The amount of customs duties to pay is calculated by multiplying the duty rate by the commercial value of the goods.  The duty rate for a particular product is determined by a tariff code classification which is managed by the government.  Duty rates are based on a number of attributes: material, function, size, weight, and value to name a few.

Duty rates can be confusing and often times appear nonsensical.  For instance, a standard non-woven tote bag is duty free, however a laminated non-woven tote bag is taxed at 20%.  Clocks and watches are even more complicated.  Electrically operated clocks have duties of zero to 40 cents per piece in addition to varying duty percentages on the value of the product depending on the movement and overall construction of the clock.

Customs duties are often used to level the playing field between domestic manufacturers and overseas sources.  In extreme cases, anti-dumping duties can be applied to products from specific countries where the product is intentionally being sold at a price lower than it costs to actually produce it.  Government export incentives or rebates may allow a factory to sell their goods below market value.  The importing country will raise the duty rate to offset the unfair advantage these incentives create.  A duty rate of 50%, 80% or 110% is not unheard of and can be quite a shock when
importing pencils, plastic bags and other common items.

Navigating US Customs regulations requires a lot of knowledge and experience so products are classified correctly when quoted.  Incorrect classification can result in thousands of dollars of lost revenues.

China seems to make everything, including fake merchandise.

Counterfeit products are not a huge problem for the promotional product industry, but there are times when buyers are looking for something “similar” to a brand name product at a lower cost.  Be warned that buying counterfeit goods will only result in a legitimately bad situation.

Counterfeiting is a $600 billion a year global problem, and costs U.S. firms an estimated $20 billion in lost profits annually.  The problem has seen a 10,000% growth in the past two decades and it is now estimated that fake goods account for 5-7% of world trade.  Globally, counterfeiting goods has been described as larger and more profitable than the drug trade. 

Not only are DVDs and software copied and sold for $1 each, but just about every consumer product imaginable is faked.  These copies are of poor quality and do not function to the same standard as the real merchandise.

In addition to being an inferior product, counterfeit goods are illegal!  If they get stopped by U.S. Customs, they will be quarantined and destroyed - with no financial reimbursement to the buyer or importer.  There are also fines, penalties, and other possible punishments that will be enforced.

When you are looking for brand name or iconic products, be sure you’re not exposing yourself by purchasing cheap imitations.  If a deal is too good to be true . . . it probably is.

The ease with which Chinese factories are able to replicate product designs is astonishing.  As the products become popular, the designs that originate in one factory often end up being produced in many locations.

The result is many products that look the same but have subtle differences in materials, quality and cost.

If multiple factories are producing products that look identical on the surface, but are manufactured quite differently – how do you know if you’re comparing apples to apples?  The only way to be sure is to get samples from the factory and TEST them for usability.  If it’s a pen . . . write with it.  If it’s a bottle opener . . . open a bottle!

Selling at the lowest price is a huge advantage for Chinese factories considering their approach is almost always price driven.  The factory’s desire to lower costs often results in cheaper materials being used.  Zinc alloy can be substituted for aluminum or a 400d polyester might be used instead of more expensive 600d.  Inexperienced temporary workers can be hired to stitch bags to save the factory money.

Buyers are also price driven and will often jump the gun without requesting samples to compare.  It’s our job to educate them about these subtle differences.  Testing the product samples will help you judge the overall quality and avoid pitfalls before you and the buyer are commited to the order.  Sometimes an extra $0.05 is worth its weight in gold.

The Chinese New Year Holiday began this week.  While the celebrations for the Year of the Dragon happened on the 23rd, there is a two-week period in China when most businesses close and many people return to their homes to reconnect with their family.  We would like to wish all of our friends, colleagues and employees in China a Happy New Year!  Gong Hey Fat Choy!!!

The Dragon is a symbol of fertility, immortality and happiness leading zodiac analysts to predict 2012 to be a good year.  Dating back to 3000 B.C. many looked to dragons to ward off evil spirits and to keep away bad luck.  When visiting any Chinese city you’re likely to come face-to-face with mystical, powerful dragons that are proudly displayed on ancient monuments and stone pillars of Chinese temples.

The Year of the Dragon comes once every 12 years and is considered to be lucky because dragons bring good fortune in health and wealth.  They also represent a long, prosperous life.

We look forward to enjoying 2012, the Year of the Dragon, with all of you.  We wish you a happy, healthy and prosperous year.  Gong Hey Fat Choy!!!

The term AQL refers to the Acceptable Quality Level. It’s a statistical method of quality control which originated in the early 1900′s as the world transitioned from producing hand crafted items to mass producing products on assembly lines.

As mass production improved, products began to pile up on factory floors. An efficient and economical process for quality control was required to keep pace with the increasing output. Mathematicians created the AQL system to meet this need.

The AQL system allows inspection to be done on a small, random sampling of product from a large production run. It describes the maximum number of defects allowable from the samples inspected. The number of samples inspected and allowable defects depends on how strict the QC requirement is.

For example, to inspect a production run of 10,000 pieces with an AQL of 2.5 (2.5% allowable defects) 200 samples would be pulled randomly. The run will be accepted if 10 or fewer defects are found from the 200 samples inspected. If more than 10 defects are found, the entire run is quarantined and a 100% inspection is carried out.

Promotional products like caps, mugs and pens are treated in the same manner as consumer goods. Usually there are two AQL’s – one for minor defects like a loose string on a cap and one for major defects like a crooked logo or a functional failure. The most common AQL used in checking consumer goods is 1.0-2.0 for major defects and 2.5-4.0 for minor defects.