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7 weeks case study update – I am out of stock

I have a problem. Well its more of a luxury problem. Don’t get me wrong, I am not complaining 🙂

I have sold 1008 pieces of my French Coffee Press and am out of stock after only 7 weeks.

How did this happen? 

If you re-call my last blog post (https://importdojo.com/case-study-how-i-went-from-zero-to-7000us-in-10-days-in-one-of-the-most-competitive-amazon-niches/) I was doing about 8-12 pieces organically after my initial launch.

After about 5 weeks I was doing around 20-25 pieces a day 

and in the last 2 weeks I was doing between 35 to nearly 50 pieces a day!!!

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I contribute this to the following factors:

  • My listing and photos are better than the competition
  • My product is superior to the competition
  • Great copywriting does matter
  • 79 reviews within 5 weeks  
  • Launch tactic and tools used 

So now I’ve been out of stock for nearly a week already and my ranking has obviously dropped significantly. The good news is I have 1 shipment (208 pieces) that will be arriving this Friday. Unfortunately it is only 208 pieces that the supplier had in stock for me. 

As soon as I saw that I am heading towards 30 pieces a day I ordered another 2500 pieces that are being produced right now but I have to send it in via Sea otherwise it gets too expensive. Also I will not do any give-aways or PPC until my 2500 pieces nearly arrive, otherwise I am running out of stock again. Luxury problems like I said 🙂 

Alright, numbers:

Start of the project: 17th of November 2015 (Chinese New Year added nearly two months to my production) 

End of the project (launch): 12th of April

Length of the project: ~5 months. It can be done in less time (2-3months) especially if you don’t forget to place orders before the Chinese New Year  

Total order value of product: 4500$ (1000 pieces at 4.5$) 

Total cost of inspection, photography, layout and packaging: 949$

Total cost of shipping: 2650$ (~900KG by Air – thats 2.94$ / per kilogram) 

Total cost: 8099$

Update numbers after 7 weeks:

Units sold: 1008 pieces

Returns, units broken: 12 pieces (1% return quote) 

Profit made after PPC, give aways & others: ~8400$ 

My estimate profit when I started was around 12,000$. So I am short about 4,000$ but I am not not complaining. 

I’ve taken these 8400$ and re-invested them in my 2nd (208 pieces) & 3rd (2500 pieces) re-order. 

Meaning that the following orders are pure profit because I covered my initial investment (8099$) and nearly covered my 2 & 3rd re-order. 

Conclusion of this case study

It’s been 6 months since I started this project and I thought its time to give you a recap of what has happened, what went well what didn’t and where I can improve.            

The fact that the Chinese New Year (CNY) was in between and that I have not worked full time on this project has delayed my project. 

If I would have focused on this project from the start and work more than the 1 hour per day I could have shipped out before CNY and would have had a total of 3 months from the start until launch of the product. Since I am aware of most things that need to be done for this project it is easy for me but if you are a beginner I estimate that from finding a product until shipment/launch you can do this in 4 months.

Now onto the things that went well and some that didn’t work well.

One thing that caused a long delay was my mistake in paying the wrong beneficiary for the sample payment. That delayed my project for nearly 2 weeks.

So make sure that you check all banking details when you make a payment. I also lacked the motivation in the beginning because I had so many other things and other products going on. That delayed my product for 2 months. Why? Because I won’t ship out before CNY. So make sure of the timelines when you want to launch a new product and be aware of Chinese holidays.  But I will explain in a little bit why this actually doesn’t bother me so much. Another thing that didn’t go so well was the misunderstanding on the extra filters that I wanted. 

Apparently I didn’t make myself very clear to the supplier on this point. Also the fact that I wasn’t able to get a price reduction bothers me a little bit but I can’t complain too much because every other modification that I wanted was accepted from the supplier even though I have a small order quantity.

One thing that bothers me a bit are the high shipment costs of Air shipment. Reason being that the quantity is low and forwarders charge high premiums for small shipments. With my re-orders I will order a larger quantity and go by SEA and that should bring shipping down to 20% at least. Which will improve my margin in the end.  Also the fact that the supplier messed up on the product dimensions and weights and that I was paying 270$ more than planned is not ideal but it is what it is.

Another thing that I didn’t plan well for was the re-order. I am now out of stock for another week and I have to get my ranking going again. Once that ranking is up again I should receive my large re-order by Sea. I should have projected my sales velocity at an earlier stage and simple send in a large re-order right away after seeing first results.

What went well was definitely the communication with the supplier and the quality of his work and attitude towards working with my small quantity. I attribute that for meeting the supplier in person at the canton fair and my clear instructions when I first made contact with him. Subsequently I also promised him more business in the future ,which definitely makes him more eager to work with me. The initial sourcing results were also pretty good, all suppliers had good prices and decent MOQs. But the fact that my actual supplier had exactly what I needed and the fact that I met him in person made my decision easy.  

I am also happy with the artwork and photos. I admit I paid a premium price for the packaging and photos but I want quality work. So often I read from people in the FB groups that they hire someone on Fiver or Freelancer.com and the results are either bad or mediocre. Or the seller of the service disappears completely or doesn’t keep deadlines which can be crucial for your launch. Think about it, a great listing and photos will set up your product for the long term even if the initial investment is bigger. I could also book a cheaper inspection now but that’s not the way I do it. I want this product to be of high quality and I don’t want unhappy customers or give my competitors the chance to give me a bad review.

I may go with a cheaper inspection for re-orders which are less complicated. There are services I work with that charge 100$.

The fact that my shipment was delayed for more than 2 months because of the CNY  actually doesn’t bother me at all because this course should be for beginners on importing from China who are launching their first product. So you actually should take your time for all the different steps. Don’t hurry the process just to ship as fast as possible. I had two months to prepare my launch, perfect my listing and think about different strategies.  Also I think many of you are just starting out or doing this on the side. The one thing I suggest you is that you take you time, do the research and know the process when dealing with factories in China. Don’t just quit your job because you heard of FBA and do this full time. Have a capital on the side, maybe do this besides your full time job and once you have a couple of SKU’s running you can think about quitting your job. If you can’t invest 5-6000$ for your first product try ordering a smaller MOQ.

However I personally think 5000$ is the minimum budget one should have and I am not saying it can’t be done with a budget of 3000$ but you will likely be in a much more competitive field when choosing a product because a lot of people look for the same products because of their limited budget. Save that money you would spend on a weekend out with friends and put it into your budget. 

Now don’t get me wrong, I have spent quite a lot of money on photography, inspection and logistics. It can be done for less, that is for sure. I could get an inspection for 100$ instead of 309$. I could get photos for 100$ instead of 650$. And maybe that would work also ok and in time I can improve photos and other things. But I don’t see it as that. I see the initial investment important because it will set up my listing for good. Now obviously a lot of people will see this case study and might copy me so I will have a lot of competition, but that is not my point.

I normally wouldn’t disclose my product and therefore (if I don’t disclose my product) the steps that I have taken will make sure I have a high quality product, great photos and a money maker for the coming years. If I were to cut costs everywhere maybe because of budget reasons I would have to cut into quality of the product, leave out the inspection, poor product photography and more.

That puts my Amazon account, Best Seller Ranking and everything else in danger. I want to have a reputation of a quality product and satisfied customers, because in the long run that is what you need to grow your business. If I were to try this as a one time thing I might make some money quickly when cutting costs and then what? I have to start all over again with a new product because someone copied me and made a better product.

See the initial investments as a road to success and don’t think about the number too much. I am not saying you should pour money into suppliers and inspection companies or photography, these have to be reasonable and negotiated but don’t be too stingy with investments either.

I think the saying “want cheap? Then you get cheap!” plays a big role when buying in China and selling on Amazon. Do your research on services that you need for your product, don’t pay too much but not too less either just to save 100$ that will hurt your product’s performance in the long run. 

I am a bit off on my initial calculations and profit projections (about 4000$ off) but I’ve added a couple of things and looked for the best so that decreased my profit. However I as I said I nearly covered both of my re-orders only with my profit. And I have no more photography or give away costs and that will certainly improve my margin. Keep in mind that your first product will not make you a lot of profit but the re-orders when launched successfully will.

Ok, so I am wrapping up here. I hope that this case study helps you to figure out the process in China and how you can apply my techniques to your own product. I have also learned that two of my students will launch the same product in Europe’s Amazon markets and in a few weeks I can give you some more results on the European market with this product

Looking back at this project I would call it a success. Here’s why:

  1. I have a product online that has quite some reviews already (mostly 5 star)
  2. No future investment needed (except re-order inventory)
  3. The product makes me 3,000$ a month minimum, possibly more.

Now onto YOU my loyal reader. Let’s assume you are still considering moving into FBA on Amazon. Imagine this was YOUR first project on Amazon and you are still employed. If you would have started this while working a full time job you could possibly quit your job now and have a guaranteed income of 3,000$ per month. If not, here’s a few scenarios what you could do with those 3,000$ extra:

  1. Escape the rat race and quit your job? Maybe not the safest decision but add one or 2 more products and you are good to go.
  2. Want to add additional income and keep your job? You’ve just added 3000$ to your monthly income.
  3. Want to go to tropical beaches on a holiday and not having to stay at budget hotels?  
  4. Want to send your kids to an expensive school? There you go. 
  5. Need more money to support your family? 

What I am trying to get to you today is:

“Focus on building a brand from the beginning. Keep this in the back of your head with everything you do. The majority of you just starting out has limited capital and can therefore not play around. So build better products from the beginning, have A+ photos and listings, great customer service and don’t be afraid to invest your money into higher priced and better quality products, be unique in what you do.

Look at this business not as a get-rich-quick scheme but rather see your investment as an opportunity to build your brand and in turn make more money in the long run (Do this as opposed to release and launching a product every week). Build it slowly and keep quality and focus in the back of your head.”

One last thing. If you are just starting out do not take your first profit and spend it on a Vegas weekend 🙂 

I hope that this case study has somehow inspired you to start your own business.

Be it on Amazon or other eCommerce (or offline channels)

If you are interested in the step by step video lessons (over 50+ video tutorials) and the other great parts of my course have a look at my Masterclass:

https://importdojo.com/importdojo-masterclass/

All the best and happy sourcing,

Manuel

https://importdojo.com/importdojo-masterclass/

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News and trends from the exhibition (April 2016)

So this post seems to be a recurring and I won’t break habits and therefore continue this series of giving you the news and trends from this April exhibition with the following sum up 🙂 I am also doing a Q&A at the end of this post, check it out. 

It has been a very busy 5 weeks for me as I’ve been to 12 different shows and I can see that more and more Amazon sellers are coming to Asia to visit the suppliers and shows. 

When I asked suppliers at exhibitions 2 years ago if they sell into Amazon they had no clue as to who Amazon is. When you ask them now if they sell to the US you get: “oh yes sure, we have many buyers on Amazon”. 

Not that I am afraid of competition but there is clearly a sign that sellers realize you need to go to the source to find the right products and suppliers. 

In recent months I have seen a gradual decline of my business to retailers (offline business) and more and more eCommerce sellers are starting to come to Asia to see the suppliers. 

This is a huge sign. Whether you plan selling on Amazon, your own eCommerce store or other online platforms (eBay, Spotify etc.) NOW is the time to get into importing and private labeling.

I see a lot of repetition at the shows but there are clear trends in several categories and I was able to find a few golden nuggets that I am thinking of launching as my next products:

Personal Transportation

The famous “hoover board” is almost outdated and I saw many new types of transportation devices. Personally I am not getting into this category as I believe it is too risky and their are no clear saftey standards. 

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Decorative items

Lots and lots of nice products at both the Houseware fair (HKTDC), Cantonfair (Phase 2) as well as the Home and Premium show (Globalsources). 

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My wife would have a difficult time choosing from the huge variety of products – there are lots of nice looking items 🙂

Interestingly but not surprisingly I met most of the Amazon sellers from overseas at the house ware/kitchen shows. A clear sign that this category is heavily competitive but also very popular AND still profitable. 

High quality and branded Chinese/Korean/Japan goods

Be it a mini projector screen from Korea, a “Lego” like learning tool for kids from Japan or high end bycicle helemts (with bluetooth) from China. Asian brands are starting to make waves and their quality is excellent. 

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However in most cases these factories are only looking for distributors and are selling their products with their own brand on Amazon or other channels. Private Label is not really welcome and if it is very high MOQ’s are necessary. 

However it is a good sign and nice to know that the asian brands are catching up in terms of quality, innovation and development. 

Sporting and camping products

A category that I personally love because I like the outdoors and love to work out. Seen a lot of suppliers offering things from kettle bells to yoga mats to roof tents. I found myself 2 products that I am thinking of launching soon. 

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While it is getting more competitive I think that with the right marketing, packaging and photos on your listing this is still a very good niche. 

Two categories that I have seen everywhere no matter if it was a houseware or gardening show: 

1) Silicone kitchen products! 

You see them everywhere on nearly every booth. Either from a trading company who’s main manufacturing line are electronics or from the actual manufacturer. My advice – be creative and don’t try to private label the next silicone mat. 

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This category is too saturated 

2) Vaccum flask / Tumblers 

Same here. I don’t know what it is but it seems when factories hear that their neighbouring factory is selling stainless steel tumblers like hot cake, they have nothing better to do than adding them as well into their assortment thinking they will sell them too – even though 40 other factories in the area are selling them already as well. Nearly every booth at the house ware and gifts show had tumblers and flasks in their booths. So unless you have a buyer list of 50,000 people and can sell your next stainless steel tumbler – Please don’t go into that category – the competition is too big. 

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The Global Sources Sourcing Summit:

https://smartchinasourcingsummit.instapage.com/

I had the honour of being the opening speaker at the Global Sources Sourcing Summit. There were about 65 (or becoming) Amazon sellers attending this event and I can say that it was truly a very exciting opportunity.

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During my speech

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Discussing strategies with a fellow Amazon seller

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Shall we go into Silicone products?

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Impressions from and after the Sourcing Summit with attendees.

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Q&A panel at the Sourcing Summit

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Will Tjernlund and fans 🙂

The line up of speakers was really impressive and to be honest I felt intimidated to be among such great speakers. We had Greg Mercer from Junglescout, Anthony Lee from Zonblast, Will Tjernlund (the Multi-Million $ Seller) Ash Monga from Imexsourcing, Mike Bellamy from Passage Maker …… among many other great speakers. The line up and summary is here: https://smartchinasourcingsummit.instapage.com/

But most of all it was great to meet so many Amazon sellers. I had some time in between to discuss strategies, procedures, importing and all that comes along being an Amazon seller myself. 

This was such a great event and I am happy to say that I will be at the next one in October 2016: 

https://smartchinasourcingsummit.eventgrid.com/

Factory trip to Shenzhen:

I had the opportunity to go with some ImportDojo members to their factory in Shenzhen to see the production and help negotiate prices:

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Arriving in Shenzhen

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At the factory with Omar who started less than a year ago and now working on several SKU’s.

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These guys seem happy with their product and factory choice 🙂

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Checking out the production.

UPDATE CASE STUDY: 

In the midst of everything I launched my newest product and case study item:

http://amzn.to/1TdzvFI

As of today my inventory down to 580 pieces (from 1008 pieces), 417 pieces sold in less than 6 weeks in a very competitive niche. I have nearly re-couped my entire investment (8000$) and I just put in a re-order with my factory for 2500 pieces (shipped by SEA this time) which should last me at least 4 months from date of arrival. 

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You can read on my previous update here and I will soon post another one: 

https://importdojo.com/case-study-how-i-went-from-zero-to-7000us-in-10-days-in-one-of-the-most-competitive-amazon-niches/

Impressions from the shows

CANTONFAIR 

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Breakfast for champions! A fellow Austrian brought me the famous Manner Schnitten from Austria and I had to have them for breakfast – thanks Stefan!

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As usual a crowded train on the day before the Canton Fair starts. Make sure to book your tickets in advance and pick them up at the train station in Hung Hom (HK) otherwise you end up waiting for a train hours later: http://www.it3.mtr.com.hk/B2C/frmFareGuangdong.asp?strLang=Eng

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walking to my hotel trough Guangzhou

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I usually don’t stay at fancy hotels as I see my business trips as a business trip, not a vacation. So I checked myself into the Lavande Hotel at an amazing rate of 60$/night. It’s right next to the Subway station so you can get to the Canton Fair very quickly. It’s not the greatest hotel and staff speaks poor English but you’ll get your room.

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Another foggy day in Guangzhou.
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One of the halls at the Canton Fair Phase 2

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Walking the floors.

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Could already use a bath after a day at the show 🙂

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You can literally find everything here.

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This might be a good camping product?

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Not sure if this prototype will make it into production 🙂

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Just one of the many many halls, full with suppliers…

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Baby products

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Heading back to the hotel

HKTDC 

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Beautiful covers and bags

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a nice kitchen gift set

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Is this my next coffee product? A drip – cold press coffee maker

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Heading to Hall 3

Globalsources 

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Mugs, mugs and mugs

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A DIY learning tool for kids

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gaming headsets

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Interesting cable organizer

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checking out gaming hardware

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iPhone lenses and covers

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Getting myself some new ties. Even though I never wear them 🙂

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Accessories, accessories and accessories

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Looking to create your own brand of shoes? This supplier works for Li Ning (the big Chinese brand) as well as New Balance (NB). I just love flyknit (see my orange Nike sneakers :))

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Gaming headset

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Time to do some sight seeing with a colleague


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Meeting up with Peter Zapf from GlobalSources

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Interesting Solar camping lantern

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High end headphones

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Silicone cooking pods

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Decorative copper items from India

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Kids travel luggage

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This bike weighs less than 10KG and costs over 800$

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My next PL product? 🙂

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Having a coffee break with Will and colleagues (Pete & Laura) from Uganda who are looking for their first products.

Yiwu

One thing I should mention is the wholesale market in Yiwu. 

Where is that? It’s a “small city” near Ningbo (Zheijang province) that houses “The World’s Largest Wholesale Market.” 

Here is a report from Business Insider. 

http://www.businessinsider.com/yiwu-china-largest-wholesale-market-2011-10?op=1#ixzz3V5meL6e8

I personally didn’t go but I have heard of a few people that came to HK that they went there before the shows. Is it worth it? Yes and No. If you have no contacts and there is no exhibition going on at the moment then YES. But if you are looking for serious suppliers with good quality and buying from factories directly then NO. The thing is that these showrooms and “suppliers” in Yiwu are thousands of trading companies mostly selling stock (with Chinese packaging and NO quality control) to you in small quantities. Yes you can give it a try and not all suppliers are bad but I personally had bad experience with suppliers there. It’s worth to see and there are a few nuggets and you can buy small quantities, just make sure to check out the supplier in-depth and have agreements and if possible inspections in place. 

Planning on coming to the shows later this year? Here are the dates for October:

http://www.globalsources.com/NEWS/SIC-trade-shows-in-hong-kong-guangzhou-october-2016.HTM?source=GSOLHP_Product_Guide

Interested in last years reports? Check out these links: 

https://importdojo.com/news-and-trends-from-the-exhibitions-in-asia/

Recap and conclusion for myself:

While I have met many amazing people, fellow Amazon sellers and suppliers this has also been a fruitful trip for me. Apart from making new friends and business partners I have also placed order for 4 new items that I found during those weeks and after initial research I can say that there won’t be any or limited competition. I have invested a total of close to 20,000$ into new products and I am expecting to get a return of 6-10,000 on each product after the first order. Once again, I can’t stress enough how important it is of actually coming to Asia to source your products. 

I hope that this update gave you a bit of an overview of whats happening in China/HK and if you have any questions please do not hesitate to contact me.

All the best and happy sourcing,

Manuel

https://importdojo.com/importdojo-masterclass/