“Starting a Business: Importing to the USA” Presented by Kenneth D. Weiss

Zintro Webinar

Presented by Kenneth D. Weiss, President at Plans and Solutions Inc.

Presenter’s Note:
“Key points to consider when starting a business to import products to the USA. Includes evaluating your idea, deciding whether this kind of business is right for you, setting up the business, selecting products and suppliers, finding and contacting buyers, U.S. import regulations, international shipping, international payment, sales promotion, and sources of additional information.”

About Kenneth D. Weiss:
Kenneth is an international trade consultant with immense experience. He has imported, exported, taught the subject, consulting in it, and written four books including the best seller, Building an Import Export Business, now in its 4th edition from John Wiley & Sons. He has an MBA from Stanford, speaks three languages, has lived in five countries, and has helped numerous individuals and small companies to follow their dreams of importing and marketing products in the USA.

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Chris: Hello and welcome. My name is Chris Lawrence, Community Manager at Zintro.

Zintro is a global online marketplace that helps connect companies with highly specialized consultants and other expertise providers for projects that range from one hour phone consults to multi-month on-site engagement and even full time jobs. I would like to thank the over 300 people who signed up for today’s webinar: Starting a Business, Importing to the USA Presented by Kenneth D. Weiss.

It’s with great pleasure I introduce Zintro expert, Kenneth D. Weiss, President at Plans and Solutions Inc.

Kenneth is an international trade consultant with an immense experience. He has imported, exported, taught the subject, consulted in it and written four books including the best seller “Building an Import/Export Business”, now in its fourth edition from John Wiley & Sons. He has an MBA from Stanford, speaks three languages, has lived in five countries, and has helped numerous individuals and small companies to follow their dreams of importing and marketing products in the USA.

We will include a couple of poll questions throughout the webinar. If you want to ask Kenneth any specific questions, feel free to use your questions section of your GoToWebinar control panel in the top right corner of your screen at any time throughout the webinar. Kenneth will respond to questions after this presentation. We will provide Kenneth’s contact information at the end of this webinar for follow ups, so stay tuned.

Without further ado, I would like to turn it over now to our presenter Kenneth D. Weiss.

Kenneth: Importing and exporting is a business. Like any other business, some succeed and some fail. It has a few added complications because it is an international business. You are dealing with people you don’t know. In some cases, they are in different countries, which you may not know very well. Also, you have to be concerned with international shipping and international payment, and with getting goods into and out of countries through the authorities that control imports and exports. So don’t be fooled by the people that make it sound to easy, but also I don’t want to make it sound too difficult. A lot of people get into this business and succeed.

I’m going to start with an example because examples are the best way to explain something. Just suppose that you want to start a business, and you are going to import tomato paste from Turkey to sell to restaurants in Texas. Note that this is fairly specific. I have product, a country of origin, a market and a kind of customer, namely restaurants in Texas. So what do you have to do? And at this point, lets do the fist poll. Let’s find out if . . . . what I am asking here is whether you have any knowledge or experience that will help you to start an import business.

Chris: Okay, we are going to go ahead and close our poll. Results come in as: 60%, yes; and 40%, No.

Kenneth: Okay, that means that we’ve got people here who know quite a bit already, and that is excellent. Let me start trying to answer the question, if you are going to import tomato paste from Turkey, what are some of the things you have to do. You’ll probably want to set up a business. You will certainly need a good supplier and probably to reach an agreement with that supplier that specifies the terms and conditions under which you can handle his or her product. You need a target market and enough information that you can understand it, what it wants and how it buys and so-on. Then you need some sort of distribution organization or company that will get your products to the target market. You need to work out your selling prices, obviously, they need to be high enough for you to make a profit, but not so high that you are priced out of the market and you don’t sell anything.

Then if you just put your product into the hands of a wholesaler or a distributor for example and they don’t sell anything, you’re not going to be in business very long. So you need some kind of promotion plan to get your customers to pool your product through the distribution channel, as to buy it from whoever you sell it to. Of course, there are U.S. import regulations, although they are often not as bad as some people think they are. Then you need to work out how to get the tomato paste into the US and obviously how to pay for it, and finally, monitor the results so that you can improve and, hopefully, increase your profits. So these are essentially some of the steps you might want to go through to get the tomato paste from Turkey into the hands of your buyers in the U.S. and of course, to make money on the deal.

Now I am going to look at it from a little different way. I am going to look at specific steps that you might take if you wanted to start an import business. It looks like at least 60% of you are really ready to do that already. I am going to explain each of these in a minute. The first thing is to evaluate the import business idea that you have and see if it’s any good. Next maybe decide whether this is a good kind of business for you, prepare some kind of plan. People hate planning, almost everybody hates planning, but I am a strong believer in some kind of plan. Get the business established, choose your products and suppliers, obviously find and contact potential buyers, comply with the U.S. regulations, work out your system of shipping and your method of payment, and then some kind of sales promotion plan.

These are steps that I am going to go through in this webinar with just one bit of added information at the end, and that will be where to find more information because there is a lot to learn, and I wish I could cover it all in 45 minuted, but I don’t think I can.

So lets dig into step 1. You have an idea, tomato paste from Turkey or any product from any place. You need to find out if this idea is feasible with regard to four specific functions. First, can you get the product? I am using the word get quite a few times here. Second can you get it to the U.S.? Third, can you comply with the regulations to get it into the U.S., that is through customs and fourth, do you get people to buy it? And if you can do all those things then, at least you have something that’s worth looking at as a possible import business. I have two examples mentioned here out of many, many.

One is a fellow I worked with for a little bit, but he called me very late in the game. We tried importing three different kinds of local liquor from Bolivia, to the port of Baltimore [SP]. Apparently, his procurement was no problem, his transportation was expensive because with liquor, what are you shipping? You are shipping glass and water mostly. It’s a nice kind of water, but it’s still water. Where he really fell down was the regulations, it never occurred to him that there might be regulations on importing liquor, and specifically on the labeling. So he got his container load into the port of Baltimore. It was held up by customs, it was moved to a warehouse, controlled by the alcoholic beverage control authorities. It sat in the warehouse for one year by the time . . . until they went through all the procedures he had to go through, and of course he was paying storage. He had lost the customers that he had planned to sell to. It was a total disaster. His idea was really not feasible with regard to these four criteria, or at least not without doing quite a bit of work ahead of time.

The second example is a very different one. This was when I was trying to work as a broker a couple years ago to sell frozen mango pulp from Peru in the U.S. The transportation for frozen pulp is pretty easy. The regulations are really not a problem. I was able to find a good buyer, but then we hit the procurement. It turned out that our friend in Peru really didn’t have as much mango pulp as I thought he did, and then he found a buyer in Europe who would pay more than my customer would pay. So a lot of work done with no results because the business was not feasible with regard to those four points. So first step is really to evaluate your idea and see if it seems feasible.

Next step, is this business right for you? My first question may surprise you, you see that little girl on the right, she failed, she dropped her ice cream. Poor thing. Most people who start businesses fail. The kinds of people who start businesses aren’t discouraged, they try again and again until finally they succeed. Therefore, we can say that almost all businesses are started by people who have failed. That means that if you have failed once or twice or three times, it’s actually an advantage. You’ve got that going for you. The second point here is you do need some money to get into business. It helps a lot if you know a little bit about foreign cultures and languages, at least of the country that you want to deal with. It’s not usually a get-rich-quick kind of business like opening a McDonald’s franchise, so you need persistence. And then with every transaction, you need to be very careful to meet the regulations, to have the documentation right. You have to get the right size and the right model number and the right numbers on all the documents you do. It takes a lot of attention to detail. Some people are cut out for that and some people aren’t.

My third point here, is do you have buyers in your pocket? That is because with most businesses including this one, the hardest part is usually to sell something. So if you have people already who will buy from you, and you’re pretty sure will buy from you, then that is probably the biggest advantage you can have to start off with.

Okay, third point is a mini business plan. If you have ever done a business plan or if you have looked at sample business plans, you will see that they are usually around 20 pages, and they include a whole lot of information. If you do it with the Small Business Administration model, they ask for everything including the size of your underwear. For this kind of business, you need at least a very basic plan. I am suggesting here that you might want to import 3D printers from China, and this is actually not a bad idea right now. You would plan to have that product from that country. You would plan to set up a limited liability company, and the reason for that is the LLC is not that expensive, it’s not difficult, and it gives you some protection from liability in case your printer or whatever else you import injures somebody or makes somebody sick.

Home-based, it used to be that . . . there was a stigma against home-based businesses, but not any more. That’s pretty much gone. You can save a lot of money from starting from your house. I am saying here that in your plan, you will say that you will sell the printers by the internet by your own website, and your main target market will be businesses such as companies that make toys and games and they can produce the parts with their printers. Then you might want to ship by sea. In the beginning, you’re not going to have enough to fill a container, the ocean-going containers hold a whole lot or merchandise, so you may plan to work with a consolidator who will consolidate your printers with other shipments from other companies and that would give you a better rate than if you ship it by yourself.

As far as payment, you would naturally like to bring in the printers and sell them and get the money and then pay your supplier, that probably is not going to work, but you might plan to negotiate 60-day terms. In order to get 60-day terms from somebody in China, you’re probably going to have to give him a secure payment instrument such as a letter of credit, something you have probably heard of, and I will talk about that a little bit later on in the webinar.

This would be essentially the narrative or sometimes it’s called the literal part of your plan. The next part is to project the numbers, try to project income and expense and the difference between those two which is profit, so that you can figure out whether it looks like this would be a viable business and worth going into.

I have two examples here, I am saying that you might try importing as a merchant, which means that you would bring in the printers, take possession of them, take title to them, pay for them then mark them up as much as you want to or can, then sell them and get paid. And I am saying here that you would project to do $25,000/month in sales, you run the numbers and figure out that the merchandise would cost $12,000, which is ` of your sales, of your income. That would leave you with $8,000. Some way, you have to sell, whether you put up a website, or use an agent or a broker, or someone to sell for you. Some way, it is going to cost you money, so I have put here $3,000 for selling and promotion costs, that leaves $5,000. Then even if you are in your house, you are going to have some expenses for telephone and electricity and maybe a part time assistant, I am figuring out $2,000. All this per month, and that would leave you with $3,000, not including your salary and not including any taxes you might pay on the profit, 15% of your sales. Now $3,000 is not a whole lot of money, so you would have to consider whether it is worth to starting your business for $3,000, maybe you could do it part time, maybe you could find a way to increase that sales figure or decrease the expenses so you that come up with more money in your pocket.

That’s one example, the second one is quite different. Here, I’ve got you working as an agent. You are probably not going to take the merchandise into your house or warehouse, you are probably not going to take title to it. You will arrange for someone in the U.S. to buy it from your supplier in China, and the supplier will pay you a 10% commission. So I am supposing that you sell $50,000/month, you get your commission, you have the same operating expenses, and you come out with the same amount of profit before salary and tax.

Now if anyone’s really watching the numbers, you will see there is a mistake in the right hand column. The percent, that is not put in there to see who’s watching. That is an honest mistake. The point of this is there are two basic ways to do business, one is as a merchant, the other is as an agent. The other point is that it is really really important to make financial projections and determine if it seems like you can make enough from this business to make it worth while for you to go into it. Okay, that is the essence of an import business plan.

Then setting up the business, I don’t want to dwell on this because you’re going to find out, there are a lot of courses in community college and other places on setting up businesses, I have already suggested an LLC. Unless you want to work under your own name, you want to register . . . you want to pick a trade name and register it with the U.S. Patent and Trademark Office. On the internet, it is USPTO.gov, it’s a little bit complicated, not too much, it will cost you around $300, but it will protect your trade name. You can use a logo if you want to, that sort of establishes your business identity. If you open a business bank account, you can use any bank as long as they know how to do international transactions. The key question is, “Do you have a letter of credit department”. It doesn’t have to be right in the branch you use, anywhere in the U.S. If they have a letter of credit department, the bank is probably okay.

Equipment, you don’t need much. You need a computer, probably a printer/copier/scanner combination, a telephone, a telephone system such as Skype, I use one called mitelefono that lets you make international calls almost free. Essentially, you need to be able to communicate, both in writing through your computer and also through the telephone. So make sure you have the equipment to do that. Like in any business, you need to keep some basic accounting, and I would suggest here that you do get the cheapest form of Quickbooks to start with or even a pencil and paper system. The one I suggest is called Dome, D-O-M-E. It’s the Dome monthly record, and you can get that for . . . you can be in business with that accounting system for somewhere around $15.00 per year. Not bad as business expenses go.

Finally, to set up the business, you probably want to get an employer identification number. You can do that on the internet, and it’s quick and free. If you are going to sell at retail in your state, you need a sales tax number, a state sales tax number, and then it doesn’t hurt to go to the company called Dun & Bradstreet and get a DUNS Number. You don’t have to have it, but you do have to admit when you get it that you don’t have very many employees, or much income, or much money, but having a DUNS Number gives you some credibility. So it’s a good thing to do, I believe, and an easy thing to do.

Now your business is set up. Where do we go next? Choosing products and suppliers. I have given a couple of examples, you obviously can’t import without picking products, and preferably a hot product or a good product. A lot of people travel and find products that they think would be in demand in the U.S. Also if you go to our friend Google, I love Google, if you go to Google and you put in import/export bulletin board, then you will find a whole lot of essentially electronic bulletin boards that offer purchases and sales, or products to buy and products to sell.

The third option here is every country has an export promotion organization, sometimes more than one, sometimes a private one and public one. So if you go on the internet and type in export promotion organization and then the name of a country, you will probably get an entity that can help you, that can send you for example a list of products that they are pushing in the U.S., that they think have potential in the U.S. market. You get a kind of product that you think you’d like to work with. You would probably want to contact more than one potential supplier, get information about them, and then ask for samples. The normal practice here is that you pay for the samples . . . I’m sorry, the company pays for the samples, and you pay for the shipping. Not everybody will do it that way, but that is sort of the normal. Then you provide the samples and you pay for the shipping.

And then what do you do? You test the market. You take these samples around to some consumers who think might be interested in that kind of product, might know something about it, and you ask them “What do you think about this?”, “What do you think about this stapler, for example, how about the size, the shape, the color, does it use standard staples? Do you like the cap, the packaging, do you like the labeling?” And 9/10, you’ll find that your product samples have to be changed in some way to either to comply with U.S. regulations or to comply with the buyer’s demands. So be sure to test the market.

That should tell you what the product should look like. With that in mind, then you can go back to the supplies that you identified up in step one. Get more information about them, try and find out if they are honest and competent, those are the two things, honest and competent, and you can if you want to, you can buy, for example, credit reports about suppliers in any country in the world. That would give you a good idea of whether they would good for you to work with. Pick one and probably work out some sort of agreement with them that would delineate the terms and conditions under which you are going to try to sell their product in the U.S. market. A lot of people start without the agreement, but sooner or later, you probably would want one. There are samples on the internet, and then books in the library. But before you sign one, it certainly doesn’t hurt to have a lawyer look at it, preferably a lawyer who knows something about international business.

Okay, you’ve got a product. Now finding and contacting buyers, this is again the critical point because the number one cause of failure, or at least a very important one in most businesses is simply not selling enough. My example here is laptop computer for kids from China. Suppose that’s your product, your target market would be toy stores that would sell these computers and that gives you what I call a product/market combination. You’ve got the product: Laptops for kids. The market: Toy stores. You need to find toy stores that you can try and sell to, and in this case, maybe one reason I picked this is you have a very handy little directory called a toy store’s directory that you can find on the internet, that tells you not only what almost all the toy stores in the country are, but gives you information about them so when you contact them, you already know a little bit. How to contact them, there is sort of a normal sequence, which is if you can get the address, the email address, you email them. Whether or not they answer the email, you try to call them. Probably you’ll have to send them some information at that point. They won’t want to schedule, in most cases, a meeting without getting some information about you and your product.

Then you try and get a personal visit, and of course, a visit is a sales call, and a sales call often is not successful the first time you do it, but maybe the second time or the third time. You have another option here, which is to find manufacturer’s representatives who routinely call on toy stores and get them to work with you and handle your product and try and move it into that market. This would cost you something, but it would give you greater sales so in the end you may end up with a profit.

The second example is very different, I am supposing that you want to import industrial floor sweepers. Your target market might be small manufactures in the New England states who would use the product to clean up their floors at the end of every day. You might find the prospects in the Thomas Register of American Manufacturers, which is an amazing set of books, and you can get information about that on the internet and I believe they will send you the complete thing on CDs if you want to. There’s a way that you can get that information. All libraries have it, too. You would probably want to call on some of the small manufacturers and show them all the information about the product. At some point, you might need to actually take a sample to them and demonstrate it because you might be able to get them to come to wherever you have one of the products, but there is a good chance you’ll have to go to one of them. This makes it even more useful to use manufacturers representatives who would call on these types of companies all the time and who already have their confidence.

Now with both of these kinds of products, the laptops and the sweepers, you need to consider what happens if something doesn’t work. You are going to have to have probably a supply of parts and someone who can fix them, and some policy regarding returns and replacements. And because both of these products are the type that can go wrong or can go bad.

You have to product, you’ve got the buyers, now we want to take a look at import regulations. I apologize if I’m going a little bit fast here, but I said it was going to be content intensive. A lot of people as me for importing to the U.S. what kind of license do they need. The answer is for almost all products, you don’t need any kind of license or any kind of registration. You can simply import. There are exceptions, and the way to find out if there are exceptions, one way is to ask a customs broker. I’ll talk about them a little bit later on. Another way is to get a wonderful little book called “Importing into the United States”, which you can get . . . and I’ve got the name written down on my last slide, but you can actually find the entire text of that book on the internet. Just use Google and type “Importing into the United States” It’s your best little resource, and it’s excellent.

Next, you need to find out if there is any problem with admissibility of you product and if there are any customs duties. Almost everything is admissible, but there are a few exceptions, and almost all products are duty free now, they didn’t used to be, but they are now from countries with which the United States has free trade agreements. Now the best way to find if your product is admissible, again, and with the duties is to contact a customs broker. But you can try to find this information yourself if you want to. You go to the internet again to USITC.gov, that’s United States International Trade Commission, and then find the harmonized tariff system by chapter. And the harmonized tariff system, HTS, is essentially a list of 30,000 or 35,000 products that the U.S. imports and it shows the customs duty, if any, from every country. If you are going to work a lot of products, it certainly doesn’t hurt to learn to use that book.

There are a few regulations on packaging and a few on marking. And again, you can find that in the book Importing into the United States. There are some documents, I will look at that again in a minute, and then there are specific kinds of product that have some specific regulations in food products and alcoholic beverages, textile and apparel are three good examples. These are all mentioned in the book I’ve been talking about, Importing Into the United States. Sometimes, you have to go deeper because that is only the basics and there are only the general information is in that book, and you may have to go into more specific websites. For food products, it would be from the Food and Drug Administration; for alcoholic beverages, it’s the Tax and Trade Bureau; and for textiles, I believe it’s the Consumer Products Safety Commission, but there may be other sources also. Anyway, make sure you know what the regulations are and make sure you comply with them before you bring in any products.

The documentation, any shipment that moves needs a commercial invoice. It’s usually prepared by the exporter, it says essentially what’s being shipped, how much of it, how much is it worth, who’s selling it, and who’s buying it and a little other information. Then if you are importing from any country that has a trade agreement with the U.S. and if you want to import the product under the terms of that agreement in order to get reduced duty or zero duty, you have to have a certificate that shows that the product originated in the country from which you are importing.

Now we all know that products are usually not entirely from one country. Most have imported components or materials or ingredients. So every trade agreement has what they call rules of origin that determine at what point or at what level of local content each product can be certified as originating in that country. If your product complies with the rules of origin, you get a certificate of origin that says, “Yes, this is a product of Paraguay” or “This is a product of Thailand.”

Next thing is a packing list that just says how many boxes there are of each kind of product and what are their numbers. For example boxes, 1-4 are spark plugs. Boxes 5-9, fan belts, back in the day when cars had fan belts. Then if box 7 is missing, you know what it was from the packing list, or if customs wants to look at the fan belts, they don’t have to open everything in order to find them. It’s a lot easier.

Next, if you’re importing anything that goes in or on humans or animals, you will want a sanitary certificate from the competent authority in the exporting country, and that says essentially that the product has been produced in such a way that meets all the standards of that certifying authority.

Next, when the product is loaded on a ship, the ship is laden, L-A-D-E-N with your product, and the steam ship line will issue a bill of lading. Same by air freight, the airline will issue an airway will. These documents are essentially a contract of carriage and in some cases, they can also be title documents, that is a bill of lading can be written so that whoever has that bill of lading endorsed to him has title to the products and has the ability to convey that title to anybody else, such as you, the buyer.

Next one is a certificate of insurance. Almost all products, not all, but almost all international shipments are insured. The standard practice is to insure for the cost of the goods landed at the U.S. port plus 10%. Let me say that again, you take thee cost of the merchandise, and add the shipping charge and add the insurance charge, total of that and add 10% more, and that is the normal practice for computing the value for which to insure. Now what’s that 10% for, you might wonder, that it simply if the product doesn’t arrive, obviously, you can’t sell it, you can’t make any money, you lose the profit and maybe you lose the customer and you have a miserable 10% to make up for all of that. It isn’t much, but it helps.

Finally, my last point here is if you are importing anything in the way of foods, pharmaceuticals, you need to tell the U.S. Food and Drug Administration before the conveyance, that is before the ship or the plane or the truck or the train arrives in the U.S. The number of hours before depends on the kind of transportation you are using. You need to tell the FDA what you have coming to the U.S. so that they can decide ahead of time whether or not to inspect it. They don’t inspect everything. In fact, they physically inspect a very small percent of the cargo. But they need this information so they can decide whether to look at your box or not.

International shipping, you can bring the product with you, that’s the fun way, take big suitcases. If you are not traveling, you can use FedEx or DHL or another courier company. Not too expensive and they do a whole lot of the work for you. They handle the documents, the customs clearance, they make it easy. You get a little more quantity in merchandise, you might want to use air freight or sea freight. Air freight is more expensive. It’s used mostly for cargo that is high value with regard in relation to its size and weight, or that’s urgent, or that’s very fragile or very perishable. If you get into a larger quantity, you probably want to get into sea freight.

As I said before, almost all shipments are insured and let me reverse the order of the next point. In the port of exportation, you have a foreign freight forwarder who will essentially make sure that your product gets on a ship or on a plan. And then on the U.S. side, you have a customs broker who will find the product when it comes and fill out the paperwork to clear it through customs. And then if you wish, he could forward it to you. Now if your shipment is by air and it’s less than $2,500 in value, you can go to the airport yourself, you do not need a broker. But if it’s by sea or if it’s more than $2,500 in value, then you do need a broker. There are a few exceptions such as watches and watch parts, and canned tuna and a few others, I’m not sure why, where you need a broker in any case. There are historical reasons for that, that we cannot go into.

Then I am sure you’ve heard of shipping terms, FOB, CIF and all this. Every 10 years, these are revised by the International Chamber of Commerce. The first list if for terms for any means of transportation. The second list is terms for cargo that moves by water, and even if you don’t specifically say CIF or CFR or FOB, when you import a product, it’s probably moving under one of these terms. Before you import something, you will want to determine which term you are using and what your responsibilities are under that term. That is until what point do you pay the cost or after what point to you pay the cost if you’re importing and afte what point do you become responsible for the cargo in case it’s lost or damaged. This is critically important it to me.

The payment, very quickly, you would like to import the goods on consignment. Lovely, right? You get them, sell them, get the money and then send it. Your supplier would love to be paid up front. Whats good for you is not good for him and vice-versa. So this question of when to pay is negotiated just like any other term of sale. Then how you pay, we are seeing more and more now of easy ways of payment, by PayPal, by credit cards, by western union, which is used to charge an arm and a leg and now competition has cut their base way down.

If you get a bigger transaction, you probably would want to use a bank transfer, and then you get into the bills of exchange and letters of credit. These are banking mechanisms that are designed to bridge the trust gap. That is you might not trust your supplier, or you might not want to pay until you get the goods. He might not trust you. He might not want to ship it until he gets the money. This is where banks can come into play with bills of exchange. They are also called site drafts and time drafts, or with letters of credit to help bridge this gap of . . . I said trust before, I guess it’s really mistrust. Those both cost money, so you don’t really want to use them unless you really need to, and most international trade is actually done on simple open account, the seller ships and later he collects.

Now the last substantive point here, I said before that it doesn’t do any good just to sell your product to somebody like a wholesaler or even a retailer because if the customers don’t come and buy it, then you are not going to sell any more so you will want to develop some sort of promotion plan, actually they are called a promotion package, by which you will promote to the people who buy form the organizations, the companies that are carrying your product. So you might want to help your distributor or wholesaler exhibit at a trade show. You might want to go to a Whole Foods or a Safeway and put on a product tasting or sampling.

Incidentally, if anyone is going into . . . if you’re going to go into the food business, which is really the one I specialize in, you definitely want to go to the trade shows. You may not want to exhibit in a trade show, but you definitely want to go because there are free samples on both sides of about 100 isles, and you can eat breakfast and lunch and sometimes even take some home for dinner. So definitely go to the trade shows, especially the Fancy Food Show, which is once a year in San Francisco and once a year in New York.

Now a lot of store companies have brokers that routinely sell them specific kinds of merchandise. So if you want to get into a K-Mart or a Walmart or . . . I was about to Costco, but actually, that too, any big store, if you can find out which brokers provide your kind of merchandise to that brand of store, that kind of store, then you can try and make a deal for the brokers to sell your product. Obviously, that will cost you money, but it can be a whole lot easier to get into the market. You might want to sell on the internet, set up your website, but then you’ve got to do advertising to drive people to your website. And in a few cases, you may want to use conventional methods like radio, T.V., newspapers, magazines, and so on. It all depends on what kind of product you have and what your target market is and how big your budget is. But you should definitely count on spending some money on promoting sales to pull your product through the distribution channel. The old push method doesn’t work, we really need to pull it through these days.

Finally, I’m just about on time here, there is a whole lot more information to be had in this business. I’ll say it again, avoid the get-rich-quick schemes. One book I recommend is “Building an Import/Export Business” that’s mine, which was mentioned in my very nice introduction to this webinar. If you speak Spanish, you might want to pick up one called Conquiste el Mercado Americano, both of these are on Amazon.com. I think Building is about $20 and I think Conquiste is about $18 on Amazon.com. Then the book that I mentioned a couple of times: Importing into the United States, is from Consumer Products Safety Commission, and the whole text is on the internet. Then one from the Small Business Administration which is called Importing Goods into the U.S. You can find that with no trouble, and then for food products, the FDA has one: Importing Food Products in the United States, also very good.

Then I have a tiny news letter that comes out every month or every two months, or to be honest, whenever I get around to it, and you could subscribe to that for free if you want to for any reason. And here is my contact information. It’s time for questions, but let’s . . . before we do that, let’s do one more poll. Let me throw out another poll question and get your answers and then we can get all the questions that you might have. This poll question is, “Do you have in mind a specific product market combination? Do you have in mind a specific product, a specific country of origin, and a specific target market?” That’s the question.

Chris: Lets allow some time, results are coming in. [Pause] We go ahead and close the poll. And results come in as 60%, yes; and 40%, no.

Kenneth: It’s interesting exactly the same as the first questions. We have some serious people listening to this webinar, so we are ready for questions.

Chris: All right, Zintro members, feel free to contact Kenneth directly with the information provided or by going to his Zintro profile. We will keep this webinar session open for another 15 minutes so Kenneth can respond to questions by our attendees.

This is from Victor, he is asking “I ship stuff back and forth between the U.S. and other countries, and the problems were typically with custom clearance in other countries. The problems I had with importing to the U.S. were environmental samples, almost a mission impossible. Please comment.”

Kenneth: If I understood the first part of the question there could be problems with exporting and getting goods into other countries, and your foreign buyers should be able to help with that, but also the U.S. Department of Commerce, The Domestic and International Trade Administration has pretty good information on import requirements of foreign countries. As far as getting environmental samples into the U.S., I would need to know more . . . a little bit more information about what they are and what kinds of problems, or what kinds of things the customs people are saying to you.

Chris: Okay, we have another question from Raj [SP] he is asking, “What are the typical commissions for B to B type products imported from a sales agent scenario.”

Kenneth: If you’re the importer and you’re trying to sell to businesses and you’re using a commission sales agents, it is normally in the range of 10%-15%. Obviously, there is a negotiation because anyone who sells it would like it as much as possible, that would be about the range. I just had the case in Peru, again, of an import agent there, and the supplier in Spain is offering him 10% and the agent was thinking that looked pretty good until they looked at the contract and he saw that the contract was for only one year. And he figured at the end of one year, he would probably just be getting started and then the supplier might take the contract away from him. So it’s the commission rate and other things that interplay with the rate.

Chris: Okay, we have another question from Paul. He is asking if you can you please go into greater depth on the prior notice process for importing food products to the U.S.

Kenneth: Yes, the prior notice, when the World Trade Center was destroyed in 2002, the U.S. enacted a law which we call the Bio-terrorism Act. That requires . . . there are four main requirements. The first one is that any company who touches, I repeat, touches food products or pharmaceuticals destined for sale in the U.S. must register under the Bio-terrorism Act. That is an absolute requirement, and that is to essentially to try to prevent the contamination of food, bio contamination or any other kind. So first, you have to register. That is one of the things I do, but you may also be able to do it yourself on the internet.

A second provision of the act is that any shipment that is coming in of foods or pharmaceuticals, a prior notice has to be filed with the FDA, is usually filed by the foreign freight forwarder in the country you are buying from, although anybody can do it. But it is usually the freight forwarder. If you use DHL of FedEx, they do it for you, and it has to be filled 12 hours ahead of the time a ship is going to dock and then smaller amounts of time in the case of planes and trains and motor vehicles.

Chris: Lets continue with some questions, we have a combined one from Roger. He says “Do you do webinars for U.S. exporters combined and is this process much the same for U.S. exporters?”

Kenneth: I can do it, and I will be very happy to talk with Zintro and try and persuade them to organize one like that.

Chris: Alright. We have another one from Satheish [SP] asking “What about importing IT products from other countries? Any specific rules or advice?”

Kenneth: Specific rules, really not. Importing countries, in general, really love to have that product and they don’t restrict imports. Exporting countries are often leery especially if it’s a new item or a high-tech product or uses patented components, then the exporting country might give you trouble. If you try and export for example the latest computers from the U.S. you will run into problems with what we call the U.S. Export Control System, and you will probably have to get a what they call a validated license in order to export it. But no, no specific problems, and the word of advice would just be that it’s a market that’s fairly dominated by a few large companies, but there are also niches if you can get into it. The new world of computers for schools, for example, where they need cheap laptops for children, or any other niche, there are certainty opportunities to get into the business.

Chris: Thanks Ken, we have another question from Conrad, he’s asking “When importing, do I need to have established buyers before I am allowed to import? Also normally, people importing normally beverages normally use air or sea?”

Kenneth: First question, you really don’t need to have anything before you are allowed to import except for a few products. It would be really great to have established buyers. You don’t need them, I suggest you bring in a small shipment first and show it to your buyers. Actually, we call that a trial shipment. You bring in before you bring in a very big quantity, and that essentially tests your transportation system. It tests the customs process to make sure there is no problem, and then you can test it with the buyers to see if they’re going to like the product. I would definitely go with a small amount first and no prior authorization needed. I got so wrapped up in the answer I forgot the second part of the questions. Please tell me again.

Chris: The part is, “Also normally, do people import beverages normally use air or sea?

Kenneth: Usually sea, because like the liquor from Bolivia, you are basically shipping water and glass. It can be water and tin or water and paper, in some cases, but it’s a heavy product, so it usually goes by sea, and it’s usually not perishable. Normally, to make it worth while, you want to send a full container load, a full container load full for beverages would be the . . . probably be the standard sized container, 20 feet long, 8 feet wide, 8 1/2 feet high, and you can do the calculation and figure out how much merchandise that container holds. It’s quite a bit. The reason for the container load is simply the bigger quantity you ship, the lower the shipping costs per unit. So if one person . . . if your competition is bringing in container loads and you’re bringing in smaller amounts, you are paying more for shipping per unit and that makes it harder for you to sell at the same price that your competitor sells for.

Chris: Okay, thank you, Ken. We are running out of time, so I am going to throw the last question here. Tive [SP] is asking “Is there a directory for customs agents? Where can they be found and what kind of fees in percentage do they charge?”

Kenneth: Where can they be found? You need first to figure out which port or which airport you are going to use. Then suppose you pick the Port of Baltimore just as an example, you would got to the Port of Baltimore website, and on the website, you will probably find something called port services. There might be slightly different names for it, but there would be a listing of the different businesses that serve importers and exporters in that port. That would give you airlines and steamship lines and insurance companies and bonding companies. I forgot to mention that you need a customs bond in order to import if it’s more than $2,500. So you can identify the brokers that way. The problem is there are too many of them, and there’s not a whole lot of information about each one. So you want to contact three of four, check out their websites first then contact them. Try to find a broker who has experience handling the kind of product you want to import from . . . it not the exact country, at least from that part of the world that you want to import from. And then you could be pretty sure that the broker can do business for you. Then the fee, they essentially charge for whatever they do. They charge for completing the customs entry forms, and if your product has to go to FDA, they will charge for sending it to FDA, and miscellaneous other things. It may turn out to be around $225-$250 for an import shipment that does not have any special complications.

Chris: All right. Thank you very much. Everyone, to follow up with your questions, please contact Kenneth directly with the information provided. And Kenneth, on behalf of Zintro and our 160,000 members, thank you so much for sharing you insights. And this closes today’s presentation. I wish all of you a very nice day.

Kenneth: Thank you all and goodbye.