Searching for the keyword “Android Tablet” on Alibaba.com will give you access to more than five million results. Since Apple launched the iPad, the market for tablets and smartphones has exploded. Although this business is – apparently – enormously lucrative, the market is dominated by a few wholesale importers who have managed to achieve economies of scale. Small and medium-sized entrepreneurs, on the other hand, struggle to achieve significant profit margins and, on the contrary, often lose part (or all) of the capital they had invested in the import process.
In today’s article I will analyze the causes of this phenomenon and illustrate the best strategies to import tablets and smartphones from China profitably.
Product Specifications
A general definition of “good quality” does not exist in the sense that quality is determined by the specifications required by the importer. Also keep in mind that Chinese manufacturing companies rarely own products in stock; It is therefore the importer’s job to provide a list of detailed specifications so that the manufacturing company can make the desired product. Tablets and smartphones are no exception; on the contrary, given the complexity of the product, a clear list of specifications is essential.
Here is a non-exhaustive list of specifications that you will be required to specify:
- Screen size (e.g. 7.7 inches)
- Screen type and resolution (e.g. IPS Retina Display, 2048×1536 Res)
- Software version (e.g. Android 4.4)
- Processor (e.g. RK 3168, ARM Cortex-A9 Dual-core-1.2Ghz)
- Internal storage (e.g. 8 GB SSD)
- RAM memory (e.g. 2 GB)
- Network (e.g. 3G and WiFi)
- Camera (e.g. Front 1.3 MPX, Rear 2.0 MPX)
- Battery type and life (e.g. 2450mAh lithium battery, 3 hours life)
- I/O (e.g. USB OTG, TF card, Earphone, Mic, DC in)
- Thickness (e.g. 8 mm)
- Language (e.g. Italian)
- Charger (e.g. European)
- Colors
- Certification standards (e.g. CE)
Leave any specification open to interpretation and rest assured that you will receive an unsatisfactory product. Chinese suppliers tend to interpret the list of specifications in order to maximize their profit margin, using the cheapest materials and components on the market whenever they have the opportunity. So if, for example, you forget to specify the type of charger, you could end up with a stock of chargers that are undersized or not suitable for European electrical outlets. The only way to receive a satisfactory product is to list all the specifications required in the sales agreement.
European Certification Standards
Although searching for “Android tablet” on Alibaba.com yields five million results, a search for “Android tablet CE” (“CE” is the name of the most common certificate in electronics) narrows down the choice to 230,000 products, or 4.6% of the results on Alibaba.
This means that only 4.6% of suppliers on Alibaba claim to be able to produce a tablet that complies with European laws (note that importing products that do not have the necessary certificates is illegal and the goods will likely be seized from you at customs).
Also consider the fact that many of the suppliers who claim to be able to comply with European certification standards are lying for the sole purpose of securing the highest possible number of customers. In March 2013 we worked with a northern European tablet importer and our research found that only 2 of the 38 suppliers we contacted had real CE certificates. The remaining 36 claimed to have CE certificates, and in fact they did. The problem is that these certificates were fake!
I repeat, European certification standards are laws in all respects and, as such, must be respected, under penalty of seizure of the goods. Many business owners make the mistake of thinking that meeting certification standards is a supplier’s problem. In reality, this responsibility falls entirely on the importer, i.e. you.
There are two main reasons why it is so difficult to find a Chinese supplier that can comply with European certification standards:
1.) Many suppliers are not used to exporting to Europe or the United States, and the standards in force in China or other countries such as Russia or Vietnam are less stringent.
2.) Making an electronic product that meets European certification standards requires a certain degree of sophistication in terms of materials, components, and manufacturing process. Many Chinese suppliers simply do not have the capacity to make a product that can pass CE or RoHS testing.
Counterfeit tablets and other types of scams
Consumer electronics is one of the favorite industries for scammers as it is much easier to rip off an entrepreneur with no experience who intends to start by importing 100-200 smartphones than it is to scam a large company that is importing entire containers of PVC or LED screens.
Apart from fake certificates, another rather common fraud is that involving payments: the idea is to convince the importer to pay the money into an offshore bank account and then disappear. Does it seem too simple to work? Read here!
Although I won’t dwell too much on the topic of fraud in this article, I still want to list some common traits of scammers:
1.) The price is too affordable to be true.
2.) You are offered a branded product such as Apple iPad or Samsung Galaxy. Do you really think that Apple gives the license to export its products to a small Chinese supplier?
3.) You are offered a wide range of products.
The last point may seem contradictory since I often repeat how important it is to choose a supplier who can offer a wide selection of products. However, there is a limit to the variety that a supplier can exhibit. A supplier who claims to be able to sell you from tablets and SD cards to radios and televisions is a scammer or, if you like, an unorganized intermediary working from an internet café.
As for branded products, as I have already mentioned, a company like Apple would never dream of delegating distribution to a small Chinese supplier. In addition, branded products usually cost 10-20% more in China than in Europe. This is why the Chinese, when they go abroad, return with suitcases full of Canon cameras, Armani clothes and D&G perfumes.
Why do you think the supplier you found can sell you iPads at half price? I’ll tell you: because these are counterfeit goods that not only don’t work as they should, but are also illegal!
The strategy I would use to import tablets or smartphones from China
If I were to launch myself into the business of Android tablets or smartphones, I would never try to compete on price with large distributors such as Trony or Media World as these companies operate an economy of scale that allows you to cut costs to a minimum. And believe me when I tell you that even such companies have meager profit margins, at least as far as consumer electronics are concerned.
No, my advice is to find a niche market such as construction, agriculture, crafts, etc., and to propose tablets programmed to carry out a set of specific actions. I am thinking, for example, of the electronic menus that I happen to see more and more often in restaurants in Shanghai: they are simply Android tablets programmed to perform a specific function, that of menus.
Clearly, to be really useful, these tablets will need dedicated software. While not everyone can code, nowadays you can hire a freelance developer at more than affordable prices on platforms like Odesk or Elance.
Aside from custom software, the other factor that can allow you to differentiate yourself from the competition and make a leap in quality (also in terms of price) is a brand that, over time, gains value and is recognized (at least within your niche). From a practical point of view, creating your own “brand” is not a problem since any Chinese supplier will be able to insert a logo in your tablets and create a personalized packaging.
To sum up, instead of trying to sell your tablets at retail – thus competing with large retail chains – specializing in a niche, design a tablet that is dedicated to solving a specific problem (replacing paper menus in restaurants or bars, for example) and propose your own brand.
As for the choice of supplier, I would rely on a highly specialized company (i.e. one that only deals with making tablets or smartphones) since we are talking about complex products. But again, before discussing prices, specifications or quantities, I would rather worry about whether the supplier I have chosen is able to comply with European certification standards (assuming I want to market the product in Europe).
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