Should You Import?
Advantages and Disadvantages of Importing
Once one has thought of all the benefits of importing, it is so easy to get carried away and jump on the bandwagon without exerting enough effort to see if problems crop up. Going direct to the source country may transform your company for the better or it may result in a disaster that would leave you wishing you had not entertained the idea. Here are the pros and cons to help you make a better importing decision:
Advantages of importing:
Cheaper goods or materials. This is the primary reason for importing, and it is indeed mostly true that you can get items for a fraction of the price here.
Higher quality. It is frequently possible to find items of better quality abroad, especially if you are sourcing high tech items.
More variety. There are many items sold abroad that are not available here. If you take the effort, you may be able to get new items that will sell well here.
Faster access to new items. Despite globalization, it is still faster to get new items if you are in the country of the manufacturer. So if you want to be first, nothing beats being in the factory of the item.
Better chance of negotiating discounts, exclusives and other benefits. If you are in the source country, there is a much stronger chance of bagging an advantageous deal if you can talk with the supplier in person. No technology yet can match personal presence in building trust.
Travel abroad. One of the perks of importing is travelling to exotic locations while doing business.
Disadvantages of importing:
Foreign exchange risk. There is the danger that there will be a sudden large change in the currency exchange rate. This may result in your suffering a loss if the peso falls in value. There are, however, several ways of hedging your foreign exchange risks to lessen the impact of currency fluctuations.
Piracy risk. Even if rare, this possibility must be considered.
Political risk. There are many scenarios where this may be a hindrance. For example, our government may suddenly impose a stiff tariff on the goods you are importing. This will drive up your costs unexpectedly. The worst case is if there is hostility between our country and the foreign state. This may prevent you from doing business with them.
Legal risk. This problem runs both ways. What may be legal or acceptable in your country may be a criminal or civil offence in the foreign country. It is advisable to have someone knowledgeable in that country to guide you.
Cultural risk. All sorts of misunderstanding can result from differences in beliefs and practices. This may be reduced, although not eliminated, by taking a crash course on the country’s culture and practices.
Importing products abroad is an exciting venture, but you must study it well to know if it will work for your situation. Learn more about it first. BusinessCoach, Inc., a leading business seminar provider, conducts seminars on Importation Procedures and Documentations. Contact 727-5628, 727-8860, email email@example.com, or visit www.businesscoachphil.com for details.
Click here to view details of the seminar: How to Import: Procedures and Documentations »
*Originally published by the Manila Bulletin. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.