How much money can you make in China?

“How much money can I make importing from China?” This is pretty much the definition of an opened ended question. Perhaps a 21st century tribute to How long is a piece of string? Never the less its what I’m asked on a daily basis as more and more people become infatuated with the idea of making money from the far east.

Unfortunately there is no set formula for this and often the actual price of a product does not simply come down to materials used and production costs.

Simple things like how many of the same goods a factory has to produce that month or how well you get on with the sales guy will have a big impact on the price, timing your order with that of another customer and spending time building rappour means you can make a big saving.

One thing is for sure though, if you want to compete with the top sellers on eBay and come in at a price that will eat into there sales your going to have to buy in quantity. There is a reason thoses guys can sell so cheap and its because they operate in big numbers both in sales and purchasing. I had a customer ask me for 10 Bluetooth iPad keyboards then ask me why a seller on ebay is selling them at £0.50p more than he can buy them from me. Its a simple answer, that seller bought a lot more than 10.

When I used to imort from Taiwan I could buy something for $50 USD and sell it for $250 USD. That was a great time about 7 years ago when not many people were doing it and there was an exciting little window of oppertunity for a few years.

Realistically speaking I was not making $200 USD pure profit at all, that’s simply the gross figure. You can often get excited when looking at the gross figure but you have to be careful as the margin is soon eaten into.

Looking at the items cost of sale gives us a true indication of how much can be made from China. To do this we better pick a couple of examples and break them down. I have to apologise, there are quite a lot of numbers in this article – not my idea of a fun either.

Since a lot of my customers look to eBay as a major sales platform lets pick a couple of items off eBay, source them here, calculate the shipping, work out the import tax, deduct the eBay and PayPal fees and come up with a rough net profit for each of them. Might be interesting for a few people out there to see the whole picture from research to sourcing to sale.

I’m a bit of a eBay geek and I spend a lot of my time helping clients research a niche product they can import to sell at a decent margin, for this example I will pick out 3 eBay sellers that I would say could be worth importing. One with a retail price below £5 GBP, one below £10 GBP and one below £50 GBP. Sure, there are better items out there that you can find but I dont want to make it too easy for you now do I.

OK lets start with our under £10 GBP item. A Women’s hoody selling at under £7.00 on eBay UK.

At £6.95 this women’s hoody isn’t really an exciting or ground breaking niche but the fact that its sold some 4,326 units is something you should be listening to. In fact its currently selling something like 50 units a day which is an impressive gross income of £347 GBP per day. Make no mistake this item is very keenly priced, in a shop on the high street you would be able to charge twice as much but to move them in this volume online the price is key.

This seller is charging £2.99 for postage and inside the UK this item could be sent as a small packet on a 2-3 day service for £2.20 without a business account, you can post for a little less with a business account but we will leave that out for now. This takes our gross income to around £496.00 with eBay fees at around £42.00 per day. Time to look at the costs and see what money is left to be made.

This looks like a nice quality hoody and for that reason we are going to go for a good mid range item in order to maintain a similar quality. For the purpose of this exercise we will say that we are buying 2 months worth of stock and shipping to the UK by air. This means that the stock is available to sell as quickly as possible without a long wait for sea freight and that with 2 months worth of stock we are able to establish a reasonable purchase price. Air fright on an item like this may not seem like the best solution, sea is after all much cheaper, but on a season and fashion sensitive item you need to take time scale into consideration so its either buy a season in advance or send by air. For this hoody we will be buying 3000 units which is 60 days stock at 50 unit sales per day and sending them by air via Hong Kong using FedEx.

3000 units is a good order size for low cost clothing like this and allows us to deal direct with a factory and even be a little specific about the garments details. For us to replicate the kind of sales seen here we will need to specify UK sizes and quite a stylish tight fitting cut. The only other thing mildly different about this hoody is the chunky modern style hood draw string. After working on various samples with a local factory here a usable product is achieved within about 6 days. After some negotiations and discussions about a repeat order of the same size every 60 days the production cost is set at 2.35 per unit. 3000 units is going to be something like a quoted production time of 10 days but best always double that as things here never seem to go as planned.

20 Days later and were £7,050 GBP lighter and looking at 3000 great hoodys, individually packed and ready for shipping to the UK. With each hoody being quite thick and heavy we are looking at a lot of cartons here and road haulage to Hong Kong airport where they will be transferred to FedEx for air freight to the UK. The price for this will be around £3,800 GBP. Yes, that’s a lot of money but your paying for the privilege of seeing your items land into the UK in a round 7 days. Sea freight will be well under half of this cost so bear that in mind.

With the product costs and shipping costs in hand we now know were looking at an overall unit cost of around £3.62 GBP, Still some room left to compete at £6.95 right? Well we are not quite done yet.

With packing and documentation completed the goods are loaded up and sent via road to Hong Kong. From here they are transferred from a local haulage firm to FedEx where they are flown to the sorting depot in Paris. From there the items are re-routed before finding themselves in the UK. Once in the UK the import duty and VAT is due at around £3700 GBP. So we now have the goods landed at a total capital outlay of £14,550 meaning our total product cost is now £4.85. This gives us a margin of around 30% if selling at the lowest price available on eBay.

30% is not an amazing margin, but you have to take into account that this is the lowest price on the internet and your selling them at a good steady volume. Sure you could sell them for more, at the end of the day they are worth more but were going for volume and fast turnaround here. Lets remember we can make a little on postage too as we got the hoodys pre packed in china so have no packaging costs to consider. This should add around £0.70 GBP to each units income. If we are able to achieve something like the gross daily income of £496.00 GBP seen above then we will see a unit gross profit of circa £2.80 GBP and a total gross profit of around £140 GBP per day every day for 60 days. After taking into account eBay and PayPal fees, depending on your current fee structure, this makes a net profit of around £7,308 GBP in 60 days for the 3000 units sold this way.

Now lets look at an under £5.00 GBP item. Items like this are good for a couple of things other than pure sales. Firstly they help create a lot of feedback for new accounts as volumes can be very high, secondly they help dilute any negative feedback’s you may receive as the will increase your overall positive % and thirdly they can help you get your account to top rated seller status. So here is a nice little item. A simple SD card reader.

With close some 8500 units sold this is a real flyer and a nice little item to look at. It is however very very cheap at £2.99 including free postage. Sent on the royal mail standard tariff as a large letter this will cost £0.69p. With around 20 units per day selling the £60.00 GBP per day isn’t going to get you rich but combine it with several similar items and its a nice steady income.

3 months stock is almost 2000 units so lets use that as our purchasing number. I buy a lot of SD cards so I know this adapter well and know at 2000 units the factory will be able to offer us this as around £0.85p per unit with a 5 day production time. These are very compact and light so sending them by air is no problem, again if combined with other goods sea would still be cheaper but for this instance lets use air freight as the method of shipping. On a 7 day service with FedEx the cost will be around £390 GBP for the full 2000 units. We are left with a unit cost of £1.24 GBP.

Obviously were going to have VAT and duty due on these which works out at roughly £530.00 GBP taking us to a total outlay of around £2620. This gets us a unit total cost landed in the UK of £1.31.

If we go ahead and sell at a similar rate to what we have seen above we are able to make a gross profit on each unit of something like £1.00 GBP. Across this shipment that’s a gross income of circa £5980 with eBay fees of £717 and domestic postage taking out £1380. Minus the costs of our actual product from China and we are left with a net profit of £1263.00 GBP from this order. Not spectacular but like i said take on 5 small simple items like this and your onto a nice little earner.

Next up lets take a look at an item under £50.00 GBP, a Bicycle work stand.

With some 2623 units sold at £34.75 and £5.00 shipping, this item sells an average of 8 units per day and has a total gross income of around £318 GBP per day.

With this item having a packaged weight of just under 8kg it will not be economically viable to send via air and will have to be sent by sea. With around 28 days shipping time to the UK I think it best to take on board 4 months worth of stock to make this worth while. This takes us to around 1000 units.

I work quite a bit in the bicycle sector so know a few places producing stands like this. With an already established relationship with a factory I know I can get 1000 of these for around £16.95 per unit. As mentioned this will have to go by sea and by using a shipment container combination with other goods a rate of around £1340 GBP for 1000 units is possible. This takes our unit cost to £18.29 with a 7 day production lead time.

VAT and duty wise we have around £2800 to think about so our total landed outlay for these is going to be something in the order of £21,000 GBP taking each units value to £21.09. This also means your going to have £21k tied up in stock for around 5 weeks before you can do anything with it – worth bearing in mind from a cash flow perspective.

Now landed in the UK we can look to sell a similar amount on eBay at a similar price which will make us somewhere in the region of a £13.00 return on each item or around £110.00 net profit per day. Shipping by courier within the UK is going to be pretty competitive at £5.00 GBP so there isn’t really any money to be made on the postage. So by working in a similar method to this the shipment will make a profit of £9,240 GBP after eBay fees.

There you have have 3 nice items that are there trading on eBay right now as we sit here. Not the best sellers but also not at all that bad. I have tried to keep this article completely factual and just provided you with the information so you can apply it to your own product research. All the figures are accurate in relation to the numbers we are talking about.

So, want to know how much money can you make importing from China? Well if you go with those 3 products above after paying your International Shipping, VAT, Import Duty Product Costs, Domestic Shipping, Paypal Fees and Ebay fees you can expect a nice net profit of around £6,360 GBP per month. Not bad.

As this is a pretty money orientated post here is a completely unrelated photo i took of two million pounds stacked up in gold bars that for some reason my bank likes to keep in the window.

photo(79)

34 thoughts on “How much money can you make in China?

  1. Yet another great, EXCELLENT post Dan!

    Congrats on keeping the bar so high, as a fellow blogger I know that it’s not always that easy and takes long hours to create posts like these.

    However, there’s one very important thing you haven’t covered – sourcing & importing is just one side of the medal, you also how to somehow sell these items on eBay at same or even close volumes to make it worthwhile.

    With same hoodies – there are thousands of listing on eBay and somehow you have to get on that 1st or 2nd page to get decent traffic levels. Most of high volume sellers are Top Rated Sellers + use Featured First promotion which is now discontinued…

    Not talking about massive selling history and it’s impact on Best Match algorithm – many these listings are started with much lower prices (2.99, 3.99) making a loss in the beginning just to get sales history and boost in Best Match.

    Basically, it’s easy to look @ what TRS make in sales with these established listings but it’s actually not that easy to replicate their success. Without TRS badge it’s almost impossible and even then you have to be prepared to sell at loss in the beginning to build up the sales history.

    Great post and tips anyway, keep up the good work! :-)

    Andrew

    • Hi Andrew,

      Thanks for saying so.

      Your right, there is a lot more to making money online than just sourcing, buying and importing.

      In fact I would advise those readers new to eBay or selling online as a whole have a look through the info Andrew offers as he certainly knows his stuff.

      I think really with stuff like this you need to be TRS and if your not you need to look at the bigger picture and sell items at a reduced rate for a few weeks to get up there in best match. Failing that add a nice USP to your descriptions. Like anything though, do the background right and you will reap the rewards.

      There are no “Get rich quick schemes” on the internet, but that isn’t to say there aren’t a few “Make decent money in a few months” options available…

      To do well from China you need to adopt a similar mentality to buying stocks: Buy in quantity, Buy with an educated yet open mind, and look long term.

      If people cant get into this mindset then they better keep clicking around Google for another blog as this one isn’t for them. :)

      Thanks

  2. these kind of posts are great.

    one detailing about HOW you pick products which sell would be great with out giving too much away of the secret sauce ;)

  3. Hi Dan,

    Only came across your blog a couple of weeks ago – to my regret! ;)

    Great post. I really enjoy the practical, numbers based side of business. It’s kind of the most important part, I guess (aside from product selection?)

    I’d like to get in touch properly if you don’t mind as I have a product I’d potentially like to manufacture (rather than buy an existing item). Would that be OK?

    Cheers and thanks for an inspiring blog!
    Phil

    • Thanks Phil,

      How did you find it, always nice to know where the traffic is coming from.

      Glad you enjoyed this post, i spend all of my free time engrossed deep into excel spreadsheets – oh the joys!

      Yes do feel free to get in touch, always nice to get involved in a manufacturing project.

      Thanks

      Daniel.

  4. Yet another great and insightful post by you.
    I’m fairly new to your blog and was really inspired by your decision of moving to china in pursuing your dreams. Well, I’m currently residing in Malaysia, and as a young ambitious entrepreneur in my university years, I hope to excel myself in this Business of importing and selling niche products here in Malaysia. It will be great if we could keep in touch and potentially be your Business partner. I Wish you all the best.

    Blessings,
    Kenneth.

    • Hi Kenneth,

      Thanks for saying hello and I’m glad your enjoying my blog.

      Which part of Malaysia are you in, I have a lot of family there – Lovely country.

      Yes please do keep in touch, there is a lot of scope for import export in Malaysia.

      Thanks

      Daniel

      • You’re much welcome, as the contents of your blog is very knowledgeable and enriching. Oh wonderful, indeed Malaysia is a lovely country, do come back to Malaysia if time permits, haha. Also, I could see many opportunities here as well, just looking for the niche one. Currently, i’m living in Kuala Lumpur and started off my own trading import/export business, still new and opt to learn more. Once things are a little more established on my part, i’ll drop you an E-mail we can chat further on it. Thanks Daniel.

        Blessings,
        Kenneth.

        • Yes i have been to KL many times. I used to export high end bicycles to a customer with a wholesale company and a shop there.

          All the best establishing your new business, very exciting time for you I’m sure.

          Daniel

  5. Hey Dan, its Liam here, weve emailed a few times not sure if you remember.

    Just wanted to say this is my favourite entry so far on your blog. I could sit and read stuff like this all day, stuff that really gets down to the numbers and details of buying and selling products.

    Also want to let you know im still very interested in working with you, even more so after a strange coincidence which i will explain. Anyway, ill email you again to start some serious discussions.

    All the best, keep up the great posts. You have a follower for life in me!

    Liam Crombie.

    • Hi Liam,

      Yes i remember you, hope your doing good.

      Glad you found this post interesting, i couldn’t decide if all the numbers made it too boring to follow. If there is anything else like this you guys want me to write about please let me know.

      Thanks for the kind words, just be careful where you follow me to, you don’t know where you might end up. Ha Ha, I’m 4000 miles away from home at present, didn’t expect to end up here thats for sure.

      Take care.

      Daniel.

    • Ha Ha, You know jokes aside that hoody is a pretty interesting item. I think if i was picking one of those thats where i would go. After all ebay sales can be a pain with item not as described cases. With a simple garment like this your pretty safe.

      Thanks James, hope your good.

  6. Great post Dan,
    Put’s it all into perspective, enjoyed reading it.
    Hugh.
    ps. Can you source me some of those gold bars like the ones in your bank window cheap? ;-)

    • Hi Hugh,

      Wont be long now till your enjoying the sales from your first China imported goods. :)

      You know, i think i could fit my little wrists through those bars and slide one out if I’m quick.

      Thanks

  7. Nice post dude…

    Do you have an up to date list of products and prices your currently dealing with?

    Mike

    Sent from my BlackBerry® wireless device

    • Hi Mike,

      I am changing the way I’m working a little, I’m still happy to source specific goods for people but for my own little projects I’m now working with a small group of sellers. I source hot selling niche items and ship the goods, they sell. For a bit more info please click”work with YMC” on the main tab.

      Thanks

    • Hi,

      I think that’s perhaps one thing people will never share, what sells well one eBay is often a closely guarded secret. I also have confidentiality agreements with my customers to protect there marketplace.

      All i can say is that there are much better things than these items to sell on eBay.

      Thanks

  8. Don’t forget counting in the self-employment tax ;)

    Also, I suppose the above is when things are ‘ideal’. Not sure whether you have anticipated goods being returned, broken in transit, lost in post, etc. but still I doubt it would impact those margins that much.

    I find that although people understand the concept of buying in bulk, they’re worried in committing £10k for example to their first bulk order. I certainly wouldn’t be comfortable sending over £10k without inspecting the goods first, especially if its a first time order with a new seller. It’s worth going over there to finalise the deal.

    Also, with that kind of volume, I suppose a warehouse is in order, probably not a good idea clogging up the corridor of your house with boxes, and raising suspicions of neighbours!

    Forgot to add, selling all you stock within that actual planned time frame, i.e. 2 months I feel is also important. Imagine buying all that stock, and shifting about 3 a day!

    I know eBay favours high selling products within the search results at the top – a real way to kill off the competition, and make it difficult for new comers with the same item to compete.

    • Well yes you will have income tax to pay, no escaping that.

      There are plenty of other factors of running a business to take into consideration, i certainly cant cover ever scenario in a small article like this without it sounding like the terms and conditions of your life insurance policy. You could also get hit by a bus and your dog could eat your homework. :)

      I wrote this article as a transparent example of just what people are making on eBay importing from China, and for that it serves well because its a fact that as were typing someone else is making that money right now.

      Thanks

  9. steady income good for me, if it pays the rent buys cigarette and beers that’s enough for me.

    if it pays for a vayron then, hell, bollocks, bugger. why didn’t I start this earlier – but we can all dream!!!!!!

    • Just a couple of comments on the above……since you’ve left the UK postage has increased and I think large letters are now 90p so eats into the profit of the £2.99 card reader a bit. Also one thing to consider with the hoody and bike stand is anyone considering something similar would need to register for vat themselves as at £318 and £347 per day their turnover would be above the vat threshold so 20% of that gross profit would have to be paid to the tax man, obviously offset by the vat paid when initially landed in the UK. I think that sounds right?

      • Now we are really getting into the details. ha ha.

        The card reader is sent on a 2-3 day service which is second class stamps, should be 69p.

        Your right on the VAT, if your not already registered for VAT then these products will send you on the way but that is not completely a bad thing. Firstly as you say the VAT due when the goods landed is claimed back, as is any VAT on your running costs and general overheads so its not all doom and gloom.

        To put that into numbers – you import something at £100 GBP and pay vat of £20. You sell it for £190 and collect the VAT of £36.00. At the end of your quarter you then claim back the £20 you initially paid and you have to pay the VAT you collected at the point of sale in this case £36. So at face value that makes the sale cost you an additional £16. Do this transaction 100 times in a month and your looking at an additional cost of £1600 a month. Assuming your a business operating from a premises using various utilities, services and equipment all with VAT payable you can then offset this £1600 against those. So the VAT due an be reduced by claiming back the VAT paid on various overheads created by your business.

        Some more number for you there, just what you wanted :)

Any comments or questions? I'd love to hear them.