Importation is the legal entry of goods from one country into another country. Importing goods involves a series of risks that you should be aware of so you can mitigate them as much as possible. This article does not cover advanced topics for importers, but rather provides a brief introduction and overview of the subject. We hope you will find it useful!
Choosing your Providers for Imports
One of the biggest concerns that businesses have when starting to import is finding a good supplier. Our clients often ask us how reliable certain companies are. Based on our experience, we recommend that you use common sense and realize that there will be risks associated with importing.
A good way to find suppliers is to attend trade shows, whether they are general or specific to your industry. At these events, you can meet potential suppliers and start building a relationship with them. Meeting a potential supplier in person will give you a better idea of the company’s product line and its financial standing. For added security, you can ask for references from some of the provider’s clients in Mexico or other countries.
We recommend that you plan your trip before going to a trade show. Review the list of exhibitors and research them online ahead of time to see who they are; this will save you a lot of time and will avoid inconvenience.
The Purchasing Process for Imports
Once you have an idea of who you want to buy from, the negotiation process begins. This can be a long or short process, depending on several factors, including the type of product and the supplier’s country.
Before agreeing to purchase, request that samples be sent to you by courier (which is inexpensive and fast). You may be asked for an advance payment; don’t be concerned, as this is normal. This is a risk worth taking to avoid problems with the final import.
Which Incoterms are best for importing?
The supplier will most likely quote you a price for FOB (Free on Board) and one for CFR (Cost and Freight). We recommend that you always try to maintain control of your shipment, meaning that FOB is the best way to go. By choosing FOB, not only will the price of the goods be included, but also any costs up to when the goods are loaded onto the ship.
Remember that FOB does not include the cost of transportation. You can obtain an estimate from a shipping agent. If you don’t have one, we would be happy to send you a quote!
If, for some reason, your goods come with fees paid, we suggest that you request a quote for DAP (Delivered at Place); however, be careful because this will be more expensive than FOB when added to your transportation costs, and you could lose control of your shipment with this option.
Remember that when calculating how much your final import will cost, you will have to find out what taxes need to be paid on the goods. Your freight forwarder will be able to help you with this.
Financing the Import
In the current market, the possibility of financing will greatly depend on your relationship with the bank. The supplier will not give you credit, especially for your first transaction, and will definitely ask you to pay a portion of the invoice in advance (20-40%) and the remainder following submission of shipping documents. This means that once the goods are shipped, the supplier will not send you the documents until you make a bank transfer for the remainder of the total.
Sometimes, instead of sending the document via courier, due to the associated costs and risks, you can use an “Express Release BOL.” This means that the agent at the destination will not require the “original” bill of lading in order to release the goods.
What do I need in order to import to Mexico?
As a general rule, the first thing to keep in mind when you begin the process to import is that you must file your business with Mexico’s Registry of Importers for Specific Industries, which is run by the Mexican tax authority SAT (Servicio de Administración Tributaria). In order to do so, you must be up-to-date on all of your tax obligations, prove to the customs authorities that you are listed on the Federal Registry of Taxpayers, and meet all other requirements established by Customs Law and SAT’s general rules on foreign trade.
Additionally, you must have an automated way of keeping inventory control, and a log of the inventory data must be kept up to date at all times.
You will also need to obtain information and documents to prove the country of origin of your goods for the purposes of preferential tariff levels, marking the country of origin, applying countervailing duties, meeting quotas, and other applicable measures according to the Law of Foreign Trade.
Before importing, you must submit a written manifest to your customs agent detailing the value of your goods for customs purposes. You will need to keep a copy of this manifest and obtain information and documents to prove that the value you declared was determined in accordance with the provisions of Customs Law.
You must electronically register a power of attorney with the General Customs Administration, granting authority to your customs agent, to carry out transactions on your behalf.
Finally, remember that you must pay all foreign trade taxes and anti-subsidy duties and comply with all non-tariff regulations and restrictions.
Remember that your import pedimento proves that your goods are in the country legally, so be sure to keep it!
What documents do I need in order to import to Mexico?
In order to import, you must have the following documents:
This is an invoice issued by the supplier, which should clearly state their registered business name and address, along with your own, as well as a description of the goods, price, and terms of the sale (for example: FOB Shanghai).
This is a clear and accurate list created by the supplier that specifies all contents of the shipment. The packing list must identify the number of pieces, unit weight and total weight, dimensions of each piece, and if possible, references. This is especially recommended for consolidated freight.
This is the document issued by the shipping agent at the origin and submitted to your supplier. Generally, your supplier will send it to you when you have paid them (or earlier, if you have an established credit account). Your shipping agent uses this document to deliver the goods.
You must pay careful attention to the number of original copies mentioned in the BOL, since you need all of them to be able to deliver your goods. If you have an Express BOL, it will not be needed to deliver your goods, but you will need it to receive customs clearance.
If your goods are subject to an excise tax, whether due to the type of goods or their origin, the official document must accurately prove said origin. This is generally done by means of a form.
More documents and certificates may be required depending on the type of product you import (food, seafood products, cosmetics and toiletries, agricultural or animal, personal effects, clothing, shoes, etc.)
This certificate must be issued by the company authorized by the Ministry of Finance and Public Credit to certify this type of document.
How do I choose a shipping agent?
Some of the factors to keep in mind when choosing a shipping agent are:
Size: Some people prefer to work with a large, international logistics provider because it gives them more confidence. Others prefer to work with a smaller one because they offer more personalized service. Perhaps the key is to find something in between, which can offer both security and personalized service.
Scope: It is best if your shipping agent has offices in the countries you want to import to. For example, if you are importing to China it is important for your agent to have offices there, since it is harder for someone outside the country to deal with the issues that regularly arise locally.
Service: Service is always one of the most crucial factors in choosing an operator. Generally, mid-sized shipping agents tend to offer better service than large, international companies or smaller ones.
Prices: This is the easiest factor to compare. Be careful, because some agents will give you quotes that are unclear. Sometimes it is best to ask for an “all-inclusive” price.
Specialization: Depending on the goods you are importing, it may be best for your shipping company to have specialized agents who are familiar with that type of commodity. For example, importing perishable goods is not the same as importing construction materials or wine.