Importing A to Z: The Checklist
by Edith Tolchin
EGT Global Trading was established in 1997 with a goal to link U.S. inventors with overseas sources/manufacturers, to provide a "One-stop Import Experience" for prototypes, quality control, manufacturing, international financing, air/ocean shipping, customs clearance arrangements, and dock-to-door delivery. Edith Tolchin, President of EGT Global Trading, has over twenty-nine years of experience in all phases of Import and International Trade. She has worked with both large and small Importers with all commodities from salted nuts to chemicals and waxes, to wearing apparel and toys. Edie also has extensive experience with U.S. Customs and Customs Brokers in various products and issues, including binding rulings, duty protests and drawbacks. Below is a checklist Edie recommends when considering importing.
1) Sourcing: Locating foreign sources, checking their references, obtaining product samples. Presenting your own samples for production of first prototype and price quotation. Exploring the possibility of locating an overseas buying agent (not applicable in all cases) who coordinates all transactions with the manufacturer, for a small commission (usually 2-4% of F.O.B. cost of item). Present prototype sample to U.S. Customs for "verbal decision", or "Binding Ruling", on Import duty/tariff rate, quota category (if applicable), as well as for any special documentation requirements.
2) Means of Financing the Import: Upon determination of product cost, negotiation with vendor/agent regarding method of payment, i.e., wire transfer, cash in advance ( not a good idea), letter of credit (the most widely used method). Locating an international bank to establish a credit line (for letters of credit).
3) Sales Contract: Usually, a "Purchase Order". The first purchase order with a new vendor should be reviewed by your attorney, if at all possible. Then a "sample" P.O. should be faxed to vendor/agent for their comments and review. All details must be included, such as method of shipment (air or ocean), inspections, special documentation, and especially proposed delivery dates (this is VERY IMPORTANT, since foreign deliveries are RARELY "on schedule"). Finalize PO, sign and mail original to vendor. Also, separate contract should be made with buying agent, again if applicable.
4) Letter of Credit: (If applicable) After credit line is established with bank, application is completed (not signed) and faxed on to vendor/agent for comments, review. Once this is done, Letter of Credit can be opened.
5) Customs Brokerage/Power of Attorney: A customs broker is appointed who will handle the customs entry/clearance process of the import transaction. A "power of attorney" form is sent to you to enable you/your company to be the "Importer of Record", and gives the customs broker your P.O.A. to clear your shipments. Single-entry or Continuous Import Bonds are determined at this stage.
6) Production: Goods are then produced in the factory. Weekly expediting details must be provided, which give you the production/delivery status of your product. Production samples are sent to importer for approval. Towards the end of production, if you wish, you may request daily delivery progress updates.
7) Shipment: When goods are ready, you must advise the vendor/agent the method of shipment you will use. Since you have plenty of time during the production process, you can research the most economical freight rates. Marine Insurance should be opened at this time, if applicable.
8) Payment: If "wire transfer", vendor must meet all documentation requirements, then wire transfer is effected. If Letter of Credit, vendor and agent now work together to make sure ALL DOCUMENTS are presented to their (foreign) bank in a timely fashion (usually no later than 7-10 days). Photocopies of these documents are IMMEDIATELY faxed to you for your review. Your account is debited for the amount of the commercial invoice, and any applicable bank fees. YOU NOW OWN THE GOODS. Vendor then receives his payment from his bank. You may then negotiate with foreign agent as to how he receives his commission, usually by check or wire transfer. Original documents are then sent to you for:
9) Customs Clearance: Original shipping documents are sent to local customs broker (usually at the port where goods enter the U.S.), along with a letter of instructions, indicating where goods are to be delivered, once cleared by Customs. You determine method of shipment of the goods from the pier (or airport if it is an air shipment). If you use your own truck, trucker must be given a delivery order. If you use the customs broker's truck, you must advise them where to send the goods from the port (i.e. to your warehouse, directly to a customer, etc.) Clearance/entry is effected and import duties are prepaid. Customs broker sends you an invoice for these charges.
Good Luck!
*Please bear in mind that the above is an example of a "typical" Import transaction. Usually, first orders follow the "Murphy's Law" of Importing. There are often "glitches", such as delivery delays (as I said before, most foreign countries do not work on "New York Time"), initial prototype quality modifications, weather-related issues (monsoons, typhoons, etc.), all of which are normally easily remedied with advance planning, allowing for plenty of delivery time, and TONS OF PRACTICE!
(c)2000 E.G. Tolchin - EGT GLOBAL TRADING, P.O. Box 231, Florida, NY 10921 USA, e-mail: EGT@warwick.net / Web: hometown.aol.com/egtglobaltrading
Ms. Tolchin contributes to INVENTORS COMMUNITY as an industry expert, but is not employed by or otherwise compensated by INPEX, InventHelp or its affiliates.
