Importing into Australia
Importing is often thought to be easier than exporting and perhaps in some ways it is but there are many traps for the unwary and inexperienced.It is important that you understand the basic steps:
- BEFORE thinking about placing an order on your overseas supplier, remember that you don’t have to be an expert in all facets of importing. Professional advice is available from your Customs Broker or Forwarding Agent or the Chamber of Commerce and Industry.
- A useful way of gaining an insight into the processes involved in importing is to attend the International Trade (Import/Export) Course put on periodically by the College of International Business.
There are numerous reasons for importing goods. Perhaps you need to import a piece of capital machinery to be used in your company’s operations, or perhaps the imported goods are components or inputs to be used in a manufacturing process.
The most common reason is to import for resale (and this is the side of importing we will concentrate on). Whatever the reason, it is important that you accurately determine the landed cost, i.e. the cost of the goods delivered to your warehouse, before you place an order.
The list price of a product in Taiwan or Argentina for example may seem unbelievably cheap, but with on-costs (e.g. freight, insurance, import duty,Gst tax, bank charges, interest, etc.) the product might not be competitive on the Australian market, even before allowing for your profit margin.It is important that you do your homework first. Having a firm idea that there is a real potential market in Australia for the type of products you wish to import.
Obtain a catalogue and/or sample plus prices from the supplier
The initial contact with a product may come through personal experience on an overseas trip or by contact with a supplier at a trade fair on a trade mission.
Other sources of assistance include foreign consulates, overseas Chambers of Commerce, banks, shipping agents etc.Before proceeding with an order it may be prudent to obtain Bank or Commercial references as to the integrity and ‘bona fides’ of the supplier.
Having obtained what appears to be a satisfactory source of supply the next step is to get a firm quotation.Remember to enquire about quantity discounts. Some suppliers may also help to provide assistance with initial marketing expenses, particularly if a new market is being penetrated.
The price should be based on, and include a reference to, Incoterms (ICC publication – available ) e.g. US$100 FOB Hong Kong 2015 Incoterms or A$500 CIF Melbourne 2015 Incoterms.
A reference to Incoterms in the contract price reduces the likelihood of misunderstandings between you and the supplier in transporting the goods to Australia. You should familiarise yourself with the technicalities of Incoterms.
If you require a CIF price, make sure you also ask the supplier to provide you with the FOB price, which will be needed to determine import duties & Gst tax that is payable.
By having both prices you can compare the freight/insurance rates you are able to obtain against those of the supplier.The price should be quoted in Australian Dollars or another major currency.Exchange risks are eliminated if Australian Dollar quotes are used.
Apply to your Customs broker
Apply to your customs broker for a classification opinion, import duty rates, gst tax rates, import restrictions and tariff concessions (if any) and quarantine requirement (if any): imported food will probably require Australian Quarantine certification, wooden items may require fumigation certificates.Note that import quotas no longer apply when importing goods into Australia.
Obtain freight and insurance rates.Obtain a freight rate from a freight forwarder, shipping company or airline. Obtain an insurance rate from a marine cargo insurance company; your freight forwarder may also be able to arrange this for you.
If you have been quoted a CIF or CIP price compare the insurance/freight components with those you have obtained. Remember also, that it may be easier to execute a claim with you marine insurer than with the Australian agent of exporter’s marine insurer.