By David L. Cunningham Jr., Chief Operating Officer, FedEx Express
Fashion is a global business, and the world is a burgeoning marketplace. The US$1.5 trillion fashion trade is on a double-digital growth trajectory driven by developing economies, and big retailers are not the only beneficiaries. Start-ups and smaller entrepreneurs are finding fresh growth potential cross-border in the form of new customers, or unique finishes and componentry for garments. However, whether it’s sourcing, manufacturing or selling fashion items internationally, getting smart on customs can make or break a budding empire.
Shoe entrepreneur, Christy Ng, cites “fresh design, distinct artisanship and competitive pricing” as motivations for sourcing shoe charms, fabrics and raw materials outside her home of Malaysia for her eponymous brand. For Juan David Martinez, proprietor of Industrias Suárez, a Colombian cycling wear manufacturer, the quality and pricing of overseas sourced zips, dyes, adhesives and reflective tapes are integral to their cost model and product integrity.
However, understanding customs rules before you take the leap into global sourcing, is a must, as Ng and Martinez will attest. Customs rules are fluid and differ markedly from country to country. Long hold-ups and penalties can ensue if rules are not followed. Ng has experienced the pitfalls first hand, where complex or changing customs rules have resulted in “unprecedented financial losses with garments left on the docks for weeks at a time.”
If you’re a fashion entrepreneur ready to take the next step of either sourcing or selling items internationally, here are some tips on navigating customs to get you started.
1. Check textile quotas and licensing requirements.
The textile industry has long been the subject of global trade negotiations. In the 1960s there was a complex global quota system, which has since been abolished. However some countries still maintain select quotas, such as Costa Rica, which controls trade in certain wool fabrics. Markets such as Mexico require textile or material importers to hold a license or visa.
2. Review banned or restricted substances lists.
Many textiles and materials used by the fashion industry contain plastics or chemicals, which are subject to ban or restrictions, such as textiles containing formaldehyde in Europe. Obtain a list of banned substances from local authorities, and check with vendors that textiles and materials pass the test before purchasing.
3. Be sure valuations are accurate and goods are clearly labelled in detail.
When importing or exporting goods, make sure to provide an accurate valuation to calculate duties along with a detailed description of the contents of a shipment – for example rather than ‘bolt of silk’, the description should read ‘bolt of blue silk with embroidered detail’. These details will help customs officials to calculate the duties and taxes to be paid on shipments.
4. Check the authenticity of goods and report any counterfeit products.
It is estimated the sale of counterfeit goods makes up 10 percent of fashion trade with belts, handbags and shoes the most popular items. We’re not just talking heavily branded bags and clothing – today’s counterfeit goods can be much harder to detect. You may inadvertently find yourself sourcing (or being subject to) ‘knock-off’ merchandise to complete a seasonal line-up.
5. Be clear on conventions and local rules prohibiting or restricting certain animal products.
The Convention on International Trade in Endangered Species (CITES) is an international governmental agreement prohibiting the trade of wild animals. In addition to this, many countries have supplemental laws that govern trade of animal products, which differ between markets. For example, it is illegal to import dog or domestic cat hair to Europe however it is permissible in some parts of Asia.
6. Secure necessary certification where required.
In some instances additional certification to import goods will be required.
Sourcing or selling goods internationally can seem complex however there are a range of organizations that can assist, from government agencies to transportation partners. Open to Export, sponsored by UK Trade & Investment, is an excellent resource to get started on building your fashion brand internationally. Once you’re on your way, talk to your transportation provider to find out how tools such as FedEx Global Trade Manager can help estimate duties and taxes, manage documentation and gain up-to-date insights into local market conditions.