Everyone quotes the factory price. Nobody talks about what you actually pay by the time your goods land in the UK. Here's the honest breakdown.
Cast your mind back to the last time you saw a product on Alibaba. £1.20 per unit. Minimum order quantity: 500 units. Total: £600. Sounds reasonable, right?
Then you actually try to import it.
By the time your goods land at your door — after freight, customs duty, VAT, inspection fees, agent fees, and the inevitable "I didn't know that was a thing" surprises — that £1.20 unit might cost you £3.40. Or £4.10. Or more.
This is the number one thing we see trip up UK businesses who are new to sourcing from China. Not the language barrier. Not the quality issues. The budget.
So in this post, we're going to fix that. I'm going to walk you through every cost layer involved in sourcing from China — so you can build a realistic budget, set a sensible retail price, and stop leaving money on the table before you've even started.
Welcome, in other words, to the real cost of sourcing from China.
When UK businesses source from China, there are typically six layers of cost between you and your finished product sitting in a UK warehouse. Let's go through each one.
This is the number you see on Alibaba, at the Canton Fair, or in a supplier quote. It's known as the FOB price — "Free on Board" — which means the supplier's price to get goods to the nearest Chinese port, ready to be loaded onto a ship. It does not include shipping.
FOB price is the starting point, not the finish line.
What influences your FOB price:
For context: a simple product like a branded tote bag might have an FOB price of £0.80–£1.50 per unit. A more complex item like a custom electronics product might be £8–£25. There's no universal rule — only category-specific benchmarks matter here.
Sourcing Hack #1:
Always ask for a price break schedule. Most factories will give you three tiers: 500 units, 1,000 units, 3,000+ units. The gap between tier 1 and tier 3 is often 20–35%. Know your numbers before you commit to an MOQ.
Getting your goods from a Chinese port to the UK is, for most businesses, the second-largest cost in the stack — and the one that surprises people most.
There are two main options:
Sea freight is the standard for most product orders. It's significantly cheaper per unit than air, but slower (typically 25–35 days from China to a UK port).
Fast (5–10 days) but expensive. Typically 4–6x the cost of sea per kg. Useful for samples, urgent replenishment, or small high-value goods.
Sourcing Hack #2:
Always get a freight quote before you finalise your product price. A product that looks profitable at FOB can quickly become marginal once you factor in LCL freight on a small first order. Volume is your friend in shipping economics.
Once your goods arrive in the UK, HMRC wants their cut. Import duty is charged as a percentage of the customs value of your goods (which is typically the FOB price + international freight + insurance — known as the CIF value).
Duty rates vary dramatically by product category. A few examples:
To find your exact duty rate, you'll need your product's commodity code (also called a HS code). You can search for it on the UK Government's Trade Tariff tool at trade-tariff.service.gov.uk.
Post-Brexit, UK duty rates are set independently from EU rates — so if you've seen older guides referencing EU tariffs, double-check against the UK Global Tariff.
Sourcing Hack #3:
Don't guess your commodity code. Getting it wrong can lead to underpaying duty (which HMRC will chase) or overpaying (which leaves money on the table). If you're unsure, a customs broker or freight forwarder can advise you — it's worth the 20-minute conversation.
On top of duty, you'll also pay Import VAT — currently 20% in the UK — charged on the customs value of your goods plus the duty you've already paid.
The good news: if you're VAT registered, you can reclaim Import VAT on your next VAT return. It's effectively a cash flow timing issue rather than a permanent cost.
The not-so-good news: if you're not VAT registered (trading below the £90,000 threshold), you can't reclaim it — so it becomes a real cost in your margin calculation.
If you're importing regularly, VAT registration is worth considering even before you hit the threshold.
This is the cost most first-time importers skip. It's also the one that saves them from catastrophic mistakes.
A pre-shipment inspection involves a third party (or your sourcing agent's team) visiting the factory before goods ship to check that:
Cost: typically £200–£350 per inspection day for a third-party inspection company in China. Most product orders can be inspected within one day.
To put that in context: on a £5,000 product order, a £280 inspection is 5.6% of your order value. A batch of defective goods that you've already paid for and shipped? That's 100% of your order value — gone.
At Epic, our on-the-ground team in China carries out QC as part of our service. But whether you use us or someone else, don't skip this step.
If you're working with a sourcing agent (like us), there's a service fee. At Epic Sourcing UK, our fees are published transparently on our pricing page — because we believe you should know exactly what you're paying before you commit to anything.
Our service tiers run from £699 for a Supplier Vetting Report through to £3,299 for our full Private Label End-to-End package. These cover supplier identification, verification, negotiation support, sample coordination, QC oversight, and logistics support.
The alternative — doing it yourself via Alibaba without on-the-ground verification — is technically "free" until it isn't. The businesses that come to us having already burned £3,000–£10,000 on a bad Alibaba order are, unfortunately, not rare.
Let's run through a realistic scenario. A UK fitness brand wants to import 1,000 custom water bottles from China.
Cost ComponentEstimateFOB unit price × 1,000 units£1,800Sea freight (LCL, approx. 2 CBM)£380Insurance£45UK Import Duty (6.5%)£143Import VAT (20%, reclaimable if VAT registered)£474Pre-shipment inspection£280Customs clearance / broker fee£120Sourcing agent fee (Supplier Vetting)£699Total landed cost (ex. VAT if registered)£3,467Cost per unit£3.47
That's nearly double the factory price. And it's completely normal. The mistake is pricing your product based on the FOB number and working backwards.
If this product sells for £12.99 on your Shopify store, your gross margin is £9.52 per unit — about 73%. That's a healthy number. But if you'd priced it assuming £1.80 per unit cost? You'd be in trouble.
The worked example above is illustrative. Your actual numbers will depend on:
Here's the honest summary: sourcing from China is still one of the most effective ways for UK businesses to access quality manufacturing at competitive prices. But only if you go in with accurate numbers.
The businesses that struggle aren't usually undone by bad factories or communication barriers. They're undone by a spreadsheet that assumed the factory price was the landed price.
If you're planning your first import — or if you've been winging the budget and want to get it right — we'd love to have a chat. We'll walk you through the numbers for your specific product, category, and order size, so you can build a plan that actually works.
No hard sell. Just the maths.
Book a free 30-minute strategy call with the Epic team →
TK Wang, Founder & Director @ Epic Sourcing UK
hello@epicsourcing.co.uk | 07551 136406
