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Pre-Shipment Inspection: A Key Step in International Trade

What Is Pre Shipment Inspection?

Pre-shipment inspection refers to a series of checks initiated by parties involved in international trade (importers, trading agents, or suppliers) on recently manufactured goods prior to their shipment from the exporting country.

The Types Of Pre-Shipment Inspection

Pre-shipment inspections can be categorized into two types based on their purpose:

1st Type: Government-mandated Pre-shipment Inspection: Certain countries require imported products to undergo mandatory inspection by a designated agency before being shipped from the exporting nation.

This type of preshipment inspection is conducted to prevent evasion of import duties, curb capital outflows, and prevent substandard products from entering the country.

2nd Type: Voluntary Pre-shipment Inspection by Importers: In most countries, pre-shipment inspection is not mandatory, but importers opt for it to protect their rights as buyers.

This voluntary pre-shipment inspection, initiated by the importer, focuses on verifying whether the goods' quantity, specifications, and quality align with the purchase contract.

It's crucial to note that an unstandardized inspection may not adequately protect your rights as a buyer.

Three Types Of Pre-Shipment Inspection Companies: Choosing the Right Fit

Numerous companies offer pre-shipment inspection services in China, and selecting the appropriate one can be a daunting task. These third-party quality inspection companies can be classified into three categories, each with its specialties.

Type A: Global Inspection And Testing Groups

This category comprises inspection companies with a long-standing history, subsidiaries worldwide, and a scope of business that extends beyond inspection, encompassing verification, testing, and certification. Some prominent names in this category include SGS, Bureau Veritas, Intertek, Eurofins, and others.

When to Choose an Inspection Company Like SGS?

The advantage of large companies like SGS lies in their high international recognition. Some countries with mandatory pre-shipment inspection requirements may appoint companies like SGS as the sole approved inspection agency. Additionally, if you aim to place your products on the shelves of supermarket chains, inspection reports from such international inspection companies may positively impact your business.

When Is A Company Like SGS Not the Right Choice?

If your quality control budget is limited, you may consider alternatives to SGS. This doesn't mean compromising on quality control but exploring other pre-shipment inspection companies if the fame of an inspection company is not your key decision factor.

Top-tier quality control companies like SGS offer product inspection services within the price range of $300-$1500.

Type B: CIQ Inspection Agency

CIQ stands for the China Entry-Exit Inspection and Quarantine Bureau, a government authority responsible for import and export inspection.

When to Choose A CIQ Pre Shipment Inspection Agent?

If you plan to import from China to certain countries, you may require a CIQ pre-shipment inspection certificate for customs clearance at the port of destination. Countries that require CIQ certificates include Egypt, Ethiopia, Sierra Leone, Iran, and Sudan.

As a foreign importer, communicating and coordinating with CIQ directly may be challenging due to language barriers and time differences. Alternatively, you can find a CIQ agent in China to apply for a pre-shipment inspection and issue a CIQ PSI certificate on your behalf.

When Is CIQ And Its Agents Not the Right Choice?

If your importing country does not require a CIQ certificate as a clearance document, you don't need to consider this option.

Type C: Local Inspection Companies

These companies have their own teams of inspectors in countries with low labor costs, and while they may not always provide inspections in multiple countries, they offer cost-effective solutions in their home countries.

When to Choose A Local Inspection Company?

If the value of your shipment is less than 50,000 U.S. dollars, you should consider a cost-effective local inspection company. The rationale behind this is twofold: first, to control the cost of quality control without affecting business profits, and second, goods of this value are usually not paid by letter of credit, allowing more flexibility in choosing an inspection company.

When Is A Local Inspection Company Not the Right Choice?

If your imported products are high-value bulk raw materials or require specific equipment for on-site product testing, most local inspection companies may not be able to meet your needs.

How To Safely Reduce Pre Shipment Inspection Costs?

I understand your concern. On one hand, you don't want the cost of pre-shipment inspection to be excessively steep, and on the other hand, you're apprehensive that over-saving on quality control investment might be detrimental to product quality.

Striking the right balance is challenging, so in this section, I'll share some practical tips on how to safely reduce the cost of pre-shipment inspections.

Adjust PSI Inspection Level According To The Supplier's Performance

Simply put, if your supplier has a consistent track record of maintaining quality, you may wish to adjust their pre-shipment inspection levels accordingly.

Let's consider a real-world example. Suppose you want to import a batch of 15,000 makeup bags. If you follow the default AQL General Inspection Level 2, the corresponding sample size code letter would be M, which means a sample size of 315 pieces. This pre-shipment inspection would take two man-days to complete.

However, if you have confidence in this supplier, to save time and inspection costs, you can choose General Inspection Level 1. In this case, the sample size becomes 125 pieces for the same total product quantity, and the inspection can be conducted within one man-day.

Combine Product Variants Into A Whole To Determine Sample Size

If a product has 5 color variants, it means that the product has 5 SKUs. The number of SKUs in an inspection is closely related to the man-day calculation because the inspector needs to check the specification conformity individually for each SKU.

So for different variants of the same product, instead of calculating the sample size independently by SKU, you can calculate it based on the total number of this product.

Charge Suppliers For Re-Inspection

Experienced buyers will specify in the purchase contract that if rework is required because the supplier's product quality fails to meet the requirements, the supplier will be responsible for the cost of re-inspection after rework.

Such a simple risk transfer clause can reduce your pre-shipment inspection costs as an importer and remind suppliers of the importance of quality control, especially in-house inspection.

Work With A Local Pre Shipment Inspection Company

A good pre-shipment inspection service is not cheap, but it's not as expensive as you might think. Many times, buyers feel that product inspection costs are high because they have chosen a pre-shipment inspection company that is not local.

In other words, the inspector needs to spend a substantial amount of time traveling to the factory, not to mention the associated transportation costs.

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