Exports from Bangladesh to the UK have progressed to more than £600 million. It is continuously increasing every year, indicating the expansion of importing business in the UK. Garment import from Bangladesh is most significant, and ready-made garments account for approximately 80% of all goods imported from Bangladesh into the UK.
Due to the GSP (Generalized System of Preferences), these imports enjoy tariff-free entry into England. Over 50 Bangladesh companies are operating in the market for producing goods for the UK.
However, import business can be complicated, and you need to be aware of all the legal and trade requirements to flourish at it. If you wish to initiate a winning start-up importing clothing from Bangladesh, this article will serve as a complete guide for you to make the right decisions.
Company Setup
Establishing an import company, however small, is not as complicated as it sounds. It can be an enriching experience that could give you the much-needed financial independence.
However, it has to be carefully researched and planned. Here are some tips to help you on your way to a successful venture:
1: Product Research
Do your homework, research wood quality reliable clothing suppliers in Bangladesh. Also, observe the local market and make a list of clothing items that sell. You don’t want to end up with a lot of unwanted stock in hand.
2: Price Research
It is essential to find the lowest prices available for the clothing items that you choose to import. There are many other costs included that you have to take into account, like shipping cost, custom duties, cost of licenses, and some additional fees. If you end up with clothing items available at cheaper rates in the local market, all your effort can go in vain.
3. Sample Testing
Do not forget to order samples from Bangladeshi suppliers. It is essential as you might not get what the product description foretells. Be sure to ask the supplier to mention ‘sample: not for sale’ on the packaging. Minimal quantities of products should be ordered.
Following the above conditions can qualify your imported samples for duty relief and VAT relief. If custom officers think that your samples could be misused in any way or resold, you would have to pay import duty or VAT on them. Therefore, keep your sample quantities low.
4. Setup your Company
You have to start right by setting up your company as a trustworthy entity. Exist online to increase credibility. Make a website and write your business plans. It is essential to set up your vision to give you direction.
5. Make your Marketing Plan
If you fail to plan, you are planning to fail. Set up all your marketing plans, from purchasing your desired product to delivering it to the final consumer. Please do your research and write your business plans, and have the guts to put them into action. After all, you are your own boss.
6. Build relationships
For a successful business venture in a developing country like Bangladesh, you need to have good relations with a local partner or agent who can guide you through the import process accurately. All you have to do is invest your time and money into good, long-term business relationships. It might prove to be more useful than you thought.
7. Visit Bangladesh
You might need a face-to-face meeting with your suppliers. Your trade visit will also give them confidence and the trust that is hard to achieve through faceless calls. You could also conduct some market research of your own in Bangladesh.
8. Get an EORI
To start importing clothing items into Scotland, Wales, or England, you need an EORI number starting with GB. If your existing EORI does not begin with GB, you’ll have to get a new one. EORI can clear customs easily and quickly. More details about EORI will come later in this article.
9. Check if your supplier can export into the UK
Before launching your order, you must make sure your supplier in Bangladesh is authenticated to export products to the UK. Your supplier should have an export declaration from Bangladesh, an export license, or a certificate.
10. Get a Local Agent
Either you visit Bangladesh to assist customs and transport processes or get someone to do it for you. A reliable sourcing agent in Bangladesh is a smart choice.
Process of importing clothing from Bangladesh to the UK
International Trade opens up a world of opportunities for you. The process is simple but requires hard work and dedication. Follow the given steps to avoid any mishap during the procedure.
Keep a Record of invoices.
You must keep a record of paperwork, including commercial invoices. There will be much legality involved. You can find more information on the legal requirements later in this article.
Avoid added cost
International trade can be expensive. There will be many fees involved, including transportation costs, government amenities, custom duties, VAT, and whatnot.
It would be best if you avoid unnecessary charges to keep your costs down. Even banks cut fees, and you lose more due to the Foreign Exchange rate provided by your bank. You should research alternative methods of payment that will prove more cost-effective. There are many money transfer companies providing market exchange rates of currencies. Many take no fee at all.
Transport Options
There are several options you could choose from for the shipment of your goods. You should be aware of the pros and cons of each to choose the right mode for yourself. These options are:
Air Freight
Air Freight is ideal for transporting urgently. However, your items should be valuable enough to cover the cost. It is usually used for small, expensive products. Air Freight is the quickest method of moving goods. However, you have to pay higher duty and VAT for this kind of transport.
Sea Freight
Sea freight is a cheap option perfect for a large number of products. You could either get a full container or share a part of it with other importers. Although it takes longer for the goods to reach their destination, it keeps the cost down significantly. The duties and the VAT are also reduced accordingly.
Rail Transport
Rail transport is also a right choice apart from being environment friendly. But it is more expensive than moving goods by road. Moreover, further transport is needed to and from stations. There is added cost and complexity involved. Rail transport can also be used along with sea or Air Freight. It can be used for internal transportation.
Road Transport
Within Europe, you could transport goods by road in trucks. Road transport is a good option for a large volume of goods at reasonable cost. However, toll and fuel expenses have to be taken into account. There are also risks involved as the journey is longer than other forms of transport.
Using an Agent
The daunting procedure of International trade can be made easier by getting a specialist on board with you. Many kinds of agents could assist you. These are:
Customs Brokers
A customs broker will help set up all necessary documents that might be needed for importing clothing from Bangladesh to the UK. The customs broker will ensure a smooth transition at customs. They can also help you avoid delays and fines in case of non-compliance with the customs regulations.
Standalone Agency
If you do not want to rely on an individual to take care of your dealer, you could also hire an agency that offers smooth custom clearance for your goods. Standalone agencies see that your import merchandise covers the custom process with all necessary documents and without delay.
Freight Forwarders
Hiring Freight Forwarders could prove to be a smart choice as they are specialists that know all requirements of the import process. They could assist with your endeavors from the point of purchasing to delivery at your doorstep.
They also offer the services of customs brokers. They could be accommodating if you don’t have a local to finalize trade deals with your suppliers.
Getting one person to deal with all processes and manage shipment could be a better idea than having different people or companies look after your import order. Hiring a freight forwarder makes a single person responsible, which proves to be a more reliable method. You could be stress-free and contact one person only.
Although freight forwarders charge a lot, their presence makes sure all your import requirements are fulfilled, saving you money eventually.
Legal requirements
Several legal requirements have to be fulfilled when importing clothing from Bangladesh to the UK. If you choose to work with a specialist like a Freight Forwarder, most of these would be taken care of by them.
The place where your supplier is based will also have some legalities to be fulfilled. You will be required to declare goods to be exported to the local authorities.
Legal requirements necessary to be fulfilled at the UK port include the following:
Register for an EORI number
HMRC assigns EORI number in the UK to international traders. It is a necessary document used in custom processes like custom declaration and customs clearance for traded goods.
The custom authorities recognize the EORI number as a mandatory document for import from outside the European Union. Your EORI number must start with a GB, and if it doesn’t, you’ll have to get another EORI number. An EORI number might take 3 to 4 days, so you have to plan.
Get a Commodity Code
You also have to apply beforehand for a commodity code for your import item. It is a ten-digit number for categories of goods being imported from outside the European Union. Each item has a different commodity code. The code determines any restrictions that might apply to the export and import of the goods you choose to trade.
The customs use these ten-digit numbers to categorize and classify products to determine their taxes and duties.
While applying for a commodity code, you might be required to use it for a BTI ruling, which could take time. Therefore, apply for a commodity code earlier than needed.
Import Licenses
You should also check if there are any licenses required for the import of your specific product kind. Most garment imports are license-free, but make sure it applies to your type of garment.
Goods Declaration at customs
It would be best if you got your goods declared at customs. Your customs broker or freight forwarder can do this job for you. It is of essential importance to get customs clearance.
Pay your Duties and VAT
You will need to pay all your duties and VAT at this point. Do not forget to get an invoice for your payment. This document is of vital importance as you may need it later to request reimbursement in case of excess VAT payment. Your freight forwarder or customs broker can also handle these tasks for you.
Reclaim your VAT
Give your account details at HM Revenue and Customs (HMRC) and fill out a form at the VAT refund desk and get it stamped by the customs officer. Do not forget to hold all invoices and receipts of your transactions. You can reclaim your VAT by submitting a complete and stamped VAT return form at the VAT return desk.
Labels/marking
Labels and markings are significant for imported goods. They should specifically clarify what they are, their material, and their usage. This critical information can be helpful while tracking imports into the country.
The labels also ensure that hazardous products are treated with caution. If tags aren’t correctly placed, you might be fined aside from the duty that you have to pay.
You can get professional advice from HMRC regarding labels and markings. Labels are required to mention the origin, dimension, weight, hazard warning, and chemical composition in printed form on the packaging. Dual labels are supported strongly in the UK.
Suppliers should label all packaging in metric units. The use of language should be in the country of consumption. However, labels can also be accepted if they are multilingual.
Eco Labels
It is a voluntary label displaying high standards of environmental awareness of the product. They are put on all sustainable and ethical clothing packages encouraging environment-friendly product consumption.
Import requirements
Import Declaration
Completion of an Import Declaration to customs is essential for importing commodities from outside the EU. The SAD (single administrative document) or C88 is the primary document for import declaration.
This complicated process can be tackled by your freight forwarder or customs broker on your behalf.
EORI
Economic Operator Registration and Identification number or EORI number are mandatory for import into the UK. The EORI number is automatically generated if you register your business for VAT. The facility for the generation of EORI numbers is also available online, and you could acquire it within a few days.
There are several different applications for the registration of EORI numbers depending on your VAT registration.
Duties
Custom Duty
Custom duty is allotted on goods being imported from outside the EU. The country of origin determines the rate of duty. You can visit the government website for calculating custom duty according to the commodity.
Customs duty is calculated by the rate of import duty multiplied by the value of the goods. Custom value is referred to as CIF (Cost Insurance and Freight).
VAT
If goods are being imported from outside the European Union, VAT has to be paid. Usually, it is 20% of the value prevailing in the UK. However, it can also be reduced for particular items. Also, if you are reimporting the same commodity within a period of 2 years, VAT is diminished or even relieved completely.
You can also be entitled to a VAT refund in many situations. You can get guidance regarding VAT refund from the HMRC.
Certificates
Import License
After obtaining your ten-digit commodity code, you are required to check with the BERR (Department of Business Enterprise and Regulatory Reforms) to ensure that an import license is needed or not?
Some clothing items are relieved from the requirement of an import license while it is mandatory for others. The import license is issued to importers by DIT Import Licensing Branch.
Certificate of Origin
Earlier, all imports entering the UK required a Certificate of Origin. However, this requirement has been relaxed for some countries since 2011.
The Certificate of Origin is required by the customs to allow goods to leave the warehouse. Custom doesn’t clear the process if you don’t possess a Certificate of Origin. It has to be obtained by the supplier every time you ship your goods from their home country.
Conclusion
Statistics reveal that the UK is the third-largest importer of Bangladeshi products. Imports from Bangladesh to the UK account for more than 10% of the developing Middle East country’s total export. The UK’s significant import items include ready-made garments, jute and leather goods, frozen foods, etc. However, 80% of products constitute garments and clothing, both knitted and woven.
Bangladesh produces high-end garments at very competitive rates in the international market. The top-notch global standard clothing commodities have generated unprecedented demand worldwide. Therefore your decision to import garments from Bangladesh is a very smart one.