Successful importers follow 4 simple rules
22/Jul/2014 • International Trade•
Ebury is helping SMEs grow their import businesses by encouraging the smarter use of trade finance and better understanding of global trade. Does your business benefit in these four key areas?
Importing goods is difficult. “The number one challenge that our members listed… is bureaucracy,” Ted Dean, American Chamber of Commerce chairman in China told the press. “Members are saying that licensing procedures have become more difficult.” This is not just a China issue: intellectual property rights, language barriers and cultural differences can all complicate matters.
Successful importers follow these four rules.
1. Building relationships with trustworthy suppliers
Your business is only as good as your suppliers. A good supplier ships on time, delivers good quality merchandise or services, and helps smooth the process of importing. To reach this point, one needs to build a trust relationship. This is hard and takes time; especially with countries with vastly different cultures like China or India. Getting to know suppliers personally makes a big difference, and seeking the best personal references is crucial.
2. Understanding how to trade
International trade is complicated by many factors, such as incoterms, customs and local regulations. Less experienced importers can benefit from guides, such as trade forwarders, and legal companies who can help you understand your rights and obligations. Import agents within the UK and freight forwarders can relieve the pressure on smaller businesses by providing more cost-effective solutions to importing. The key is to negotiate a very clear contract concerning payment and delivery terms. Any contracts with foreign third-party services have to use internationally agreed legal terminology; a specialist legal company will be able to help make sure the contract adheres to protocol. Contracts will also cover factors like currency for payment, and payment or finance terms.
3. Turning currency risk to advantage
Dealing in foreign currencies over a period of time and in large quantities brings an element of risk: one is exposed to fluctuations in the currency market that can affect the bottom line. Good risk management means putting proper policies and controls in place that protect your business from currency volatility, but it also offers the chance of finding opportunities in your business as an importer. Hedging currency is a common practice, but needs a trusted provider.
4. Finding flexible finance partners
If your finances are limited, you may prefer to deal with suppliers who offer credit. On the other hand, being a cash buyer can help negotiate a competitive price – for example, being able to pay cash in Renminbi in China could land a discount of up to 10% off the already negotiated price. Finding a trade finance solution, such as the one offered by Ebury can help secure these discounts.
If you are interested in how Ebury Trade Finance can help your business, apply now.