Purchasing goods from overseas is entirely different from buying goods domestically. Trading with other countries requires different language, culture, and business practices.
People who are not familiar with trading need to be careful as the risks are high. Even though it is not easy to purchase goods from overseas, it is attractive from a cost perspective.
There are a few things that you will need to check before actually purchasing and reduce the risk of import trade failure. So, let’s get started.
First of all, you need to decide what you want to buy. If it is a product related to your current business, you should note price and quality to select suppliers.
However, if you are starting import trade as a new business, you will need to do some detailed search to find good products. Once you decide on the product you want to import, the next step is deciding which country you import from.
Choosing a country is very important. Don’t just look at the cost of the product. If the country is politically unstable, has no preferential tariffs or is too far from your country, you will lose the price advantage away.
Let’s discuss more about the distance between countries. For an example, if you buy products from an European country to Japan, it will take about 40 days to transport by sea. This makes it difficult to adjust stock control, and cash flow during the transportation period will be poor. It is also expensive for you to travel to check the production in-person.
However, if your product is unique enough to make up for the disadvantages of distance, or good enough to differentiate yours from competitors, there will be no problem. This is the case for many successful companies based in Europe or America, but the actual country of production is in China or Southeast Asia.
Some companies decide on the country they are purchasing from simply because they like the country very much. It is common for small businesses to start with that kind of enthusiasm.
Once you decide on a country to buy from, how do you find a company to buy from next? Nowadays, you can get enough information on the internet. Just enter the keywords to search, and contact the relevant companies by email or phone. One-time contact is not enough to get a reply. So if you are serious about starting a business, approach them many times.
It is also advisable to visit trade shows. Exhibitions are held in many different countries. It costs a lot of money to open a booth at an exhibition, but this usually shows the seriousness of suppliers in finding good customers or distributors. An exhibition will be a good opportunity to promote business negotiations more quickly.
If you are worried about the difference in language and business customs, it is better to use a third-party trading company specialize in a particular field. They will import the goods to your home country, so there is some cost as a margin. However, you will be able to purchase the small lot and sometimes they will stock the goods automatically, which is an advantage.
Another option that can be used is the Chamber of Commerce. This organization support companies trying to expand overseas in their respective nations. They usually provide you with information about local companies and the market situation.
Importing is less difficult than exporting. This is because you are a customer, and it is easier to find suppliers than sellers. If you are a beginner in trade, it is better to start with importing than exporting.
When finding a foreign supplier, you need to be careful about the credibility of the company. In the case of importing, there are some problems whether the company will send you the goods you paid for, product quality is followed to the specification, or they are responsible for the delivery schedule.
When dealing with companies through email, credit risks become higher. You will not meet them face to face, and you will not know if the company exists. Some companies even ask you to send more money again because of additional costs or make an unreasonable request.
If you want to find out more about the company you are dealing with, it is usually best to analyze its financial statement depending on availability.
As you can see, if you don’t have the proper trade knowledge, you could lose a lot of money.