Importing and Exporting

1. Importing and Exporting Presenter Geoffrey Hawke MAIEF, Grad Dip Bus Admin (WAIT)

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3. Important Notice • Rules and regulations, customs and quarantine requirements and required documentation are specific to each country. Free Trade Agreements also exist between a number of countries. • For Importing goods you will need to check the rules and regulations within your own country • For Exporting goods you will need to check the rules and regulations for importing goods into the country you wish to export to. E.g. quarantine for wood items without certification • It is advisable to make contact with the relevant government departments in your country or with a Freight Forwarding company who can advise you of the requirements.

4. Importing goods into Australia – customs requirements, duty, import permits, quarantine permits, treatments Extensive process - inspection of cargo, import controls for biological products, chemical fertilisers, food, live animals and reproductive material, personal effects, plants, grains and horticulture, timber; and vehicle and machinery. These steps will help your importing activities be more successful – Customs requirements Prohibited and restricted goods Quarantine requirements Assistance for importers Labelling requirements If Importing into or Exporting Australia - visit www.business.gov.au and go to Importing and Exporting for information available to assist you through this entire process. Importing - Basic Steps 1

5. These Basic Steps need to be understood before committing yourself to importing goods or placing an order. Ready to import/export? Viable market in Australia/Export Country? Market Research – need for the product (s), potential buyers, frequency of purchase? Who are your competitors? Will your product stand up to the competition’s products? Good understanding of what being in business is about? Started in business*? Begun trading? Business Plan identifying the products to Import/Export? ** *View our ‘How to Start a New Business’ webinar. **View our ‘Business Planning’ webinar. Importing/Exporting - Basic Steps 2

6. Prepare a detailed costing analysis, cost of landing the goods into Australia , determine selling price Margin remaining in the selling price - cover your business overheads? Is the selling price - competitive in comparison to those already in the market place? one that the market will bear? If unsure of this you should view our ‘Pricing, Costing and Cash Flow’ webinar. Costing/Viability

7. What are some of the costs involved for Importing an item? THE EX- FACTORY PRICE: The price charged by the Country of Origin. PLUS: TRANSIT COSTS: Inland Transport; Handling Charges; Freight; Insurances; Local Handling Charges. ADD: ARRIVAL COSTS: Customs Duty; Tariff Charge: GST; Taxes; Import Licence Fees; Interim Storage Fees; Demurrage: Quarantine Fees; Fumigation Fees: Transport to Warehouse; Certifications; Labelling. ADD: Financing Costs: Exchange Rates; Bank Charges Calculating Your Landed Cost

8. Having calculated all the costs involved, you will arrive at your Landed Cost. Important Decision: Is it a worthwhile project toprogress? If YES - what else needs to be considered? If NO - seek an appointment with a Belmont BEC Facilitator. There may be some ways you can reduce costs and/or increase the Selling Price. Feasibility of your Project

9. Bona Fide status of your supplier (Bank or Commercial references) - investigate. Obtain their Terms of Purchase. Catalogue and/or sample prices from the Supplier. Sources of assistance – foreign consulates, local and overseas Chambers of Commerce, banks, shipping agents etc. The Contract Price - reference to Inco Terms reduces misunderstanding between you and the supplier. Common Inco terms are: FOB, CIF, FIS. An information sheet will be supplied. Typically it may state “Aus 300 CIF Fremantle 2010 Incoterms”. Get a firm quotation – enquire about quantity discounts. Importing - Purchasing Arrangements with your Supplier

10. Demurrage: When you pay for extra time when your cargo is still on board and not unloaded. Inco Terms: Abbreviated commercial terms used in shipping. FOB : Free On Board or Freight On Board. FOB specifies which party (buyer or seller) pays for which shipment and loading costs. CIF: Cost for Insurance & Freight FIS: Free Into Store.In addition to freight and insurance the exporter is responsible for the cost of all entry costs, including import duty, unloading, inland freight, broker’s fees and custom house fees. Letters of Credit: Letters of credit are used primarily in international trade for transactions between a supplier in one country and a customer in another. NOTE: You need to be very clear if using Inco Terms as to who is responsible for which costs, e.g. freight, insurance, demurrage etc. Some Typical Terminology

11. Customs Broker – you may want to appoint a Customs Broker to allow a trouble free clearance of goods through the Customs and Quarantine processes. Obtain some quotes to decide whether to do it all yourself. A useful website is Customs Brokers and Forwarders Council of Australia: www.cbfca.com.au Australian Quarantine Service/Customs Service: www.daff.gov.au/aqis To identify if any special importing requirements apply, contact AQIS and Australian Customs Service who will supply the relative information: www.customs.gov.au It is a good idea to build a good, strong working relationship with the relevant Government Trade Departments of the Country you are importing from / exporting to Getting the Goods into Australia

12. The goods will require to be paid for! Identify the currency in which the transaction will be undertaken. Currencies fluctuate daily, liaise closely with your Bankers. Foreign Currency Accounts - purchase foreign monies in advance when the exchange rate is favourable. Letters of Credit for purchase can be issued. Other services may include: Payment Guarantees; Business Loans to buy stock. Success of your relationship with your Bankers depends on the quality and depth of information supplied. Business Plan - essential item Early discussions about your intentions are also a prerequisite to ensure success in placing an order. Your Banking Relationship

13. Check with Customs before placing the final order On the basis that everything checks out okay, you can go ahead to place the order, ensuring the following terms and conditions are clear to both parties- product quality; specifications; quantity; price; price basis; payment terms; date required; freight arrangements; related costs; and the documentation is in order Advising- Now advise your Customs/Freight Broker with whom you have been closely liaising Your Banker’s too will need to be informed as they are likely to be paying for the goods! Placing the Order

14. The transportation has gone smoothly, the goods have arrived at your nearest port or airport. Either Customs in your country (or equivalent) or your Customs Broker will contact you to clear the goods. INSPECT THE CONSIGNMENT! Or have it inspected - particularly for insurance purposes. Only give a clean receipt for goods once you are satisfied as to the quality, quantity and condition of the goods. NOTE: This process may vary greatly depending on the terms of purchase. It may be necessary to inspect goods before leaving the supplier or receiving some kind of assurance that what you have ordered is what you receive. These essential controls will be best dealt with during the early stages of negotiation and when you are choosing a supplier. Receiving the Goods

15. Provided you have taken precautionary steps along the way and followed the basic steps outlined, the exercise should have arrived at a satisfactory conclusion and you will be ready to distribute or directly sell the goods that you have imported. Conclusion - Importing

16. Start with the domestic market. Build success in your domestic market. Become a strong competitor in the domestic market. When ready, entering the international market can lower your costs of production. An increase in supplies lowers the cost of production per unit of product. Plan your entry into other markets. Research, research and more research - every Country has its idiosyncrasies and local customs; ways of trading; purchasing and “doing business”. Take time to understand the market into which you are going to export. Exporting - Preparatory Steps

17. Building relationships takes time. Do not expect things to happen overnight. Plan a progressive entry into the market. Develop potential export partners. Visit your markets (if you are originally from your intended country of export this can make the process less daunting as relationships, local business customs/practices etc are already familiar to you). Understand the regulations of the country in question. Investigate possible Australian Government Export Support programmes (or support programmes/funding in your country). Above all: BE PATIENT! DO Your Research thoroughly. Commitment

18. What is EMDG? The Export Market Development Grants (EMDG) scheme is a key Australian Government financial assistance program for aspiring and current exporters. Administered by Austrade, the scheme supports a wide range of industry sectors and products, including inbound tourism and the export of intellectual property and know-how outside Australia. The EMDG scheme - encourages small and medium sized Australian businesses to develop export markets. reimburses up to 50% of eligible export promotion expenses above $5,000 provided that the total expenses are at least $15,000. provides up to seven grants to each eligible applicant. Applications for EMDG Grants to be lodged by mid-night (AEST) Monday 1 December 2014. Later time frame with EMDG Consultants http://www.austrade.gov.au/export/export-grants/what-is-emdg Australian Government Export Support

19. Visit www.business.gov.au and then Grants & Assistance Finder you can search for grants and assistance that is available by state or territory. Detail is provided on each listed program including which businesses may be eligible. Export Finance Navigator will help you finance, grants and tax concessions - http://www.exportfinance.gov.au/Pages/Home.aspx If outside Australia, your Country may have similar information online, or available from the relevant government department. Australian Government Export Support

20. Consider how you deal with faulty items, poor quality/spoiled goods and returns Logistics (in Western Australia) – look at satisfying a purchaser’s needs in the Perth Metro Area; further afield in Western Australia, other states of Australia; internationally Progressively extending outside your local area, logistic issues become apparent and a way of solving them becomes clear Develop links initially via the Internet - potential markets, suppliers, regulations and products Nothing beats the personal approach Telephone, make a visit - developing the personal approach works wonders in exploring potential (both as an importer and exporter). Export Logistics

21. This webinar has only intended to give an overview on the subject of importing and exporting and to give some basic steps and tips to fulfilling your goals. As mentioned previously, if you are located in a country other than Australia and are seeking to import goods, you will need to check the rules and regulations in your country. For exporting goods you will need to check the rules and regulations for importing goods into the country you wish to export to. It is advisable to make contact and build a relationship with the relevant government departments in your country or with a Freight Forwarding company who can advise you of the requirements. Conclusion

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