How to find profitable product in China

When venturing into importing products from China, the cornerstone of your success lies in the astute selection of the right products. Whether you’re involved in e-commerce or operate physical stores, this decision is the linchpin of your business journey.

However, the choice of products is highly contingent on the unique business environment of each country and your specific business model. For many entrepreneurs, especially those lacking in-depth import experience or market acumen, the risk of choosing the wrong products is substantial. This misstep can lead to significant financial losses, wasted time, and in some cases, the abandonment of their business aspirations altogether.

In this article, I’ll provide you with practical insights into product selection by dissecting six distinct product types. By the end, you’ll have a clearer understanding of which products are best suited for import from China.

1. Trending Products

Trending products are like wildfire in the market, captivating both online and offline businesses alike. They spread rapidly, drawing in a horde of new sellers eager to cash in on the trend. Often referred to as viral products, hot-selling items, or best-sellers, these products have a distinct lifecycle.

Typically, it takes about six months to a year for a trending product to transition from obscurity to widespread recognition. Once they reach the peak of popularity, when seemingly everyone wants to buy them, the market becomes saturated. At this stage, the demand starts to wane, and the supply far exceeds the demand, squeezing profit margins. Usually, the early adopters who start selling at the onset of the trend are the ones who reap substantial profits.

Examples of such products abound, including loom bands, selfie sticks, hoverboards, fidget spinners, and more recently, masks due to the COVID-19 pandemic. While it is possible to make money importing these hot products from China, the keys to success lie in having an efficient distribution system and robust marketing capabilities, rather than just being an early entrant. In the case of mask imports, in addition to the above, having the proper import clearance qualifications is crucial.

In essence, I do not recommend novice importers to start with trending products. Only those with exceptional market foresight and the ability to time their entry perfectly can hope to make a quick buck.

2. Low-Value but High-Demand Products

Many new importers often assume that low-value, high-demand products are ideal for import from China. Items like toilet paper, printer paper, baby diapers, and disposable cups seem appealing because their wholesale prices in China are significantly lower than in their home countries. These importers believe that the constant market demand for these products ensures easy sales, perhaps even to large local companies or supermarkets.

However, these products are not as straightforward as they seem. Despite the low prices offered by Chinese manufacturers, the relatively high shipping costs per unit can eat into the profit margins. For instance, when importing disposable paper cups, you need to order in large quantities to reduce the per-unit shipping cost. Shipping a single cup in a 40HQ container will be more cost-effective than in a 20HQ container.

Moreover, many countries have local or nearby factories producing these items. The price difference between local purchases and imports from China may not be significant enough to justify the import process.

Therefore, if you’re a new importer, it’s advisable to avoid such products. Exceptions could be if you’re importing for your own company’s use or if you have a solid relationship with a large local buyer who guarantees purchases if you can source products from China at a competitive price.

3. Ordinary Daily-Use Consumer Products

Products like towels, T-shirts, hoodies, backpacks, and sunglasses are common in the market. Let’s consider socks as an example. In China, the production cost of a high-quality pair of cotton socks is around $0.3. The shipping cost from China to the United States can range from $0.02-$0.2 per pair, depending on the shipping method (sea or air) and quantity.

If you were to buy a similar-quality pair of socks in a US retail store, it would likely cost you at least $3. At first glance, importing from China seems highly profitable, with a potential profit margin of six to seven times. However, these products are not the best choice for new importers for two main reasons.

Firstly, in developed regions like North America and Europe, big retailers dominate the market for ordinary daily-use products. As a small-scale seller, you would face high store rent and labor costs if you were to sell these products in a physical store.

Secondly, even if you opt for online sales, the high cost of online marketing is almost equivalent to the rent of a physical store. Additionally, it’s challenging for ordinary products to attract customers and convert them into buyers.

In the past decade in China, many small factories producing ordinary daily-use goods have exited the market, and numerous small online and offline stores selling these products have either gone bankrupt or are struggling to survive. Even in China, we pay $2-$3 for a good-quality pair of cotton socks from big retailers or manufacturers.

But there are still ways to make these products work:

• Solution 1: Differentiate the product. For example, the Swedish brand Happy Socks has found success by offering socks with unique and interesting designs in a highly competitive market.
• Solution 2: If you’re from a developing country where small street stores still play a significant role in selling ordinary products, and large retailers haven’t monopolized the market, you can consider importing these products.

4. Small-Demand Products in a Niche Market

If you’ve delved into e-commerce product-selection tutorials, you may have come across the idea that small-demand products in a specific niche market can be highly lucrative. A small demand doesn’t necessarily mean a lack of opportunity. In fact, it can be quite the opposite.

On one hand, the competition is relatively low as fewer sellers are dealing with the exact same products. On the other hand, customers in these niche markets are often more willing to pay a premium for the products they need. This allows you to earn a decent profit.

Approximately 50% of our clients are e-commerce entrepreneurs, mainly operating on Amazon and Shopify. Many of our million-dollar-revenue clients are selling niche products. Once you focus on a particular product type, you may find it surprisingly achievable to generate a substantial income, such as $200,000 in annual revenue from a single product.

For example, some of our clients selling expandable garden hoses have achieved an annual revenue of over $300,000. However, if the return on investment (ROI) of a product becomes too low, it may no longer be worth selling. Other examples of niche products include moving straps and acrylic makeup organizers.

So, small-demand products in a niche market are definitely worth considering.

5. Brand Products

Given that many well-known brand products like Nike shoes, Xiaomi smartphones, and Huawei smartphones are manufactured in China, new importers might think that importing directly from China will be more cost-effective. However, this is often a misconception.

Most brand products have their own established sales networks, and it’s difficult to source directly from the original manufacturers. For example, Xiaomi, a Chinese brand, sells its products at official retail prices regardless of the quantity you wish to purchase.

Nevertheless, there are two scenarios where importing brand products from China can be viable:

• Situation 1: If your country lacks official retailers for a particular brand, and you have the financial capacity to handle the import costs, you can give it a try. But it’s crucial to choose suppliers in China who have the authorization to sell the brand products. During the customs clearance process in your country, you’ll need to present the supplier’s letter of authorization issued by the brand company. Otherwise, customs may suspect the products are counterfeit. Last year, we assisted an Indian client in importing a large number of Logitech web cameras from China as they were not available locally. In some cases, a professional freight forwarder may be able to help with customs clearance even without all the necessary certificates.
• Situation 2: Buying second-hand brand products or parts from China can be a profitable option. For example, many phone-repairing centers around the world source second-hand iPhones, iPhone screens, motherboards, and other accessories from China.

6. A Specific Product Category

Among the product types discussed, I highly recommend that new importers consider small-niche products. Additionally, focusing on a specific product category can be a winning long-term strategy. By dedicating yourself to a particular category, you can identify various product opportunities within it, build your own brand, and cultivate a loyal customer base.

For example, a Singaporean client of ours specializes in women’s underwear. With our support, her business has grown from a small-scale operation to a million-dollar enterprise in just two years. Her e-commerce store has also been cited as a successful case by Shopify. Another example is our Italian client who runs a luxury resort and has developed his own line of branded cosmetic products named after the resort.

So, if you’re aiming to build a multi-million-dollar business over the next five to ten years, start by choosing a product category that interests you. Then, explore and develop products within that category, gradually turning them into your own branded offerings.