The following article aims to
assist would-be businessmen and beginners who intend to promote and sell their
products or procure their stock in trade, capital assets, to or from the
international market, respectively.
IMPORTATION:
1. Register your business and ensure that all
licenses and other legal requirements have been complied with.
2. Obtain a list of suppliers dealing in the
products you wish to import and select the most dependable. Do a comprehensive
research on the industry. This can be done with the assistance of your bankers
through their correspondents overseas.
3. Obtain a pro-forma invoice or firm offer from your selected supplier. Make sure that their quotation includes, among others, the terms of shipment such as FOB, C&F, or CIF.
Payment for imports can be done in the following manner:
a.) By Letter of Credit (L/C)
Once you have agreed with your supplier on the pricing and other terms and conditions of your purchase, open a letter of credit with your bank.
Depending on the agreement with your supplier, the L/C can either be sight or usance, revocable or irrevocable, confirmed or unconfirmed.
Under a sight L/C, payments for the goods are made upon presentation of the documents from the supplier through your bankers (which is commonly the L/C opening bank) regardless whether or not you have received the goods imported.
Under usance L/C, payment is made at a later day, after 30, 60, 90 or 120 days. A revocable L/C is one which you can revoke even without the consent of your supplier.
A confirmed L/C is one by which the L/C advising bank, by virtue of their confirmation of the L/C, is liable to pay your supplier the value of the imported goods should the L/C opening bank be unable to pay your supplier for some reason.
b.) By Open Account (O/A)
Payment is made at a later
date depending on your agreement with the supplier.
c.) By
Documents Against Payment (D/P)
Under this mode of payment, you have to effect the payment of the imported goods upon presentation of the import documents by the bank.
d.) By Documents Against Acceptance (D/A)
Under this mode, the documents are forwarded to you through an appointed bank in your locality and upon your acceptance, (i.e. signing the relative document signifying your acceptance of the liability) the bank then surrenders the documents to you, and payment will be made later, after 15, 30, 45 or 60 days depending on your agreement with the supplier.
e.) By Prepayment
Advance payment must be made
before supplier ships the goods.
Note that the basic import documents consist
mainly, but are not limited to, original Bills of Lading (B/L) or Airway Bill;
original Commercial Invoice; original Packing List; or any such other original
documents which you may require.
These documents are necessary so the importer can secure the release of the imported goods from the shipping/airline companies and customs authorities.
EXPORTATION:
1. Register your business ensuring that all
requirements have been complied with.
2. Choose the products that you are going to
export and ascertain from the difference governmental agencies that these are
not banned items.
Where necessary, obtain a list of all the documents that are required especially for regulated products. If you produce or manufacture your own products for export, know your production capacity. If you subcontract the production of your goods, know the production capacity of all your subcontractors.
3. Open an account with a bank with international connections or one with correspondents in the locality of your customers.
4. Where necessary, obtain a
background check of all your would-be customers through the aid of your
bankers.
5. From new buyers, always insist on prepayment
before you ship your goods.
6. If you agree on payment by Letter of Credit (L/C), ensure that the L/C is irrevocable and at sight.
7. Try to understand the
different modes of payment for international trade, as discussed above, under
Importation.
This is a simple step-by-step guide on import
and export procedures. While requirements may vary from country to country, the
general and basic procedures are essentially the same.
Why do people sell overseas?
There are a wide range of reasons and benefits of selling and buying products overseas, they include;
- Obtainability
Certain things are not easily obtainable or not available at all in a country because they cannot grow them.
Such things like some fruits such as bananas, vegetables, lumber, and a whole lot of things make selling overseas necessary. To be able to obtain the benefits derived from such things, a demand for the product oversea is pertinent.
2. Profitability
To be able to maximize profit and also improve the financial performance of a commodity, selling overseas is very necessary.
Selling some products in just the country of origin can be profitable but not as profitable as when they are sent out to a different country.
Depending on the demand of that commodity in the buying country, you can make a lot of profit as the selling price would be to your benefit.
3. Prestige
A wide range of things like champagne, French perfume, Scandinavian furniture among others are usually imported for the image they represent.
Even if those products can be produced locally, the imported ones are seen to be prestigious and classier than the local ones.
4. Business growth
Selling overseas creates opportunity for the growth of business. Despite the sector of trade and size of the business, bringing the products of the business to the international market enables the business to grow rapidly.
There will be increase in demand of the product as it is not just demand of the country that needs to be satisfied but that of people in other countries of the world.
This business growth will in turn result in the growth of the managers of the business, down to the local community and the growth of the country at large.
5. Price
Price is another major reason why people sell and buy oversea. As said earlier, some products cannot be produced in certain places. Producing them in places where they are not easily available can be quite expensive.
Therefore, buying such products like cloths, electronics, and so on can be cheaper when they are bought out of the country.
Generally, countries import goods that are efficiently produced in another country and then export goods that they cheaply produce.
The major reasons behind the above description include the availability of the resources and then technology.
Certainly a country might have the raw materials needed for the production of certain products but not have the right technology for the production.
It is now a clear fact that goods produced manually are more expensive than the goods produced using advanced technology.
6. Boost of profile
A wide range of companies and countries sell oversea in other to boost their general profile both home and abroad.
Import and export is a global business and companies and countries involved in the business are invariably known globally for the product and services they offer.
Depending on the quality, usefulness, high demand and availability of their product, the profile of the company engaged in the export will boost in a short time and this brings about high patronage even locally.
Players in import and export business
There are different types of import and export business which include;
- Import and export merchant
Import and export merchant is known as an international entrepreneur that acts as a free agent in the market.
Merchants do not specialize in the import or export of any particular product; instead, they look out for any trending profitable products.
They buy the products directly from the manufactures either locally or abroad and then packages, exports and resells again. Merchants bear profits and risks involved in the business alone.
2. Export Trading Company (ETC)
The duty of an export trading company is to find out the demands of foreign buyers and then look for domestic manufacturers that have the willingness to export.
The export trading company connects the two companies and then collects their commission. In many times, they claim ownership of the products in question.
3. Export Management company (EMC)
The EMC is a great player in the import and export business as they aim majorly at handling all aspects of export of any company in their domestic locality that wants to export but does not know how to.
The aspects they handle include but no limited to packaging, financing, distributing, advertising, shipping, marketing, and represents the products generally.
There are many ways the EMCs receive their pay but it all depends on agreement. Some of those ways include either by retainer commission, salary or even commission.
Conclusion
It is only through import and export that goods produced in a country gets to other countries of the world. No doubt, import and export has improved the lifestyle of many in different countries.
Another good thing about import and export is that it doesn’t take much to start it up. The ideas here will be of help to beginners in importing and exporting products.
