal, this continent is poised to want to import products from China and India. With Chinese being a major business hub for manufacturing and production too, it is important to arm yourself with the actual associated costs. The shipping charges from china to India can be exorbitant if you do not take the necessary caution. The expected gains can easily be erased by extensive transit times and rising delivery costs, among others. This article highlights every little detail you should know about the costs.
1. Calculating the Actual Profit Margins
Calculating the actual profit margins directly on price per unit may not be a prudent decision. When shipping goods from China, there are several associated costs to consider, and this is only in reference to the shipping as well as import duties.
Purchasing your goods from the Chinese manufacturers is almost like flying with a specific budget airline line. This is because there are no extras included.
You clearly get only what you have paid for.
The shipping department provides machinery, manufacturing expertise, coupled with labor. Then you must part with the rest, including items that a purchaser can take for granted most of the time.
Need a tailored component material or a material substance analysis? Well, that is totally on you and not the supplier.
Many businesses importing from China to India need to manage the process or pay a professional in that sector, to manage the essential parts of the product development process, quality inspections, and lab tests.
So what costs should track, in essence?
2. The tooling costs
When manufacturing a broad range of consumer products, injection molds are instrumental parts of the whole process. Most Chinese suppliers keep molds in storage. Buyers like you finance these elements.
So when purchasing factory designed products, the buyer is not really supposed to pay for the mold but the tooling. This should increase the VAT and other forms of taxes.
3. Procurement and product development
Randomly choosing a supplier online, without conducting due diligence will be disastrous.
To know what to look for in one, you should confirm the product safety as well as labeling regulations that apply to the product. But that is just the tip of the iceberg.
Prominent suppliers will manufacture products in different quality standards using unique materials and components. This implies that, at a minimum, you will need a detailed draft of the product specification.
If you intend to have a custom-designed product created, then you should create more material. A prototype should work. Do not rely on your prospect supplier to handle the product development phase for you.
None of these is free.
The costs highly depend on how complex the product is and just how much of the procurement you can manage on your own.
Final Thoughts
The procurement budget above considers the important costs. There is definitely no universal or standard way of outsourcing production to China. So as you delve into the shipping project, take note of the following tips for calculation your costs.
