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STRATEGY

How to Navigate the Importing Seas

Valuable advice on importing.
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Going directly to a foreign source of product looks like a great way to cut costs and boost margins. For Peter Nielsen, importing hard-to-get parts for vintage Volvos proved to be the perfect complement to his auto-repair-and restoration business, Swedish Classics, in Oxford, Md.

Nielsen, whose sales are just under $500,000, has three employees and three WATS lines. He got his start in importing about 10 years ago by copying down the address labels on a few parts he had purchased from U.S. suppliers and contacting the manufacturers in England and Sweden directly. "They were very friendly," he says. Today Nielsen stocks thousands of Volvo parts and has the exclusive U.S. distribution rights on a profitable line of Volvo emblems. But, as Nielsen knows, there's more to importing than making a few long-distance phone calls. Before you jump in, consider:

* Total product costs. Dozens of components factor into what's called the landed cost, or the price of purchasing and securing the product; all will have an impact on your profit margin. The landed cost includes the initial cost of the product from the factory; air- or ocean-freight charges; U.S. customs duties; interest on bank letters of credit; and customs-broker fees. If, like Swedish Classics, you can't fill an entire air-freight container on your own, expect to pay a premium.

* The customs maze. Nielsen mistakenly figured he could take his first shipment through the U.S. Customs Service (USCS) himself. "It took me all day to do it, and I barely got the shipment through. Every part comes with a series of questions and criteria." Soon after, he hired a customs broker to handle all freight arrangements. Ask other importers in your industry for names of customs brokers, who must be licensed by the USCS and usually charge a flat fee "per entry."

* Quality control. When finding product suppliers, visit a number of foreign factories or trading companies, suggests Steven Kivitz, foreign buyer for Chadwick Miller, a Canton, Mass., importer of giftware. Then hire an overseas inspection agency, which will charge a flat fee or by the hour, depending on the tests done. You can make passing inspection a condition of the letter of credit, he adds, so your bank won't release payment without the stamped certificate of inspection.

-- Susan Greco

Last updated: Sep 1, 1992




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