A reader e-mailed me about starting an import-export trade business between Malaysia and the US. Here’s a quick five step guide to international trade between the US and Malaysia.
1. Get Educated on the Import-Export Trade
When dealing with international trade, you will have to follow a strict set of guidelines in advance. These two sites provide you with all the information about trade between Malaysia and the US. The Import-Export Bank of the United States has information for US exporters and international traders. The Malaysia External Trade Development Corporation provides resourceful information for Malaysian based exporters.
Visit these websites, and get educated on the legal aspects of international trade. It will save you a lot of time (and money) in the long run.
2. Get Legal
Your business should be legal and recognized by your nation’s trade department. Import-Export requires four important building blocks:
- Working Capital – this is the money you will spend to import-export goods
- Insurance – always pay for shipping and business insurance when conducting business overseas
- Loan Guarantee – Some of your clients may purchase on credit. Does your business offer them any loan options?
- Finance Lease – your financial agreement with another dealer/supplier
Along with the proper financial background, separate your business from your personal finances by setting up an LLC. An LLC is a hybrid of a corporation and partnership. Getting legal protects you and your family from any risk your business may take on.
3. Decide What to Import-Export
Look up Malaysia’s top export industries or seek assistance from an international trade network. Low volume import-exporters can utilize an international trade network as a valuable resource. I listed some greats sourcing ideas in my previous post, How to Invest in a global import-export business.
4. Build Business Relationships Overseas
Networking is important to any business venture, especially for high risk activities such as import-export. You must form an honest business relationship with potential trade partners. Any importer-exporter should have a business contact number, an EIN (Employer Identification Number), a relationship with a reputable business network, and attractive goods at attractive prices. Ask a lot of questions, and feel out your suppliers/dealers. You will be conducting a lot of business in the future, so do your investigative work before anything else.
Also, beware of these bogus, scam import-export online sites. There are lots of scam artists lurking. If it looks sketchy or too good to be true, it probably is.
5. Keep Up the Learning Process
Running a business is an ongoing learning experience, so I recommend reading a few books on import-exporting to get a better grasp on the trade world. A good book for beginners is Building an Import/Export Business, 3rd Edition by Kenneth Weiss.
For an advanced outlook on import-exporting, try Export/Import Procedures and Documentation (Export/Import Procedures & Documentation) by Thomas Johnson.
1. Get Educated
2. Get Legal
3. Decide on Trade Goods
4. Build Relationships
5. Stay Educated
I’ll keep you updating on the progress of my own import-export business. Stay in touch by subscribing to my RSS Feed to get daily updates on this blog.