How To Import Goods from China to Uganda For Your Small Business

Whether you are planning to diversify your business or looking to leverage cheaper products, importing goods from China to Uganda can be an essential ingredient in your business.

Any successful business starts with a great product. Think of products whose market is riding on upcoming trends, emerging opportunities in the market or latest technologies. It is always good to go for products you are familiar with, which would give you a distinct advantage while making decisions for your business.

Try to stay away from products that have a lot of competition to avoid price wars and to keep your margins healthy. Take time to do your research and define your market. Calculate all your landed cost and be sure you will make significant profits out of your goods. A landed cost is the total of a product until it has reached your final destination. This includes the price of a product, shipping and customs fess.

If you are planning to start a business in Uganda and you are considering sourcing goods from China, here is a definitive guide for first time business owners looking to source and import goods from China to Uganda or anywhere in East Africa.

Related: The Insider Guide To Starting An Online Business In Uganda

Why import goods from China to Uganda?

Buying goods from China for your small business comes with a lot of benefits. Below are a number of reasons you should import from China to Uganda

• Rumors of Chinese products being poor quality are untrue
• Goods are sold cheaply, giving you high profit margin
• Materials are more accessible
• Chinese are great at designing products
• Chinese are masters at mass production
• China’s production lines are more refined and organized than for Europe.
• You can get unique and rare goods from China
• You can buy goods customized just for you

Steps to import goods from China to Uganda

Below are the simple steps to follow while importing goods from China to Uganda:

Step 1: Finding the Right Supplier

Step 2: Dealing with the Supplier

Step 3: Ordering your product

Step 4: Arranging Import Logistics

Step 5: Payment and Completion

Step 6: Identifying the Port of offloading

Step 7: Collecting Your Goods

Step 1: Finding the Right Supplier

Suppose you have the right products you want to import in mind, the next thing to do is find a supplier who can give you quality products at reasonable prices.

There are several ways to find suppliers in China such as;

• Using B2B ecommerce. Eg websites like Alibaba, DHgate etc
• Using Sourcing agents. Many Ugandan souring agents are based in China and help Ugandans find goods at local markets in China.
• Attending China trade fairs. For those who prefer finding suppliers personally
• Contacting factories directly e.g by searching them on the internet

Among the above, the most convenient way to find suppliers in China is by using Chinese B2B (Business to Business) ecommerce websites. You don’t have to use any agents or fly to China to look for suppliers. Everything can be done online right from your smartphone or computer. These B2B websites maintain a database of thousands of manufacturers, suppliers, wholesalers and middlemen from all over the world. The most popular B2B websites in China include;

• Alibaba
• AliExpress
• DHgate
• Made In China
• Globalsources
• Tradekey

The most popular B2B ecommerce website in China is Alibaba.com which boosts of over two million sellers / suppliers. I have personally used Alibaba to source products for my small retail store in Kampala.

For purposes of this guide, I will only focus on sourcing suppliers in China using Alibaba. Alibaba is always the first choice for Ugandan traders who want to buy from China. The only problem with Alibaba is the Minimum Order Quantity (MOQ) is always high and finding goods with a value less than UGX 1,500,000/- can become a little problem.

The process of sourcing suppliers from Alibaba is not simple as it may look on the outside. There’s a looming possibility of getting poor quality goods or getting scammed of your hard earned money.

While using Alibaba, it is important that you take your time interacting with the supplier before you choose to work with them. Not all suppliers on Alibaba offer top quality products and a good number of them are fraudsters and scammers. You must individually do your due diligence to ensure that you choose a reliable and trustworthy supplier.

Finding a legit, trustworthy and reliable supplier on Alibaba is not a walk in the park. One way to spot a good supplier on Alibaba is by checking whether they have a Gold Supplier badge or not. The Gold supplier badge indicates premium membership on AIibaba and Gold suppliers are vetted by Alibaba and the existence on ground is verified.

Keep an eye on other information such as how many years they have been operating on the site, their origin, physical address, their company website, their contacts, their customer response rate and how many transactions they have completed. Browse their entire company profile so you can get a better understanding of their business. Use this information to analyze and validate the legitimacy of their business.

Besides that, also ensure that the supplier offers Trade Assurance and accepts payments through a Secure Payment method such as PayPal or Credit Card. Following this would protect you from falling prey of scammers or receiving improper goods.

Once you have selected the right supplier, go ahead to contact them and inquire about their products through the Alibaba platform. You can do so either through their website or mobile apps.

Step 2: Dealing with the Supplier

Connecting with suppliers on Alibaba is easy and fairly straightforward. You can chat with the supplier within the Abibaba website or app. If you are buying from the supplier for the first time, it is strongly advised against having communication outside the Alibaba app such as email or WhatsApp, because you will not be protected by Alibaba if by any bad luck you are scammed outside the platform.

Keep in mind that the person you will be talking to is a professional sales person trained to handle customer inquiries day in and day out. Be polite to them but also exercise maximum caution.

Begin your engagement with the supplier by requesting for information about the products. Insist on getting description and photos of products you intend to buy. The supplier should be in position to provide all these. If he refuses or gives gave answers to questions to you ask then it is likely that he’s a fake supplier or sells deceptive goods. Sales agents usually have at hand answers to common customer inquiries. Inquire about the following:

• What is their Minimum Order Quantity (MOQ). The MOQ is the minimum quantity of a product that a supplier is willing to sell.
• What payment methods do they accept?
• How about the shipping process?
• Do they ship to Uganda?
• Price lists
• Specification sheets
• Delivery time
• Do they offer sample?

Get feel of the supplier and try to hold their attention. Remember these people are businessmen who are looking to close sales, competing with millions of other suppliers on the same platform.

Study the professionalism in their customer service. This would determine whether they can be good long term business partners or not. Ensure that you ask the right questions about their products right from the very beginning to know whether they are worth buying from or not.

Step 3: Ordering your product

After negotiating and agreeing on things like quantity, price, specifications and shipping, the supplier will send you a Proforma Invoice (PI) detailing a list of items and corresponding cost of your order. Take your time to review the document thoroughly and take the following notes:

Calculate the exchange rate of a dollar against Uganda shillings. Do not overlook this as it could significantly affect your budget.

If you plan to pay for your order using PayPal, some suppliers add an extra fee to cover PayPal transaction fee. Clarify if this has already been included.

Delivery method and estimated delivery time should be clearly discussed when finalizing prices. Your invoice may or may not include delivery to the port. Clarify this to avoid addition costs.

Once the invoice and all costs are clear to you, you will be required to make a full payment before the supplier can start your order.

How to pay for goods on Alibaba

Alibaba supports several payment methods that to deal with its suppliers. The primary method of payment is using Alibaba’s Trade Assurance. Trade assurance offers protection the buyers incase their order is not shipped or the products shipped don’t meet the buyer’s desired quality. With Trade Assurance, you can make a payment using Telegraphic Transfer (T/T) or credit card. Telegraphic transfer is the same as Bank Transfer or Wire Transfer. Learn more about using Trade Assurance on Alibaba here.

Another option to make payment is by use of Secure Payment. With this method, your payment is held in escrow a third party, Alipay, which is a member of Alibaba Group. The payment is only released to the seller once you confirm you have successfully received you goods and they are exactly as advertised.

There’s also an option to use PayPal. This is the simplest payment method Ugandans can use to make payments online but it is the least secure as compared to the above mentioned methods.

Under no circumstances should you ever risk making a payment using Wire Transfer (direct bank transfer), Moneygram or Western Union. You get no protection using these payment modes as the risk of crooked suppliers vanishing after receiving your payment is too high.

Before you make a payment, be sure you have fully assessed the seller and can trust them with your money.

Step 4: Arranging Import Logistics

Now that you have finalized all arrangements with the supplier, it is time to get your goods delivered from China to Uganda or to your door step.

The first thing you need to do is determine the intercoms of your transaction. Intercoms are the rules on ownership and responsibility which both you and seller and have to abide by when transporting your goods.

The most commonly used terms here are Free on Board (FOB) and Ex Works (EXW). Free on board means the seller’s responsibility of good ends when goods leave the shipping vessel, while Ex Works means the seller’s responsibility of goods ends when the goods leave the seller’s door.

In both agreements, the buyer foots all the transportation fees. You can learn more about Incoterms here.

Now you will also have to decide whether you will ship your goods via Sea Freight or Air Freight.

The use of Air Freight is significantly more expensive as it is usually charged by weight but it is fast and ensures speedier delivery of your goods. Usually your goods arrive within just a few days and same day delivery is also possible. It is advisable to go for Air Freight if you are shipping in small and light items or very urgent orders.

On the other hand, most importers use Sea Freight because it is cheaper and cost-effective. The downside of shipping by sea is your goods take much longer to arrive, often takes several weeks to months.

Whether you choose to use air freight or sea freight, the best way is to go through a courier or shipping company. A courier company will handle for you everything from shipping, forwarding, customs clearing and if in agreement do for you door delivery.

Find a courier that delivers to Uganda. They are available at every port in China. It is advisable that you go for a courier that has offices in Uganda. This would make tracking and delivery process much easier. If you can’t locate a good and reliable courier on your own, the supplier will help get for you the best deal since suppliers have good connections with courier companies.

However there are instances whereby a courier company may not be in position to process your shipment beyond customs points. This can be due to improper paperwork which needs to be verified or slow clearance process by the local revenue authority. In this case, upon arrival of your goods at the port or airport, you will have to go there in person and clear taxes before your items are released.

If your goods were shipped by sea, you will have to clear the fees at the port (likely Mombasa), and at the local URA customs unit (likely Malaba if your goods passed via Mombasa port). There are several customs units. Some goods pass via Kenya, Congo and Tanzania.

Below are the major courier companies operating worldwide shipping services in China.

• FedEx
• UPS
• TNT
• DHL
• EMS

Alternatively, you can use services of a forwarder to facilitate the entire delivery process from China to Uganda. A forwarder is a logistics company that organizes shipments and handles entire delivery process for customers from trucking, shipping, customs clearing and delivery.

However it is more costly to use a forwarder than handling everything on your own. Depending on the classification of the cargo you are importing, it is more better to rely on a forwarder in terms of costs and paperwork verification than trying to work out everything on your own. If you decide to use a forwarder, there’s a plenty of local freight forwarder that have presence in China such as;

• Daks Couriers
• Nile Cargo
• Ballore
• Atlas Cargo
• DHL Express
• Intraline

To get a quotation from a forwarder or shipping company, you will need to have a Proforma Invoice (PI) and packing list that your supplier should provide. A packing list is a document that contains information about your items such as weight, volume, how it is packed, delivery and pick up destinations. This will be the basis of the cost of your shipping.

Step 5: Payment and Completion

Once you have received and accepted a quote from a forwarder or shipping company, you can now proceed and finally place an order with your supplier by completing payment. Instruct your supplier to release the goods to your forwarder or shipping company.

You can also choose to connect your forwarder or shipping with your supplier so they can communicate directly to ensure everything is ready before items are cleared for shipping.

Now the remaining thing is for you to sit and relax as you wait for your goods to be delivered in Uganda. The forwarder will give you a tracking so you can know the whereabouts of your goods. Tracking information is provided by the courier. Not knowing where your goods are can create anxiety especially to first time importers.

Step 6: Identifying the Port of offloading

If you shipped your goods by sea freight, you need to identify the port where they will be offloaded. Most goods that enter Uganda are offloaded at Mombasa in Kenya, others via Dar es Salaam in Tanzania. Port details will be available under your information.

Step 7: Collecting Your Goods

If you choose to ship your goods via air freight, it goes straight to Entebbe airport where you will have to collect it from. At the airport, you will be required to pay custom duties and inspection fees. However some goods are exempted from taxes e.g raw materials and medicines. Some couriers can bring your cargo closer to you ie at their nearby warehouse or even deliver to your business location.

On the other hand if your goods are shipped via sea, they will first land at the port in Mombasa where you will be required to pay warehouse, handling and inspection fees before your goods are loaded onto trucks to Uganda. Some goods don’t go through inspection; you only pay handling and warehouse fees. Before goods finally enter Uganda, you will also have to pay another customs fees at URA customs office.

Like I said before, if you use a forwarding agent, everything will be done for you and you would only wait to receive your goods at your door step.

Tips to follow when buying from Alibaba

Beware of Scammers

Scammers are everywhere on the internet, and Alibaba.com is not an exception. While searching for products, look for supplier who have the Alibaba premium Gold membership and accept payments by Trade Assurance. Generally, the Gold supplier’s basic company information has been authenticated and verified by a third-party agency authorized by Alibaba. These checks are conducted to ensure that Gold Suppliers are legitimate, existing companies.

But still don’t buy from a supplier just because they have premium membership. Some can have a gold badge but still scam buyers.

Just to make sure you don’t fall prey of these scammers, here are a few precautions to take:

• Never communicate with the seller outside the Alibaba platform such as WhatsApp, facebook or email. All communication must be done within the Alibaba app or website. Just in case of any dispute with the seller, these chats would be used as evidence.
• Never pay for goods via unsecured payment methods such as Western Union, Moneygram or direct bank transfer. When you send money to someone via Western union, you have sent to an individual not a company. So you can’t really tell where your money is going to end up. It could even be a sales person working with a genuine company trying to scam you or the company itself is a scam.
• When making payments for your goods, the only payment modes you should use are Credit card, PayPal or Telegraphic Transfer. And the payment should be made within the Alibaba app. Do not make a PayPal payment outside the app. If a supplier does not accept one of these payment methods, do not buy from them. The only exception to this rule is If you are paying for samples, and you have fully assessed the supplier company and it totally looks legit and you are not dealing with high risk items, you can pay via western union.

You can learn more about common scams on Alibaba and how to avoid them here.

Bulk goods

When dealing with the supplier for the first time, do not order goods in bulk from them, first request for samples. Some Chinese sellers offer counterfeit and poor quality goods. Importing poor quality goods may make your business incur very huge losses. If the seller says he can’t offer samples, then you can suspect he’s either trying to scam you or his products don’t meet the advertised standards. Most sellers give samples for free while others charge for them. If a seller offers free samples, you only to pay for shipping.

Large MOQs

Do not be scared by the extremely large MOQs presented by sellers. Usually, many  suppliers are willing to accept shipping orders way below their set MOQ. The trade off may however attract slightly higher prices.

Negotiating

It is acceptable to negotiate prices with the supplier. Don’t be afraid to ask for the best price. There are always cases where can get lower prices simply by asking or negotiating with accessories and packaging.

Compare prices

Always compare prices of similar items between suppliers. This would be used as your negotiating tool. The Alibaba platform also has a feature called Request for Quotation (RFQ) where you can input details of the products you are looking for and several suppliers will contact you with quotations.

Check locations of suppliers

Ensure to check locations of suppliers, as this can increase cost of shipping. In my personal experience, I landed on a supplier that offered products at really very low prices, but he was located in the Northern end of China. Even with low prices, the estimated costs of transporting goods to the port turned out to be too high. I had to switch to another supplier who was near the port.

Final thoughts

Do you have any experience importing goods from China to Uganda? Or you would like to start importing soon? Share your thoughts below.