|
Colette: We’re speaking with Kelby Woodard of TradeInnovations.com. We’re talking to Kelby about how to limit liability when you’re importing inventory.
Colette: Kelby, we kind of got that scare factor out there, the buyer is responsible. You need to make sure you know what you’re getting yourself into. But really, when it comes down to it there are a lot of great things you can do to get yourself into importing and it’s a lot simpler than a lot of people think it is. Can you give us some tips about that and how to consider these regulations and what we can do to make sure we have all our bases covered?
Kelby: Absolutely. In fact, I absolutely agree with you, the benefits far outweigh any of the difficulties that you’re going to have in the importing process. The key is to go into it with your eyes wide open and understanding that there will be hiccups along the way, but the benefits will definitely outweigh those hiccups. The first I would do is start off in phases. If you’re just beginning to start off importing don’t just automatically go to the internet and find somebody in China who says they manufacture your product and then just make an order. You do need to do your do diligence, whether it’s you personally, as we discussed a little bit earlier, or whether you use an expert in this particular area to help you through this process. The second piece is consider sourcing from a country that is a little bit closer to the U.S. during your first time, whether it’s a country like Mexico or a little further south in South America, because those countries have a little bit easier logistics into the United States sometimes than the Pacific and coming from Asia. In fact, what you’ll find is some of the benefits in sourcing from Asia are beginning to wane because of increased logistics costs out of Asia and increased costs at the U.S. ports who are handling goods from Asia. So is potential for competitive advantage here by using other countries, particularly countries that have free trade agreements with the U.S. in which you’re not going to pay any duty whatsoever on products that you bring in. Countries like those in the Caribbean basin, those in Central America and of course, NAFTA countries like Mexico and Canada. There is a real competitive advantage for those countries because of the duty issues and the fact you don’t have to pay taxes on those. So those are two ideas when you’re first starting out that are pretty key to a successful import operation.
Colette: Those are two great points of advice. Using those free trade countries there are even more benefits in there that you can really benefit from. What can we do as a buyer, let’s say we go into one of those free trade countries, to make sure that manufacturer or who we’re buying from is a good reliable source?
Kelby: Well, the first thing is, of course, to pick the right one (laughter).
Colette: (Laughter) Easier said than done, right?
Kelby: (Laughter) That’s right. And that requires you to do some do diligence research including some online research, it’s amazing what the internet can tell you about companies and how quickly somebody who has been dealt with wrongly by a company will post that on the internet. So that’s a great way to do some initial research. The second piece is again, to use that expert. Find an expert in that particular area who can give you some advice on which companies are reputable and which ones aren’t so reputable, which ones you might have some issues with. The third piece is to trust, but verify. Once you’ve identified somebody who you think is going to be a good supplier for you is to do some verification during the process, and that really requires you to have a good freight forwarder or customs broker, or again, a consulting expert that can help you through that process. Because, what’s going to happen is even if the product itself meets all of the right regulations and qualifications for entry into the U.S., now you have to make sure that you get all of that accurate information in a timely manner to customs. And in order to do that your freight forwarder, customs broker or yourself, using a consultant, will have to make sure all of that data gets to customs on time. For instance, there is a requirement that the manifest of every container on an ocean vessel bound for the United States is submitted to customs 24 hours before that container is put onto a vessel. So all that information has to be accurate from the supplier and has to be verified by your freight forwarder or carrier that you’re using and then submitted to customs on a timely basis, or your going to add significant time to your supple chain as it sits on the dock waiting for that information.
Colette: Is this where the concept of direct filing for customs entries comes in?
Kelby: It is. As you continue to become more sophisticated in your operation, of course, one of the things that you’re going to consider is importing and once you’ve done that and decided that there are more ways in which you can save money and become more efficient and effective in your operation is direct filing. It is a law in the U.S. that you have the right as an importer to file your own entries with customs and border protection. So you can do that by filling out paperwork and being at the port and submitting that, but there are also numerous companies today who allow you to use the internet to file that entry with U.S. Customs and save a considerable amount of money. Now, the good news is, from a liability standpoint, it is one less person who can make a mistake in your supply chain, because no one knows your product and what is happening to that import better than you because you have that control. So in many cases your broker can provide some good advice when in a lot of cases they can also just add complexity which can result in mistakes being made on your entry and costly delays in your import. So it is just like anything else in today’s internet age, similar to TurboTax where you file our own IRS entries, you can file your own customs entry. Because at the end of the day, really, that customs entry is a tax return. Every entry into the United States is filing an individual tax return with customs and some of these software programs are really idiot-proof where, again, like TurboTax, will ask you questions about, are you sure you want to file it this way or have you considered these different areas?
Colette: And if you do decide to use a broker or a consultant service, go by recommendations.
Kelby: Correct.
Colette: When you’re in the online world there are many friends out there, coworkers online, if you don’t know anybody directly, who have done this process many times over and they can have recommendations. So don’t be afraid to ask for recommendations and if you’re interviewing somebody don’t be afraid to ask for their references and who they’ve actually worked for, so you can build that trust factor.
Kelby: Correct.
Colette: Now, at what point does buying domestically make better business sense than from an importing standpoint?
Kelby: I would say if you have a commodity or a product that the margin is not important on, there’s not much competition, but yet you can find a good domestic, either manufacturer or someone else who has already imported that product, and can afford that additional margin to your final product, then that makes sense. And if it’s a product that is a little bit more complicated to get through the import process because of it’s nature, for instance, I assume there are not many people doing this, but if you’re bringing in pharmaceuticals, that’s a little bit more difficult for you to bring in yourself rather than allowing somebody else who has the resources and the knowledge base to be able to bring complicated products into the U.S.
Colette: You’ve given such great information. Where can I find out more information about these subjects that you’ve just touched on today?
Kelby: I think there are two websites I would recommend. One is CBP.gov. CBP stands for Customs and Border Protection which is the new name for the U.S. customs service. There is very good information on that website regarding different requirements as part of its informed compliance requirement to bring stuff into the U.S. Too, of course, is our website where we have lots of different links for different kinds of information as well as direct information, which is TradeInnovations.com. A third site that I would recommend is a site called TRGdirect.com. For those companies who are interested or those individuals who are interested in learning more about the direct filing concept you can find some information there on savings regarding direct filing. So I think those are three websites you can go to for more information. And one more is there’s a trade association called Trade Bridge International that also has a website and really advocates for the small to medium size importers and exporters in the U.S. who typically have been underrepresented by associations in the past. So there is a lot of information specifically towards small to medium size enterprises on that website as well.
Colette: We’ll make sure to get those URLs on ProductSourcingShow.com for those of you who don’t have a pen or pencil handy right now you can go to ProductSourcingShow.com and get those URLs as soon as we have this interview up online. And please check out TradeInnovations.com. Kelby, I’d like to step back for a second. Early on in the show we were talking about some of the quality issues that you need to consider when you’re buying products from other countries, especially with China. What is China doing right now to answer these quality issue concerns? For the sellers out there who are interested in buying from China, what are those things that they need to consider?
Kelby: The first thing to consider is China isn’t really doing this in order to try to circumvent U.S. laws or regulations in general. This is a bit of a cultural issue. If you talk to many Chinese people they don’t quite understand this quality assurance issue because in the U.S. we have fairly advanced quality assurance requirements, whereas in most areas of the world that is not the level that it needs to be. So there is this misunderstanding from a cultural standpoint exactly why we’re so worried about quality assurance. When in the long term, for instance, if toys have lead based paint in them, that is more of a long term issue than anything that the Chinese in general see as a short term issue for the safety of American children. We just have a tendency culturally to look at that a little bit differently. Too, the Chinese government is obviously concerned about its image regarding being the manufacturer of the world if its products are seen as not being quality. So they are doing a lot of things from a regulatory standpoint to really clamping down on companies who are not following the quality assurance standards, both in China as well as from a U.S. import standpoint. A lot of that’s pressure from the U.S. and most of it is just economic survivability, because China realizes it needs to have a good reputation, so there’s a lot of that. Most companies use a third party validation firm to make sure that the quality of products is what has been ordered and to make sure that they meet all U.S. requirements or have in-house staff for bigger companies who do that same thing, when they actually visit factories to ensure that those quality assurance pieces are all in place. But I must admit that most of the companies that were importing products into the U.S. during this quality assurance scare from China were using third party and in-house validation firms. So it’s not something that just eliminates your liability, it’s one that mitigates your liability.
Colette: Right. It comes back down to what we said earlier. It’s the buyer's responsibility and sometimes the best way is just to go straight over there yourself.
Kelby: That’s correct.
Colette: It’s a good excuse for a business trip.
Kelby: (Laughter) Right.
Colette: Thank you so much Kelby, for being on the line. We do really appreciate all the wonderful information that you’ve provided us.
Kelby: Thanks again for having me.
Colette: For more information go to TradeInnovations.com. Coming up next, our Product Source of the Week segment, when Product Sourcing Radio continues.
|
