How to import goods from non-EU countries

In this article, Willeke Borman and her daughter Saskia Borman explain how their company Fuego B.V. imports products from countries outside the EU. They will take you through all the practicalities to show you exactly what steps you will need to take.

• Market research
• Product requirements
• Working with suppliers
• Laying down agreements
• Arranging transport
• Customs and taxes
• Paying your supplier

Market research

Do market research to find out if there is demand for your product. You can conduct market research from home (desk research) or in the field, by visiting a trade fair, for example.

Fuego B.V. imports AED devices and first-aid materials from the United States and China. Willeke Borman, the company’s director and majority shareholder, has worked in the safety products industry for many years and still tracks the latest developments closely. “Our market is fairly closed, so we regularly visit international trade fairs to stay up to speed and spot gaps in the market. On top of that, we use research and surveys of our customers and our partner, the Dutch Heart Foundation.”

Product requirements

Products purchased in the European Economic Area (EEA) are subject to product requirements on safety, health, and the environment.

“Our AEDs have to comply with the MDR, the European Medical Device Regulation, and the EMC Directive (in Dutch) for electrical devices,” says Saskia Borman, operations manager at Fuego. “We have all the necessary documentation and had all our devices tested and assessed by a testing agency to make sure that they are all safe and fully compliant. All AEDs bear the mandatory CE marking.”

Working with suppliers

Mother and daughter met two of their suppliers at a conference and a trade fair, respectively. “I met our U.S. AED supplier at a European CPR conference in Iceland,” Willeke recalls. “I took the plunge and was lucky enough to convince them of the merits of selling their AEDs in the Netherlands. At the MEDICA trade fair in Düsseldorf, we met our Chinese supplier of first-aid kits for businesses and cases for our AEDs.” Saskia adds: “We also work with a Chinese AED supplier, so we are less dependent on a single supplier. We got to know this supplier during the coronavirus pandemic, which meant that we were unable to visit the factory in China first.”

Online business is not the same all over the world. The Bormans use Teams to communicate with their American and Chinese suppliers, as well as using  WeChat in China.

Vetting your supplier

Before you do business with your new supplier, you can vet them to make sure they are reliable. Willeke: “We vetted all our suppliers to check that their financials were in order. The American and Chinese AED manufacturers proved to be reliable multinationals with a proven track record that also produce other medical equipment and devices.”

Culture

Familiarise yourself with the do's and dont's  of doing business in another country. Working on a personal relationship and learning about local cultures will help build mutual trust and is worth the time.

“We understand American culture better than Chinese culture,” Saskia notes. “Hierarchy is very important in China. At a trade fair, our supplier gave my mother a more expensive scarf, just because she is the director of the company and I am not. Who your contact person is in China depends on your position in your own company.” 

Private label

Fuego has the first-aid kits and AED cases made under their own brand name, or private label. “We wanted to have our own case for the AEDs with our logo on it,” Saskia explains. “The same goes for our first-aid kit. Having your own brand sets you apart from others.”
 

Fuego designed the AED case itself. “Because of the coronavirus pandemic, all our dealings with China were entirely digital. We sent a drawing with measurements by email. The manufacturer got to work on it and sent us videos during production, so we could tell them that we would prefer a different zipper or colour. Everything worked out in the end. The sample they sent us met all our quality requirements and we started placing our first orders right away.”

Laying down agreements

Willeke has set clear targets for the AED suppliers in the distribution contracts. “The contracts outline all the agreements we have made with our AED suppliers and require us to purchase a certain minimum number of AEDs every year, for instance. We did not agree on a target for the cases, but we did work out how many cases we need to purchase in order to turn a profit. The contract does bar our supplier from making the same cases for others.”

Exclusivity

Fuego was first given a one-year contract by their American AED supplier. “They gave us a year to prove ourselves by achieving the targets that had been set. After that first year, they gave us exclusivity for the Dutch market, which means that we are now the only importer of these AEDs in the Netherlands,” Willeke explains.

For the Chinese AED devices, the Chinese supplier has another importer in the Netherlands besides Fuego. “Seeing as the other importer works in a different market, we can coexist just fine. Our sales area for the Chinese AEDs includes the entire Benelux in addition to the Netherlands, and we are now even working on entering Denmark and Finland. We lay down all these planned expansions in  contracts.”

Arranging transport

Make clear agreements on transportation with your supplier. Adopting an Incoterms® rule will tell you exactly who is responsible for transportation and for the costs of transport damage.

“The goods from China and America arrive on a container ship, but seeing as we cannot fill an entire container, we use groupage shipping, which means that our products are transported in the same container as other companies’ goods,” Saskia explains. "We also work with a logistics provider who takes care of customs clearance and transports the goods to our facility in Tiel. 

Air transport

Due to the coronavirus pandemic and container shortages, Willeke opted for air transport on a one-off basis. “The AEDs were shipped from China in a passenger plane, which led to some pretty tense situations. Due to high container prices, the cost of air freight was almost equal to sea transport, but the former was a lot faster. Unfortunately, the air carrier would not transport the lithium batteries for the AEDs because they are so-called 'dangerous goods' subject to strict transportation regulations, so we still had to have the batteries transported by ship.”

Customs and taxes

If you import products from non-EU countries, they have to be declared to customs. This will often be done by your logistics service provider, such as your carrier or customs broker. You will, however, need an EORI number when dealing with Dutch customs. The import declaration contains information about the shipment, such as a description of the goods and their Taric code. Every product has its own Taric code that tells customs how much import duty you will have to pay and whether the product is subject to specific import requirements, such as a health check or mandatory import document.

Paying your supplier

For importers, purchasing goods on credit is a risk-free approach, whereas you will always run the risk that your supplier may not deliver your goods if you pay in advance. You have multiple options when it comes to payment.

Willeke: “Our Chinese suppliers only accept prepayments and want us to pay before they start manufacturing our products. This approach is risky for us, but it is a hard requirement for our suppliers. We limit our financial risk by limiting how many units we order with each batch.”

Foreign exchange risk

If you pay suppliers in a currency other than euros, you may run  foreign exchange risk  due to currency fluctuations.

Willeke used to pay their American supplier in U.S. dollars. “Until I asked them whether we could pay in euros to avoid foreign exchange risk, which they accepted.” She does pay the Chinese suppliers in U.S. dollars. “I keep a close eye on the USD exchange rate and I pay only when it is favourable, which lets me limit our foreign exchange risk.”

Do you want to discuss your import plans with an adviser? Call the KVK Advice Team: 088 585 22 22.