What you need to know about exporting
If you want to make your brand a global household name, you’ll need to export. But first you’ll need to be clear what exporting is, and be sure you’re ready for it.
Exporting means making your goods or services in one country and selling them in another. Most people would realise that making shoes in New Zealand and selling them overseas is exporting. But you can export in less obvious ways too. Maybe you’re already exporting.
What exporting is and isn’t
If you have a client overseas, you’re an exporter, even if you don’t sell physical things.
Exporting includes:
- teaching English on Zoom to someone in South America
- designing a house for someone in the United States
- translating a document and emailing your translation to someone in Asia
- selling your product on a New Zealand website with the option for worldwide shipping.
Exporting for business involves goods or services going overseas, a client, and money changing hands. Just because something goes overseas doesn’t make it an export. If you send chocolate fish to your homesick Kiwi friend in London, that’s not exporting. If you take samples of industrial pipe to a trade show, that’s not exporting.
Advantages and challenges of exporting
Exporting can grow your business and make it more competitive. Benefits include:
- more sales to new customers and markets overseas
- lower cost per unit as you increase production (economies of scale)
- spreading your risks, for example when your products or services aren’t performing so well in New Zealand, they might perform better in another country
- learning about new ideas, technology and ways of working that might make you more competitive, both at home and overseas.
But exporting brings challenges too, such as:
- paying new costs, for example for customs, tax, shipping and compliance
- dealing with complex regulations and compliance requirements
- managing legal risks that arise when you operate in another country
- managing political risk, especially if your market is politically unstable or there are restrictions on foreign exchange.
Getting expert advice and planning well, for example, having good export and risk management plans, can help manage challenges and risks.
Check if you’re ready to export
Successful exporting takes resources and commitment. You’ll need:
- a good business set-up, with tried and tested business practices
- to deliver goods or services as efficiently as possible
- a good grasp of your local market and knowledge of the marketing strategies that work best
- a good understanding of how your product or service will solve a problem for customers in that market.
Improving operational efficiency and innovation
Check if you’re ready to export by adding to your business plan. A plan will help you identify where you are, where you’re going and how you’ll get there.
Exporting is exciting but challenging. It takes time, money, and commitment. Use this assessment to check if exporting is for you. We’ll tell you whether:
- you need more preparation, for example, reading, research and advice from experts
- you’re ready to contact New Zealand Trade and Enterprise to talk about how they can help.
5-10 minutes
Self-assessment: Getting ready to export
Need a hand with your business plan?
Consider these things before exporting or setting up overseas
Here’s a broad idea of what exporting involves. Not everything will apply to every business, and you may need to consider other details not listed here.
Money
- Prices: How do you set prices?
- Foreign exchange: How changeable is the exchange rate? Are changes likely to wipe out your profits?
- Finance: What are your trade terms? Do you need trade finance in case your customer takes a long time to pay? How will you get extra money to scale up or help with cashflow?
- Tax: How much will you pay? When, and in which country?
Logistics and tariffs
- Supply chain: What’s the best way to get your raw materials, and goods or services, from A to B?
- Tariffs, customs, and duties: How much will you have to pay? How long will your goods take to clear customs?
- Freight costs and logistics: Will you have to deliver to your customer’s door, or does your customer arrange the freight and logistics? Who applies for any special permits, for example, for dangerous goods? Make sure both parties know who’s doing what.
- Export regulations: What are the import rules in the country you’re selling to?
Marketing and sales
- Market representation: Do you need sales staff, or can a distributor sell on your behalf?
- Marketing and sales: Will you use a website, social media, or both? Will you exhibit at trade shows?
- Packaging: What kind of packaging will you need for your new market? Think about things like design, labelling requirements and bar codes.
Risk management
- Risk and product liability: What insurance do you need? For example, do you need insurance for non-payment?
- Intellectual property (IP) protection: Who owns the intellectual property? What rights does the customer have? Do you need to set up trademarks? Talk to an IP specialist.
- Legal considerations: What sort of customer contracts do you need? What do you need to consider about data integrity, privacy and business structure?
Culture
- Language: How much of another language will you need to learn?
- Culture: What do you need to know to make things run smoothly or at least avoid making mistakes?
If you set up overseas
Depending on the country and the business structure you choose, you may have to do some or all of the following things when you set up overseas.
Register the business
If you set up a new company, you’ll need to register it for tax, GST, payroll taxes, superannuation, and so on.
Ask the companies office in the relevant country if you need to provide accounts for auditing or other purposes.
Set up a bank account
Setting up a bank account overseas can be more complicated than many people realise, and can take weeks. For example, you’ll need to get documents certified and perhaps translated. You may have to be at the bank in person.
New Zealand banks don’t always have strong relationships with overseas banks, so your local bank may not be able to support you fully.
Think about getting your money back to New Zealand
You might be able to get your money out through a management fee, a royalty or software licensing.
You’ll have to pay withholding taxes or dividends on royalties. If you send a dividend from Australia to New Zealand, your Australian company won’t have to pay tax. But your New Zealand company may have to pay tax when it pays out the dividends to shareholders.
Appoint overseas representatives and consult advisors
You might need a resident director, a director who lives in the other country. For example, Australia requires resident directors.
You might need a lawyer in the other country to check standard terms and conditions, or an accountant to advise on tax.