How to Succeed in Your Import-Export Business - Hoshino Shiro

How to Succeed in Your Import-Export Business

How to Succeed in Your Import-Export Business

International trade is a very flourishing and varied sector which notably offers import-export services. The objective is to offer any type of possible and imaginable merchandise (and also transportable) that can travel across the four corners of the planet. 

But also that the economy of a country continues to turn thanks to a system where companies send products with which the country is abundantly endowed (and which they generate profit) and that it appropriates other goods that this same country would not necessarily have.

Import-Export Business Tips

Of course, this is only a tiny part of what is international trade and more precisely of import- export. The import and export industry is one of the most developed industries in recent decades. The process of selling and buying goods is not new in itself, but it has been practiced for centuries when merchants exchanged their goods and services from one country to another.

There are still things that have changed today, including the “ease” or rather the accessibility of doing business. Better transportation management and larger-scale opportunities with good government support to promote the export of goods and services from one country to another are in order and commonplace in order to incentivize and welcome any person wishing to invest in the field.

This article therefore dwells on some advice so as not to commit certain mistakes that one could make when one decides to create an import-export company. Good reading !

The constantly evolving field of import-export

If there's one piece of advice you should immediately take into consideration, it's that before you even start doing business in the international market, you need to have a thorough knowledge of the sector. You have to know and study your sector.

Not having the right import and export knowledge can lead to costly mistakes for your business. It is true that starting to invest in import-export makes it possible to achieve high profits for anyone wishing to develop their business on a global level.

However, we must pay attention to all these small errors that we can commit and that we must not ignore. Indeed, a single small error can potentially lead to bigger errors and thus reduce the profit margin that companies can obtain through importing or exporting.

We are therefore going to start with some tips to avoid these errors in import-export. Then we will continue on the explanation of other points that must be known and not omitted.

Lack of import-export knowledge

The first step is to understand and apply the regulations of a country. When you start in this sector, it is common that you make this mistake as an importer. Indeed, do not think that we can send any goods to a foreign country. 

Each country has its own standards and regulations for each product and you have to be careful to respect them so as not to pay more than necessary and in the worst case have the goods returned because they do not comply with the standards. of the country to which we export.

Some countries voluntarily limit the import of certain products and this should be known and kept in mind.

It is therefore absolutely necessary to carry out research and therefore understand these standards, thus allowing an exporter to save a large amount of money and even his products.

Of course, each country has its own regulations but the field of international trade itself is closely monitored and regulated. So do not think that we can easily supply any product on the international market.

It is necessary to know the regulations and standards with regard to import-export in order not to suffer a significant loss due to carelessness.

There are certain conditions that the International Chamber of Commerce (ICC) has put in place to make sure that business done in the import-export business goes smoothly. It is therefore essential to understand the basic rules of import-export before entering the world of international trade. They must also keep in mind specific information such as country codes but also the procedures put in place by the customs office.

Unfortunately if you neglect this step can lead to problems such as an unexpected increase in costs, penalties, reduction of profits or delays in deadlines.

Overlooking the importance of incoterms

Incoterms are simplified terms created to facilitate the exchange of goods. They have been defined by the International Chamber of Commerce and it is one of the most important principles to master in the transport of goods abroad. 

They are therefore abbreviated to three letters (EXW, FOB: free on board, FAS: free alongside ship, etc.), each of which has a meaning and designates the way in which the goods will be transported.

If you want to start in the field of import-export, you absolutely must know the usefulness of each incoterm because they will allow you to know what risks you run in transporting the goods yourself or if it is better to leave this work to the supplier.

But also, since there are several kinds, finding the incoterm that suits the type of trip you want and overcoming the risks involved in handling the goods, which will save you a few pennies.

Signing a contract without confirming the legitimacy of the buyer or seller

It must be said that there are really a lot of people, especially small traders and manufacturers who wish to develop their activities in international trade.

However, they generally tend not to pay attention to the importance of verifying contract information. And therefore check the reliability of the importer. If you do not go through this crucial step, you unfortunately risk suffering losses.

There are many examples in international business where one party is unaware of the existence of the other party involved in the business. Later, we realize that the customer or the supplier with whom we started doing business was not legitimate.

This is a preparation step that helps avoid fraudulent providers and scams. Indeed, it is possible that some companies try to lure the importer or exporter with fake company profiles and fake product portfolios

Understanding your customer is your right, whether in an international or domestic market, and verifying the credibility of a buyer or seller with the relevant authorities will help a business minimize the risk factor and maximize profit.

Customs, insurance and exchange rate

Choosing the right customs broker

An incompetent customs broker increases the risk of losing money. Let us first recall that a customs broker ensures that all goods and activity in the import-export sector actually comply with the standards and regulations of the importer's and exporter's countries. 

In other words, he checks that everything is in order for everyone. Moreover, they indicate whether one is ready to import or export the products or not. If this is not the case, he is there to guide the negotiations between the two parties.

It is essential that you choose the right customs broker so that he can verify all the necessary documents and that all goods meet the legal standards of a country. All this in due time.

Thus, it is essential to contact a reliable customs broker. It is even recommended to carry out an additional verification with the competent authorities in order to be sure of the satisfaction of his work with your company even if it means paying a little more, this will save you much more than an incompetent broker who wrong on the calculation of the customs value and customs clearance which will result in huge losses but also potential legal problems.

Finally, do not choose the “ease” in terms of declaring the customs value. Do not attempt to falsify the true customs value. Do you think that if you undervalue your merchandise it will reduce costs and therefore bring in more profit? Certainly but it is very risky and it is really not worth the cost to do it.

Indeed, the customs are very picky and if ever you are the subject of an investigation or control, the competent authorities will initiate legal proceedings and this can have very serious consequences. You must therefore pay the necessary customs duties and taxes.

Insurance of goods supplied or imported

Insurance is a very important factor when talking about import-export. Indeed, it makes it possible to ensure that the goods have arrived safely, which is unfortunately not always the case.

Indeed, it is possible that you suffer losses if something happens to your merchandise, whether intentional or not. Your goods may very well be stolen, or your merchandise damaged due to an error or bad weather.

It is very common that products which travel by sea freight in particular arrive damaged by the trip for example. In this case, if you were kind enough to take out insurance, after a procedure, you can be compensated for the losses

This insurance is taken out by the importer himself or by the transport authority. It is therefore important to insure your goods, even if it costs you a little more. It is not an exorbitant price either and therefore helps to secure your products. This requires proper documentation between the consignee as well as the shipping company.

Pay attention to exchange rates

When you trade internationally, you necessarily trade with foreign countries. It is therefore good to find out in advance about everything concerning this country and in particular the exchange rates. Generally, some tend not to look into it because these traders neglect the risks involved and only focus on the profit margin they can obtain. Do not forget that the rates are not fixed! They fluctuate all the time and it can cost you quite a bit.

You must therefore imperatively focus on the exchange rates and carry out a kind of "tracking" for a period of 30 to 90 days in order to wait for them to stabilize and thus make more fluid transactions and higher margins.

Country codes and world port codes

Nowadays, international trade evolves like any other trade or service. The era of digital and digital prevails and we must use it. They allow to obtain new opportunities, to have a better organization and to supply its goods more quickly. It should be noted, however, that this considerably increases the competition.

And as said before, you absolutely need a good knowledge of import-export and international strategies. It is necessary to carry out research work beforehand, to start collecting certain specific data and to make the essential decisions.

And how do we find this information? You can simply seek help from an import-export data provider. Indeed, it provides data services on trade data and on international trade in general.

It will therefore teach you that you will need to know codes. These are international recognition codes that are used electronically or administratively for customs nomenclature in particular. They are used to encode countries in order to process information more easily. These are called country codes.

Now suppose you already have a business in the international trade sector and you already have an HS call code. Well, normally you should already have a fairly good knowledge of most country codes and world port codes. They are important for establishing relationships with international exporters and importers. But this is the best case scenario, because most of the time it is difficult to find the information for new traders who are starting out.

So it's better to understand how they work. So, to begin with, thanks to the country codes, you will be able to more easily find the information on a shipment as well as its country.

When it comes to country codes, if you want to check a country's best imports, you need to know its country code in order to get the information you might need for your business.

Here are some examples :

  • India: IN or IND
  • Hong Kong: HK or HKG
  • France: FR
  • United States: US
  • China: CN

Now let's look at the world port codes. By using them, you will be able to verify the entirety of a shipment from a specific port in a reasonable, of course, and non-intrusive way.

This is usually done on a web portal on the internet and this code is provided to you by an import-export data provider. You will then have the possibility of recovering information which you will surely need. The port code consists of six characters.

The advantages of setting up an export business abroad

This is one of the many possibilities available to you when you start importing and exporting. Indeed, if you decide to expand your company and enter the international market, it can bring you many long-term benefits.

If you decide to expand your business worldwide , it will increase your profit potential more than if you only do business in your own country. It's a kind of restriction, you don't take advantage of new foreign customers and it restricts you to new opportunities.

You can then take advantage of the fact of exporting your products in order to have them discovered abroad and thus avoid a potential saturation of the market or a drop in demand in a case where competition is strong on a national market.

In addition, it is preferable to develop its activity on the international market in order to “ secure” itself in a way. In other words, if it happens that a national economy unfortunately runs out of steam, you will always have the possibility of developing your goods and services on the international market and thus avoid losses.

This therefore makes it possible to reduce the risk and balance your gains in the event of a difficult economic situation, a kind of spare wheel.

One last point can be added to this paragraph. National economies fairly favor companies involved in international trade. They tend to provide aid or bonuses to encourage companies to export.

FAQ | How to make your import-export business successful

What is international trade?

It is an expression that groups together all the flows of goods (goods) and services traveling between different countries. It is not just an exchange of goods and merchandise, but also flows of commercial services. A whole system of standards is created to regulate this whole system.

How to create an import-export company?

Well, as said in the article, you absolutely have to organize yourself before you even start your business. You have to find your suppliers, what products or services you want to export or import. After that, like any other business, there is a whole administrative process to be carried out. The job of trader being accessible to everyone, you just have to carry out the process to create your business normally. (Drafting a business plan, choosing the legal structure of the company, the name, the logo, etc.)

How to find a good supplier?

It's true that there are tens of hundreds of providers around the world. And you have to choose it well if you want to do good business. In recent years, the creation of marketplaces such as Amazon or Alibaba has made it a little easier than looking blind. The best is still to choose a supplier known in his field and reliable and who has experience with other buyers. Of course DocShipper can help you find these suppliers and advise you.

Is there a cost to starting an import-export business?

It depends on a lot of things but in general no. On the contrary, you will have every interest in getting started, given the profits you can generate if you prepare well and follow our advice. This also depends on the legal structure you choose for your future business (depending on the status, you will have to put a certain sum as a shareholder for example) There are always costs when starting a business, indeed and they may vary but these investments are worth it if you are successful in your business.

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