The import-export industry is among the oldest and most successful businesses ever. It started even in ancient times, where countries trade with others for resources and products. Now, the world is more accessible and open through the improvements in sea and sky travel. Import-export industry businesses are booming and are continuing to see success.
In the import-export industry, there are a couple of types of businesses available. If you want to enter this industry, the first step is to find which the best is for you. In import-export, there are two common types of business; importing and exporting. Which one is more profitable?
Import vs Export
So are you deciding whether to focus on importing or exporting? The truth is, both imports and exports businesses have their advantages and disadvantages. And since they are two different types of companies, it’s difficult to gauge which one is more profitable. It also depends on a lot of factors.
To help you decide, here are some of the advantages and disadvantages of import and export businesses. This comparison will help you select which one is more profitable when it comes to your time, money, and effort.
Advantages and Disadvantages of Importing Businesses
Importing is the business of reselling products bought from other countries. Compared to exporting, importing business is usually the easier one. The reason behind this is because it’s easier to do market research in your own country better than the others. This makes it easier for you to choose the right product and put the right price tags.
Another advantage of importing products is reducing cost. Some items or products with the same or higher quality may be cheaper compared to the ones available locally. To maximize profits, many buy and resell large quantities of these products. Another reason to consider importing business is the chance of being the pioneer of a specific imported product. Since manufacturers continuously improve their products, purchasing them, and supplying them locally before anyone else is a huge advantage. For instance, you can invest in a composite decking business where the materials are from overseas. Since most top composite decking materials are imported, you’ll get easy access to them.
However, there are also disadvantages of importing products. For one, it doesn’t contribute much to the local market, and can even replace it. More money is leaving the country. Because of this, many countries are putting high tariffs on importations. Over time, imported products will increase in price. Importing products from other countries also impacts on the locally made products in the international market. If local consumers start to buy imported brands and products, the local brands won’t stand a chance to grow or compete in the international market.
Another very alarming disadvantage of importing products is the environmental impacts that these products cause. Many times, the products made in developed countries carry harmful materials that can disturb importing countries’ environment. The reason behind that is globalization. Due to globalization, international competitiveness has increased to a margin that every business is running towards cutting the cost to the maximum extent so that they can offer better rates. During this process, many harmful and low-quality materials can have very bad effects on the environment.
Importing products are also at the mercy of exchange rates. When the local currency falls in value, it’s likely for the business to suffer. There are also legal and cultural risks involved like changes in taxation policies, a rise in import duties or changes in consumer behavior due to culture can cause big losses to the business.
Advantages and Disadvantages of Exporting
Exporting is the business of producing or selling products in other countries. For existing companies, it enables the expansion of sales potential by having an international market. It also increases the chance of discovering new opportunities in the global market. So the business companies can expand their markets to different countries besides depending on a single one. One might say that exporting products is more profitable, especially for medium to large enterprises. As you can charge more in the international market. If the manufacturing country has low labor and material costs, the can achieve a good amount of profit by exporting the products and charging international rates from the consumers of that country. Not only it increases the profitability of the companies but, it also boosts business growth.
Another advantage of exporting is that it boosts the economy and helps local businesses to increase their sales. Because of this, the country has more funding to develop and improve. This scenario is a win-win for both the government and the business owners. For this reason, exporting businesses often get various incentives and favor from the local government. One other advantage of importing business is that payments are often faster than in local markets.
These are only a few of the advantages of exporting business. However, like importing, it has disadvantages as well. First, it needs more effort than importing. You will need plenty of market research and data analysis. You may also have a harder time maintaining and managing relationships with customers. If the companies get too focused on the international market, there is a chance to lose on the home market.
Another disadvantage is that the export business carries many risks and extra efforts. Your company needs to get a license, many documentation to get export the products which can even cost you extra and there is also a chance your product won’t survive in the international market as the competition is fierce. Every other day new business is trying to capture the consumers. While exporting the products, you would need to take care of your local and international competition too. The transportation of export goods carries risks also. Many times, carriers get damage before it reaches the destination country, which causes hefty loss to the company even after getting the insurance amount because all of the effort to make and marketing of that product would go down the drain.
All in all-
Importing and exporting business both have advantages and disadvantages. While exporting businesses may have more significant growth potential, you may also need to put in more effort, and sometimes, more funding. On the other, importing products from overseas can be easier depending on the scale but has its own disadvantages as well, including high tariffs and susceptibility to fluctuating exchange rates. To sum it all up, both of them are profitable. It’s only a matter of finding which one is better suited for you or your business. Any business can be successful in imports and export. All it requires is the right selection and consumption of resources and making the right move at the right time.