Asian Crafts
Learn Export Import Business
How to Start Import
Export Business - 1
Thinking of starting an
import/export business? Jennifer Henzel, a Certified Import/Export Trade
Professional offers these tips for getting started:
1. Many countries have set up offices (Consulates or Embassies) in foreign
countries to promote the exporting of their goods. The Consulates will
supply you with industry directories and more. Embassies are located in a
nation's capital and Consulates in different cities. In many cases, the
Embassy web site will contain directories and manufacturer lists, as well as
an email link that you can use for sourcing
2. To import goods, communicate with that country's Consulate situated in
your own country. If you are uncertain what products the other country
wants, you can obtain catalogues and lists of manufacturers.
3. Contact your country's taxation department to ask about registration
numbers or other procedures that you must follow. For example, if you are
Canadian, you will require a Registration Number, issued by Canada Customs
and Taxation 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
on 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, arms,
certain food items and certain articles of apparel), you might need a
license. "I strongly recommend that people start out with low risk items
that can be easily traded and have fewer barriers? like giftware and
consumer items," said Henzel. "Certain industries, like dairy, are guarded
by lobby groups in some countries. You will be faced with 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 whether there are restrictions or embargoes against
the country you are considering. Next, contact that country's Consulate or
Embassy to see if there are restrictions against goods from your country.
6. Participate in the local Boards of Trades (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 trade
information.
7. Use customs brokers. "Small businesses attempting their own paperwork can
run into delays at borders. If you make a mistake, you can be fined," said
Henzel. "A custom broker's service is well worth the fee you pay."
8. When exporting, understand that there is no one solution to shipping and
customs handling that will work in every situation. Every deal is different.
Each company and each set of products will require a different set of
services, or a combination of services. Engaging the services of a freight
forwarder is one possibility. Freight forwarders arrange shipping and
customs for goods going to other countries. "You have to shop for these
services and do your research," Henzel explained. "Ask a lot of questions.
It's no different than buying a piece of furniture. You shop around first."
9. Be familiar with Incoterms, as posted to the International Chamber of
Commerce Web Site (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 deal. The best known Incoterms include EXW (Ex works),
FOB (Free on Board), CIF (Cost, Insurance and Freight), DDU (Delivered Duty
Unpaid), and CPT (Carriage Paid To). "You negotiate according to the
Incoterms," Henzel said. "You decide who pays for shipping, who pays for
insurance, etc."
10. Consult your bank for information about Letters of Credit, the most
common form of payment when trading internationally. With a Letter of
Credit, you minimize your risk because the banks assure that the goods are
delivered before the money is exchanged. As an importer, a Letter of Credit
reduces the risk of having to pay in advance for goods, or of paying for
goods that are inconsistent with the product description in the Letter. As
an exporter, you have the buyer's bank's assurance that you will receive
payment provided you ship the goods as specified within an agreed-upon time.
11. Participate in Trade Missions. Consult your Board of Trade or local
Chamber of Commerce to discover what is available.
12. Finally, look to the Web for information about international trade. Many
web sites offer an array of information that you can access for no charge,
including Henzel's site (www.importexportcoach.com).
HOW TO START AND OPERATE YOUR OWN PROFITABLE IMPORT/EXPORT BUSINESS AT HOME
What is a good way to build up a successful business from nothing and have
fun doing it? The import/export business may be your answer. Not only does
it require little financial investment to start, but it offers the prestige
of working with clients from all over the world.
You don't need previous experience in the field, but you should have a good
head for organizing. Fulfilling a successful import/export business requires
constant attention to little details.
Do you know some local manufacturers looking for ways to increase their
market for the goods they make? Or are you planning a trip abroad and want
to make some contacts for setting up a business?
If you have an ability to sell, and an air of diplomacy, the import/export
business might be right for you. All you need is the desire and
determination to make it work.
As you progress in the business, many factors become obvious and easy to
handle. For example, you'll need to find a person to handle shipments,
called a freight forwarder. And you'll need to create solid contacts and
strong relationships with reliable suppliers. But after a short time, you
can be well on your way to making a sizeable income - with a very low
overhead.
Do you like the idea of running your own business? How would you like a tax
deductible trip to foreign places a couple of times a year? The advantages
of an import/export business are great.
The biggest advantage is the money you'll make. Once you get the business
underway, the commission for setting up sales is very profitable. And after
you establish and maintain a number of exclusive accounts, you'll find the
time you spend is highly rewarded with money.
Take a look into the import/export business. Consider the risks, and
consider the advantages. Talk to people in the business. Is it for you?
HOW IT WORKS
Of all the manufacturers in the United States, only a small percentage
distribute goods outside of North America. The goods that do find foreign
markets are exports. On the other hand, anything that is manufactured
outside the country and brought in for sale, is imported.
Although it seems obvious that all manufacturers would want a worldwide
market, it is not easy for a company that is limited in its scope and
abilities. That's where you come in.
An import/export agent is a matchmaker. Manufacturers of domestic goods seek
foreign distribution; foreign manufacturers want a United States market. You
need to find them, make a solid connection, and establish a business
relationship with these companies.
The agent's commission is generally about ten percent. Now, think of ten
percent of $500,000 or ten percent of a million. Although that may seem like
a large order, it wouldn't be, if you're talking about machinery, raw
materials, or computers.
The market is unlimited and there are hundreds of manufacturers looking for
foreign distribution. Sporting goods, clocks, electronic games, radios,
housewares, garments, tools - anything can be readily imported or exported
if there is a consumer demand and if you can get the products.
The United States Government encourages exports. Indeed, it is those sales
that keep our balance of payments with the vast amounts of goods that are
imported. And you'll find government agencies helpful in establishing your
business.
THE BASICS
You can start your import/export business at home with a telephone. You'll
need a file system, business cards, and a machine to answer the phone calls.
Once you get going, you'll want a cable address or a telex hook-up.
And you'll need a classy letterhead. Until you establish personal contacts,
it is your letterhead that represents you. Make it look professional,
possibly embossed or two-color, or gold leafed. Have it printed on
light-weight paper for airmail correspondence, but don't have airmail
envelopes printed. You'll have a lot of domestic correspondence too.
More than office equipment, you need the determination to make it work. It
will be slow at first, and you'll need to plan your moves, make contacts and
SELL YOURSELF. But once you make a few sales and sign several exclusive
contracts worth money, you'll know your dedication was worthwhile.
MAKING CONTACTS
The most important step in setting up your business is finding the contacts.
You may have relatives in a foreign country; you may have frequently visited
and established business relationships in a country. Or, you might just have
a feeling for what will sell where. A person who keeps well-informed in the
business world can pick up and ride the crest of worldwide trends.
Foreign consulates located in the United States have commercial attaches who
want to establish outlets in the U.S., and they're a good place to start.
Sometimes these consulates can help you find indices of their own import/
export enterprises.
The United States embassies abroad are another place to find contacts for
commercial distribution. They can help you find out about a company's
solvency and reputation.
Another way to establish contacts is through the Chambers of Commerce of
every city you are aiming for.
Start small - don't tackle the world. Where do you want to sell the American
goods you might have in mind? Which countries have the merchandise you want
to import? Find out about the countries, what they have to offer, and what
is generally in demand.
Then prepare a massive mail campaign.
The easiest way to mail hundreds of letters is to use a typing service that
has the equipment to produce the same letter with a different address each
time. It's worth the money it will cost - you'd go crazy typing so many
identical letters.
To every possible contact, write a letter introducing your company,
requesting the names and addresses of appropriate firms to contact. Ask to
have the notice published in the monthly bulletin or posted in an
appropriate place.
From the names you get back, write another letter, again introducing
yourself, and asking information about their company. You can use a
questionnaire, which fill out and invites a response.
What goods do they want to import? What products are now imported and how
are they distributed? Does the company have a certain territory, does it
have sales representatives, branches in other cities? What are the basic
details of operation - history, assets and liabilities, plans for growth.
Request any information you need, to find out what they will buy and what
they have to sell. If the company is a manufacturer, ask for samples or a
catalog, the facts and figures of current foreign distribution, and the
product demand in their own country.
ANALYZE THE MARKET
Keep informed. Read everything you can find about world trade. Look at trade
publications, international newspapers, news magazines, and financial
reports. Who is selling what to whom? Although the market for American-made
airplanes is sewn up, there are thousands of medium to small sized
manufacturers in every state of the union.
You can get goods to sell, but you have to be sure to study where they are
in demand and can get the price to make exportation viable. Your
questionnaires will tell you what further and read the journals published by
that country - and many are available in English. Do these publications
confirm the desire for certain products?
The American market for imported products fluctuates with the value of the
dollar in comparison to the value of each other country's currency. And,
importation prices reflect that directly. Can American consumers afford to
pay the price of certain imported goods? Or will they?
Finding the right market is as important as the actual particulars of making
deals and selling goods. What do you think will sell? If you do some careful
studies and think about the trends, you'll be able to come up with hundreds
of products to import and export.
The import/export business is actually smaller than you might think. There
are only a few of these businesses - that's why there's plenty of room for
more.
WHERE TO FIND HELP
Establish a good business relationship with a local bank that handles
international business. Your personal banker will follow through on the
actual foreign transactions, and will help keep your credit afloat. In fact,
that is one of the best factors about an import/ export business. Aside from
office supplies and correspondence, or possible business trips, you need no
personal cash outlay. All you need is good credit and a good reputation.
Your banker is your credit manager and will give you valuable advice and
references when you deal with both American and foreign manufacturers and
distributors.
The United States Government agencies are great places to find help. These
agencies promote the import/export business, and publish many small booklets
and pamphlets. They also distribute continually updated reports on foreign
markets, commerce and financing.
Read these sources of information and find out the particulars of exports,
global surveys and ocean freight guidelines. Become familiar with the market
share reports, current laws and regulations, and government promotional
facilities.
MAKING CONNECTIONS
As you continue your correspondence with foreign companies, build up a good
rapport with their representatives. Pin down a few companies - perhaps in
the same country or similar territory - to their exact needs. What are the
two or three products most in demand?
Consider their methods of distribution. You may be able to work directly
with a wholesaler of an overseas importing company. Your commission will be
lower, but you won't need to handle as many particulars, and they will take
care of distribution.
Or, you may need to supply catalogs and samples, working with a network of
small companies, or sales representatives from a larger conglomerate.
The highest fees that you can collect are for raw materials taken from the
source and delivered directly to a manufacturer. But you must be certain of
a guaranteed quantity and the continued ability to deliver.
If you are importing goods, you'll need to find U.S. distributors that can
handle the quantity of goods at a high enough price for you to profit by. A
single retail outlet or two is not enough to make your time worthwhile. Look
into how buyers work and make contacts in the larger retail chains if you
have retail merchandise.
GETTING THE GOODS
There are hundreds of American manufacturers with limited distribution
looking for an overseas market. Exporting their goods is the place to start
your business.
You have many selling qualities for convincing the manufacturers to engage
you as the sole export agent. You have foreign contacts and know the demand
for specific goods. You will handle the sale, the paperwork, the money, all
shipping, customs, and foreign distribution.
The manufacturers in return provide quotations, and you put your fees on top
of that - you cost them nothing.
The manufacturers have everything to gain - an increase in sales, a broader
market, and more profit. And you have everything to gain - establishing your
business, an a commission on the cost of the goods. That is the basis of a
firm business connection and a mutually profitable arrangement.
Contact local manufacturers first and then move into larger territories. You
can make these contacts by phone, in person, or by personal introduction
from contacts you may already have. Or, you can advertise in business
publications and newspapers.
Before you do get into a legal agreement, be sure to check the reputation of
the company. How long has it been in business? Where are the products
distributed domestically? What is the solvency and reliability of the
company and its goods? When you make your sale, you'll want to be able to
deliver.
MAKING AN AGREEMENT
Once you have agreed to represent the manufacturer as the export agent, you
need to have a written and signed contract to bind this agreement. Your
attorney should be the one to draw up this contract - later you can just use
the same one, substituting names of other manufacturers.
Basically, the contract is between the manufacturer and you as the export
representative. You are granted exclusive rights to distribute goods to all
countries except those they already distribute in.
The manufacturer will pay you the specific commission quoted to the
distributors on top of the price of goods. The company will also provide
catalogs and samples for your use in distribution.
You, the export representative, in turn will promise to do everything
possible to make contacts and distribute the manufacturer's goods in foreign
territories.
The terms of the contract should then be stated: how many years the contract
will be signed for, the terms of cancellation by either party voluntarily or
because of no sales action over a certain period of time.
THE SALE
You've made your contacts with foreign distributors who will buy the
merchandise. You have a signed contract with an American manufacturer that
will deliver the goods. Perhaps one of the distributors now asks for a firm
quotation on the price of a certain amount of goods.
You go to the manufacturer and get a price quotation on the quantity of
goods. It should be valid for a certain stated period. The manufacturer may
agree to deliver the goods to the ship, handling the freight to that point,
or you may need to make arrangements from the factory.
You add on the commission you want to the price of the goods. Then you add
on all the extra costs of getting the merchandise from the factory to the
warehouse of the distributor.
If you've made an agreement with a foreign import/ export company, their
representatives may take over the shipping, paying you the price of the
goods and your commission. That's the easiest, but your commission will have
to be reasonably lower.
If your sale is to a company that will distribute the goods wholesale or
retail from its premises, you have to arrange all the transportation.
TERMS OF SHIPPING
You will become more familiar with the terms of shipping used in quoting
prices and delivering goods as you gain experience. Your responsibilities
vary with the terms of the agreements and orders. Check with your freight
forwarder to be clear about your responsibilities.
A bill of lading is a receipt for goods shipped. It is signed by the agent
of a ship or common carrier and assures the buyer that the goods were
unloaded in the same condition as they were accepted. These are the
documents you'll need to produce for your banker to release the letter of
credit.
FOB means free on board. The seller delivers the goods to a certain
destination with no additional charges. The seller insures and takes the
responsibility until that point. The buyer takes the responsibility and pays
the charges after that. For example, FOB New York means the seller's price
quotation includes full responsibility and shipping to New York.
FAS means free alongside. The seller delivers the goods to the ship that
will carry the merchandise. The buyer pays to load onto the ship and takes
responsibility from there. FAS New York, for example, means that the seller
will deliver and store the goods until they are ready for loading onto the
ship.
C & F means cost and freight. The seller pays the freight charges. The buyer
insures the merchandise and takes full responsibility after the destination.
CIF means cost, insurance and freight. The seller is responsible for the
value and condition of the goods, and pays both insurance and freight
charges to a certain point. The buyer is responsible from there.
THE FREIGHT FORWARDER
A freight forwarder is a person who takes care of the important steps of
shipping the merchandise. This person quotes shipping rates, provides
routing information, and books cargo space.
Freight forwarders prepare documentation, contract shipping insurance, route
cargo with the lowest customs charges, and arrange storage. They are
valuable to you as an import/export agent, and they are important in
handling the steps from factory to final destination.
They can be found by looking in the yellow pages or by personal referrals.
Find someone who can do a good job for you. You'll need someone who you can
work with, since this may become a long-term business relationship
You'll need the help of a freight forwarder when you make up the total price
quotation to the distributor. Not only do you include the manufacturer's
price and your commission - usually added together, but you need to include
dock and cartage fees, the forwarder's fees, ocean freight costs, marine
insurance, duty charges, and any consular invoice fees, packing charges, or
other hidden costs.
Be especially careful when you prepare this quotation. It certainly isn't
professional to come back to the distributor with a higher quote including
fees you forgot. You might go over the price quotation with your freight
forwarder to be sure nothing is overlooked.
Usually the quotation is itemized into three main categories of cost of
goods, which includes your commission; freight charges from destination to
destination; and insurance fees.
Give a date the quotation is valid to, which should be the same as the date
given on your quotes. You may also include information about the products,
including any new sales literature.
A formal letter that accompanies the price quotation should push for the
sale. You can inform the distributor of the shipping date as soon as the
order is received and confirmed by a letter of credit. Send the letter and
price quotation by registered mail to be certain of its delivery.
THE LETTER OF CREDIT
A letter of credit eliminates financial risks for you, the manufacturer, and
the distributor. When your distributor confirms the order, a letter of
credit is drawn from that company's bank to a branch in the United States or
to your bank.
This letter of credit confirms that funds are available from the distributor
to cover the same costs you quoted. An irrevocable letter of credit assures
you the order will not be cancelled at any time. When that letter of credit
is likewise confirmed by your bank to deliver the goods, the distributor is
assured of delivery. Once the letter of credit is confirmed by the bank, the
currency exchange is also confirmed, so you don't have to worry about the
fluctuation in currency.
Basically, the bank holds the money until all shipping documents are
presented. The letter of credit states the terms and conditions to make it
legal and negotiable into money, usually holding for proof of shipment of
the goods. Your freight forwarder helps you attain all those documents. When
you hand them to the banker, the letter of credit is turned into liquid
assets for you to then pay the manufacturer and all other invoices from the
transaction.
Never work on promises. Not only do you take a gigantic risk, but you create
bad risks for everyone you are involved with. A letter of credit is the only
sure way to transfer these payments.
DELIVERING THE GOODS
There are many combinations of people and methods that you can use to
deliver the goods that were ordered. When you produced a price quotation for
the goods, you had to go through all the steps the merchandise will follow.
Now, before you proceed, check again.
Do you have a confirmed order signed by the authorized representatives of
the distributing company? Has your banker approved the letter of credit from
the company?
Compare the amount of the letter of credit to the amount quoted for the
goods. Be sure they match exactly. Or, if the distributor chose a certain
quantity of several offers, check the prices again and confirm the quantity.
Confirm the quotation and sale with the manufacturer, and do the same with
the freight forwarder and any marine insurance agents you are working with.
Then follow through.
In order to assure the quality of merchandise, some manufacturers prefer to
handle freight to the loading docks, which makes it easier for you. If you
handle overland shipping, follow through to be sure the merchandise is
picked up and arrives safely at its destination.
Be informed of the date the goods are loaded onto the ship. The factory
should have them freighted in time to avoid costly dock storage charges.
Since all conditions of the sale must be met to comply with the terms of the
letter of credit, you need all the signed documents. Have your freight
forwarder or other contacts get authorized bills of lading for the
merchandise each step of the way - from destination to destination.
Once you have all the signed documents, present them to your banker. If all
the terms are met, the funds will be released. Since your commission is part
of the quoted price of the merchandise, you'll usually collect your fees
from the manufacturer.
When it is totally complete, you collect your money - and make a sizeable
profit for simply making connections. Consider the commissions when you have
dozens of orders coming and going.
IMPORTING
Take a look at the household items and equipment you have in your home. Made
in West Germany; made in Japan; made in Korea. You may have clothing from
India, shoes from Brazil, a leather wallet from Italy. Your car may be an
import; your stereo equipment may be manufactured elsewhere. There are
hundreds and hundreds of items manufactured all over the world, now being
used by the American consumer.
The market is huge. And there are many American firms looking for
foreign-made merchandise to distribute. Some items are less expensive; some
are better made; some are imported because they are made in a country now
fashionable with the designers.
What can you tap into? Maybe you have contacts in the United States,
distributors looking for certain goods. And you've already made contacts in
the foreign countries that produce these goods. Follow through and get
yourself an exclusive distribution agreement with those manufacturers.
Importing requires the same diligence and follow-up as exporting does.
You'll need a signed contract with the manufacturer to be the sole agent
distributing to North America - or the world, depending.
You'll also need to obtain firm price quotes from the manufacturer in the
quantities your distributor requests. These quotes should be converted into
the appropriate dollar figures representing the currency exchange.
Investigate the reputation of the manufacturer and the reliability of the
goods. If you import something like electronic components, check into the
other distribution market the manufacturer has to assure the quality of
merchandise.
Your commission will come through from the foreign manufacturer. Have your
bank investigate the solvency of that company and the reputation of living
up to agreements. Since it's on foreign territory you'd have more trouble in
any legal suits, even in light of the many international laws.
Prepare the price quotation. It is easiest if you request terms of delivery
to the port of that country. Your freight forwarder can help you move the
merchandise from that port, overseas, and through domestic customs.
Follow through with all the details of shipment. Be sure to include any
insurance, dock fees, storage rates, and shipping overland. Overlook nothing
so your price quotation to the American distributor is accurate.
Itemize the quotation and give it to the American distributor. Upon receipt
of an authorized order, double check prices and follow through on delivery.
The letter of credit will go from the American distributor to the bank of
the manufacturer. All terms and agreements regarding prices, freight and
insurance will be defined. The manufacturer's representative will confirm
receipt of the letter of credit, which will release the goods for shipment.
Have your freight forwarder follow up on the shipment of goods. They may
have to be freighted from the factory to the docks. Arrangements for
shipping need to be carried out. Customs duties and unloading need to be
followed through from the American port. Then, the goods may need to be
freighted overland to the final destination.
As soon as the goods have arrived at the proper assigned destination, papers
have to be documented and presented to the bank that holds the letter of
credit. Then, all carriers and agents need to be paid, and you collect your
commission.
PROMOTION
After you have completed a few sales transactions to establish yourself,
you'll need to promote your import/ export business to get more clients. The
first transactions give you the experience to learn the ropes of the
business, and to establish contacts and agents both here and abroad.
Join organizations of commerce and foreign trade associations to develop
more contacts and extend your territory. Talk to everybody you contact about
importing and exporting, learning from their mistakes and successes.
Advertise in the print media for distributors and for goods. Manufacturers
don't know how to make the contacts for foreign distribution. Show them your
credentials and pick them up on exclusive contracts. With a little
experience, you can market almost anything anywhere.
EXPANDING THE BUSINESS
The profit of the import/export business is in the quantity of the goods
traded. The higher the cost of the merchandise, the higher the profit from
your percentage. Since you need to go through all the steps for each
transaction, having more sales on a continual basis simply adds to profit.
Send constant mailings to your original list of contacts and follow-up
leads. You might develop a sales approach. As you develop more clients, you
can convince the bigger companies of your reputation.
Contact as many manufacturers and distributors as you can on both sides of
the ocean. And solidify these contacts. You may be able to work out an
arrangement with someone to work in a certain country for a commission. Or,
you might want to take a business trip there to personally meet with the
various companies.
Get in-depth information on the products now selling. Why are certain
products successful? Maybe you can get into the same market with a more
competitive product. Investigate ways to sell more. Do the products need to
be better made? Do they sell better at a reduced price? Know what sells and
where to get it.
MAKING IT WORK
The import/export business is a high profit enterprise. Because of the low
overhead, most of the money you make on commission is yours. But building a
truly profitable business requires dedication and a good knowledge of the
business.
You need numerous contacts who know you, respect you, and can recommend your
work. You need to have good agents both here and abroad to help you follow
through on the delivery of the goods. You need a good working relationship
with your own bank and possibly the others that letters of credit come into
as branch transfers from foreign offices.
Don't be hasty for orders. Investigate the manufacturers and distributors to
be sure the products and sales methods are reputable. Check out the
particulars of shipping and manufacturing from the foreign country. Each
culture works in a specific manner. Get to know how to work with those
people.
The import/export business is not for everyone. But it is a personal
operation that you can run yourself - you don't have to answer to anybody.
The rewards of negotiating in a foreign country are excitement, a touch of
the exotic, and the great profit potentials. When you make the proper
contacts and follow through completely with reputable manufacturers,
reliable shipping companies, and responsible distributors, you have it made.
If you are ready to put in the time, sell yourself. Start making inquiries
and contacts. Try it on for size. Does it feel good? Then MAKE IT SUCCEED.
If you need specialized LEGAL advice or assistance on this subject, the
services of a professional person is recommended.
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Our handicrafts buying managers and handicraft quality control staff see that
wooden handicrafts terracotta handicrafts, bamboo handicrafts, leather products
and Bali handicrafts are inspected for uniformity, moister content and other
strict quality control criteria. Our experienced packing and warehouse staff see
that all handicraft orders are well packed for safe shipping and maximum use of
shipping space.
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| Article on Asian Arts and Crafts
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