Guidelines on importing for SMEs
The current SME focus is on exports, but there is little guidance for firms wanting to import for the first time.
Small and medium-sized firms are well supported in the exports arena. However, those wishing to start importing may feel left out or confused by the government literature currently available.
Before venturing headfirst into the market, you may like to consider the following important points to help you succeed.
Fully understanding the product you are looking to purchase is key to avoiding low quality goods. Make sure you only buy high quality – well-made and durable – if you wish to consistently sell for a profit. Test them before buying, and ideally tour the factory where they are made and meet manufacturers in person.
Businesses looking for manufacturers for the first time may like to think about finding a sourcing agent who already has relationships with trusted manufacturers and suppliers.
If you find a supplier you can trust, make sure to build a strong working relationship with them by making every transaction with them as smooth as possible. Plan ahead, give advance notice of orders, and generally create as little hassle for them as possible.
Suppliers love being paid on time, and will prioritise your shipments if you consistently keep up to date with invoices. If a supplier has to wait to be paid, the next time you order from them you will likely find yourself at the bottom of the list.
Read the small print of your insurance, because no two policies will be the same. Some will only cover 50 per cent of value, while others will cover more. The types of damage covered often varies too, so make sure you get the most comprehensive insurance to mitigate risks.
“Incoterms” is a set of internationally recognised standard trade terms that you should fully understand before shipping goods. They define who is responsible for insurance while the goods are being transported, and who will be paying duty owed on them.
Managing currency risk
Variable exchange rates can put you at currency risk when trading internationally. If you are paying suppliers in one country and customers are paying you in another, you are automatically at risk. Learn to either set rates when buying, or have a product to hedge with.
Understand import tax rules
Find out if you should fill in a customs declaration form, pay VAT on imports, or pay customs duty before you embark on your trade. These costs could cut profits or end up in a fine if you misunderstand them.
Don’t forget, you can always ask for help. Importing for the first time is tricky, and it may be worth spending a little extra on an advisor to protect you from making mistakes.