TLDR;
This video is a master class on importing from China to build a business in India, featuring Jatan Bawa, the founder of Perfora. He shares insights on product design, factory selection in China, local assembly in India, marketplace listing, and building a successful business. Key takeaways include strategies for sourcing without traveling to China, understanding unit economics, identifying white-space opportunities, navigating BIS compliance, optimizing shipping, and building a brand with in-house content.
- Sourcing strategies from China without traveling
- Unit economics of importing and local manufacturing
- Brand building and content strategy
How to Source from China Without Traveling [0:00]
Jatan explains the process of manufacturing electronic products, which typically involves plastic and technology components. Custom design through injection molding can be expensive, leading many to white-label existing products. Perfora initially avoided mold investments by securing exclusive rights to a unique design from a Chinese manufacturer, agreeing to a minimum volume commitment. To find suppliers without traveling to China, Jatan suggests using online platforms like made-in-china.com, hkt.com, and Volza (a paid database). He emphasizes targeting manufacturers not currently supplying to India but serving reputable US brands like Walmart to ensure quality and communication standards. Building trust and selling the "India story" can help negotiate lower MOQs.
Sampling and Vendor Selection [13:17]
Perfora evaluated 20-25 vendors and received samples from 8-10. They differentiated vendors based on design, quality, willingness to work, and ability to reduce MOQs. The final vendor was chosen based on their high quality, global team, agility, and willingness to enter the Indian market. The manufacturer sent samples without initial payment, convinced by Perfora's storytelling and vision for the Indian market.
Unit Economics of Importing from China [14:53]
Initially, Perfora's electric toothbrush cost $4 (₹300) X factory, with a landed cost of ₹550 after shipping, customs, and GST. They sold it for ₹1200-₹1250, achieving a 55% gross margin. Over time, optimizing shipping (from air to sea) and increasing volumes reduced the landed cost to ₹350, while the selling price decreased to ₹1000. CM1 expenses (logistics, shipping, warehousing) are typically 15-20%. CAC has decreased from ₹1200 to ₹400, and AOV is around ₹1000.
White-Space Opportunities & Innovations from China [19:35]
Jatan identifies at-home coffee machines as a category with innovation potential, suggesting a sweet spot of ₹5,000-₹7,500 for a premium design and functionality. He also sees opportunities in health monitoring devices and home appliances, driven by millennials setting up homes. Innovations in kitchen and home appliances, such as silent mixer grinders and custom-colored appliances, are also promising. Glass cleaning machines for homes and offices are another potential white space.
BIS Compliance and Import Strategy for India [24:27]
BIS specifications are increasingly important for manufacturing in India. Perfora has set up local manufacturers to produce electric toothbrushes, launching their first India-assembled product in August. Due to BIS mandate, manufacturing has to happen in India. Importers are primarily doing SKD (semi-knockdown) or CKD (complete knockdown) assembly. Perfora is currently using SKD but plans to move to CKD.
SKD vs CKD & Pricing Strategy [30:06]
In CKD, reliance on China or Taiwan is mainly for PCBs and motors. Other components like plastic and bristles are available in India. For new products like coffee machines, starting with SKD is recommended due to lower volumes. For higher volume products like smartwatches or beard trimmers, CKD is feasible. Jatan recommends understanding consumer pain points and willingness to pay. The X factory price should ideally be no more than 20% of the selling price (5x markup) to allow for sufficient margins for advertising and brand building.
Shipping & Import Economics [33:32]
Perfora uses a custom agent in India for shipping and custom clearance. They evaluated multiple agents based on process, timelines, and cost. UPS, DHL, and FedEx are easier but more expensive. 70% of shipments are via sea, and 30% are via air, depending on planning, lead time, and inventory levels. Sea freight takes three times longer but is two to 2.5 times cheaper than air. For sea shipments, goods land at Nhava Sheva port in Mumbai and are transferred to Delhi via rail. Jatan recommends checking time, freight, cost and connectivity to Delhi when choosing a landing port.
Quality Control in China [45:05]
Perfora uses a third-party quality inspection agency, ProQC, to inspect shipments before dispatch. Trust is built through established relationships and visual QC reports with pictures and videos. ProQC charges a fixed rate (around $300) for an 8-hour inspection, checking about 5% of the total units.
Lead Time, Production Cycles & Forecasting [46:59]
Perfora's lead time is 50-75 days, depending on order volume, customization, and time of year (Chinese New Year affects timelines). This requires a 100-day lead time for sea shipments.
Vendor Payments, Import Financing & Bank Facilities [48:43]
The standard payment mechanism is 30% advance and 70% before dispatch, but Perfora now works on 20/80 or 15/85 terms due to established trust. Payments are made via banking partners like HDFC, Kotak, and RBL. Perfora uses import financing, where the bank finances the balance payment (80%) and is repaid 90 days later, with a 9-12% interest rate. Equity money in the bank account is a key factor for banks to provide import financing. Perfora started with venture debt and then moved to banks.
Finding Indian Assembly Factories & Cost Benefits of Local Manufacturing [54:48]
Perfora received inbound interest from Indian factories for SKD/CKD assembly. The new "made in India" products are about 30% cheaper, with the cost per unit around ₹270 compared to ₹350 for imported products.
Building a Brand & In-House Content Strategy [57:18]
Perfora worked with StratEdgy for brand identity and packaging. Content creation is done in-house, focusing on direct communication with the audience and founder visibility. Key moments for follower growth included Shark Tank India and a viral spoken word event. The content team consists of three people, with a monthly cost of about ₹4 lakhs. Performance marketing is also largely in-house for faster iteration and better brand understanding.
Sales Split Across Channels & Product–Channel Fit [1:03:19]
Perfora is a 100% digital company, with sales split equally between their brand website, e-commerce platforms (Amazon, Flipkart, Nykaa), and quick commerce (Blinkit, Instamart). Channel-level profitability is not the primary focus. Certain products have a better channel-product fit: toothpaste on quick commerce, flossers on Amazon, and electric toothbrushes on the brand website due to personalization options.
Quickcommerce and E-commerce strategies [1:06:03]
Getting listed on quick commerce platforms took Perfora about 10 months. Persistence and networking were key. Category managers closely analyze data and Nielsen reports. Hacks included persistent emailing, LinkedIn networking, and leveraging investor networks. It's now tougher to get listed due to the power dynamic. For innovative products, focus on brand.com and advertising. For marginally differentiated products, be available across platforms and rank higher.
Competing in Big Categories & Key Founder Insights [1:14:12]
Competing with larger players requires careful category selection and problem-solving. Skincare and haircare have strong tailwinds, while oral care is tougher. With limited capital, focus on the problem and category evolution. Jatan emphasizes that with less capital, one can still make a good business and a good brand, but one has to choose the category and the problem that one is going to solve very very carefully.
