The 15% Myth: Why Only a Fraction of Your Product's Cost is "From China"

When you import a product from China, it's easy to assume that the price you pay the factory is the main cost. But what if we told you that for many products, the actual value added by the Chinese factory—the labor, assembly, and their direct profit—often accounts for as little as 15% of the final landed cost?

This isn't a trick. It's a fundamental concept that separates amateur importers from professional ones. Focusing only on negotiating that 15% is like trying to save money on a car by only haggling over the price of the tires. At Befach.com, we help our clients manage the entire 100% of the cost. This guide will break down where your money really goes.

Deconstructing the "15%": The Factory Price (FOB)

The price your supplier quotes you (often the FOB or "Free on Board" price) represents the visible part of the iceberg. This 15-20% typically covers:

• The factory's labor and assembly costs.
• Factory overheads (electricity, rent).
• The factory's profit margin.

While it's important to negotiate this price, obsessing over it means you are ignoring the other 80-85% of the costs that can destroy your profit margin.

Uncovering the "Other 85%": The Total Landed Cost

The Total Landed Cost is the true cost of getting a product from the factory floor to your warehouse door. This is where the majority of your money is spent.

1. Raw Materials & Components (40-50%)

Your Chinese factory has its own supply chain. They have to buy raw materials (like steel, plastic pellets, fabric) and components (like microchips, zippers, motors). These costs are passed on to you and often make up the largest single portion of the product's price.

2. International Logistics & Freight (10-15%)

Getting your goods from a factory in China to a port in India is a major expense. This includes trucking to the port, ocean or air freight, and various port handling charges. This is a complex area where costs can fluctuate wildly. Professional logistics management is key to controlling this spend.

3. Customs Duties & Taxes (15-25%+)

This is a huge and unavoidable cost. When your goods arrive in India, you must pay customs duties. This typically includes Basic Customs Duty (BCD) and IGST. The exact percentage depends on the product's HS Code. You can research these rates on the CBIC portal. Misclassifying your product can lead to massive fines. Expert customs clearance is not a luxury; it's a necessity.

4. Other Costs (5-10%)

This category includes a range of smaller but significant costs:

• Cargo Insurance: To protect against loss or damage.
• Quality Control Inspections: The cost of ensuring your product meets standards.
• Bank Fees: For international wire transfers.
• Inland Transportation: Getting goods from the Indian port to your warehouse.

The Befach Advantage: Managing the Full 100%

Focusing only on the factory price is a recipe for failure. A successful import strategy requires managing every single component of the Total Landed Cost. This is what we do at Befach.

• Our sourcing team ensures you get a fair price on the "15%" while guaranteeing quality.
• Our logistics and clearance teams expertly manage the "other 85%", optimizing shipping costs and ensuring full compliance with bodies like the DGFT.

We provide you with a clear, transparent breakdown of your Total Landed Cost, so you can price your products accurately and protect your profits.

Stop Focusing on 15% of the Problem

To succeed in importing, you need a holistic view of your costs. Partner with a team that understands the full picture.

Ready to manage 100% of your import costs effectively? Contact Befach today for a comprehensive consultation.