Let’s Talk Granite - Pre-fabricated Granite Import Guide

It’s one of the hardest substances on the planet, its classy and its profitable! Walk with me examining what has been one of the most profitable importing ventures to date. You have to have networked into the right business circles, but pre-fabricated granite has rock hard margins for selling to or consulting for real estate builders/developers/tycoons or granite shops.

Granite in a Nutshell
This is an immensely labor intensive business, which makes a great recipe for a Chinese manufacturing and import venture. The material doesn’t cost that much so the majority of the cost is from the middleman and fabricator.

This is generally how granite countertops arrive in your home:

Granite Process Diagram

There is a solution that places you as the main link between the quarry and the builder. Let’s buy from the source, do all the fabricating in China, import it and sell it direct to the builder. Sounds complicated, it’s not, but you have to be meticulous with your work.

Overview
This business model will only work for selling to a client that has a minimum of twenty homes that will need granite. Track home builders, condo developers or high end apartments are the main types of companies to target. Granite fabrication shops are also good customers, but we will discuss that sales model later. This also works for restaurants or commercial businesses depending on their size. You will need to find clients that have a large enough order to fill up an entire 20ft container worth of granite countertops. If you do not fully fill the container then you are losing profit margin. When you have imported the granite, you will open your container and find crates containing pre-made granite countertops. What is required for installation is to unpack the crates, set the countertops onto the cabinets and glue the undermount sinks. That’s it!

Multiple Pre-fabricated Countertops

This is how our business model will work:

1. Find a client that you can either sell granite pre-frabricated and ready to “drop in” or work out a consulting fee to do it for them (if they do not want to pay you the money direct). The key here is to take measurements just as any other granite shop would either from architectural plans or from cabinetry already installed. The order needs to be placed a minimum of 45 days ahead as this is how long it will take to produce and ship the granite to the US.
2. Take those measurements and enter them into Microsoft Visio or a CAD application. This is often referred to in the granite industry as templating. Diagrams should include exact measurements for the granite that will be made including: locations for sink holes, indications of which sides are polished and overall length/width. If this is a kitchen, for instance, break the countertops into sections. As an example, here is a a diagram from a recent order for a developer that performed an apartment to condominium conversion and needed 114 condos worth of granite :

Diagram of Granite

3. Enter all the dimensions from each diagram into a purchase order list like this (this is just a section):

Granite Purchase Order List from Diagram

4. Email order and diagrams to your granite or stone fabricator/manufacturer in China. I would recommend that you have the manufacturer arrange delivery and logistics. I have personally purchased a number of containers of granite from China Newstar (www.stone-export.com) and have nothing but great compliments about their craftsmanship/work.

5. Arrange payment (for deposit) via international wire transfer or letter of credit.
6. Accept delivery either at a commercial location with a loading dock or have the product transferred to a flat bed tractor trailer. This can be done in conjunction with a customs broker and domestic freight provider. Encore Forwarding (Jacksonville, FL) can handle this type of request, they have offices in most major US port cities. In any event, you will need a fork-lift to unload the crates.
7. Partner with a capable contractor for installation. They will be getting 20+ houses of install so you can negotiate for a very reasonable price. Often times the builder has staff that can handle install on their own.

Areas of Cost and Additional Profit Opportunity
Let’s first examine the various areas where margin can be increased.

Chinese Local or Import Granite : The way I see it, stone is stone. You could get a nice Italian suit or the same suit without the label, your choice. Imported products are typically more expensive than domestic. When it comes to granite, the savings can be enormous. You obviously want to request samples from the manufacturer to compare, but I would recommend showing your customer the Chinese granite samples with a “this is in the style of Uba Tuba” disclaimer. If the customer wants the real deal, sell it to him. The real cost savings to the customer will be better in Chinese granite. Compare the two colors below.

Compare Uba Tuba to Chinese Green

Granite Fabrication and Installation : It’s important to note that the granite fabrication and installation phase is the highest factor of cost. By the time we are done, it will be the least expensive factor. The granite will arrive and be ready to drop in place.

Accessory Items : If what you have read hasn’t sold you, here is the kicker. The same company you will select to manufacturer the granite can offer you the stainless steel kitchen sinks and porcelain vanity sinks at well below wholesale. They do this so that they can cut the sink holes in the granite to exact specifications. Stainless steel sinks typically cost $50USD and the 18″ vanity sinks run $8USD.

Costs, profit margins and what to expect

Here is the overview of specifications and related costs per unit/home. This is important when discussing prices with the builder/developer. If after talking with the your client, they are interested in getting an ACTUAL quote, then ask for architectural plans to prepare a quote from. The below spreadsheet shows actual costs, is setup for a consulting-style contract and includes a $250 markup per home. At forty homes, using this schedule, your total profit from one container of granite is $10,000. Profit margins are much higher if you “sell” the granite to the builder just as a would a local granite fabrication shop. This pricing is also based upon the import of Uba Tuba and additional profit can be obtained by using Chinese domestic granite colors. This information is purely for instructional purposes and should not be taken at face value.

Cost Breakdown Overview

The comparison cost of purchasing US domestically fabricated granite would well exceed $2,364.85. This translates into a 50% savings to the builder and enough to land his business. It is important to note that this is not an installed price. Negotiating with a contractor for a reasonable installation price is paramount in keeping the margins up.

Here are some of the typical costs for importing a 20′ container of granite including sinks. These figures are from actual costs (2 years ago).

Typical Breakdown of Container

Here is an example of a multiple container quote for a 90+ unit luxury Florida condominium development. You can imagine what the granite would cost here in the states if our quote was $110k!

More importing granite cost information

Dylan Blankenship signature
dylan@sourcejuice.com

December 24, 2007 | Filed Under Sourcing Guides | 6 Comments

Quality Rating Systems – Single A through 5A

There is still a stigma in many peoples’ minds about the quality of goods produced in China. With recent events leading to news about toys, it is understandably a very important topic. What you need to know is that many manufacturers utilize a rating system for their products. This rating system can give you a gauge for your products’ quality and also give you a better understanding of reasons for product cost. This is very important when comparing similar products from various sources.

While this system, for the most part, is governed on the “honor” system, you can inquire with the manufacturer about what makes a particular product fall into a specific rated category. There isn’t a standard rating system in place and the manufacturer typically determines what qualifies a product for each level. Some of the differences between ratings involve levels of material quality (plastics construction/thickness), life of the product, number of uses, thickness of coatings/finishes and components. On a side note, this does not mean that Mattel (the toy company) has been selecting a lower quality rated product that includes utilizing lead paint. This issue is caused when the factory isn’t properly informed of where or how they sourced their raw materials (or in the worst circumstances didn’t know or care).

Single “A” though “5A”
The rating system is comprised of “A” rating indicators, the more of them, the higher the quality and cost. Every country typically has a particular acceptable “A” rating for a product and the manufacturer is usually familiar with the details of each country’s requirements.

Let us use kitchen and bath faucets to explain this point further. “AAAA” and “AAAAA” are acceptable quality grades for faucets utilized in the US. The differences in these two grades are great and so is the cost. The “AAAA” product might have a typical lifespan of 10,000 uses (turning the faucet on/off), is constructed with a plastic valve and has a lower quality finish. In comparison, the “AAAAA” product has a lifetime warranty, includes a ceramic valve and high quality finish. Many times you can mix components from different grades to match the requirements of your market, consumer, or grade.

Do not always go for the higher rated product just because of the higher rating. Just as any smart consumer would do, get all the specifications and ask the right questions. Working with a manufacturer that has implemented a rating system like this means they are organized. Organization is key when there are so many variables that can mean the difference of having a profitable landed cost or not.

The time of China only producing cheap knock-off goods, toys or furniture has long since passed. This is an era where high quality goods are available if you look in the right places. As an example, I was able to source an identical “waterfall” roman tub style faucet/fixture to that of an item sold at Home Depot Expo ($1,200) for 7% of retail (FOB) with a “AAAA” rating.

Dylan Blankenship signature
dylan@sourcejuice.com

December 21, 2007 | Filed Under Quality Control, Sourcing Guides | 1 Comment

Private Labeling & Criteria for Selecting the Right Manufacturer

“Private label products or services are typically those manufactured or provided by one company for offer under another company’s brand.” –Wikipedia. This is the name of the game for China and for the most part, the products you buy here in the United States are not really manufactured by the name on the label. In some instances most of the big box or clothing stores you frequent have an inventory almost entirely made up of their own products under their own brand or multiple unaffiliated brands. This is not just a game for the big boys, this can be accomplished with the same everyday products under your own company’s label. Welcome to the club, we are about to pull back the curtain to reveal what you need to know in developing your own private labeled line of products.

Take notice that every manufacturer has its own guidelines, requirements and procedures for producing a private label product. Not all manufacturers offer this service or have the capability to laser-etch/carve logos etc. The first step is to source the product you like and then follow-up with the manufacturer opening a dialog about private label opportunities.

Lets get off on the right foot by stating that selecting the right manufacturer to work with may be the quintessential most important decision to make. Over the next few paragraphs we will detail some choice areas for consideration so that you can ask the key questions that will determine your success. You may find that this article is just as much of a primer for selecting the right manufacturer to work with as it is about developing a private labeled product.

Quality Assurance Testing
When you evaluate a brand you think most importantly about quality. It is important to court your prospective manufacturer inquiring about any quality assurance or rigorous testing that may be performed prior to shipping the products to you. You don’t want to damage the brand’s integrity with poor workmanship. Find out if your manufacturer implements or maintains any manufacturing certifications, process controls, quality management or assurance systems. Depending on the manufacturer this might be a free service that might put one manufacturer above all the rest. In my experience with private labeling kitchen and bath faucets, Globe Union offered unparalleled testing measures while keeping the price competitive. What else do you expect from the largest faucet manufacturer in the world. Are you familiar with the “Premier” faucets at Home Depot? They are made by Globe Union and if you only knew that Home Depot was making over 80% profit margins on them…

Designs, Legal Issues, Copyright & US Umbrellas
Most of the smart private labelers have already submitted for legal protection for their products under US copyright or other umbrellas. The manufacturer may have other customers, which may have invested large amounts of time and development monies into a particular design. Though some manufacturers will allow it, it is not a good idea to use someone else’s design. Fear not, in some cases this leaves an opportunity to design your own product. If there isn’t much of an artisan in you, then many times there will be some kind of stock/standard item that you can just slightly modify. This is all industry specific information, but it is something you should inquire about. Just because there aren’t any laws to prevent the manufacture of a protected product in China, there are in the US when you try to sell it.

Retail Packaging
One of the main selling points to a private labeled product is the opportunity for premium packaging. Obviously it is nice to have the logo on the product, but the packaging is where the consumer will first identify with the brand. Typical packaging for products that come out of China will come in a standard white/brown box or packaging with a marketing scheme that makes it obvious that it came from another country. This is one of the first places to incur an additional landed cost for your item. This amount can vary depending on the packaging material and the number of colors printed on the retail box. Remember that in the eye of the consumer, the better the packaging the more solid the brand.

Support/Defective Products/Warranty
Be prepared for defective products, this is inevitable, but less likely depending on the amount of quality assurance measures your factory implements. It is too costly to ship your product back to China for a refund, but you need to be able to accept returns, as this would hurt your brand’s reputation if you did not. You should combat this problem by building in an additional 3% of extra product into your order. You should handle warranty issues in the same way. Confirm this is the case, but the manufacturer will likely give you a credit on the backend transaction of your next order. Unless you have invested more money into a AAAA+ rated product, it is best to offer a short or limited warranty. Do not expect a lot of support from the manufacturer. It is a good idea to do your due diligence in the beginning, learning as much as you possibly can about the product before launching your line.

The Cost Comparison for Private Label
This is an area you will have to explore for yourself as it can vary entirely on the product category, quantity of order and manufacturer. In the case of Globe Union’s private label plan for kitchen and bath faucets, all the costs for the private label were built into their pricing schedule, which was very competitive with non-private labeled products. In terms of having logos laser-etched onto stainless steel kitchen sinks I have seen this raise the price $5-$10 per sink depending on the order size and use of premium packaging.

Branding Development Ramp-Up Time
There are two main elements that can determine ramp up time for having your private labeled product produced: manufacturer preparation and your own preparation. From your end, you may outsource the design of your retail packaging, which may take several weeks. In addition, if you have any design changes to the product other than imprinting logos, this is also on you. The manufacturer will have to prepare to source the required materials, create moulds, implement changes to their production line, QA, etc. It is important to inquire about the ramp-up time as it will vary depending on the factory, its staff and the specifics of your order. After everything has been decided, pricing agreed upon and detailed to the manufacturer, you will want to receive a sample of the final product before authorizing production. Remember, you will of course need to make changes to your own schedules for completing work to meet deadline/timelines. Get started early, I have seen manufacturing ramp-up timelines requiring up to 6 months!

Minimum Orders
Minimum orders should not be an issue if you are already importing. It is standard to purchase at-least a container of goods while importing from China, but many times you must commit to purchasing a certain quantity of containers annually to obtain a private label item.

Certifications, Licenses and Incorporating
Many times licenses and certifications must be registered, applied and obtained by the branding company and not the manufacturer. It is best to do your due diligence to find out what if any requirements that your brand should have. Do not take the manufacturer’s word on it, check into it yourself as it will not be them who will have to deal with the ramifications. This will also affect some decisions you may have to make during the pre-manufacturing and deal-making phase of your import venture. Try locating similar already imported products in the US and reviewing the packaging for identifying marks of their certifications. Depending on your product and scale for distribution, you should also consider incorporating.

Expanding the Product Line
Leave room for expansion; make sure that the manufacturer you select has accessory items or a variety of other styles to incorporate into your line. If you purchase the various products for your line from different vendors you will have to start from scratch with each one. This way all your packaging and logos retain their continuity throughout the line.

Dylan Blankenship signature
dylan@sourcejuice.com

December 18, 2007 | Filed Under Private Label, Sourcing Guides | 5 Comments

Beware the Middleman and Seek the Intermediary

So you come across what seems to be a stroke of good fortune. A company having experience in making your product and after calculating your landed price are once again surprised at how cost effective it is to manufacture goods in China. There is no substitute for traveling to tour the factory, but depending on your situation, you may not have the opportunity to visit. Having received some literature, a sample and verified the company’s references, what else can you do? What is the worst that can happen? Let me tell you the pitfalls and learn from my experience importing a new product, from a new company, for the first time.

This is a story as much about the intermediary as it is about the middleman. Both are important aspects to consider in the importing process. Both will cost you money and increase your landed price, but only one will add value.

Sourcing Companies vs. The Source
There are an unlimited amount of companies in China that represent themselves as the manufacturer and they can, at times, make it hard to make the distinction. These companies can do some of the leg-work for you of having to locate the manufacturer in person or on the internet. They can be useful in that they are creating a “one stop shop” to find and purchase all of your goods. Sourcing companies have created partnerships or special pricing agreements with the different manufacturers and in turn resell the goods to you. While I have found a number of sourcing companies that are useful, it is best to go right to the source. One issue, is that without dealing with the source, you do not know who or how your products are really getting produced and under what circumstances. Secondarily, if you have problems with your goods, you are going to have to deal with the source through another company (or two possibly – you just don’t know). Another important detail is that without dealing with the source, you cannot be sure that this isn’t the first time they have built your product. As in my situation, the company had produced similar “wood” products like front doors and figured that was enough expertise to build “wood” kitchen cabinets. As with many things in China, the country is amazing at being able to accomplish extraordinary feats of “Magic” that may not have ever been done before or at that scale. This can sometimes be dangerous for the consumer.

It is important to note that it is only good business ethic to do a trial run of any product you import for the first time at your own risk and not the clients’. This is the case for my venture into producing modular kitchen cabinets to add to our private label product line.

Pre-Manufacturing Design
One of the issues with working with the middleman or sourcing company/agency is that they may be knowledgeable about a wide variety of products, but not intricately experienced in any of them. By unknowingly using a sourcing company, I opened myself up to an extraordinary amount of work early on in my kitchen cabinet manufacturing venture. Aside from putting together kitchen cabinet layouts, order lists and color/style selections I immediately found myself in a storm of pre-manufacturing design related conversations with the “manufacturer”. The questions I was being presented with are ones that should already be known as industry standard specifications for a product. Check it out, an actual diagram from the sourcing company asking design related details to cabinet construction. It gets much worse, but you get the idea.

Unknown Design Related Questions

Delays & Intermediaries
Suffice it to say, design wasn’t the only head-ache, delays were inevitable. Production was looking to run past a year and I encountered excuses about material shortages, issues with paint drying due to the rainy season and hardware not arriving on schedule. I had no way to confirm production was actually moving according to the emails I am receiving. At the same time I was expected to make progress payments on the manufacturing. I became skeptical if I would ever receive the order when I asked that a sample door be produced, completed ahead of the order as to confirm quality and mailed to me. This was nothing more than an attempt to satisfy my curiosity of their actual progress. Additional excuses followed and with a 20% deposit on the line, I contracted an intermediary to do some due diligence on the company. The World Trade Group has offices here in the US and in various places in China. This is important as you have a local contact in both places in which to interface, send documents, etc. For a consulting fee they are able to fly a consultant out from a city in China to your factory and give us a detailed report with photos. This was invaluable in that for the first time we were able to get a vivid picture of exactly what and who we were dealing with.

Their Findings
The report from the World Trade Group confirmed that the factory was not being truthful as to the nature for the lengthy delays. By the time of their arrival, it was claimed my sample doors had “just shipped out” express mail. By hiring a consultant, we were able to reopen communications with the sourcing company since talks had broken down months prior. They also were able to begin to negotiate for a hard ETA on completing production and had a backup plan if they were not successful. Lets look at some of the details from the report. The report outlined an actual timeline of events generated from email correspondence on both sides. Also included was a description of the company outlining that it had been in business for ten years exporting wood doors and had started their new cabinetry product offering shipping only to Europe. There were six factories that the sourcing company was working with, each without a sign identifying who owned the factory or their affiliation. All finishing/paint coating was to be subcontracted, but at the time of the inspection by WTG, no contractor had been selected.

Factory from Report

Factory Machines from Report

All door and drawer panels had been completed and stacked in the corner.

Finished Panels from Factory Report

Of course reviewing all of this information gave me a false sense of security that everything will go on schedule from this point forward. As a contingency for further issues, a hard date was set for shipment and terms for late delivery established. WTG continued to monitor communications and status of shipment and when the factory again failed to meet deadlines, intervened. Due to the terms of our agreement, the shipment was so late that we had to again negotiate an acceptable discount even though we had an agreement in place.

Arrival/Conclusion
The order exceeded a year to conclude and with only one of the two containers finally shipped. At the final point, it was decided to have the cabinets painted and finished here in the United States for fear they would never be completed. The World Trade Group or other companies alike are essential in conducting business from the US. They provide a cost effective alternative to source new products, evaluate factories of interest, provide quality assurance measures, confirm integrity of products before shipment or mediate an already bad situation.

Dylan Blankenship signature
dylan@sourcejuice.com

December 16, 2007 | Filed Under Factories, Negotiating & Strategy | 6 Comments

The Nitty-Gritty of United States Import Duty Rates

Customs Logo

United States Customs and Border Patrol has a duty rate for importing virtually any item on the planet. There are however, a number of things you might want to consider before calculating your landed cost based upon a particular rate. Here is your intro guide to deciphering tariff schedules, rulings and trade agreements. The Harmonized Tariff System (HTS) is a reference manual roughly the size of an unabridged dictionary containing duty rates for virtually any item in existence. Just as a dictionary has an order for organizing words (and their definitions) so does the HTS. Goods are arranged in categories or numbered chapters with similarly typed items. For instance, Chapter 89 is where duty rates for ships, boats and other marine or floating structures can be found.

Classification experts spend years learning how to properly classify import items. This schedule of rates will enable you to get an approximate/general rate for a particular product. An important fact to remember is that the United States Customs and Border patrol make the final determination on the correct rate of a particular good and not the importer. I would recommend contacting a customs brokerage house when in doubt. It is important to begin working with a customs broker in the early stages of your import venture. Aside from utilizing them to strictly clear your goods through customs, many times they can arrange logistics and be an essential resource for many aspects of the import process. I have worked with Encore Forwarding (Jacksonville, FL) for a number of years and can say nothing but great things. http://www.encfor.com/

To review the Harmonized Tariff Schedule by Chapter please visit the United States International Trade Commission at: http://www.usitc.gov/tata/hts/bychapter/index.htm

The U.S. International Trade Commission also has an interactive and searchable database that can help in determining rates of your goods at: http://dataweb.usitc.gov

Ruling Letters / Binding Rulings are requested as a means to confirm a particular items duty. Additionally the importer may need additional information regarding a particular transaction, definitive interpretation of applicable law or any other additional information. Requests for tariff classifications can be made in the form of a detailed letter to any service port office or:

Director, National Commodity Specialist Division
U.S. Customs and Border Protection
Attn: CIE/Ruling Request
One Penn Plaza-10 Floor
New York, NY 10119

Alternatively, information on electronic ruling requests can be found here: http://www.cbp.gov/xp/cgov/toolbox/legal/Rulings/eRulingRequirements.xml

Customs Rulings Online Search System (CROSS) It is possible that in-fact you may not be the first person to inquire for or about a particular ruling/situation. You should search and review the Customs and Border Patrol website’s CROSS database for information on past rulings: http://rulings.cbp.gov

Reduced Duty Rates by Country Consider that not all countries are treated equally and are sometimes covered under international trade agreements. To obtain a current list of countries that are eligible for reduced duty rates or duty-free treatment under an international trade agreement (such as NAFTA, GSP or CBI), please visit the International Trade Commissions website at : http://www.usitc.gov/tata/hts/bychapter/0702gntoc.htm

Be aware, not all goods manufactured, produced and exported from an eligible country or international trade agreement are eligible for reduced or duty-free treatment.

Dylan Blankenship signature
dylan@sourcejuice.com

December 12, 2007 | Filed Under Customs, Landed cost | 1 Comment

Solar Powered Device Charger Reviewed

We’ve had several readers express interest to us about sourcing environmentally friendly/green products. In the spirit of giving readers what they’re looking for (that’s our job!), here is a review of a quality solar powered device charger we’ve located.

Solar Charge Open

This unit is designed and marketing by a company called Sunnytech, located in NanShan, Shenzhen. Upon receiving the sample, the first thing we took note of was the quality of the packaging. The unit comes in a very nice box which is very much suitable for resale in the US and Europe.

In fact, this is the same box that our HTC Tytn II mobile phone came in, which is a very high end phone. This must be a relatively up scale box that several of the Chinese manufacturers are using now. The vendor is open to re-branding/re-packaging so if you’re interested in selling this product you will be able to re-brand it with your own company information.

When opening the box, the unit sits in the middle, surrounded by a black velvet liner. This definitely improves the appearance of the unit and puts the package as a whole into “quality” territory.

Pulling up on the yellow (silk?) loop reveals the instruction manuals. The manuals are in Chinese but again, the company is open to re-branding and re-packaging. You shouldn’t have a problem having instruction manuals done in English or another language suitable for your country.

Under the instruction manuals is a velvet platform that includes an AC adapter and seven adapters. The AC adapter can be used to charge the unit outside of solar so that it can also be a store of power. For example, if you are going on a long trip you may decide to charge the unit with AC power and keep topping it up via solar. The adapters fit the major cell phone brands. The standard USB adapter fit our phone in the office just fine. Included also is a USB cable. One side of this cable plugs into the unit’s ‘power out’ and the other side is where you plug the various adapters into.

The unit itself has a velvet-y feel to it and feels solid and well manufactured. The logo is placed on the top along with an engraved company name where you open it from. Again, these can be replaced with your company’s information. In fact, the factory showed us several other examples with the China Mobile and Nokia labels as they purchase from Sunnytech as well.

The unit feels a bit large but can easily be held in hand.

On the front of the solar charger, you can set the voltage out depending on what you want to charge. The options are 4.5 volts, 5.0 volts, 6.3 volts and 9 volts. This covers the general range of mobile devices.

On the right side, the unit sports a USB-OUT slot, an LED.OFF.ON switch and a DC-IN slot where you connect the included AC adapter to.

Below is a picture of the included USB cable connected to one of the included adapters.

If you are interested in contacting Sunnytech directly, it’s best to speak with Vanilla Wu. Her English is quite good and she has helped SourceJuice arrange for this review. Her phone number is +86 13823283738 and can also be reached via email at . Their English website is http://www.china-solar-charger.com/index.

Inside the factory is a typical production line where the components are assembled manually by hand.

The unit itself goes through many steps of manufacture and here is an almost finished unit, with the inside components intact but not yet placed in the outside case.

The units are placed in foam layered padding.

We hope you enjoyed our first “green” product review and that our readers find it interesting as an option to source. For more information if you have any questions, please fill out the contact us form at the top of the page.

The SourceJuice Team

December 7, 2007 | Filed Under Sample Reviews | Leave a Comment