Import/Export Challenges for SMEs
The import/export business is a tough racket. On any given day, you’ll deal with supply chain problems, cultural issues, border holdups, and other headaches. On top of all that, COVID-19 has introduced additional responsibilities.
Fail to stay on top of everything, and you’ll be forever playing catch-up.
Top Issues Facing Export/Import Businesses
Don’t want to caught off-guard? Below, we’ll outline the most common challenges you’ll face when importing/exporting products.
Sourcing/manufacturing products overseas is not a cheap endeavor. For example, doing a test run can cost you thousands of dollars. When the time comes to scale production, you’ll need even more capital.
To stay liquid, you may need to take out a business loan. If banks say no, private lenders offer easy access to hundreds of thousands of dollars, including unsecured access. With fast response times and flexible terms, you can access cash affordably when you need it.
From the factory to your customer, countless hands touch your product. At any point, numerous things can go wrong. For instance, dockworkers could pack your products incorrectly, causing them to break on a rough ocean crossing. If your warehouse puts an incorrect bar code on your product, significant shipping delays can result.
Dealing with these issues requires a hands-on approach. Sometimes, you can avoid them by being proactive. You could instruct factory owners to package breakables in extra bubble wrap. To find a reliable warehouse, you could ask other owners for recommendations.
However, many supply chain issues are unpredictable, as they arise from labor or political issues. In these cases, be prepared to spend hours working out alternative arrangements.
In your home country, rules and regulations change regularly. Now, expand that to every nation – eventually, one of your shipments will break a new/updated law. When that happens, your shipments may get held at the border. Even worse, they may get seized.
To avoid fines, lost shipments, and angry customers, stay on top of relevant trade laws. Subscribing to sites like the Global Supply Chain Law Blog certainly helps. However, we advise outsourcing this task to an executive assistant.
A 1% shift in currency markets can suddenly leave you short. In previous years, movements like these were rare. These days, however, the world is rife with uncertainty. Nations seceding from political unions, unexpected election results, and disease outbreaks now occur with regularity.
How is this a problem? Let’s say you need to send 7,000 CNY to fund a production run. So, you set up a transfer to China through your online money transfer provider. However, the night before your transaction, a development occurs in the U.S.-China Trade War. As a result, the CNY rises 1% against the USD.
Now, instead of getting a USD/CNY rate of 6.91, your transfer sends at 6.83. Because of this, you end up shorting your supplier by 83 CNY. In this instance, you’d have to spend half your day correcting this mistake.
Fortunately, international business money transfer firms like OFX offer forward contracts. This way, your transfer will send at a guaranteed rate, avoiding embarrassing situations as described above.
Thousands of factories make what you want to import. However, only a handful do it well. Eager to attract business, many factories paint a misleading portrait of themselves. Months later, they send fewer items than promised, products that break easily, and so on.
To ensure your supplier is the real deal, you’ll need to put boots on the ground. By examining their facilities, you’ll be able to sort the wheat from the chaff.
Customs & Culture
Overseas, people conduct business & life differently. In the West, we expect contacts to be punctual and time-efficient. In some countries, though, meeting times are often guidelines. Rather than a quick factory visit, 2-hour lunches and late-night drinking sessions are part of the process.
Get upset or impatient, and it can jeopardize the whole deal. Before heading abroad, research local customs & culture. By understanding everything that is going on, you’ll avoid offending your business contacts unintentionally.