Strategic Reasons to Launch an Import Business

By | July 10, 2021

Prospective importers must first gain a thorough understanding of the imported goods to be sold. Just as important is a detailed study of the financial realities of importing those goods. This often depends on the audience to which the imported goods will be marketed. Another key factor is the business environment in which the proposed importing company must operate.

Product Reasons to Import

Successful importers search for products with global reputations for quality. Other importers focus on raw materials that are cheaper on international markets sometimes due to climate. Specialists prefer to import exclusive products like Canadian ice wine as a way to dominate share for targeted products in their respective home markets.

Below is a checklist of reasons for importing based on the advantages of the targeted goods.

  • Acquire goods in constant demand due to their high quality.
  • Raw materials cheaper internationally than in home market.
  • Exclusive products enable importers to dominate market share.
  • Replace obsolete goods.
  • Take advantage of technical advances.
  • Develop new lines of import.

Financial Reasons to Import

When the US dollar depreciates, American importers have to pay more dollars to buy Middle Eastern oil. However, imports in general garner higher profit margins than exports because exporters have operating costs including manufacturing and production expenses.

The following summarizes financial planning factors for importers to consider.

  • Strong importing nation currency lowers import costs
  • Higher profit margins for importing over exporting
  • Imported products are more attractive as domestic production costs rise
  • Exporters offer special trade discounts to start import business.

To encourage the import of raw materials and components not easily accessible in the home market, local Custom authorities may establish a remission program that reduces or eliminates tariffs on those inputs if used to manufacture final products.

Marketing Reasons to Import

Ideally, the home market should have healthy economic indicators including low interest rates, believes a casino review website. Low inflation and high employment so that people have the cash to whatever goods the importer decides to sell. Specialized niche services like refining raw diamonds have made many Indian entrepreneurs wealthy. More recently, market demand for imported premium beers has steadily grown over time. Importers also bring in ethnic goods ranging from Ethiopian spices to Filipino buns to satisfy immigrant market demand.

The following list can be used to evaluate an importing opportunity from a marketing perspective.

  • Positive economic indicators in home market encourage purchases of imports.
  • Provide specialized services in importers market.
  • Demand for an imported product has increased over time.
  • Import goods to service specific ethnic groups.
  • Invest in a local distribution system.
  • Wholesalers or distributors want to buy directly from importers.
  • Importer may choose to supply retailers in his market directly.
  • Exporters offer market support to importers especially for highly technical products.

UK entrepreneurs could import New World Wines like those from Argentina and New Zealand if they were investing in a distribution system to local retailers. Wholesalers and distributors sometimes want to buy commodities like tea and coffee directly from importers. Other times, importers have to convince large retail chains like Wal-Mart and Costco to allot shelf space for their goods like specially imported safety shoes. Exporters can entice importers to buy technical products like voice-activated GPS navigation systems by bundling those advanced products with import marketing support.

Strategic Planning Key to Success

Many importers plan to also export products at a later stage. Customers in other countries sometimes ask importing countries to source such products as gold coins produced by the national mint. If feasible, the importing company then engages in exporting activity as a way to increase overall business revenues and profits.

Import initiatives can also lead to joint ventures and strategic alliances with companies in other countries with comparative advantages. For example, German engineers are currently developing solar and wind energy technology that can be manufactured and marketed around the globe.

Entrepreneurs Seek Import Business Advantages

Importing businesses offer strategic opportunities for entrepreneurs in Canada and the United States to rebuild their economies by providing jobs that support North American core competencies.

Imported Products that Satisfy Unmet Demand

One of the most common reasons to launch an import business is to deliver products that fill a void or gap in the home country’s supply chain. The imported product is typically new, unavailable or produced in insufficient quantities to meet target market demand.

For example, the sweet dessert alcoholic beverage known as ice wine can only be produced in four cold-climate countries: Canada, Germany, Austria and China. Import businesses in America, South Korea, Japan and China use their competitive advantages in distributing ice wine to market and distribute wine lovers willing to pay premium prices for a product not produced by local industry.

Similarly, Americans consume more bananas than any other fresh fruit. While bananas can be grown in Florida, the U.S. imports most of its bananas year-round from foreign suppliers led by Costa Rica, Ecuador, Honduras and Colombia.

Perceived Value of Imported Goods

Old World Wines from countries like France, Italy and Germany have a rich tradition of fermenting top-class wines. These imported vintages command premium prices around the world. New World Wines like those from California, Chile, Australia and South Africa are also enjoying increased demand from importers as affluent middle-class drinkers pursue new unique taste experiences.

The ability to afford premium imported wines is seen as a status symbol, particularly in emerging economies like China and India. This in turn increases the perceived value of imported wines from these countries.

Quality of Imported Supplies

The quality of imported goods had a direct impact on the level of sales in the domestic market. Because of product dependability and superior performance, Intel is a world leader in sales of microprocessor chips that go into desktop and notebook computers as well as network servers.

Importing businesses in the Asia-Pacific region are well aware of the quality of Intel products. According to Hoovers, importers in the Far East and Australia generate more than half of Intel’s revenues.

Imported Products with Cost-Efficiencies

Many importers take advantage of the fact that some products can be produced more inexpensively elsewhere and therefore are cheaper when imported. This includes foreign-made automotive products from countries like Mexico where the average automotive parts worker earns about $3 per hour. Excluding rich employee benefits and retirement packages, employees working for American or Canadian automotive companies make more than $18 an hour and are unionized.

To lower their costs, importers in developed countries often focus on products made in lower cost nations including Mexico, China, Taiwan and South Korea. Another example is the Canadian company Gildan Activewear which makes the bulk of its T-shirts, underwear and socks in the Honduras – one of the poorest countries in the Western Hemisphere. Gildan then supplies its low-cost textile products to importers in North America and Europe.

Lower Shipment Costs

The mode of transportation for imported goods can involve lower costs than shipments within the domestic country. Shipping Red and Golden Delicious apples from Washington State via truck to importers in the nearby Canadian province of British Columbia costs less than comparable shipments from orchards in other Canadian provinces like Ontario or Prince Edward Island.

Falling Foreign Currencies Good for Import Businesses

Imports often increase when the currency of the exporting country falls, principally because the exporting country can afford to buy more of the imported products. After the Mexican peso was devalued in 1994, American imports of fresh vegetables from Mexico rose sharply by 36% within 2 years.

Comparative Advantage Like Technology

Entrepreneurs often build their import businesses based on products from another country with leading technological features. Looking past the current financial meltdown, America has strong competitive advantages in successfully launching products with world-leading technologies. Apple iPods and iPhones are leading imports into global markets around the world because they represent the leading edge technological advances.