How to create an import-export business? What are the import-export rules, what are the formalities to be completed?
The idea of starting an import-export business usually comes when you already have contacts abroad or after a trip abroad.
Several steps are necessary before launching your import-export activity:
– Identify suppliers or customers abroad,
– Conduct market research,
– Negotiate prices: determine the value of the product, in order to estimate customs duties and VAT, and provide an acceptable margin rate.
– Consult the customs nomenclature to anticipate the formalities to be completed during different customs clearance: free or regulated product, marketing tests,
documents to present, customs duty …
– Search for information on the country of origin or destination of the goods:
know the preferential agreements between countries,
– Choose an Incoterm (term of the transaction): obligations of the seller and the buyer in loading, transport, delivery of goods as well as formalities and
charges (insurance) linked to these operations.
– Identify carriers and freight forwarders who will be responsible for the transfer of
– Create the business and obtain an intra-community VAT number. Register in the
community base of economic operators and obtain the EORI number
(Economics registration and identification).
The risks and drawbacks of import-export.
Import-export activities are riskier than trading activities within the same country,
Here are the main difficulties to be taken into account:
– The price structure: the prices of imported or exported goods are often pulled down to cover the costs of transport, logistics, customs clearance as well as
costs of intermediaries (freight forwarders, distributors and final retailers, etc.); margins are reduced,
– Transport risks: risk of breakage or deterioration, delay, theft or the unexpected, risk of stock shortage,
– Risks linked to quantities: imports are often subject to minimum orders, which can involve overstocking, losses and unsold products, not to mention the
– Risks related to quality: non-conformity of products, order error due to communication problems,
– Legal risks: risk of non-delivery of products ordered abroad; risk of non-payment for exported products (advance payment must be required, taking into account
difficulties in taking legal action abroad),
– Cultural risks and communication problems: negotiating with a foreign interlocutor is not always easy, and trust can sometimes be difficult to establish. The best is to make the trip, but it involves costs and time,
– The cost of insurance: indeed a good insurance will be necessary to cover all the above risks!
The advantages of import-export.
Importing goods can be of interest in the following cases:
– if the imported goods are not present in the territory of destination: the objective is to introduce new, exotic or “trendy” products,
– if a territorial exclusivity contract is signed with the foreign supplier: the objective is to be the exclusive importer or distributor of the products in question in your country,
– if the end consumer is prepared to pay for the goods at a much higher price than in their country of origin.
Exporting goods can be of interest in the following cases:
– exporting considerably increases the size of its market,
– exporting can improve cash flow if advance payment is required for orders intended for export,
– exporting little makes it possible to make certain investments more profitable,
– exporting little will increase the value of the company faster.