Different Kinds of Import Export Business
The import export business has more potential than almost any other. International trade has grown astronomically around the world in the past decades and is continuing its upward trend. With this in mind, it is easy to get started and the opportunities are endless.
What is an Import Export Business?
An import export business is one that is involved in international trade, so, one that is exporting items from one place and importing them to another. Because of this, they are considered to be intermediaries in trade between the producers of goods in one country and consumers in another. Many of the companies involved in the import export business are small companies that specialize in very specific types of goods, services, or areas of the world, as opposed to large, multinational corporations.
Import Export Business Merchants
There are three basic kinds of companies involved in the import export business. Import export merchants are international entrepreneurs who purchase goods directly from foreign or domestic manufacturers. They then pack, ship, market, and resell the goods on their own, adding a mark-up that covers the cost of shipping the goods and creates a profit. These individuals assume all the risks and get all the profits of their business, as opposed to other kinds of import export business.
Export Management Companies
This kind of import export business oversees exporting for a domestic company that wants to sell its products in foreign markets. Export Management Companies (EMCs) are often hired by companies that are expanding into overseas markets but don’t know how to proceed. EMCs hire dealers and distributors, oversee packaging, handle advertising, arrange for shipping, and sometimes even do financing for the goods so that the domestic company doesn’t have to do any of it. They usually are paid by commission or retainer.
Export Trading Companies
The final type of import export business is an Export Trading Company. An ETC works on the other end of the trading spectrum from the EMC. This means that an ETC first finds potential foreign markets and buyers. They then hook the buyers up with domestic sources that are willing to export. An ETC may purchase the goods from the domestic source and resell them to foreign buyers or it may get a commission for finding the buyers. Either way, the risk is spread between the ETC and the other parties in the transaction.
Getting Involved in the Import Export Business
The best place to begin getting involved in the import export business is to educate yourself. The rules and regulations that restrict the import export business vary from country to country, so it is important to do your research before getting started. In addition, identifying potential markets or potential sources of goods, depending on which end of the business you’re involved in, is an essential step. Being specialized in one particular area of import export will help make your business successful.
The import export business has major earning potential for those who approach it in an educated, targeted way. Make sure you do your research and use any connections you may already have when starting an import export business.
If you enjoyed reading about Different Kinds of Import Export Business then see our next article about Import Export Business Plan.
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