Importing can be a complex process.
Rebecca Spicer takes notes from the shop floor of a successful business, and checks out red tape requirements, how to outsource to experts, and how first-time importers can avoid pitfalls.
You’ve found products overseas that you believe would sell well in your speciality retail store. How do you import them? Just a phone call and a credit card transaction and, hey presto, the goods are imported into your store, flying out the door, rocketing your bottom line into the stratosphere?
Unfortunately, it’s not that simple. You may find an Australian wholesaler who already imports the products, otherwise you’ll need to buy directly from an overseas supplier, and this comes with a raft of legal, official and business considerations.
Lyndall Kellar runs her Les Indiennes de Provence stores in Sydney and the Hunter Valley, specialising in homewares imported from the South of France, and knows the benefits and risks of direct importing. While she buys some products from wholesalers and agents in Australia, she imports most of her main lines. “That keeps the cost down for the customer, otherwise there are added layers of cost,” she explains.
When first sourcing an overseas supplier it’s important to form reliable relationships. Kellar believes line of supply is one of the most important considerations. “Customers don’t want to wait six months for a container ship,” she says. “So you need to be able to bring things in within the month, if you can.”
After sourcing a potential supplier and learning the exact specifications of the product you’re hoping to import, you’ll need to check you can legally import it into Australia. “When planning to import into Australia the most important thing to consider is that different goods will need to satisfy very different import requirements,” explains Paul Heiskanen, import clearance officer for the Australian Quarantine and Inspection Service (AQIS). “Therefore, the best place to start is to find out what type of import conditions might apply to your goods.”
The latest information on what items can be imported into Australia and the associated import requirements can be accessed via the web from the AQIS import conditions database, ICON (www.aqis.gov.au/icon). This contains specific import conditions for thousands of different goods, and provides details on what kind of documentation an importer needs to obtain and what treatments might be required before the goods can enter Australia. Some goods may also require the importer to apply for an Import Permit (ICON will specify if this is required).
It’s also important to make sure you have a complete list of your cargo detailed on a packing declaration.
But Heiskanen says it’s not just your goods that are subject to inspection. Care should also be taken when choosing material to pack goods, and the shipping or air cargo containers your goods are imported in are also subject to AQIS inspection. More information on this can be found on the AQIS website.
If your products are listed as being at risk for import into Australia, this doesn’t necessarily mean they’re barred. “AQIS does not usually take a clear cut ‘allowed’ versus ‘not allowed’ approach to the importation of goods,” explains Heiskanen. “Even for goods that pose a high level of quarantine risk, AQIS makes every effort to facilitate trade by ensuring these goods are inspected or treated to reduce this level of risk and eliminate threats posed to our industries and environment. AQIS officers are able to advise importers of the most suitable option for their goods in order to avoid damage during the treatment process.”
Once you’ve researched any potential restrictions on the products you’re importing, you’ll need to consider the Customs controls you’ll be subjected to. All imported goods must first be declared to the Australian Customs Service, at which point they are registered on the Customs database. “If the goods are valued at over A$1,000 then the goods require an Import Declaration,” explains Rana Rowland, public affairs officer for Customs. “Import Declarations may be lodged electronically with Customs or by a manual declaration. Importers will also need to provide import documentation such as an air-way bill or bill of lading, invoices, any other relevant papers (including packing lists and insurance documents) relating to the shipment. This documentation is necessary to complete the relevant customs Import Declaration or Informal Clearance Document.
“The Import Declaration will provide details of the transaction value or invoice value (which is the value of the goods), the type of goods being imported, transport and insurance costs, etc, to enable the system to calculate the applicable costs and charges.
“Once the Import Declaration is input in the Integrated Cargo System (ICS), the Customs system will calculate the applicable customs duty, GST and any other charges payable for the goods. There are preference schemes and Free Trade Agreements, which can reduce or exempt importers from duty and GST,” Rowland adds. Details and applications of these schemes are outlined on the Customs website (www.customs.gov.au).
In terms of getting clearance for your goods, if they do not pose a quarantine risk, Customs will clear the goods without any AQIS intervention. If the goods do pose a quarantine risk, the database automatically refers the goods to AQIS. This will usually require the importer to visit an AQIS office so any relevant paperwork (such as import permits, packing declarations, cleanliness declarations, or treatment certificates) can be checked. Any inspections that may be required can also be arranged.
Additionally, retailers who import clothing need to be aware of the Commerce (Trade Description) Act 1905 with respect to the labelling information required on clothing, particularly ‘country of origin’ requirements. “First-time importers should also be aware of goods that infringe copyright or trademark legislation,” adds Rowland.
Information is available on trademark and copyright issues on the Customs website along with a host of information regarding prohibited and restricted imports.
Dealing with Customs
Under the Customs Act business owners have the choice of dealing directly with Customs or engaging a licensed Customs broker to act on their behalf. To deal directly with Customs, the business owner will need to report their imports electronically in the Customs system. To access the ICS, a business must have a digital certificate and be registered in the system.
Steven Morris, executive director of the Customs Brokers and Forwarders Council of Australia (CBFCA), says the majority of importers, particularly small businesses, are more likely to engage the services of a broker.
International supply chain management and trade logistics companies have licensed Customs brokers to conduct the import declaration on an importer’s behalf. Additionally, depending on your requirements, these service providers (who essentially become your agent) can take over the whole import process for you or just certain parts, such as barrier clearance in Customs and quarantine, air and sea freight, or logistics, warehousing and movement of cargo from wharf or airports into your premises.
Kellar says using an agent has been particularly useful for quarantine clearance for her homewares business. “With things like our Limoges dinnerware, we had to get certificates stating what the lead content of the pieces are. And that’s where it’s very useful to have a shipping agent because they understand those issues and pre-empt them for you,” she says.
Brokers can also act like business advisers, in areas such as looking over supplier contracts and, at the end of the process, to help evaluate the overall cost of importing your goods.
International supply chain management and logistics companies may specialise in certain areas, such as air or sea freight, or in specialised industries such as motor vehicles or textiles. Kellar asked around and received several quotes on her first shipping before selecting an agent in her local area in the Hunter Valley.
Morris advises searching local Yellow Pages and the CBFCA members list (see www.cbfca.com.au) or simply asking others in your industry which agent or brokerage company they use. He suggests selecting three or four and sitting down with each to discuss your business and what you’d like to do in terms of importing, before you make a final decision.
While there is much planning and many checklists to cover when importing for the first time, there are certain things you’ll need to consider on an ongoing basis. If your products have required clearance by AQIS, in most cases AQIS will need to clear every batch of product being imported as the quarantine risks may change over time. Importers should regularly check ICON for changes.
Under the Customs Act there are requirements for importers to keep documents related to importations for five years. Good record-keeping by the importer is essential, and penalties may apply if records are not kept. Importers can engage their broker to do this, but compliance still lies with the importer.
You’ll need to constantly reassess the most cost-effective way to have your goods delivered into Australia, either with the help of a broker or through self-assessment.
* First-time importers should check out the Documentary Import Declaration Comprehensive Guide available on the Customs website at www.customs.gov.au