How to Start Importing from Thailand to Australia – Tips for Small Business
Here are a few starting tips if you are thinking about importing from Thailand to Australia.
- Shortlist up to 3 product types that Thailand manufactures – something that is ideally unique to Thailand. Many people will take an extended holiday and add factory visits into their time on the beach. However these days you can find products and suppliers from Thailand online.
- Work out product potential. Here you want to be checking for 3 key things. First landed cost and cost to market, and a minimum profit margin with a large buffer for changed costs and exchange rates. Second degree of risk – anything high risk, that requires large amounts of product development, testing or strict regulations will drain your time and enthusiasm quicker than a dodgy street merchant. Unless it is your area of expertise, avoid high risk products. Thirdly, think low hassle and speed to market. The ‘perfect product’ takes time, think about a minimum viable product you can start selling for quick returns, then work on a premium product line.
- Test, Test and test. Product quality testing is obvious, you need to know the product will withstand the required consumer warranty period required of an importer in Australia. Customer testing is not so obvious, and I definitely don’t mean asking friends and family. I mean rigorous and objective target market testing on tastes, styles and prices. Third is supplier testing, you only know how good a supplier can be after they have manufactured your product several times. The process of communicating your needs, feedback and trial orders is a good testing period to see if a supplier is flexible for a long term supply arrangement.
If you want more detail about the business case, sampling, clearances, negotiation and shipping, take a look at our online learning program.
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Thailand has a strong manufacturing base. In fact, its manufacturing sector is 16% larger than Australia with manufactured exports dwarfing Australia by 400%. The World Bank also ranks Thailand high in its list for ease of doing business, at 17th in the world.
Thailand has the second largest economy in Southeast Asia. Thailand stands as one of the ideal sources of import products for the Australian market as a result of the ongoing bilateral trade agreement known as The Thailand-Australia Free Trade Agreement (TAFTA).
What is TAFTA? Thailand Australia Free Trade Agreement
TAFTA allows entrepreneurs like you to now import from Thailand to Australia at a lower cost with zero to low import tariffs. TAFTA is the free trade agreement entered into by Australia and Thailand that took effect in January 2005. It is Australia’s third free trade agreement and Thailand’s first with a developed country.
Major Benefits of TAFTA – Importing from Thailand
Since TAFTA took effect, goods that make up 96% of imports from the Southeast Asian country enjoy zero tariffs. Tariff for the remaining 4% of items that compose current trade will also be reduced in various phases until it reaches zero.
TAFTA coming into place presents a golden opportunity for Australian entrepreneurs to import to Australia from Thailand and do it at a lower cost because of zero or low tariffs.
Items of Thai origin imported to Australia with zero tariffs include, among others, imported plastics and chemicals, textile yarns, imported footwear and automotive components. Tariff for apparel and finished textiles was reduced from 12.5% to 5% in 2010. The 5% tariff will be completely eliminated by 2015.
Other Benefits from TAFTA
Under the agreement, Australian import export businesses have now more open access to Thailand’s services market and Australian investors can even hold majority ownership in numerous business sectors. Visa requirements have also been eased for Australian entrepreneurs who are planning to take business trips to Thailand.
Import Export from Thailand and Australia
Trade between Australia and Thailand has grown by leaps and bounds as a result of TAFTA. A comparative of trade between the two countries, from 2000-2004 before TAFTA and 2005-2009 when it was already in effect, showed a 190% increase in trade value. In 2011, Thailand’s trade with Australia was valued at AU$18.5 billion.
Thinking of importing from Thailand or even Malaysia to Australia? Import export businesses are using our online training programs to learn to import and sell their own product brands.