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 merchandise. 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 for
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 catalogs and lists of manufacturers.
3. Contact your country’s tax department to inquire about registration numbers or other procedures you must follow. For example, if you are Canadian, you will need a registration number, issued by the Canada Customs and Revenue 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 the 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 items), you may need a license. “I strongly recommend that people start with low-risk items that are easily tradeable and have fewer barriers, such as gift items and consumables,” Henzel said. “Certain industries, like dairy, are protected by lobbyists in some countries. You will face quotas and restrictions.”
5. Embargoes are trade barriers set up 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 that country’s Consulate or Embassy to see if there are any restrictions against goods from your country.
6. Participate in local Boards of Trade (or Chambers of Commerce if there is no local Board of Trade). 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 experience delays at the border. If you make a mistake, you can be fined,” Henzel said. “The service of a customs broker is well worth the fee you pay.”
8. When exporting, understand that there is no single solution to shipping and customs handling that will work in all situations. Every deal is different. Each company and each set of products will require a different set of services, or a combination of services. Hiring the services of a freight forwarder is one possibility. Freight brokers 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 Incoterms, as published on the International Chamber of Commerce website (http://www.iccwbo.org/index_incoterms.asp). Incoterms are standard trade definitions that dictate the shipping and payment responsibilities of each party. The two companies involved negotiate Incoterms for each agreement. The most popular 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 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 are guaranteed by the buyer’s bank that you will receive payment as long as you ship the goods 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 the Henzel site (www.importexportcoach.com).