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Import FAQs

These Q & As will help you learn the key steps in importing.
June 23, 2003
URL: http://www.entrepreneur.com/article/62758

Importing can enable your small business to operate more competitively in many ways. You may be able to expand product offerings, gain an edge by providing customers with unique merchandise, or distinguish your business with great prices.

But realizing these advantages through importing requires careful attention to detail. Start learning about key steps in import planning with the following FAQs.

How much does it cost to import goods to the U.S.?
While the great silver jewelry you spotted on your last vacation may be inexpensive abroad, it will cost you much more to import it than the cost of goods and freight. All merchandise entering the U.S. must clear U.S. customs and is subject to duty unless specifically exempted by law. A document called the Harmonized Tariff Schedule details tariff rates for all goods imported into the U.S. It is available through the U.S. International Trade Commission.

If you have ever traveled outside the United States, you know that you must fill out a customs declaration form upon re-entry. It is the same for importing merchandise for re-sale. You can handle this process yourself or hire a customs broker or a freight forwarder. These companies help you estimate freight and insurance, assure proper packaging, arrange container loading and portions of documentation, and give shipping advice. Freight forwarders and customs clearance services are highly competitive. Be sure to get several quotes.

If you want to handle this part of the process yourself, the U.S. Customs Service has an Automated Commercial System (ACS), which electronically receives and processes entry documentation and provides cargo disposition information. Contact your district U.S. Customs office for more information.

Is it better to import by air or sea?
While airfreight is quicker than ocean freight, it is also roughly three times as expensive. Another difference is minimum charges. Minimum ocean requirements may be three to four times greater than air requirements, but for large volumes it is much more cost-effective. Ocean freight is also comparatively cheaper than land freight, so it is advisable to compare alternative route combinations of ocean and land transport.

The two most common arrangements for getting goods from your supplier to their final destination are Free on Board (FOB) and Cost, Insurance, and Freight (CIF). With FOB, the suppliers' responsibility stops when the goods are on board the ship, truck, or plane. With CIF, the supplier is liable for the international transport and insurance to the destination. CIF terms will likely cost more, but in some cases the peace of mind will be worth it. The customs broker or freight forwarder can advise what's best.

What events in other countries will affect my importing?
Developments to be aware of include:

How do I find out about the rules governing the products I want to import?
Check with your trade association before embarking on importing. There may be special laws that apply to your goods like food, drugs, cosmetics, alcoholic beverages, textiles, and textile products. U.S. Customs offices or any regional U.S. Department of Commerce office can also supply you with these details.

Are there any tricks regarding packing goods for importing?
Always count, weigh, or otherwise verify the quantity of goods you receive when you import.

Pack goods uniformly. If the contents and values differ from package to package, the possibility of delay and confusion increases. Whenever possible, try to have packages contain goods of one kind only.

Load cargo effectively. When shipments are consolidated it saves you time and money. And simple things, if not done properly, can cause unnecessary delays. For example, placing cargo on pallets allows for easy movement and will speed up examinations.

Establish a detailed agreement with the company you are buying from. Make sure your agreement covers transportation costs, required packaging, delivery time and storage, and insurance.

Consider using a local agent. Perhaps the best way to ensure success is to use a local agent in the country. It will increase your chances of getting a better deal. A local agent knows the domestic culture and business practices and can also help find out about suppliers.

What are the various options for structuring my importing?
Although a host of options exists, there are four common types:

Should I deal with one supplier or with many?
Even if you decide to set up a shop to sell imported rugs from Nepal, there will be many places in Nepal from which you can obtain your sales product. You will have to weigh the variety of your sales stock with the complexity of juggling multiple suppliers. In some cases the manufacturer may want you to sell only its own product line; be sure to consider whether it is extensive enough to meet your demand. You could also turn exclusivity into an advantage if you respond with a request that you be the exclusive importer in your market. Conversely, if you have only one supplier and it fails to deliver the products, you have no fall back for your customers.

Can I retain the name of goods I import?
If a product has a great name that you think will help it sell in the U.S., you may use it as long as no one else in the U.S. currently owns the right to use the name of the product. If the product is branded, make sure that trademark issues don't run afoul of U.S. law, in which prior use can outweigh filing first. For example, even if you file a trademark to use the name "Yummy Tummies" to describe the caramelized tripe you have been importing from Italy, you may be forced to discontinue using the name if another firm in the U.S. can prove that it was openly using "Yummy Tummies" as the name for its novelty round-shaped candies. Use the services of an experienced intellectual property rights law firm to help you.

How should I pay my foreign supplier?
There are many standard methods of paying for imports, each with its own associated monetary costs and risks. Four common options, ranging from most secure (to you, the importer) to most risky (which will be the most secure to your exporting counterpart) are open account, documentary collection, letters of credit, and cash in advance. Typically, a larger local bank (with its own international trade services department) can help you through the process.

The views and opinions contained herein are not necessarily those of American Express and are intended as a reference and for informational purposes only. Please contact your attorney, accountant or other business professional for advice specific to your business.

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