Intro to Import/Export Business

Introduction to Import/Export Business

• Import business involves buying goods from foreign countries and selling them domestically.
• Export business involves selling goods produced in the home country to foreign countries.
• Both import and export have equal potential for making money.
• Import business has higher competition due to many trying to procure from China and sell in India.
• There can be unethical monetary involvement with customs officials.

The Speaker's Background

• The speaker has dealt in carpets from Bhadohi and Mirzapur, India.
• Bhadohi and Mirzapur are known as the carpet cities of India.
• A small carpet cost around $40, procured from the US for a video shoot.
• The speaker has been in this expert import niche for the past five years
• The speaker has two companies
  • One in India
  • One in Tanzania
• The speaker has dealt with shoes, leather items, scraps, corrugated boxes, and jute bags

Frauds and Misconceptions

• Essential commodities are high-risk for beginners due to fluctuating prices and government regulations.
• An example of a successful but unusual product is a "pet rock," a decorated stone sold as a companion.
• A company selling pet rocks is worth ₹500 crore.
• Importing and exporting is commonly perceived to be a very challenging task to complete
• Importing and exporting are actually very easy to complete.

Starting in Import/Export

• The podcast discusses how to start an import/export business.
• It covers how to avoid fraud, deal directly, and maximize profitability.
• There are individuals 10-15 years into importing and exporting.
• Many of these individuals students earn lakhs of rupees alongside their jobs
• The speaker introduces the basic and advanced concepts of the import/export business
• The speaker is a computer science engineer by education
• Initially, the speaker was a poultry farmer
• In 2020 the speaker entered export/import niche

Why Choose Import/Export

• Import/export is not a unique business
• This business has its advantages and disadvantages
• Any product that is made in your country, you sell to other countries, it is called export.
• Any product from other countries that is being sold locally in your country, it is called import

Reasons for Failure

• 90% of people fail in the import/export business due to an incorrect mindset.
• It’s more important to know the market you are selling to and the consumer psychology
• People fail because they try to sell products of their choice instead of what the market needs.
• Money comes from the customer, so it is important to prioritize the demand of the customer
• Enormous capital is required to generate and sell a product that you like in the market

How to Research Demand

• Visit foreign e-commerce platforms to see what products are in demand
• Check customer ratings and purchase volumes to gauge demand.
• Use business principles to estimate and create a roadmap
• Be willing to be flexible and try new things

Experience With Products

• The speaker started with leather shoes.
• The speaker has also dealt with leather, scrap import, corrugated boxes, and jute bags.
• Scrap business is very risky for beginners and requires substantial capital.
• Restrictions exist on exporting scrap from some African countries due to infrastructure damage.
• Rate of scrap commodity is highly volatile

Market Size & Profitability

• The import/export business has unlimited opportunities ("sky is the limit").
• The import/export market is very old.
• It influenced the Moguls rise to power
• It influenced the British rise to power
• It was Dhirubhai Ambani's first impactful business

Import vs Export

• There is a higher competition in import
• There are more opportunities in export due to less competition

Essential vs. Finished Goods

• For high earnings in exports, always choose finished products, as opposed to essential goods.
• Essential commodities are a "suicide formula" for beginners.
• Examples of essential commodities from India are wheat and rice.
• You can’t export wheat from India, as of right now
• There are also restrictions in some onion varieties
• Sometimes there is a duty when selling essential goods to other countries due to shortage of that material

LCL vs FCL

• LCL (Less than Container Load): part shipment
• FCL (Full Container Load): full container, 20 or 40 feet, or refrigerated cargo.
• It is more profitable to work with finished goods if you only want to do LCL
• The world needs finish goods such as textiles, furniture, and engineering goods

Capital Required

• The majority of expert work done in bulk
• Starting can be done with a minimum of ₹5-10 lakh.
• The speaker advises having a minimum capital of ₹5 lakh.
• He emphasizes practical business advice based on experience in African markets.
• He advises people to be wary of those that sell "dream selling"

Essential Documents & Licenses

• The import/export business is very fair.
• There are multiple rules and regulations to protect you from getting your money lost
• First, get a company
  • Sole Proprietorship
  • LLP (Limited Liability Partnership)
  • Private Limited
• Public limited company is for much larger exports volume
• Savings bank account holder cannot export
• You need a current account to export, which is the second step
• Next, you need a GST

GST Explained

• GST (Goods and Service Tax) certificate is necessary.
• The government wants to ensure that purchased goods are actually exported to prevent tax evasion.
• There are two pathways to take if you get GST
• You get an LUT (Letter of Undertaking)
  • Your CA is the person responsible for giving you that letter
  • This letter gives you access to GST wave of 0%
  • If you exported 1 lakh in product you will get the 18% back that you used to buy the product
• Second pathway gives your money back

Import Export Code

• Need an import export code which costs ₹500.
• Can be obtained from the DGFT website.
• You can get the import export code done at your home, and it is very easy

Advanced Documents Needed

• Beyond basic setup, focus on securing a strong seller and supplier.
• Minimum of give supplier of one item is needed so that you get the best deals.
• Key factors are the need for competitive rates, good quality, and timely delivery
• Words are very important; do what you say. If there is commitment to doing something, it must be done
• The country India has an export deficit. The import is double what export is
• Important to always prioritize the suppliers, such as China

Finding the Right Seller

• China has a dominance in exports.
• It is important to choose finished products to get good return on your money
• To find the right export, a person must always keep consumers in mind

India's Dominance and Exports

• India is known for commodity products, such as vegetable and food items
• Nasik onions are exported to Europe due to their quality and low moisture.
• Electronics are a major import for India, largely from China.
• Some people make money by selling rocks with eyes on them as pets

Recommendations for Export

• Textiles
• Jute
• Leather material, such as bio leather
• Furniture
• Focus on what you can sell now

Logistics of Exporting

• One of biggest things is that quality must be looked at and is what makes or breaks the deal
• Some of the biggest challenges is the customer’s mind

Earning Potential

• One can earn approximately 20 Lakh a month
• There is a scarcity in the copper scrap market, and there is the ability to make a high amount of money in copper
• An ordinary individual can automate their process
• If client is interested, they will come. You don’t need to go to them!
• Create a portfolio
• You can use client portfolio to get more clients

Working With Suppliers

• In India, the suppliers are overburden with local things that are not sales related
• The Indian supply chain is not as strong as it should be
• Therefore, India has trouble with exporting
• Many clients that make 30 crore a year only take out 2 lakh a month in revenue

Types of Exporters

• There are two types of exporters
  • Merchant Exporter (traders)
  • Manufacturer Exporter (maker and seller)
• 60% of traders are merchant exports

Logistics Break Down

• One should get inspiration from client, not copy them
• One has the ability to make two lakh rupees a month at an easy pace
• If you want to make good money, you can’t focus on commodity products
• One needs to know how the parts move to figure out if something is real or not
• Tax and duty varies product by product
• There is no need to export with a lack of knowledge. Do the research and study

Taxes & Fees

• When sending things out of the country it is cheaper
• Electronic have 30-50% in tax and duty
• Even with import duty, China is still able to undersell local manufacturers due to low costs

Cost Break Down

• The government wants to know the price by shipping and loading (FOB). This is how prices and taxed are calculated

Shipping Challenges

• Transportation must be calculated
• Transportation incidents must also be calculated (accidents, spills, rain)
• Bad shipping can decrease or destroy deals
• Packaging is important to stop deal from falling apart

Supplier Relations

• The main game is to make sure the equipment is with the right fit
• One must maintain supply relationships and maintain healthy relationships

Minimum Requirments

• Minimum 5 lakh in capital is needed

Tanzania and Export Rules

• Tanzania knows more about exports and regulations than Indian exporters!
• The buyers need convenience. You must be able to give that person an easier alternative than their original plan

Reaching Suppliers/Buyers

• The person will need to be a salesman-like to close

Reaching Buyers

• Easiest approach is networking; build relationships with clients in the same sphere
• List yourself and items on B2B portal for more clients

Prospecting

• Contact the business in person or online
• You can get the listing as a client

Common Mistakes

• Not building a personal network is a common mistake
• One should build face-to-face personal connections with clients

Reasons for Export Failure

• The greatest mistake is desperation
• The businessperson must not be afraid to negotiate
• The leaders must work with integrity

Sales Mindset

• It is important to apply a sales mindset instead of thinking of the job as simply doing someone a favor by giving them an item
• Don’t just depend on free methods to get client

Product Marketing

• Marketing is as important as product quality
• Use networking and showcasing methods to build trust. Cold outreach does not usually work
• Master the skill of quality of sales and filtration to maximize revenue

Converting Client

• Learn the client to see if they’re serious by getting on a call with them
• Being able to know where to stop and where to move
• An Indian exporter has a very bad mentality (weak)
• They are not firm in what they believe

Frauds

• One way to get hit with fraud is to rely on something that the person doesn’t know

China Scam

• One time 35 lakh of product was lost to a scam from China due to import problem (scrap)
• One should get something shipped from the seller
• Most of government agencies are supportive of exports rather than imports

Bill of Lading

• Don’t trust B/L
• Everything can be falsified if you don’t know the secrets

Safety

• Prioritize protecting yourself, then money, then goods

India Export

• One of the safest product to use for beginner is handicraft
• An individual can export with those items and will not fail
• Export gives more revenue than salary work

Toy Market Size

• The toy market is going to grow immensely
• Today’s children use tablets and will want something nice, not cheap

Export Statistics

• Minister Piyush announced that India will reach 8 billion USD in exports by 2025