A dozen tips for starting an import/export business
Thinking of starting an import/export business? Jennifer Henzel, a Certified Import/Export Trade Professional, offers these tips to get you started:
1. Many countries have established offices (Consulates or Embassies) in foreign countries to promote the export of their goods. Consulates will provide you with industry directories and more. Embassies are located in the capital of a nation and consulates in different cities. In many cases, the Embassy website will contain manufacturer directories and listings, as well as an email link you can use to search
2. To import merchandise, contact the Consulate of that country located in your own country. If you’re not sure what products the other country wants, you can get manufacturers’ catalogs and lists.
3. Contact your country’s tax department to inquire about registration numbers or other procedures to follow. For example, if you are Canadian, you will need a registration number, issued by the Canada Customs and Excise Agency (CATA). When you inform CCTA of your plans to import or export, they issue an extension to your business number. This number is used in all related documents.
4. Find out about licensing requirements, if any. Many countries do not have licensing requirements for most products. However, if you are importing or exporting high-risk products (pharmaceuticals, liquor, chemicals, weapons, certain foods, and certain clothing), you may need a license. “I strongly recommend that people start with low-risk items that can be easily exchanged and have fewer barriers, such as gift items and consumer items,” Henzel said. “Certain industries, like dairy, are protected by lobbyists in some countries. You will face quotas and restrictions.”
5. Embargoes are trade barriers established against other countries. Many countries have embargoes against Cuba, for example. First, contact your own government to determine if there are any restrictions or embargoes against the country you are considering. Then contact the Consulate or Embassy of that country to see if there are any restrictions against goods from your country.
6. Participate in local Trade Boards (or Chambers of Commerce if there is no local Trade Board). In addition to networking, you have access to research libraries and other resources that will offer good business information.
7. Use customs brokers. “Small businesses trying to do their own paperwork can get delayed at the borders. If you make a mistake, you can get fined,” Henzel said. “The service of a customs broker is well worth the fee you pay.”
8. When exporting, understand that there is no one-size-fits-all shipping and customs handling solution that works in all situations. Every deal is different. Each company and each set of products will require a different set of services, or combination of services. Hiring the services of a freight forwarder is one possibility. Freight forwarders arrange shipping and customs clearance for goods going to other countries. “You have to buy these services and do your research,” Henzel explained. “Ask lots of questions. It’s no different than buying a piece of furniture. Shop around first.”
9. Familiarize yourself with the Incoterms, as published on the International Chamber of Commerce website (http://www.iccwbo.org/index_incoterms.asp). Incoterms are standard business definitions that dictate the shipping and payment responsibilities of each party. The two companies involved negotiate Incoterms for each agreement. The best known Incoterms include EXW (Exworks), FOB (Free on Board), CIF (Cost, Insurance and Freight), DDU (Delivered Duty Unpaid) and CPT (Carriage Paid To). “You trade according to Incoterms,” Henzel said. “You decide who pays for shipping, who pays for insurance, etc.”
10. Check with your bank for information on Letters of Credit, the most common form of payment when trading internationally. With a letter of credit, you minimize your risk because banks ensure that goods are delivered before money is exchanged. As an importer, a letter of credit reduces the risk of having to pay for goods in advance or paying for goods that do not match the product description in the letter. As an exporter, you have a guarantee from the buyer’s bank that you will receive payment as long as you ship the products as specified within the agreed time.
11. Participate in Trade Missions. Check with your local Board of Trade or Chamber of Commerce to find out what is available.
12. Finally, search the Web for information on international trade. Many websites offer a variety of information that you can access free of charge, including Henzel’s site (www.importexportcoach.com).