How to Buy Direct from China Suppliers from Australia

Thinking of setting up a global supply chain for your business? Sourcing from China can be cheaper and great for scaling quickly, but finding a reputable supplier isn’t easy. You’ll have to negotiate prices and consider things like shipments and import duties.

In this blog, we’ll cover everything you need to know about buying direct from China suppliers. There are tips on how to find reputable vendors, what you’ll need to do to get goods into Australia, and how you can pay overseas suppliers/vendors.

Table of contents
Buying direct from China? Pros Cons Where to find reliable Chinese suppliers? Step-by-step guide to the sourcing process Safest ways to pay Chinese suppliers Wise Business FAQs

What does buying direct from China really mean for businesses?

Buying direct from China means working with manufacturers or wholesalers in China and purchasing products straight from them, rather than relying on a ‘middleman’ like a local distributor or agent. When done right, direct sourcing gives access to lots of products at low factory prices, which can improve margins, especially for startups.

However, there is more to sort out and manage. You can’t just place an order with a local distributor and then sit back and wait to receive it several days later.

If you’re based in Australia, you’ll usually have to:

• Arrange international shipping
• Coordinate container shipments
• Make sure products meet Australian safety standards
• Handle customs clearance in Australia

Many vendors will also have minimum order quantities (MOQs) and other requirements, like upfront deposits.

Now, let’s look at the pros and cons of buying direct from China. As we’ve already covered, you can get goods for less money, but there are trade-offs or challenges to consider when setting up relationships with third parties overseas.

Pros of buying direct from China

• Lower costs and higher margins - Paying wholesalers and distributors in Australia typically includes a big markup above factory prices. By buying direct, you cut out several intermediaries and get better prices.
• Huge product variety - China accounts for around a third of the world’s entire manufacturing output¹. Pretty much every product you can imagine is produced there. This gives you a much wider choice of products compared to the limited stock with local distributors in Australia.
• Private labelling - You can use the white-label services offered by many Chinese manufacturers to add your own branding, packaging, and even product tweaks to customise goods for a low cost.
• Scalable production - China’s impressive production capacity and economies of scale will make it easier to scale quickly if you need to, without the time or capacity constraints you might run into with smaller Australian manufacturers.

Cons of buying direct from China

• Quality control risks - China is roughly 7,500 miles away from Australia. This distance makes it much more difficult to assess and guarantee product quality, as you’re very unlikely to visit a factory in person.
• Longer lead times - Air and sea freight from China can take days or even weeks to arrive. When customs clearance is factored in, you might have to wait a long time from your initial order to receiving stock, which requires careful inventory management.
• Import taxes - Goods imported from China are subject to Australian duties and Goods and Services Tax (GST), which can neutralise any financial gains from sourcing cheaper goods.
• Compliance requirements - All the goods you import will have to meet Australian safety and consumer standards by law.
• Payment risks - Dealing with Chinese manufacturers will involve lots of international payments. If you have a business account with a traditional bank, these transactions usually include a 3%+ fee (in addition to hidden costs and conversion charges).

Where to find reliable Chinese suppliers?

The easiest way to find a reliable Chinese supplier is through online marketplaces, but you can also visit trade shows and use sourcing agents for a more tailored approach.

Here are a few of the best channels to consider.

Alibaba

Alibaba is the world’s largest B2B marketplace — it has millions of suppliers across pretty much every product category you can think of. There’s an English language interface, too.

To start finding trustworthy vendors, you can search for a product and then filter wholesalers by reviews, lead time, manufacturing certifications, and more. It’s then a case of negotiating with them directly and making an order. You’ll also have some protection through the Alibaba Trade Assurance program².

AliExpress

If you’re just starting out as a dropshipper or want to buy things in lower quantities, you might value the smaller-scale offerings at AliExpress. There are no minimum order requirements, but you still get access to a vast catalogue of ready-to-ship items in lots of categories. Prices are slightly higher. However, it is more flexible, and the logistics are easier to manage.

👆Click here to read on comparison between Alibaba vs Aliexpress

Made-in-China

Made-in-China’s tagline, ‘Connecting Buyers with Chinese Suppliers,’ captures its purpose succinctly. It offers quality assurance and manufacturer verification, which is a good start when prioritising reliability and long-term relationships over ultra-cheap prices³. There's also a ton of product categories, from manufacturing machinery to arts and crafts.

Trade fairs and expos

If you are willing to travel overseas, you can visit big trade shows and events held in China, like the Hong Kong Trade Development Council Fair and the Canton Fair. These are very useful for meeting suppliers in person, which can help forge stronger, lasting relationships.

Sourcing agents

Sourcing agents are individuals or companies in China that smooth the process of finding and negotiating with trustworthy suppliers by vetting them and managing logistics on your behalf. However, they are in effect intermediaries, which negates some of the upsides of going direct. There are additional costs, too.

👆Check out our handy guide on small business wholesale suppliers in Australia

Step-by-step guide to the sourcing process from China

There’s more to manage when sourcing from China compared to a wholesaler in Australia, but what’s actually involved in getting products from

1. Research and shortlist suppliers

Start by defining the products you want to source (specs, pricing, quantities, etc.) and using platforms like Alibaba to find potential suppliers. Ideally, you want to shortlist three to five vendors, looking closely at things like their trading history, communication quality, and customer service.

2. Verify and request samples

To make sure the supplier is reputable and everything is above board, request copies of business licences and certifications (like ISO and CE). Follow this up with online research — check reviews and feedback, and search the company name with terms like ‘scam’ or ‘complaint’ to spot red flags.

If everything looks okay, contact the vendor to request some samples to check the quality of the products and packaging before committing to a large order.

3. Negotiate contracts and MOQs

This is a big one that you might be unfamiliar with if you haven’t worked with large vendors in Australia. During negotiations, you should discuss any MOQs, pricing for each unit, lead times for goods, and what sort of payment terms will work for both parties. Most suppliers should be flexible, especially if they see potential for repeat business.

4. Place your order

Once you’re happy with everything, you can go ahead and sign a purchase agreement. The terms should include:

• Product specifications
• Delivery timelines
• Payment schedule
• Quality standards and inspection procedures

5. Arrange shipping and customs clearance

When you’ve made the order, work with your supplier to sort out shipping. There are two main options: sea freight (cheaper and slower) and air freight (more expensive and faster).

Also, request a Certificate of Origin (COO) to access the lower 0% customs duty⁴. Without this document, you’ll have to pay the default 5% rate if goods are valued over $1,000 AUD⁵.

To make things easier, you can use a freight forwarder to sort out transportation and customs clearance and manage all the necessary paperwork. It’ll cost you extra, but it does reduce some of the stress and complexity of buying direct.

👆[Read our guide on shipping from China to Australia

Safest ways to pay Chinese suppliers

Payment security is a big factor to consider when buying from China. It can feel like a leap into the unknown if you’re working with and paying a new supplier overseas. You do have a few payment options, each with different risks and costs.

These include:

• SWIFT - You can pay Chinese suppliers directly with a wire transfer through your Australian bank (if they support it), but while it’s a secure transaction, there is no buyer protection if problems occur, and there are fees.
• PayPal - Both the sender and recipient incur fees with PayPal as well, but it can be convenient for smaller orders, and it does offer buyer protection.
• Escrow - Alibaba's Trade Assurance program holds payments in escrow until you’ve received the goods and confirmed everything is okay. This is useful if you’re worried about quality issues or non-delivery.
• Letters of credit - You can get your bank to guarantee payment to a supplier only after certain terms are met. This reduces risks but does add much more complexity and cost to the transaction.
• Money transfers - You can use alternative solutions like Wise Business to send money directly to a supplier’s bank account in different currencies at the real, mid-market exchange rate.

Paying suppliers in China with Wise Business

Paying suppliers in China regularly will be expensive if you plan on using most traditional bank accounts. There will be a percentage fee for every international transaction, plus other hidden costs, high currency conversion fees, and long settlement times to consider. It can make global business much more challenging than it needs to be.

Wise Business helps simplify and cut the cost of sending money to suppliers abroad. You can pay suppliers in 40+ currencies from one multi-currency account with low, transparent fees.

Wise Business helps streamline overseas business payments without foreign transaction fees, saving up to 3x compared to other providers.

• Free to register — Send money to 140+ currencies with no hidden exchange rate markups
• Make up to 1,000 transfers at once with the Wise batch payments feature
• Fast, low-cost payouts to customers, freelancers, employees, investors, and suppliers globally
• Automate invoice payments, recurring transfers, and international payroll
• Fast and fully secure payments through Wise, even for large amounts

Tired of hidden fees and complex processes when making overseas payments?

Start sending with a Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.

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FAQs on buying from Chinese suppliers

1. What is a Minimum Order Quantity (MOQ) and can it be negotiated?
A minimum order quantity (MOQ) is the smallest number of units a supplier will produce for you or sell to you in a single order. It’s usually negotiable, especially if you’re a first-time buyer or testing new products.

2. How do I handle quality control when the factory is thousands of miles away?
It is more difficult, but you can work with third-party inspection companies to check the quality of products before they ship to Australia. You can also request photos or videos during production to get a better idea of what’s happening behind the scenes.

3. What are the safest ways to pay a Chinese supplier?
For your first order, it might be safest to use escrow services like Alibaba Trade Assurance so you can verify the quality of goods before paying. For regular B2B business, money transfer services like Wise provide a fast and secure way to transfer funds with full tracking and payment updates.

4. Do I need an import licence to buy from China?
Generally, you don’t need to get a licence to import most goods from China to Australia⁶. However, you might have to apply for specific permits or approvals to bring in goods for certain product categories like food or chemicals. Make sure to check all the import guidelines in Australia beforehand.

5. How much are import duties and taxes from China?
Most goods can be imported from China to Australia at a 0% customs rate thanks to the ChAFTA agreement, provided you have a Certificate of Origin (COO). However, you’ll still have to pay 10% Goods and Services Tax (GST) on the total cost of goods and ‘extras’ like freight and insurance⁷. GST is always applied when importing, even if you aren’t registered to pay GST in Australia.

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Sources:

1. CEPR - China is the world's sole manufacturing superpower
2. Alibaba - Trade Assurance Program
3. MadeInChina - Audited suppliers
4. Department of Foreign Affairs and Trade - ChAFTA COO
5. DHL - Australia import tax
6. Australian Border Force - Import requirements
7. Australian Border Force - GST and other taxes