1. Plan Ahead
One doesn’t discover new lands without consenting to lose sight of the shore for a very long time. – Andre Gide
If you are in search of new lands to expand your business abroad, it’s a good idea to start the process of evaluating overseas markets as soon as possible.
A vital element in ensuring success is to assess your readiness and commitment to grow internationally before you get started.
Many businesses fail to plan. They rush in where angels fear to tread.
Come up with an international expansion strategy that clearly states your business goals.
Part of the strategy must include thorough market research. Questions to ask are:
- Is there a need for your product?
- Do people like what you are selling?
- Should you make changes to your existing products?
- Are there distributors you can partner with to get your product on shelves as soon as possible? Here are a few tips in how to build trust with foreign suppliers.
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2. Know Your Incoterms
If you are not willing to risk the unusual, you will have to settle for the ordinary. – Jim Rohn
When global companies enter into contracts to buy and sell goods they are free to negotiate specific terms.
The Incoterms (international commercial terms) determine who pays the cost of each transaction segment, who is responsible for the loading and unloading of goods, and who bears the risk of loss at any given point during an international shipment.
Many traders are under the misconception that incoterms rules refer to the passing of title/ownership, when in fact it refers to the passing of risk and the dividing of costs during the physical movement of goods.
In order to minimise one’s risk, importers and exporters should familiarise themselves with Incoterms. Read more about it here.
3. Anticipate Extra Costs
The road to success is always under construction. – Arnold Palmer
Most first-time importers make the mistake of not anticipating extra costs and therefore they’re not completely prepared for the financial implications of importing products to South Africa.
It will be wise to engage the services of a freight forwarding or customs broker to assist you with understanding the trade terms of an agreement, and to talk to your bank to understand the financial implications of the order you are thinking of placing.
Also, it will also be helpful to keep the following pitfalls in mind when calculating importing costs:
- Ensure you use the correct calculations for VAT or Import duties
- Ensure you have cargo insurance
- Ensure you have the right permits to clear goods at customs so that you do not pay storage fees.
If you follow these guidelines it will protect you from taking unnecessary risks that might be counter-productive. It will also create a watertight structure to expand your import and export business.
Find more original resources, leading-edge training and assistance with customs licenses and foreign exchange on Trade Logistics.