10 tips before you import Ngā tīwhiri 10 i mua i tō hoko whakaroto

Importing for resale

Make sure there is enough demand in your local market before you start to import goods for resale. Identify your potential target customers and conduct a survey to get a feel for whether importing will be profitable. If there’s limited demand, you could end up sitting on a pile of stock that you can’t sell and making a loss on the deal.

Importing for use in manufacturing

If you’re planning to manufacture a new product, check there’s sufficient demand for the end product to warrant importing some of the stock you’ll need.

If you plan to import material – rather than use local suppliers – for items already in production, check that current levels of demand are likely to remain the same or increase. If demand decreases, you could end up tying up too much of your working capital in import stock that sits on your warehouse shelf.

You’ll also need to conduct market research to establish what products your competitors are selling – keep a list of product names, specifications and retail prices. This will help ensure your imports do have a competitive advantage or unique selling point, that differentiates them from products your competitors sell.

Validating your business idea

Before you spend time, effort, or money on further research, make sure you’re allowed to import the goods you plan to bring into New Zealand. There are many restrictions on items you can import.

These range from outright prohibitions, which apply to things like chemicals or medicines, to restrictions on products or items from particular countries.

You might need consent from the New Zealand Customs Service or the Ministry for Primary Industries, which deals with biosecurity concerns, to import some products.

There are also special rules that apply to importing cars, which involve the New Zealand Transport Agency.

The Ministry of Health deals with the importation of controlled drugs.

Importing laws

Importing a motor vehicle – New Zealand Transport Agency

Bringing medicines into New Zealand – Ministry of Health

Find out all the costs and charges you’ll need to pay before you place an order with an overseas company. These costs could include:

• transport and insurance costs (depending on the trade terms you negotiate)
• GST
• customs duties and levies
• storage
• finance charges
• charges for services like the use of customs brokers or freight forwarders.

You’ll probably need to:

• identify the correct customs clearance tariff for the goods you want to import, to find out how much you will need to pay in customs duties
• supply the country of origin of the goods and the value (excluding shipping), to calculate the correct amount payable.

Once you have an idea of the final landed cost of an item, you’ll be able to check whether importing will be a cost-effective option for your business. There are a lot of additional charges you’ll need to pay over and above the cost per unit from a factory overseas, and these can add up. You’ll want to be able to make a reasonable return on investment after you’ve considered all these costs.

Get your accountant, business adviser or customs broker to go through your calculations, to make sure you’ve accounted for all the costs you’re likely to have.

Make sure you can afford to finance the cost of importing. Importing is cash intensive for two reasons:

• Given the high shipping or transport costs, it's more cost effective to place a few larger orders than many smaller orders – so import orders are often large, and therefore expensive.
• Importing ties up working capital. The person you’re buying from will either ask for payment upfront or ask for a letter of credit or payment guarantee from your bank. This means you can’t access the money or use it to run your business in the time between placing the order and paying for it, which can spread over many months for some orders.

Run a cash flow forecast to make sure you can still afford to run your business effectively while you have money tied up for import orders. Speak to your accountant, bank manager or financial adviser to double check you haven’t overlooked anything important.

Cash flow forecasting

There are more risks associated with importing than buying locally, and you need to be aware of these to manage them effectively. These include the following quality and delivery concerns:

• The distance between you and your supplier can be large. This means it’s harder for you to check on or deal with issues, like quality control.
• The delivery distance is further and the delivery time longer, which makes returning goods harder.
• Because of the time it takes to deliver, you might end up in a position where you must accept inferior goods, because you can’t source a replacement product in time.

You’ll need to find reputable suppliers and only place orders on terms that give you cover against non-delivery, including penalties for late delivery or for goods that are not up to standard. You could also have alternative suppliers, so you have a back-up if you need it.

Exchange rate fluctuations are another potential risk you could be exposed to as an importer. You’re probably buying goods priced in a foreign currency, which means exchange rate fluctuation can affect the final amount you’ll end up paying in New Zealand dollars. The rate could move in your favour or against you.

You can deal with this by:

• transferring the risk to the supplier by asking them to quote in New Zealand dollars
• purchasing forward cover to protect you from currency fluctuations
• adding an exchange rate risk to your margins and carry the risk yourself.

The cheapest supplier is not necessarily the best supplier to deal with for imports. It's more important to find a reputable supplier. You want to find a supplier who you’re reasonably sure:

• won’t disappear overnight with your cash
• will deliver on time
• will deliver the products you have specified and at the level of quality expected
• will keep you informed if there are any problems or delays.

You can:

• ask to see a list of customers that your potential supplier works with and contact them for references
• do a credit check on the company
• physically visit them and inspect their premises, plant, and the quality of their output
• ask for samples before placing your order, if you can’t arrange a site visit.

Dealing with suppliers in a foreign country often involves a steep learning curve. You might be dealing with people who don't speak the same language as you, and whose culture and values differ from yours. The potential for misunderstanding and miscommunication is much greater than when dealing with local suppliers.

Find out all you can about doing business in the country you plan to import from. Your industry association or local Chamber of Commerce might be able to give you some pointers. The best way to find out all the ins and outs is to talk to people who are currently importing from, or exporting to, the country concerned. 

New Zealand Trade and Enterprise (NZTE) has useful country information for exporters, some of which applies to people importing goods from those countries.

Exporting with NZTE – New Zealand Trade and Enterprise

Trading terms

Before you sign an import order, you need to:

• understand trading terms used by importers and exporters
• be sure that both parties have the same understanding of these terms.

Understanding technical terms is easier than it seems. The International Chamber of Commerce has developed standardised rules for the interpretation of trade terms called Incoterms. You can ask for help with this from:

• your bank’s international trade department
• a freight forwarding agent
• your local Chamber of Commerce.

Customs requirements

There are many customs requirements that you need to be aware of if you plan to start importing. It's a good idea to have a freight forwarder or customs broker help you with your Customs paperwork.

You can also ask for assistance at the New Zealand Customs Service if you’re a first-time commercial importer, but all importers are expected to handle their own paperwork or use a professional service provider for subsequent imports.

If you want to handle this yourself, the Custom Brokers and Freight Forwarders Federation offers training.

New Zealand freight courses – Customs Brokers and Freight Forwarders Federation