Have you ever wondered if it’s really worth the hassle of importing from China?
You know it’s cheaper but then you factor in your time and the risks involved you might decide it’s easier to just pay more and source your products locally. But have you really considered the difference to your business’ bottom line when you compare locally sourced to imported goods? If it doesn’t feel like much of a saving over six or 12 months consider the savings over a five or ten year period and then decide if importing isn’t worth it.
Increased Net Profit
Even a small increase in net profit can have significant impact on the bottom line of the business, particularly when multiplied over time. Assume you were producing a locally made product for $50 each. You placed a markup of 33.3% on the product to sell it for $66.67. If you were able to import the same product for $37.50 and you sell it for $66.67, your markup increases to a healthy 77.78% and your net profit improves by 18.8%. If you can increase that markup from 33.3% to 50% on the local product, your product sells for $75 with a markup of 100% on your imported product. A markup of 100% on the local product sells for $100 and the markup on the imported product is an impressive 166.7%.
The increase in markup after five years significantly increases the level of profit the business can earn. Being able to reliably source your goods overseas with a strong profit, makes the business far more valuable when it comes time to sell.
If you can decrease the cost of your goods through importing, you are giving your business a competitive edge. You don’t want to be the business trying to survive with a markup of 33.3% when your competitors are achieving a markup of more than 77%. Owning a small business is hard work so you need to do what you can to cut costs where you can. Reducing the cost of goods through importing is one of the best ways of significantly cutting your costs. It’s difficult to cut costs on rent, electricity or staff but with the right supplier in China, you can achieve significant cost savings on products.
Getting to Market Quicker
One way to stay competitive is to be able to get your product to market quicker. The set-up time can be reduced by using an overseas supplier compared to a local manufacturer. If your product is a fad or you are trying to beat other competitors to market, time is of the essence. You need to remove days from your supply chain where you can. Vara Allied ensure our clients’ products are manufactured and shipped as quickly as possible. Capture more of the market faster to maximise the gross profits of your business.
Tell us about your product and see if we can’t help maximise gross profits for your business. Call (08) 6115 0118 or contact us for a no obligation-free quote on manufacturing your product in China.