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Want To Start An Import Business – Here Are The Importing Terms And Documents Involved

An informative guide to understanding the terms, tariffs and documents involved with importing.

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Regulations

Regulations

All the regulations from the ingredients of what may or may not be used, to labelling are found in CTFA Cosmetic Compendium, which lays out all the guidelines, Codes of Practice and Standards for the industry. The hair and beauty industry in South Africa abides by the requirements which appear in the CTFA Compendium which you can obtain from them.

These requirements have been developed by industry, government, the CTFA and South African Bureau of Standards (SABS) and are based on the EU Directive.

Labels on Imported Products

Labels on imported products must be printed in English. The law requires that the information and ingredients must appear in one or more of the official languages.

The SABS publish a book which can be obtained directly from them which includes all the regulations that must be adhered to with regard to labelling. You can order it online or it can be posted to you.

Nicotine-based products

According to the South African Revenue Services (SARS) nicotine falls under restricted goods. It is only allowed to be imported under certain conditions.

Restricted goods can be imported to South Africa under certain conditions i.e. on production of a permit, certificate, or authority from the relevant authority.

For example, medicine (excluding sufficient quantities for one month for own personal treatment accompanied by a letter or certified prescription from a registered physician) can only be imported if there is  a permit/licence issued by the Director-General: National Health and Population Development.

Products containing Peroxide

Whether or not restrictions apply depends on how much peroxide the product contains. The best thing to do is to contact the South African Revenue Services (SARS) and explain more about the product to Customs and Excise. They will be able to provide more information based on the amount of peroxide contained in the product.

Solar panels

A permit is required to import solar panels.

Soft drinks

Approval from the Department of Health is necessary. Before you attempt to start an import business that imports any kind of food product, even soft drinks, you need approval by the Department of Health. It monitors the source of food for consumption at ports, airports, on vessels and on aircraft.

Food is detained by Customs and Excise for clearance. Entry into the country can be denied if the food does not comply with the requirements of the Act. (Foodstuffs, Cosmetics and Disinfectants Act, 1972 (Act No 54 of 1972).

Medical supplies

As a once-off situation, you would probably be allowed to enter the country with medical supplies providing you have the correct paperwork and a commercial invoice.

As it is not clear what type of products you intend to import, you would have to contact the Medicines Control Council of South Africa (MCC) and establish if you are permitted to import these products.

Complementary medicine

Complementary medicine in South Africa includes a wide range of therapies ranging from traditional practices that have only recently been regulated, to widely accepted alternative therapies that are recognised by some medical aids in South Africa.

Related: 5 Simple Steps to Importing into South Africa for Small Business Owners

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Import Export

How do I know whether my product is export-ready?

Your product has to tick several boxes before you can consider exporting it.

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I want to start exporting my product into Africa. I’ve made contact with some buyers in Nigeria and they’re interested in signing a contract. How do I make sure that my product is ready for export?

Whether or not your product is export ready depends on the buyer’s needs, your product’s ability to meet those needs, and how your product will shape up against international competition.

In order to determine export readiness, you need to research the following:

  • Your target market
  • Any potential competitors
  • The buyers themselves.

Common factors that would affect the exportability of a product include:

1. Market

Unless there is a market for it, your product won’t sell. Look at your domestic market for an indication. If you are meeting a need locally, you should be able to meet the same need internationally.

This, however, is not the only consideration. International markets are usually further away, meaning that you will have to add transport costs, and will most probably have to include the cost of import duties and taxes in the final delivery price.

2. Product adaptability

A key quality of an export product is its ability to adapt to suit an international market. Cultural differences between countries could affect the use or acceptability of a product in each country. A product name could have a totally different and possibly derogatory meaning in another language and might have to be changed for that market.

3. Cost structure

The cost structure of the product will obviously impact on its competitiveness. For example, depending on the cost of materials, and whether or not those materials can be locally sourced, international transport costs and customs duties in the importing country will collectively determine the final delivery price.

4. Competitors

The more you know about your competitor’s product, the better your position when determining your own chances of succeeding. Price is an important factor in determining success, but not the only way to compete. You can also differentiate your product by highlighting some of its unique selling points.

5. Product complexity

The greater the complexity of your product, the more important the strength of your business. Products that need a high level of support or installation assistance will need a strong local network with trained staff to support them. The investment in setting up a sales and support structure in the importing country could be prohibitive, making it unviable to export the product.

For more information, read more here.

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Import Export

How do I verify foreign suppliers?

Do your homework to reduce the likelihood that you’ll end up out of pocket.

Entrepreneur

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I run a small import business and want to find some new suppliers in the Far East. How do I establish their credibility from South Africa?

It’s essential to establish that any new suppliers that you intend to do business with are credible and reliable. Here are some ways that you can check up on their credentials:

  • Use internet trading forums such as that on eBay to establish whether the supplier has a history of being trustworthy and dependable
  • Do online research to find out more about the company, including how long it’s been in business for and how long it’s had the product line that you’re interested in.
  • What does their website look like? Has it been professionally designed and kept up to date? Does it have proper contact details including a physical address and telephone number?
  • If you can’t afford to visit the supplier, contact them by phone or email and discuss your requirements. Find out about delivery times, payment methods and ability to deliver what you need, when you need it. These discussions should give you a feeling for how professional the supplier is in conducting its business.
  • Ask for references and check them.
  • You can consider using the services of a reputable inspection agency to make absolutely certain that the supplier is trustworthy.
  • Obviously a site visit is the number one way of establishing a supplier’s credibility.

See the full article here.

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Import Export

What insurance does an importer or exporter need to take out?

Being under-insured can cost you dearly in the long run.

Carmen Pasqualle

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Can you point out some of the common insurance mistakes that SA exporters and importers should avoid?

As South Africa continues to strengthen its trade ties with countries like China, Germany, Japan and the United Kingdom, it is becoming increasingly important for exporters and importers to get to grips with the complexities of arranging marine cargo insurance.

With the rise of cargo ship accidents worldwide, including the bulk carrier Smart, that recently ran aground off the main beach at Richards Bay, exporters and importers can least afford skimping on cover, or making costly mistakes that could present their businesses with even bigger problems, in the event of an accident.

Marine cargo insurance helps exporters and importers to cover the physical damage or loss of their goods while being transported by sea. Failing to arrange appropriate cover can potentially harm a business and have a serve impact on its revenue stream.

Exporters and importers should take note of the following when taking out marine cargo insurance cover:

  • Limited cover:  Inexperienced exporters and importers often view insurance as a grudge purchase and risk not having adequate cover in place. This exposes their businesses to financial and liability risks in the event of an accident.
  • Picking on price: During tough economic conditions, exporters and importers have the tendency to shop around for cover only using price as determining factor. Businesses should rather focus on what the policy covers, instead of basing their decision solely on price. Rushing to sign a contract without fully understanding the terms and condition of the policy is a mistake. Each business is unique and has its own insurance needs. For example, a perishable goods importer will have different insurance needs to a components importer.
  • Reducing liability: Opting for lower liability, or other limits, in order to save on monthly premium costs is certainly not advisable. Exporters and Importers should seek advice from their brokers and insurers to arrange the right amount of cover for their business, as well as to protect personal assets.
  • Unaffordable deductibles: Exporters and importers should avoid opting for deductibles that they cannot afford. A deductible, commonly known as excess, is the amount that a business will have to pay upfront before an insurer can settle a claim. While choosing a higher deductible may help to reduce monthly premium costs, it is best to choose a deductible that will be affordable in the event of a claim.

Know about the general average

Exporters and importers should also be familiar with general average, which is independent from marine cargo insurance. It is an agreement between the ship owner and cargo owners, to share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole during an emergency.

General average claims can arise from the ship being stranded, catching fire, damaged engine, and when the ship is in any danger of sinking.

The 2 types of policies

Marine cargo policies come in two forms, namely, open policy, which covers a number of consignments and a specific policy, which normally covers specific consignments.

There is also an option to take out an all-risk or total loss cargo policy, which covers against all fortuitous losses.

Regardless of the nature of business, it is advisable to seek advice from a broker or insurer before arranging any type of marine cargo cover, to fully understand exclusions and avoid being over and underinsured in the event of a loss.

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