Introduction to exporting: Part 1
Introduction
Businesses of all sizes become involved in exporting for a variety of reasons. Whether you want to increase your sales abroad or export a new product to sell in Europe, exporting can provide you with a whole new range of products and customers.
Despite its many advantages, exporting can be complicated and expensive; there are many rules, regulations, and situations that need to be taken into account.
Administration
The administration of exporting must be precise and logical. Paperwork must be in a format that will satisfy and function in both countries, some of which may be less advanced than the UK.
Product suitability
Is it lawful for the product you want to sell to be exported?
A number of products are restricted in the UK; including:
- Some foods;
- Some flowers;
- Plants or seeds;
- Some types of electronic equipment, and;
- Certain types of art and antiques.
Each country will have a different list of restricted products. You should always find out as soon as possible if the product you wish to move is restricted.
A number of items will require a licence from the Department of Trade and Industry’s (DTI) Import Licensing Branch to be imported legally.
Some products are more suitable to exporting than others. You must consider whether:
- Your product is suitable technically;
- You can market your product overseas and beat the competition;
- There is demand for your product;
- The competition can be beaten;
- If your product will need servicing - by whom will this be done?
- The target country is stable (conflict affects countries overnight);
- You need to conduct specific market research (is your product unchallenged or will you have to gain a share of the market from an existing exporter or local manufacturer).
Additionally, you will need to consider:
- Shipping and transport: cost and delivery preferences;
- Packaging and labelling: get it wrong = delays, even lost goods;
- New invoice and payment skills: totally unique skills;
- Good knowledge of import country: you are blindfolded otherwise.
An export manager can help you with all these concerns. Of course, they too, will cost money!
Will Your Products Work?
A crucial element of exporting knows that the product will sell. If you export an electrical item, will it need a new plug or adaptor to run? Is it compatible with other European / Chinese accessories and products? Are the instructions and product details in the right language? Some countries and products require readable instructions by law.
Regulations and Taxes
Duties and VAT
In the majority of cases, you do not need to charge duty or VAT on exports. You must have official or commercial evidence of non-EU exports to not charge VAT. The rules are different depending on the product and whether it is being exported in or out of the EU. Before you start exporting, you must make sure that you are fully aware of any duty or VAT you need to pay when exporting.
As small businesses may not be VAT registered, the rules will vary depending on the product, you should be certain to clarify the duty or VAT you will need to pay, and how this will change if you register for VAT in the near future.
Depending on the amount you export, some business will be entitled to claim back some of the duty or VAT payments that you make. A number of businesses are also entitled to delay payment of duties (mainly for goods imported from outside the EU).
Customs Entries
The vast majority of exports outside of the EU or to special EU territories also need to be declared to Customs and Excise as they leave the country.
If you are exporting from within the EU, a customs declaration is not usually necessary. If you are VAT registered and your EU imports or exports exceed a set amount (currently £233,000 a year) you will need to fill in a supplementary declaration form each month.
Training
The exact details of export regulations are long and complicated. One way to help improve your businesses ability is to undertake export training. This will help you to understand in more detail the rules and regulations regarding the products you move.
This will help to ensure that you pay all necessary duty, and are able to claim back all the money you may be entitled to. The cost of training can be quite high, but if your business is looking at exporting in the long term, then the cost will usually be more than worth it.
