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Importing products
Businesses usually import products from overseas because they are not produced here in Australia, they are cheaper, or they are of better quality.
You need to carefully consider your decision to import-while a product may seem cheap to import at first, there are extra costs and risks to consider.
Importing checklist
Before you decide to import products, consider the following checklist:
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Is the product you want to import already available in Australia?
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Are there any prohibitions or restrictions on importing the product? |
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Is the product subject to customs duties or GST? |
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What is the best method of payment to use when paying overseas suppliers? |
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How are you going to distribute the product in the Australian market? |
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How much profit are you likely to make? |
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What costs will you incur to import the product? Try to identify all likely costs including transport, duties, insurance and other unforeseen costs. These costs are listed in more detail below. |
The costs involved
There is a range of costs you need to take into account to assess whether your product is going to be viable in Australian markets. These include:
- exporter's selling price-usually doesn't include transport or insurance costs
- inland transport to the point of loading-usually determined from either the exporter's or importer's freight forwarder
- port charges at the point of loading-you can find out these charges from the exporter, freight forwarder, shipping company or airline
- freight from loading to discharge-ask the freight forwarder, shipping company or airline
- port charges at the point of discharge-ask the freight forwarder, shipping company, airline or customs broker
- clearing charges, customs duty and GST-ask a licensed customs broker to quote a price for clearing your product from customs control. Your customs broker can also tell you the rate of duty you are likely to pay and if you are required to pay GST and, if so, how much
- fumigation charges-these are available from customs agents
- inland transport to your premises-ask a cartage company, freight forwarder or customs broker
- insurance-you can insure against loss or damage. This can be arranged by freight forwarders, insurance agents or insurance brokers.
Methods of payment
It is recommended that you consult your business banking manager or accountant to work out the best method of payment for your imports. The most common methods of payment are:
- cash in advance-before shipment
- letter of credit-a deal set up between you, the exporter and the banks
- sight draft-a different kind of deal between your respective banks whereby you receive the product's documents from your bank after payment
- tenor draft-similar to a sight draft but set at a future date
- open account-the exporter sends you the documents and you then pay for the product by bank draft or telegraphic transfer.
Exchange rates and transport
To minimise the risks involved in exchange rates, ask for quotations and invoices in Australian dollars rather than in local currencies. Otherwise, ask your bank manager if you can take out a forward exchange contract to cover the exchange risk.
Consider both sea and air freight as possible methods of transport for your imported products. While sea freight may have lower base rates, they may also have a much higher minimum charge. Costs will also depend on whether containers are full, the kind of vessel used and the shipment route. To make sure you get the best deal, ask for quotes from airlines, shipping agencies and shipping and forwarding agencies.
Who can help?
If you are considering importing products into Australia, there is a range of government and industry bodies that can provide you with information and advice.
- Chamber of Commerce and Industry Queensland-provides information and advice on importing products through its Tradelinks and Trade Match programs, individual consultations and international trade library (telephone (07) 3842 2244)
- Australian Customs Service (ACS) (telephone 1300 363 263)-has information on customs duties and import regulations. ACS also coordinates a Tariff Concession System where you can have tariffs removed on imported products that are not replaceable with Australian products-telephone (08) 8447 9211
- Austrade (telephone 13 28 78) foreign embassies, consulate offices and overseas business associations-may be able to offer you specific economic and cultural advice
- Quality Assurance Services (telephone (02) 8206 8001)-can guide you on whether your product meets Australian Standards and can assist with product certification.
Once you begin to import products, you can also use the services of trading banks, confirming houses (who can act as your agent) and customs agents to do much of your paperwork. This leaves you free to concentrate on the more important tasks of selling and distributing your imported product.
