How to import successfully
Key points in this article
- Importing can result in lower prices, new products and new channels
- Seek advice before making any major currency purchases
- Carefully draw up a supplier contract to avoid increased risk
The benefits of importing
Sourcing from the Asia Pacific region is often cheaper than buying locally or manufacturing yourself, particularly for smaller volumes. You may also get competitive hourly rates offshore for services like accounting, customer contact and software development.
New or exclusive products
Importing can give you access to materials and finished goods that aren’t available in your home market.
Research new potential with trade shows, suppliers and online. Also ask your customers – some people will always prefer Italian tiles.
Diversify your channels
Overseas suppliers can reduce your reliance on local sources, especially where climate or other geographical factors are relevant. Or could your business get the edge on your competition by gaining additional skills and expertise from further afield?
There are a number of benefits that are associated with becoming an importer
The pitfalls of importing
The stakes can be high if things go wrong with importing. You could be left out of pocket if a large order goes missing, or face problems if quality's awry.
You’ll need to consider:
- Cash flow – Keeping control of cash through supply delays, new payment terms, larger minimum orders
- Distance – Secure supply, ensuring you receive and pay for exactly what you ordered, maintaining relationships from afar
- Foreign exchange – Which currency to trade in, variations in exchange rates and inflation, secure currency transfers
- Reputation – Does moving away from ‘Australian made’ dilute your competitive advantage?
Government – Staying abreast of import regulations, permits, quarantines, duties and taxes at point of export and import. Find out more at the Government’s trade, import and export site.
Make sure you get the right advice before considering trade in foreign currencies
Finding and dealing with overseas suppliers
Go to international trade and gift fairs to research and make contacts. Searching online is cheap, but visiting in person always helps – you just need to weigh up the costs. Before you visit a country or start importing, increase your chance of a match by:
- asking your contacts to personally recommend a supplier
- seeking advice from industry associations, Chamber of Commerce, trade shows, international delegations and interest groups
- using Austrade, which assist Australian businesses to succeed in trade.
Sole agency or distributorship
Consider asking to become a sole agent or distributor. You’re more likely to gain a sole agency if you can offer the supplier an established business, good industry contacts, and the commitment and business skills to promote their products effectively.
The logistics of importing
Duties, tariffs and restrictions
Find out if the type of goods you want to import attract duties or levies in Australia through the Australian Customs Service. Everything imported into Australia has GST added to it so visit the Australian Tax Office page on GST and Imported Goods to learn more.
Product compliance risks
Investigate restrictions on the products or services you wish to import. For example, electrical goods or children’s toys would have to meet Australia’s safety codes and standards.
Quality control in offshore manufacture is a constant concern – establish a relationship with a local quality control agent in the country of manufacture to help reduce risk.
Payment and currency risks
Make sure you understand the methods of payment and how a fluctuating exchange rate can impact on your profitability. It’s always a good idea to seek advice before making any major currency purchases.
International terms of trade
Carefully draw up your supply contract so the overseas supplier is clear about expected quantities, quality standards, delivery deadlines and how payment will be made. You’ll also need to consider insurance cover for cargo in transit to Australia.