Contact Form – Garment Solution

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test page

First Name *

Last Name *

Email *

Do You Want To Schedule a Call? * Please Confirm Yes No

Phone *

What Phase Are You In * Design Pre-Production Production

Comment or Message *

Name

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Contact Form – Garment Solution 2

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What are the Custom Duties when Importing Clothes from Asia?

Understanding custom duties is the most complicated part of a clothes importing business due to the fact each country has a different set of rules, regulations and fees which you need to know of. If you aren’t knowledgeable with custom duties then chances are, your clothing products will not get through the customs office and could be held hostage by the country where you are about to import clothes. This problem could be detrimental to your company and may affect your business’ financial flow.

When working with clothing manufacturers in China, you need to be aware of custom duties so you can apply the rates and work on necessary papers once you start importing to certain countries. Here are vital information any importer needs to know on custom duties for importing clothes to usual countries being imported to:

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1. USA

All import clothes are charged with custom duties if they are valued at $200 and above. The duty rate for regular clothing products is at 16.5% while this number could be a bit more expensive for authentic clothing which are made of wool and fur such as coats and jackets. The US do not have VAT which means you cannot expect additional taxes aside from custom duties. However, they have the Federal Excise Tax charged on luxury products and fortunately, it does not cover clothing and garments.

All imported products to the US are subject to Merchandise Processing Fee (MPF) which is based on the value of the order and is divided into a couple of categories:

1. Imported products with value less than $2500: MPF tax is at $2, $6 or $9 per shipment depending on the type of product/s.
2. Imported products with value $2500 or more: MPF tax is 0.3464% of total value.

(Minimum MPF: $25, Maximum MPF: $485)

The MPF tax is almost negligible when it comes to import clothes and garments since they only accumulate for a small amount with this type of product.

For import clothes transported by sea, Harbor Maintenance Fee (HMF) is applied as a custom duty but much like the MPF, the tax value is close to negligible since the current rate is only 0.125% of the product value.

All custom duties and tariffs with clothes in the US are calculated based on the Free on Board (FOB) value of the import clothes which covers the following factors;

• Product cost
• Transportation cost (from Port of Loading in China)
• Export clearance (China)

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2. European Union

The European Union is an economic group consisting of 28 states all located within Europe. All of these states follow the same custom duties for importing clothes coming from non-European Union countries. In this scenario, tariffs with clothes will only take its toll once and are no longer added to the prices of the import clothes once they enter European Union territory. Clothing products which are not manufactured in Europe have low customs charges and are usually even as low as 0% for standard garments.

However, the EU is strict with products belonging under industries which are strengths of the EU. For example, garments like bags and shoes have customs duties of 10%-12% since EU countries are known producers of such garments. Furthermore, most countries have VAT rates applied to import products as well which includes clothing. But the VAT rate is often reduced to a minimum and is added to the customs duty which makes it close to negligible. It is only for goods above a certain value of around 10-22 euros so that it doesn’t apply to small quantity deliveries or prototype manufacturing when samples are sent.

All custom duties and tariffs in EU are calculated based on the Cost Insurance Freight (CIF) value of the import clothes which covers the following factors:

• Product price
• Shipping fees and logistics costs
• Product development expenses
• Insurance
• Tooling fees

The custom duties and tariffs in EU do not cover the following expenses;

• Sourcing fees
• Transportation costs (from Port of Loading in China)
• Port of Destination costs
• Bill of Lading’s declared value

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3. Canada

Canada has arguably the most complex custom duties and tariff system because there are 3 different sales taxes to monitor aside from the import duties.

1. Goods and Services Tax (GST)
2. Harmonized Sales Tax (HST)
3. Provincial Sales Tax (PST)

At least one of the sales taxes apply in Canadian states but none of the states cover all three sales taxes. These sales taxes are charged based on the location of the importer instead of import clothes’ origin.

Alberta: GST only

Ontario: HST only

Prince Edward Island: GST & PST

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4. Australia

Australia has a fairly cheaper custom duties and tariffs compared to the US and EU mainly because it is a smaller market with an isolated geographical location. Regular import clothing products are charged at 10% while authentic garments can be charged with a slightly higher custom tax. Products from China also get to enjoy a minimum threshold since products valued up to AU$1000 are exempted from custom duties, tariff rates and Import Processing Charge.

The lone relevant custom tax in AU is known as the Goods and Services Tax (GST) which currently sits at 10% and is added on top of the customs value of the products, transportation and insurance fees. On the other hand, the Import Processing Charge (IPC) only applies if the total value of the import clothing is more than AU$1000 and is dependent on the following factors;

• Mode of transportation (air or sea freight)
• Customs value (import clothing valued from AU$1000-AU$10,000 and clothing products exceeding AU$10,000)

(Minimum IPC: AU$40, Maximum IPC: AU$50)

All custom duties and tariffs with clothes in the US are calculated based on the Free on Board (FOB) value of the import clothes which covers the following factors;

• Product cost
• Transportation cost (from Port of Loading in China)
• Export clearance (China)

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Anti-Dumping Duties

China has provided specific industries and domestic manufacturers with subsidies which means these relevant Chinese manufacturers can sell their products below the standard market value for a price dump. Other countries such as the US and EU do not agree with these privilege resulting to anti-Dumping custom duties. They target these Chinese manufacturers and may sometimes cover an entire industry. Affected manufacturers should be avoided form the beginning for the product development process.

As a clothing manufacturer, you must be wary of anti-dumping custom duties since they could charge you for as much as 40%-60% more expensive than your average custom duties for importing clothes. If you are involved with a domestic manufacturer or supplier covered by anti-dumping duties, then might as well consider working with different partners to avoid the anti-dumping custom duties.

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Are Custom Duties for Importing Clothes Refundable?

Custom duties and tariff rates are never refundable in all type of imported products and not only in import clothing. This is the reason why manufacturers include customs charges as a factor to product costing. This is also evident when purchasing branded clothes which are made in China, some import clothing products are more expensive when bought in the US compared to Australia. It is because the customs charges are taking its toll.

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The Secret to Finding Your Clothing Sample Manufacturer

The manufacturer tasked to create your clothing samples does not have to be the one who will do the mass production of your items. There are factories who specialize in creating clothing samples but aren’t built for big quantity production. This situation can be very tricky since most of the time, clothing lines settle with their sample manufacturer as their final clothing manufacturer.

Let us keep in mind there is a different set of qualifications for sample manufacturers and wholesale manufacturers even though they are both related to each other. Your clothing sample maker should understand your product vision, pays attention to details and will charge accordingly for sampling. The product manufacturers are focused on the production line and their efficiency since they are producing large batches. Clothing sample manufacturers are more detail-oriented which is crucial when sampling.

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How to Assess Clothing Sample Makers?

The best way to assess clothing sample manufacturers is to first determine their strength/s. For example, if they are good at pleating then note it down or if they are excellent at braiding and shades, then list them down as part of their pros. The next step is to find out their flaws and weaknesses. You do not have to include aspects wherein they are average at but simply list down things in which they are bad at. The clothing manufacturing companies that do mass production might also be an option if you don’t want to iterate too many samples and don’t want to try different sizing options.

Last but not the least, list down their respective fees for creating clothing samples. You don’t have to choose the clothing sample maker which charges the cheapest because you have to weigh all of the pros and cons along with their service fee to come up with your choice. You also have to think of the clothing style you are creating a sample for and assess whether your potential clothing sample maker is suitable for the job.

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Questions to Ask Your Potential Clothing Sample Maker

1. Ask for a sample of their past work.

This is a direct evidence of their work quality and will help you assess their sampling service if they are as good as they claim to be. If they ever collaborated with other clothing sample makers for the product, then you deserve to know of the collaborators as well.

2. Who are their current and past clients?

Their client roster is also a good way to distinguish their level of reputation in the clothing industry. Big named clients should be someone to watch out for in their client list.

3. What are the materials they use?

Cotton clothing should be a given with clothing sample manufacturers but are they skilled in dealing with materials like wool or silk? You should be aware of the different materials they are skilled working with.

4. Ask for an estimated quote for your request.

This will help you check if they are additional charges aside from their professional fee. There are clothing prototype makers who attract customers based on their low service fee but have numerous additional charges which catches clients off-guard.

5. What are their payment terms?

Do they allow installment payments wherein you pay half of the amount upon order then pay the other half upon completion? There are different payment terms with clothing prototype makers, make sure the manufacturer you choose have terms which works for you.

6. What is the average sampling lead time?

You need sampling lead time information for you to know how fast they work and how long it takes for them to finish your fashion sample. The sampling lead time would also be critical for your choice to go with them as your clothing sample manufacturer.

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Other Sampling Info You Need to Know of

Sampling costs vary depending on the type of clothing you want to get sampled. Coats and jackets are obviously more expensive compared to a regular shirt or dress. The materials needed for the clothing samples will also have a direct effect on the quote. You need to be considerate of these factors once you see the initial quote of your potential clothing prototype maker.

You should also remember the sampling process is not a one-time thing. You may get lucky if the clothing sample manufacturer gets the job done in their first try. Usually, it takes two or even three sampling attempts before they achieve the desired sample. Revisions are part of the process. They are neither a setback nor disadvantage but it would be helpful if your clothing sample manufacturer gets the job done in a try or two.

The location of the clothing sample manufacturer’s company is also a factor to their pricing. If they are located in the city proper, you can expect them to charge at a higher rate compared to clothing sample manufacturers located in the rural areas. This is pretty understandable given their rental fees and other costing components which are factors to their service fee. Let’s take China as an example. Most clothing lines ask sampling from clothing sample makers located in Guangdong instead of Beijing because of the huge disparity in terms of prices due to specialisation.

Always ask for the clothing sample pattern your clothing prototype maker used for the clothing samples. You will need the same exact clothing sample pattern for mass production later on. You don’t have to pay anything extra for this request as it is considered to be part of their service as your clothing sample maker. Asking for the clothing sample pattern will make the transition from sampling on to production easier most especially if you work with different clothing manufacturers for each process.

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Clothing Sample vs. Final Product

Once you find your clothing sample manufacturer, it would be a big dilemma whether you hire them for mass production of your clothing products. Are they capable of producing the same quality when it comes to large quantities? A lot of clothing sample manufacturers assume they are right away given the production project after tasking them to do fashion samples for you. However, it would still be your choice to assess whether they are qualified to your standards or not.

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How to Start a Clothing Line: 7 Cost Factors you should Know

How to start a clothing company is a regular question which can easily be answered if you type those exact words in the internet these days. However, if you dig deeper and go a bit more technical by trying to know costing factors and scaling of a clothing company then the expected answers would be scarce. In this wiki guide, we will give you a thorough costing guide on how to start a clothing company. Here are the determining factors when starting a clothing line.

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Costing Factors to Consider when Starting a Clothing Line

1. Manufacturing costs

This is the main costing factor in which the bigger part of your capital will be spent on. Manufacturing cost is the central focus of your business plan and this could dictate the size of your business along with your target market. First off, there are sub-factors to consider from the general factor which is the manufacturing cost.

2. Quantity

Manufacturing cost decreases as order quantity increases and this applies in all of manufacturing, not only in garment or apparel manufacturing. Factories always charge lower when you are ordering in large quantities. If you are planning to print 50 shirts then you would obviously save a lot of money off of manufacturing cost if you decide to increase the quantity to 500 pieces. While some custom clothing manufacturers can still realize such small quantities, the economics of scale are still not as good.

However, the quantity you would like to produce is also crucial to the outcome of your business which is why it is important to consider the number tightly as part of your business plan.

3. Location

Manufacturing cost will largely depend on your manufacturing location because of the labor fees involved which is different for each country. When it comes to small production manufacturing, this would not be much of a factor. But for large scale manufacturers, it is a major consideration. This is also the reason why countries like China, Taiwan and Philippines are manufacturing-friendly compared to the US and other European countries. Product development consulting and product design consultancy still commonly take place in Western countries.

It is advisable to start a clothing line in phases to determine whether you are suitable to move up in terms of quality and scale. For DIY clothing businesses, the following sub-factors aren’t relevant but could be major considerations when moving up.

4. Material costs

The costs of raw materials you will use for your clothing business is a major costing factor. Expenses for materials such as fabric, packaging, labels etc. should be summed up for the materials cost.

5. Marketing costs

A lot of businesses take advantage of social media as a form of free marketing since it will not cost you anything to sign up for social media accounts. However, if you want your clothing brand to compete with other established brands out there then you have to spend money for your marketing schemes. Allot a few dollars for ads be it online or traditional ones. You can also give out shirt samples to a few friends and target customers to spread awareness of your brand.

No matter how you advertise yourself, shell out some money for your marketing campaign and do not simply rely on free marketing which the internet can provide. Spending on marketing is a necessary thing to do on how to start a clothing business.

6. Designing costs

Your shirt designs are a crucial factor when starting a clothing line. This serves as the backbone of your products. A lot of people simply purchase shirts because of its print and only bother about the garment quality or comfort later. This does not mean you have to compensate quality and comfort for design, but it only goes to show you need to spend for your designs to sell your products.

If you have graphic design skills and do all of your shirt designs personally, then you would not have to pay for professional graphic designers or garment product design agencies to do it for you. But in the long run, you cannot do it alone and you will eventually need the help of other graphic designers for a helping hand. Designing costs is inevitable when starting a clothing line.

7. Licensing or business permit

Registering your business is a must to legalize your business operation. There would definitely be some expenses involved in processing the business permit and as well as pay for taxes involved when starting a clothing business. You must have a budget for the license acquisition and not allow this to become a hindrance on how to start a clothing company.

8. Labor costs

No one will advise you to become a one man wrecking crew on how to start a clothing company. You need to have a staff working with you including third-party individuals who will be part of your operations. Pay these employees for their worth to expect quality work from them. Employees who are underpaid are the ones who will not work up to the right level expected out of them.

9. Start a website

E-commerce is already the way to go for any form of businesses these days. The mileage and reach the internet can give is its biggest advantage as it allows you to have customers which are beyond your store location. If you are starting a clothing line, might as well consider to start a clothing business online. Building a website will not cost you a fortune and with the availability of online stores like Amazon or eBay then it will be more convenient to connect with them for your clothing business.

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Summary

The costs of starting a clothing line depends on the scale and business size you are planning. For small batch clothing production, you can already jump start with $500. If you are thinking of a medium sized clothing company then $1,500 up to $5,000 should be sufficient enough.

However, if you are thinking of a major clothing business then $20,000 to $50,000 is a perfect investment amount. These numbers could vary depending on the costing factors involved but they generally give you an idea of the amount you need to prepare when starting a clothing business.

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