Importing goods from another country is a bit tricky procedure, then getting the goods from the other city in your country. There are so many things to consider before starting an import business. Import business can be very beneficial if you choose the right product to import. It will give you great benefits. Many importers import products to resell it in the country and some of the industrialists import goods for their manufacturing use.
Top tips to start import business
Here I have compiled some tips for the new importers to start the import business with ease.
Import purpose and local research
You need to define the purpose of your import and do some local research about the product. You either import the goods for resale or manufacturing use.
Importing goods for resale
You must ensure that there is sufficient demand in the local market for the product before importing for resale. Identify potential customers and conduct a survey to determine whether imports will be profitable or not. If the product demand is limited, then you won’t be able to sell the product in the market and face a big loss.
Importing for manufacturing use
If you plan to produce a new product, make sure that there is sufficient demand for the final product. If you like to import materials instead of using local suppliers for products that are already in production, it would be wise to check if current demand can be the same or grow. You should also do some market research to determine which products your competitors are selling.
It is recommended that you keep a list of product names, specifications, and retail prices to ensure that your import has a competitive benefit or unique selling point that separates your product from the competitor’s product.
Calculate Importing Cost
You need to calculate all the charges you have to pay for importing the product in the country before placing an import order. The importing cost includes:
- Customs duty and taxes
- Freight and insurance charges
- Local transportation charges
- Storage charges
- Inspection charges (If you hire a third party company to inspect the product on your behalf).
- Services charges of the customs broker.
You need to determine the correct customs clearance of the goods you want to import according to the tariff to find out how much you have to pay in customs. You may also need to provide the country of origin of the products and the cost to calculate the correct payment amount.
Analyze whether importing is cost effective or not
You can check whether import will be a profitable option for your import business after you have an idea of the final cost of the goods. There are many additional fees that you must pay in addition to unit costs abroad, and these can be added. You can make a reasonable return on investment once all these costs have been calculated. It is good to get advice from your accountant, business advisor, or customs clearing agent on your calculations to make sure you have calculated all the costs you may have to pay.
Is the import affordable for you
It is important to make sure that you can afford to pay for the import goods. Importing is cost intensive because the larger the import order, the better benefits you have. Smaller orders are a bit expensive, as compare to the large import orders and for a large order, you have to pay more. One other thing is it bounds the large amount of cash that you may be needed to run the business. So, you need to consider the amount you need to keep the business going before placing the order for import business.
Don’t forget about exchange rate fluctuations
Exchange rate fluctuations are another potential risk that you maybe had to deal with as an importer. You will most likely buy products at a price in a foreign currency, which means that fluctuation in the exchange rate may affect the final amount that you will pay in Pakistani rupees. The rate conversion can be beneficial for you or maybe not.
Are the product legal to import in your country
Before you spend time, effort, or money on additional research, make sure that you can import the products that you intend to bring to your country. There are more restrictions on items that you can import. They range from explicit bans that apply to things like chemicals, or drugs to restrictions on certain foods or products in certain countries.
Risks involve in import business
There are many risks involved in the import business. The long-distance with the supplier makes it harder for you to deal with the quality control issue. You have to get third-party services to handle quality control. The shipment may take a longer time to reach the country. If you don’t get someone to check the quality of the product, you might end up with poor quality products.
Choose a reliable supplier
You need to choose a reliable supplier for the imported product, who is responsible for the delivery on time, quality of the product, keeps you inform about any problem or delay, and of course, the cash you give him. You can ask them to give you the list of companies they are dealing with in your country for reference. Check the credibility of the supplier and physically visit the company if you can to check the product quality and see the manufacturing unit.
Clear communication with the supplier
Communicating with the suppliers in a foreign country often involves a strong learning curve. You can deal with people who do not speak the same language as you and whose culture and values are different from yours. The likelihood of misunderstanding and lack of communication is much higher than when working with local suppliers. Discover all you can do in the country you intend to import from. Your industry association or local chambers of commerce may give you some resources, but the best way to find out all the details is to talk to people who import or export to this country.
Know the trading terms
Before you sign the import contract, you need to know the trading terms involved in the import-export business. To know about the trading terms is not a difficult task; the International Chamber of Commerce has introduced some standardized rules for the trading terms known as incoterm. The common trading terms that are used in international trading business are EXW (Ex-works), FOB(Free on Board), and FAS(Free Alongside Ship).
Follow the above-mentioned tips to get success in the import business. I hope this article helps you better understand the import business and the risks involved with it.