What Do I Need To Know About Importing Goods Into New Zealand To Sell?

16 November, 2021 | Kristal Rogers

Importing goods from overseas is slightly more complicated than you may expect and it is advised that anyone looking overseas for products to resell in New Zealand thoroughly investigate the matter before doing so. Some helpful steps to check off are:

Is there demand for the goods you are wanting to import?

It is important to know this and to gather this information using an external measure like a survey to gauge customer demand, this will limit your risks of there being limited to no demand for the imported goods.

Are you able to bring these goods into the country legally?

Like many countries, New Zealand also has restrictions on what is and what isn’t allowed to be imported into the country. Before spending time and money importing the goods, it will pay to research whether the goods can be legally imported into New Zealand.

Importing costs can include:

• GST
• Charges for freight
• Customs clearance tariffs
• Customs duties and levies
• Storage

These are some of the costs that may be involved with importing goods into New Zealand, and they should be properly calculated as part of your landed cost before the purchase of the goods is complete.

Cost effective

Once all costs have been accounted for and you have an overall landed cost of the imported items, it is important to then establish if this is a cost-effective option for you and your business. These additional costs can add up and you need to ensure you will still be able to make a reasonable return once these costs are covered.

Affordability

Shipping and transport costs generally make it more economical to place larger orders  – so you will need to balance the desire for a lower per-item transport cost against the higher upfront purchase price for more items.

Importing from overseas is not an overnight delivery process and shipping can sometimes take months. It is important to keep this in mind because your supplier will usually want at least a proportion of the purchase price at the time of ordering, meaning that money is either tied up or unavailable for a number of months.

Importing risk

Control issues

As the goods are coming from overseas there is larger distance between you and the supplier making it harder for you to check on your stock, and deal with any issues that may arise

Returning goods, if something is faulty, damaged, or wrong, has a much larger turnaround time due to the distance between you and the supplier.

If your supplier lets you down, you run the risk of having to accept inferior goods or goods of a lower standard than you originally ordered due to not being able to find replacement goods in time.

Find reputable suppliers and try to place orders with terms attached to them that give you insurance on non-delivery or include penalties.

Exchange rate fluctuations

To avoid this risk:

• ask the supplier for quotes in New Zealand dollars,
• add exchange rate risk margins,
• Purchase forward cover to protect from these fluctuations.

Trading terms and Customs requirements

The international Chamber of Commerce has developed standardised rules for the interpretation of trade terms called incoterms. It is important to be aware of these to understand terms such as FAS (Free Alongside Ship) and FOB (Free on Board) – but not all international suppliers/distributors rely on incoterms, so it will depend on negotiating with the other party to a large degree.

Safety Regulations

Any individual looking to import goods into New Zealand must be well aware of the relevant product safety regulations. If the imported products do not comply with New Zealand safety standards they will be stopped by Customs and will not be allowed into the country. A list of products are already banned from being brought into New Zealand, others must be compliant with the standards to be signed off on importation, this requires a signed off certificate to prove the goods meet all the required standards.

After taking this information into consideration and being well aware of potential risks it is then important to establish sustainable demand for your goods in New Zealand, gather information on reputable supplier, engage in freight forwarding services or custom brokers to assist with understanding any or all terms of trade, and ensure protection terms or negotiate contract terms for things such as non-deliver, below standard goods received and late delivery etc.

Smith and Partners commercial team can help you understand the risks, determine the provisions of any contract you’ve been given and help you draft terms to protect your interests in these types of matters. To set up an appointment, contact business law expert, Kristal Rogers on 09 837 6896 and email kristal.rogers@smithpartners.co.nz.