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Foreign Trade: Tips to Succeed in your Import Operations

If you consider yourself an audacious entrepreneur, importing the product can offer you great deals.

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If you consider yourself an audacious entrepreneur, importing the product can offer you great deals. Gift of opportunity, ability of a good negotiator, ability to surround yourself with professional providers, and intelligence to anticipate and protect against risk are some of the skills that you will have to demonstrate, but knowing that you will never control the process one hundred percent. We have searched for the best advice among the experts so that you can succeed in your first import.

“The importer must understand the whole of the operation he faces to make the right decisions. Must assume the deadlines, know the payment conditions, product specifications, anticipate the documentation but also anticipate that there may be uncontrolled factors that generate additional costs.”

MINIMUM OPERATIONS OF € 7,000

In this prologue on how to become an import professional, it is necessary to be clear that it is the physical and legal person who are the only ones authorized by law to introduce goods into a territory. As a private person you can only buy for personal use, it is the difference between B2C (business-to-consumer) and B2B (business-to-business).

In addition, “you must exceed the threshold of minimum volume so that the operation can support the costs of transport, customs, etc. Your import must exceed 7,000 euros, for the least amount it is preferable to buy from a local importer.”

EXPLORING OPPORTUNITIES

In many occasions the first mission of the importer is the exploration of opportunities. The Internet is the fundamental tool in this search, but we must be aware that many other entrepreneurs do the same information that you do: in the era of social networks it is difficult to reach the first. However it is always possible to find product niches or brands.

Example of this good smell is the Spanish company Trade Gate. In 2010 identifies in the emerging market of BB Cream (cosmetic niche to correct imperfections in a more gentle and respectful with the skin) an opportunity, but also in the Korean offer, which in those years was only praised by a reduced number of aware. Just eight years later, Trade Gate invoices 30 million euros a year and is the European leader in the importation of Korean cosmetics, as explained by Miguel Ángel Grandía, founder of Trade Gate.

Separating the wheat from the chaff in the information that the Internet offers has a lot of smell, but you can rely on tools to base your decision on data. Terapeak is now one of the most popular, offering statistics with sales and online payments from eBay and Shopify, which can help you identify products with rising demand.

But the network is not the only source of information. Once one or several opportunities have been identified, you should go to national and international fairs to refine ideas. One of the references every year is the Export and Import Fair of China, which within the sector is simply known as ‘Canton Fair’.

Another source of basic information is the commercial offices of other countries in Spain. It must be explained that in the importation, ICEX will not be of any help given that this organization is focused on export, so your advice will be limited to contacting your counterparts in the country you indicate. On the contrary, the financial entity with which you are going to work can become an unexpected ally: discuss your plans with your qualified staff and listen to their recommendations.

ANALYZE THE PRODUCT AND THE MARKET

Once the type of product has been decided and the geographical radius of action in which the supplier is selected, it is necessary to keep informed. You must answer questions such as: can I import this merchandise to Spain? Will it require a special homologation to comply with EU legislation? Will I need to hire a certifying company? Is there any commercial restriction with the country of origin? … These are questions that you will have to answer little by little, but you should keep the whole process in mind to ensure the pertinence of each decision.

Special precaution must be taken with the type of tariff to which the product could be subject. José Manuel Castellano, director of Internacional de HispaColex, explains:

“When the importer is not sure of the tariff code that corresponds to him, the manufacturer may decide to force the concept to use another with fewer requirements in the country of destination”.

In this case, the risk is great, since the Spanish customs authorities may consider that the declared tariff does not correspond to the merchandise. Traffic will be paralyzed, generating additional expenses.

IN SEARCH FOR THE PROVIDER

One of the first decisions is to look for a supplier, which in many cases will lead to China and other neighboring economies. This region has become the big global factory, so many of the supplier selection processes are here. Experts in services such as Asia is Easy support, for example, ensuring that within ten days you can locate any type of provider. “We provide updated information and quality but it must be the client who makes the decision based on the knowledge he has about his sector”, explains Pérez. The cost for a typical service is 2,700 euros, which will include this presentation of suppliers, a previous face-to-face inspection to audit the chosen factory, quality control of the order and transport management.

The mediation of these companies can replace the importer’s trip, but as much as new technologies facilitate remote negotiation, Castellano is resounding: “If you think you’re going to talk to a strategic supplier for your business, or intend to establish a relationship Lasting, you have to visit their facilities. There are opportunities that only arise when you are there. ” As an example, explains that there are entrepreneurs who change their strategy from importers to representatives of a certain brand or product when they detect that a supplier is interested in establishing themselves in Spain, being able to close a more comfortable and lasting agreement for your interests than a simple one. import.

WHAT ARE THE ‘INCOTERMS’?

But we return to an import type operation, a scenario in which the purchase conditions always occupy an important part of the negotiation. This is what in the jargon is known as negotiation of incoterms: the set of international rules that determine the scope of the commercial clauses included in the international sales contract.

In practice, it will regulate aspects as important as when and where the transfer of risk between seller and buyer takes place in the logistics process, for example, when it is delivered to the factory, at the port of shipment or at the destination port. Who contracts and pays the logistics operation and insurance, or which documents are processed by each party are terms that also include the incoterms and that are standardized in acronyms.

CERTIFIED MERCHANDISE

It is very important that the merchandise you are going to import meets the quality standards required by the European Union to be marketed in its territory. The Soivre (Official Service of Inspection, Surveillance and Regulation of the Exports) is the organism in charge to supervise that this is it, and it puts under its control to industrial goods as different as shoes, toys, furniture, plugs or wood. Of course, sectors such as food, health and beauty or weapons have specific and demanding regulations.

It is the importer who must ensure that the merchandise has ‘Soivre’ before being nationalized, which forces him to make the arrangements in the market of origin. Romeu recommends entrusting its management to the customs agent. In the event that the services of a certification company that homologate the quality of the product to the European standard must be contracted, it is very important that this company has recognition in Spain. There are markets in which companies operate whose certificates have no validity for the European authorities so the goods can be retained.

WITHOUT OPTIMIZED LOGISTICS THERE IS NO BUSINESS

It is important to have the entire picture of the route and understand all decisions that await.

The best decision is to trust a good freight forwarder. The advice of these professionals can save important amounts of money to new importers but also with experience. A simple example: it may happen that your product supplier advises the delivery of non-palletized goods to optimize the space during transport (allows a more compact load than on several pallets) but in destination you are likely to have to control that manipulated because your client final (for example a large area) requires you to deliver the goods in pallets of cargo, but the hiring of that manipulated in origin is more expensive than the amount you saved in transportation. But the situation may be the opposite.

With a didactic spirit, Romeu synthesizes the basic decisions to be made by the importer: “You will have to choose between a sea or air transport, and between your own container or in groupage, the latter in which goods from different clients travel in the same container. ” In theory transportation will always be cheaper by sea than by air, but “it depends. It does not always happen that way, “explains Romeu. For example, with the celebration of the Chinese New Year there is a break in activity, which can mean extra delays in the usual delivery times, and if the merchandise must be at destination on a specific date, it is convenient to assume the cost of air transport . “It is a very dynamic sector, what may be convenient today may not be tomorrow, so the work of the freight forwarder is so important because it is who handles this information. Our obligation is to be up-to-date, a tariff change or any other that may occur in customs must be communicated to the client, you can not surprise at the last moment when perhaps there is no alternative but to assume an extra cost.

To the question of how to choose the freight forwarder, Romeu speaks in terms of confidence and professionalism, but also recalls another important fact: “We are going towards the specialization of the logistics organization, look for the one that best understands your product and better does it in the sector that you work. You should also make sure that it is also a good provider of value information in real time. “

In terms of savings:

“If you get to a full container you save a lot, and if you do it to a 40-footer much more because your The price is not much higher than a 20-foot one and can double. If you often import by plane, try to negotiate a closed price for a period of three months so as not to suffer fuel fluctuations. You should also know that prices vary according to supply and demand, and that there are times of the year to avoid because transport rates skyrocket, especially in air from the end of November to January.”

THE CUSTOMS OFFICE

“The worst thing that can happen to you as an importer is that one of the first operations goes wrong. It is the best way to attract the spotlight on you, which in practice means that there will be more revisions.”

The objective of the importer is:

“Ensure that all customs procedures are controlled, so the safest thing to do is to trust a customs agent. When it is imported without documentation or the correct one is not provided, the merchandise does not go to be able to enter the country, and until the incident is solved it will occupy a space in the facilities of the port authority, which can generate an important expense.”

The customs authority assign a risk assessment channel based on the importing company, the type of merchandise and other criteria. The codes of these channels are established by the colors of the traffic light. The most favorable is the green, ‘of immediate release’, with which it is possible to conclude the procedure without greater intervention of the authority than the seal of conformity. The orange documentary recognition channel implies the verification of all the information reflected in the declaration and the agreement with the rest of the documentation. Finally there is the red channel, which entails the physical verification of the merchandise by the customs, and the verification of all the documentation.

Take care of the easy businesses in appearance and not look for the cheapest supplier, if not the one that better service gives two of the recommendations that can avoid problems in the customs transit. Ensure the success of your first import.

THREE BASIC DOCUMENTS

  • Commercial invoice: Sets the conditions of sale of the merchandise and its specifications. It serves as proof of sale, and is essential for any type of import.
  • Packing list: it details the list of contents of the package, completing the information of the invoice.
  • Bill of lading (BL) or Air Waybill (AWB): is the document of boarding at the port or airport according to whether it is maritime or air. It contains all the conditions of the contract necessary for the cargo to be accepted on the ship.

THE MOST COMMON INCOTERMS

Present in any import negotiation, the incoterms are the rules set by the International Chamber of Commerce to determine the scope of the commercial clauses included in the international sales contract. There are thirteen, but here are the four most common:

  • FOB (Free On Board): Also known as Free on board, the responsibility of the seller ends when the merchandise arrives at the vessel at the port of shipment agreed, shipped in full export conditions. From that moment the buyer bears all costs and risks of loss, damage or other that may occur.
  • CIF (Cost, Insurance and Freight): O Safe cost, indicates that the responsibility of the seller arrives until delivery at the port of shipment agreed, including freight costs to the port of destination, and the purchase of insurance for possible loss or damage. It also includes dispatching the goods under export conditions.
  • DDP (Delivered Duty Paid): Delivery in place of agreed destination, is a door-to-door service in which the seller assumes all costs and risks until delivery at the agreed place, including customs procedures, customs duties, taxes , etc. to the destination country.
  • EXW (Ex-Works): Known as factory, is the opposite of the previous, so it represents the least obligation for the seller: delivery of goods and necessary documents, packaging and packaging. It will be the buyer who assumes the rest of the procedures.
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