Customs Restrictions SMEs Should be Wary of

Aspiring e-commerce entrepreneurs should be wary of the different customs restrictions, rules and regulations from various countries around the globe.
Logistics in the manufacturing industry

By Karen Reddington, President, Asia Pacific, FedEx Express

Going into business internationally has never been easier thanks to the evolution of e-commerce. It might be simple to set up websites, source or make products, then start taking online orders – but what happens next? Are small businesses ready for the many customs hurdles ahead?

FedEx reveals some rules and restrictions that could easily catch out some of Asia’s growing number of e-commerce start-ups.

Asia Pacific is tipped to become the leading region for e-commerce sales in 2015, making up just over a third of the global total and just slightly larger than the North American e-commerce market.[1]

Much of that growth is coming from small to mid-sized businesses (SMEs) who can now participate and help drive global trade in ways well beyond their individual size and stature. Yet grappling with international networks, infrastructure, technology and processes can be a hazardous and time-consuming occupation if small businesses go it alone.

So too can negotiating the maze of import rules and regulations in a myriad of markets.

Most problems that slow down the movement of goods are regulatory – whether it’s different laws or different procedures or different processing times from market to market.

Each time barriers to trade are removed or lowered, the cost of doing global business decreases. International business groups are all looking to simplify border procedures and reduce barriers to trade, including raising the de minimis value at which goods attract duty and taxes. The International Chamber of Commerce (ICC) says a global baseline de minimis value of at least US$200 would generate huge economic benefits, and says governments should strive for a much higher de minimis value of US$ 1,000.[2] That’s a long way from the current level in the EU, for example, where only commercial shipments below 22 Euros have no duty and VAT collected.[3]

It goes without saying that shipping unlicensed weapons, hazardous materials, flammable chemicals and illegal drugs are naturally prohibited imports around the world, but it’s usually the less obvious and often downright weird items which can snare the unsuspecting small start-up.

Some restrictions are purely about quarantine, so here’s some ‘food for thought’ of edible items that SMEs should think twice about:

  • Australia has import prohibitions on meat products, as well as milk (unless it’s from New Zealand), and does not allow the import of gift hampers containing fresh fruit, unpopped popcorn, or nuts. [4]
  • China doesn’t allow import of beef and beef products originating from the US, [5]  while Germany does not permit the import of green or black tea from China,[6]  [7]
  • Singapore prohibits the import of chewing gum unless it’s of the oral dental and medicated kind, in which case it must be licensed.
  • And then there are edible insects. These delicacies have always been part of some cultures, including in Asia, but now they are set to go mainstream. With the world population expected to surge to 9 billion people by 2050, the Food and Agriculture Organisation (FAO) of the United Nations now sees insects as one solution to food security issues in the next 30 years.[8] Belgium approved 10 insects for human consumption in 2014, but many other EU countries have yet to follow their culinary lead. So too in Asia, China does not allow processed or unprocessed insects to be imported. [9]
  • Packaging is another important aspect, as is safety. For instance, bans on wooden packing material trip up many small companies, who aren’t aware of the quarantine issues associated with containers or the goods they carry.

Aside from food products, there are also many unusual items to look out for. If you think you have a quirky or innovative product, it could still face countless cultural, safety or government hurdles before you can export to other countries. For instance:

  • The surge in global use of electronic cigarettes has not been without business headaches for their makers and importers. Hong Kong, for one, prohibits their importation unless prior approval has been granted by FedEx Hong Kong Operations, Sales and Trade Services[10]; while Singapore lists e-cigarettes among its general prohibited items. [11]
  • Singapore also bans cigarette lighters in the shape of pistols or revolvers, and Malaysia prohibits the import of pens, pencils and other articles resembling syringes.
  • The US bans the import of Kinder Chocolate Eggs – because the Italian chocolate treats contain small inedible toys deemed dangerous for children.[12]
  • Likewise, France prohibits the import of rubber erasers that are similar in appearance to food products that could easily be ingested,[13]

Merchandise produced by convict, forced or indentured labor cannot enter the US,[14] nor can products made by prisoners be exported to China[15] or the UK[16].

France bans the import of imitation pearls which have a coating of lead salts, as well as pyjamas and other nightwear made of artificial fibres that are not fire-retardant.[17][18]

  • Electronics classed as radio transmitting devices, including mobile phones, require import licenses from Hong Kong to Seoul and beyond. In fact, South Korea recently banned unauthorised ‘selfie-sticks’ because it said they could cause interference with other electronics. The crackdown meant anyone selling or importing selfie sticks required government certification to ensure they did not exceed the required Bluetooth frequency – or they’d face a $27,000 fine or three-year prison sentence.

There are also many cultural differences to be aware of:

  • The UK prohibits the import of animal hair and wool[19], while articles containing dog or cat fur cannot be imported into the US.[20] There’s also an EU-wide ban on the commercial import of all seal, walrus and sea lion products.[21]
  • Malaysia does not allow the import of any cloth bearing the imprint or reproduction of any verses of the Quran.[22]
  • China bans any printed matter, films, photos, records, audio and video tapes, VCDs, computer storage media and other commodities which are harmful to China’s politics, economy, culture or ethics. [23]
  • Indonesia has similar requirements, banning any materials that are anti- Muslim in nature or that promote communism. It also prohibits import of any articles on which Chinese characters appear. [24]
  • Such lists are never-ending.

These are just some examples of the thousands of country-specific restrictions that can make international shipping difficult.

So it’s a good idea for aspiring e-commerce entrepreneurs to target specific countries first. For example, it can be a lot easier to ship to Singapore, say, than to ship to Russia.

Know what shipping costs, and factor in various business hours and national holidays into your expectations for delivery. “Time in transit” also does not account for time spent clearing regulatory hurdles at the border.

That’s where a globally experienced service provider can help SMEs overcome international obstacles. From simplifying confusing processes, offering automatic customs clearance, collaboration with customs, or even strategic advice on expanding internationally, that help make the movement of goods across borders more efficient, and less costly.

For now, more than ever, time is money. It’s clear that time spent deciphering import restrictions and doing the associated paperwork is not time spent building your business.

Recent research for the global express industry shows that the high costs of keeping up with these requirements can actually hamper e-commerce, and even risk the survival of SMEs.So doing your homework now, and keeping up with restrictions in your preferred markets, will save a lot of pain and money in the future.

   E-Commerce, SME