Importing Raw Materials from China to Uzbekistan: Practical Experience, Common Mistakes and Advice for Manufacturers

How to contact a foreign factory for the first time, arrange delivery and avoid unexpected expenses.

Sooner or later, many manufacturing businesses consider buying raw materials directly from factories abroad. The reasons are understandable: to reduce production costs, secure better terms and become less dependent on local suppliers.

But is direct importing always cheaper? What challenges might a company face when it decides to purchase raw materials from overseas on its own for the first time? Drawing on my experience of working with Chinese manufacturers, I would like to share practical observations, difficulties and solutions that may be useful to managers of manufacturing businesses in Uzbekistan.

This article is not a comprehensive guide to foreign trade. Its purpose is to highlight issues that first-time importers may not even know to anticipate.

1. First, decide whether direct importing makes financial sense

There is a widespread assumption that buying directly from a factory is always cheaper than buying from a local supplier. In practice, this is not necessarily the case.

In Uzbekistan, some trading companies combine the demand of several businesses and import raw materials in large quantities. Their higher volumes may enable them to negotiate better factory prices and terms. As a result, their local prices can sometimes be comparable to, or even lower than, the total cost of importing a smaller shipment yourself.

When calculating costs, consider more than the factory quotation:

• Transportation;

• Customs duties and other customs payments;

• Bank charges;

• Cargo insurance;

• Customs broker fees and other related expenses.

Working capital is another important factor. With direct importing, a company's funds can be tied up for weeks or months between payment and arrival of the goods at its warehouse.

Therefore, compare the local supplier's price with the full landed cost of the raw material at your own warehouse, not merely the factory's price.

If you consume only small amounts of a particular material, buying locally may be the more sensible option. Direct importing becomes more attractive when demand is sufficiently large and consistent.

2. How to find an actual manufacturer in China

The first challenge is identifying the factory.

I would not recommend relying solely on Alibaba, 1688 and similar trading platforms. In my experience, many of the suppliers listed there are trading companies or intermediaries. This does not mean that every seller on these platforms is a reseller. But if the goal is to establish contact with the factory itself, I prefer another approach.

Start by searching for manufacturers' official websites and contacting them directly by email. Remember, however, that a professional-looking website is not proof of manufacturing capability. An intermediary can also have a polished website and catalogue representing several factories.

The next step is to check the company through official Chinese business registers. One example is the National Enterprise Credit Information Publicity System (gsxt.gov.cn), which provides company registration information. Registration alone, however, does not establish that a company owns a factory.

In my case, Chinese friends helped me check prospective suppliers. Reliable local contacts can be especially valuable when you are just beginning to work with Chinese companies.

Industry exhibitions are another useful way to find suppliers. They give you an opportunity to meet representatives, discuss terms and establish direct relationships. But trading companies attend exhibitions too, so checks are still necessary.

Finding someone who sells the material and confirming that they actually manufacture it are two different tasks.

3. Negotiations, contracts and delivery terms

Once you have selected a manufacturer, you need to agree on pricing, quantities, lead times and delivery terms.

International trade uses Incoterms rules. A first-time importer should at least recognise the most common options:

• EXW — the buyer generally organises transportation starting from the factory.

• FCA — the seller hands over the goods to a carrier at an agreed location.

• FOB — the seller delivers the goods on board a vessel at the agreed port of shipment.

• CIP — the seller pays for carriage and insurance to the agreed destination.

These are simplified descriptions. Under CIP, for example, the risk normally transfers to the buyer when the goods are handed to the first carrier, not when they reach the destination. Detailed Incoterms guidance is readily available from specialist sources.

In my experience, Chinese suppliers sometimes use very simple contracts, occasionally only one page long. Even then, the description and quantity of goods, price, delivery and payment terms, and the parties' details must be correct.

4. Paying the supplier and the possibilities offered by SINOSURE

When making international payments, allow for bank transfer charges, including possible fees deducted by correspondent banks. Transfers often use the SWIFT network, and total fees depend on the banks and the chosen charging arrangements. Check them with your bank before paying.

I strongly recommend carefully verifying the supplier's bank details. A small mistake may delay the payment and require additional correspondence with the banks. If a supplier unexpectedly announces new bank details, verify them independently using a communication channel you already know.

Can you import without paying in advance?

Many first-time importers believe that Chinese suppliers will always require advance payment. Other arrangements can be available.

For example, China's SINOSURE (China Export & Credit Insurance Corporation) provides export credit insurance. This helps Chinese exporters manage the risk of non-payment by overseas buyers, making it possible, under certain conditions, to offer deferred payment.

There are arrangements in which goods can reach a customs warehouse in the buyer's country without advance payment. In my experience, Chinese trading companies often arrange such transactions. Before granting these terms, the buyer's registration and financial standing are assessed.

This does not mean that every business will qualify: approval depends on the assessment and the particular contract. Also, export credit insurance should not be confused with insurance against physical loss of or damage to the cargo during transportation.

Nevertheless, businesses with limited working capital should know that such an option may exist.

5. Choosing a freight forwarder: why the lowest quote may cost more

Organising international transportation is one of the most important parts of importing. In my experience, Chinese freight forwarders often respond and act particularly quickly, but speed and the initial quote should not be your only criteria.

The lowest initial shipping quote does not necessarily mean the lowest final cost.

I have encountered situations in which a forwarder began adding charges after work had started, even though those costs had not been clearly identified when the rate was agreed. The final transportation bill ended up significantly higher than expected.

Before committing, request an itemised quote and clarify:

• Which services are included;

• Which services are charged separately;

• In what circumstances additional charges may arise.

It is best to record these terms in writing. An experienced, reliable forwarder may ultimately cost less than a company that initially offers the cheapest rate.

Transporting industrial equipment

When importing machinery, there is another issue: not every factory packs, positions and secures equipment properly for international transport. A knowledgeable forwarder can identify unsafe loading or securing arrangements and warn you before dispatch.

Whenever possible, ask the factory for photos of the equipment, its packaging and the loading process before shipment.

6. Chemical raw materials: check transportation restrictions in advance

If you import chemical raw materials, first establish whether the particular product can be carried by the intended mode of transport and route.

Request the manufacturer's Safety Data Sheet (SDS, sometimes called MSDS). But the existence of an SDS does not, by itself, guarantee that the product can be accepted for railway transport.

Ask the freight forwarder to confirm the material's transport classification and whether it may travel along the proposed route, including through transit countries.

Otherwise, you may agree on a shipping rate only to discover later that the product cannot be carried by rail under the selected conditions. Finding another route or mode of transport may significantly increase the cost. For chemical manufacturers, this is particularly important.

7. Routes from China and seasonal logistical challenges

In my own work, I have come across several routes for shipping goods from China to Uzbekistan:

• Rail through Kazakhstan — one of the main options;

• Combined transport via Russia — in a route I considered, the goods travelled by sea first and then by rail;

• Road transport through Kyrgyzstan.

The best choice depends on the cargo, freight charges, transport availability and delivery requirements.

Border delays

On the rail route through Kazakhstan, delays can occur at both the China–Kazakhstan and Kazakhstan–Uzbekistan borders.

Another complication is seasonal pressure on China's railway capacity. In my experience, demand for rail freight rises in late autumn and towards the end of the year. Wagons can become harder to secure, while prices and transit times may increase.

In my own shipments, delays arose during freight arrangements because the Chinese rail network was congested—not because Chinese factories failed to produce the goods on time.

Chinese New Year

Chinese New Year is another period that importers should factor into purchasing plans. It normally falls in January or February. Many factories, warehouses and logistics providers suspend or reduce operations, sometimes for longer than the official public holiday.

Plan purchases and dispatches early, taking both production schedules and the Chinese holiday calendar into account.

The China–Kyrgyzstan–Uzbekistan railway

In my view, the new China–Kyrgyzstan–Uzbekistan railway is one of the most promising infrastructure projects for our country's international trade. It should create an alternative route for cargo from China and reduce dependence on existing corridors.

Published plans envisage completion around 2030, although actual dates may change. For manufacturers in Uzbekistan, another route could encourage competition among carriers and improve the resilience of supply chains.

8. Tax residency certificates: an important issue when hiring foreign forwarders

I want to highlight this issue because it can create unexpected difficulties for importers.

Before engaging an overseas logistics provider, discuss whether it can supply a certificate of tax residency. This document establishes the provider's tax residence and, where the legal conditions are met, can support application of a double taxation agreement. Uzbekistan and China have such an agreement.

In my experience, missing supporting documents can lead to difficulties with the Uzbek tax authorities and additional tax costs, particularly if the importer has to cover a tax amount itself. Obtaining and properly formalising the certificate can take considerable time for a Chinese forwarder.

It is therefore better to resolve the documentation question before paying for freight services. The availability of treaty relief, the relevant deadlines and the reporting requirements should be checked with your accountant or tax adviser.

A possible alternative: CIP Tashkent

If the forwarder's documentation creates difficulties, one option is to agree directly with the manufacturer on CIP Tashkent terms. The manufacturer then arranges and pays for the international carriage and insurance.

This may simplify your dealings with the overseas forwarder, but it does not automatically eliminate the importer's tax obligations. The outcome depends on the services involved, the contract structure and applicable tax rules, so the arrangement should be reviewed in advance.

Also remember that a certificate of tax residency does not automatically provide an exemption from VAT.

9. Customs clearance and cargo insurance

Customs clearance

In my experience, customs clearance for imported raw materials in Uzbekistan is generally well organised; I have no major complaints about the work of customs authorities.

For a first import, I recommend working with a professional customs declaration specialist or customs broker. Even so, keep an eye on the documents yourself. Determine what is needed for the particular shipment, including certificates of origin, transport waybills and the export declaration where applicable.

Cargo insurance

I also recommend insuring shipments wherever possible. In my experience, the premium is relatively small compared with the value of the goods and the potential loss from damage or theft. I do not think this is a good place to economise.

Check which risks the insurance covers and whether it applies to the entire intended route.

10. A short checklist before your first purchase

Before importing raw materials independently:

• Calculate the full landed cost at your warehouse and compare it with local suppliers' prices.

• Check the Chinese company's registration and manufacturing activity.

• Carefully verify payment details.

• Agree with the forwarder on included services and possible extra charges.

• For chemical raw materials, confirm that transport along your chosen route is permitted.

• Allow for seasonal rail congestion and Chinese New Year.

• Discuss the overseas forwarder's tax documentation in advance.

• Hire an experienced customs declaration specialist and insure the shipment where possible.

Conclusion

Direct imports of raw materials from China create opportunities for manufacturing businesses in Uzbekistan. But success depends on much more than negotiating a low factory price. Reliable partners, sound logistics planning, an understanding of tax obligations and the ability to anticipate extra costs matter just as much.

My experience shows that the main difficulties do not always arise at the factory. Sometimes the complicated part begins after the goods have already been purchased and need to be transported.

That is why I advise first-time importers to evaluate the entire supply chain—from the factory gate to their own warehouse.

Direct importing should not be a goal in itself. It should be a tool for improving manufacturing efficiency. If a local supplier offers better value after costs, delivery times and risks have been considered, there is no reason not to continue working with that supplier.