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You've identified a product you want to import
You've researched the market, looked overseas and identified a product you think has a market in New Zealand. What comes next?
It's important to manage your risk, so you might want to:
- Do your due diligence on the supplier, the product and the market.
- Think about the logistics, the physical movement of the goods. How will you actually get the goods into the country, by sea or by air?
- What are your import entry requirements?
- Consider the cash flow impacts on your business.
As well as this guide, check out the business.govt.nz website for useful tips on what to do before you import.
Due diligence - what to consider
Due diligence involves doing as much research and analysis as you can before making the decision to import. Some of the most important things you should consider are:
Research
Chances are you've thought about this, but it's prudent to do some market research, so you have an idea about pricing sensitivity, customer interest, the needs of your target market and who your main competitors are. Make sure there's enough demand in your local market for the end product, whether you're importing a product to re-sell in New Zealand, or importing a product to use in manufacturing.
Barriers to trade
Are there any trade embargoes, socio-political unrest, economic issues, sanctions or anything else outside of your control which might impact you? Think about not only the country you are importing from, but your whole supply chain. Read more about how sanctions may impact your transactions.
Supply consistency
Make sure that your foreign supplier can maintain a constant supply of goods at the same specifications and quality. Check their references and try to do an on-site visit. It's a good idea to scope an alternative supplier(s) in case you run into problems and need a back-up.
Liability
If you import goods from another country you'll most likely be responsible for any recall or safety issues with the product, which can be costly as well as carrying the risk of litigation and associated damage to your company's reputation. Protect yourself from safety issues and recall risks by taking out liability insurance for the product you're importing.
You can check the consumer protection website for information on product safety and recalls.
Legality
Make sure you're legally able to import the goods into New Zealand. Some items are prohibited (for example some chemicals or medicines), some items are restricted, and some items are not allowed if they're from certain countries. You might need consent from the New Zealand Customs Service or the Ministry of Primary Industries. You can find more information about importing, including what items are prohibited or restricted, on the New Zealand Customs Service and Ministry of Primary Industries websites.
Additional costs
Determine whether importing is cost-effective for your business. There are lots of extra costs and charges associated with importing goods, so investigate what these might be before deciding whether to import.
Additional costs might include:
- Transport and insurance
- GST
- Customs duties
- Storage
- Finance charges
- Freight charges
Terms of trade
Negotiate the terms of trade with your supplier. What happens when there's a non-delivery or late delivery? Who pays insurance costs for the goods in-transit? Who's responsible for customs declarations? In what currency will the transaction take place? The following links will help shape your terms of trade:
Exchange rates
Decide how you want to deal with exchange rate fluctuations. You'll most likely be buying goods in a foreign currency which means you'll have a foreign exchange risk. You can deal with this in several ways, such as:
- Asking your supplier to quote in New Zealand dollars.
- Purchase a forward foreign exchange contract. We can help with this.
- Add an exchange rate risk to your margins and carry the risk yourself.
Moving your goods
It's important to understand the logistics and risks of actually moving the goods from your overseas supplier to your business in New Zealand. Here are a few things to consider.
Shipping responsibility
Who will arrange the physical movement of the goods you're importing, and will they be sent by sea or by air? Either you or your supplier will have to get in touch with shipping companies and explore the various shipping options. You should also sort out who pays and who is responsible for insurance of goods in transit. We can help with this.
Customs requirements
What are the customs requirements? Who will lodge the paperwork and declarations? Check that you're legally able to import the goods into New Zealand and also which countries the goods will pass through before reaching New Zealand. There may be different customs requirements depending on where the goods come from.
Paperwork
Make sure you're clear as to who will be lodging the customs paperwork and declarations. It's usually the sender who arranges this, through their logistics company, but it's important to be clear at the beginning of the process as to who's responsibility it will be.
Import entry requirements
You'll need to declare your imports to New Zealand Customs by lodging their details through the import entry clearance process no later than 20 days after they arrive in New Zealand. Check the business.govt.nz website for information on how to declare your imports.
You'll also need to clear your imported goods by submitting an import entry clearance or Electronic Cargo Information (ECI) form to New Zealand Customs. Usually a customs broker or freight forwarder will do this for you, but you can do it yourself online if you wish. You can find out how to submit your import entry clearance on the New Zealand Customs Service website.
New Zealand Customs Service will screen your goods and you’ll have to pay any applicable charges such as GST or import duties. Goods from some countries have lower duty rates than those from other countries. You can find out which countries have preferential tariffs on the New Zealand Customs Service website.
Check out the New Zealand Customs Service website and the Ministry for Primary Industries website for more information about customs clearance and what’s required by customs when you import goods into New Zealand.
We can help you through the process of arranging shipment of your goods, dealing with the customs requirements and insurance of your goods in transit.
Cash flow management
Importing is cash-intensive for two reasons.
- It’s more cost-effective to place larger orders less often rather than smaller orders more often, but large orders are more expensive.
- There’s often a time-lag between making payment and receiving the goods.
It’s a good idea to find out when you’ll be required to pay for the goods and how long you should expect to wait before receiving them. There’s often a time-lag and you may need to fund this gap.
We have a range of trade finance options which can help your business operate smoothly, including letters of credit, invoice financing and trade finance loans.
We recommend you also discuss this with your accountant or business adviser, and make a plan to manage the impact of importing on your cash flow.
Next steps
Talk to an expert
Talk to one of our International business experts.
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