Dummies Guide to Importing - Part 2

In part 1 (written over a year ago...!) we looked at the information required to ensure that you can get an accurate freight cost for goods coming into the UK.

As mentioned in the article, freight costs are often the largest chunk of the bill, but what else is there to consider? Most obvious:

Products and Suppliers

When thinking about importing you are probably in one of 3 camps:
1. You have an existing product and are looking for outsourced production to cut costs
2. You have an idea for a specific product and are looking for outsourced production partner
3. You are a "trader" - looking to make money on the transaction of many different types of goods

Existing products:

In the UK we often hear about the decline of manufacturing with many businesses unable to compete with the low cost base of overseas production. This is a fact, and it is not going away. There are still a great number of (mainly) small businesses that are still manufacturing goods in the UK, and there will always be niche areas where production lead times outweigh the emphasis on cost, but there are many that are afraid to look at overseas partners and are facing difficult times as a result. So how can you limit the risk of outsourcing?

Like any business transaction, it has to come down to your trust in suppliers to deliver on their promises. Just because the supplier is on the other side of the world, it makes no difference. Some tips to get started:

Meet face to face: You can never underestimate the power of going out and meeting potential suppliers face to face, preferably at their premises. It gives you a chance to start building a relationship and getting a feel for the people involved - just the same as you would do if it was a local business.

Be culturally aware: There is a need to be culturally aware of differences between Western and Eastern cultures as this can be the first stumbling block to building a healthy relationship. Just making the effort to understand is often appreciated by the supplier and can help to build the initial bond. For example, in China it is considered rude to discuss business over a meal, when it is the normal thing to do in Western culture. Also (my favourite) never finish your meal completely in China as it is seen as an indication that you are still hungry! Have a look at www.cybor.com/besite/ for more tips on this

Use your Bank!: The financial transaction is the most worrying part for most people. If you have a good relationship with your International Trade team at your bank, they can be an excellent source of ideas and information. Trade finance of some type is a pre-requisite for most larger overseas transactions whether it be a Letter of Credit or another arrangement it offers a safeguard for both parties.

New Products:

One of the greatest additional fears of having new products manufactured overseas is the protection of your IPR, and rightly so! There is an excellent article here written by the China-Britain Business Council, and the same is true of any supply overseas. Do not suspend your common sense and business sense. Check your suppliers thoroughly or even better go into Joint Venture or a "Wholly Foreign Owned Enterprise."

Traders:

The key to being a very successful goods trader is spotting the potential in a product before anyone else does! Again, it comes back to the face to face approach. If you are serious about trading goods you need to visit the country you plan to source from and meet your contacts face to face. There are a huge number of trade shows in India, China and many other emerging markets and these are a great place to try and look for the next "big thing." Again, do not suspend your normal due diligence just because of the distance.

Some people rely on a google search or a website link to find a new supplier, and for very small businesses and speculative trading it may work.......but it may not...! The risks lessen considerably if you make the effort to see how things work on the ground and understand them. Do not be afraid to ask people for advice - use your Bank, your Chamber of Commerce, your Logistics company, your friends, anyone with the right experience could savee you some painful experiences!

Please let me know if you found this information useful, and I am always happy to answer specific questions and offer advice.