Export-import business, also known as international trade, involves buying and selling goods and services between countries. It is an important part of the global economy, as it allows for the exchange of goods and services between countries, promoting economic growth and development. Bangladesh is one of the fastest-growing economies in South Asia and has made significant progress in the export-import industry over the past few decades.
According to the Export Promotion Bureau, Bangladesh’s exports reached $52.08 billion in FY 2021-22, while its imports stood at $65.48 billion. The country’s main exports include ready-made garments, frozen food, leather products, and jute goods, while its major imports include capital machinery, petroleum products, chemicals, and raw materials for the textile industry. The ready-made garment sector is the largest contributor to Bangladesh’s economy, accounting for more than 80% of its total exports.
The government of Bangladesh has been actively promoting the export-import industry and has implemented various policies and initiatives to facilitate trade and investment. This has led to an increase in foreign direct investment, which crossed $3 billion in FY2022. The country has also been making efforts to improve its infrastructure, such as building ports, roads, and bridges, to enhance its competitiveness in the global market.
Why is Export-Import An Ideal Business Choice?
With the rise of globalization and the increasing interconnectedness of the world, export-import businesses have become more relevant and important than ever before. Stepping in the export-import business can offer numerous benefits. Reasons why export-import business is a good choice:
- Diversification of Market: By engaging in export-import business, companies can access new markets, diversify their customer base, and reduce their dependency on a single market. This can help mitigate the risks associated with a slowing or declining market, and provide a steady source of revenue.
- Improved Competitiveness: Export-import business allows companies to access new technologies, products, and ideas, which can help improve their competitiveness. This, in turn, can help them stay ahead of their competitors and increase their market share.
- Increased Revenues: By accessing new markets, companies can increase their sales and revenues, which can help them grow and expand their business. Moreover, by exporting goods, companies can develop global demand for their products and increase their profit margins.
- Better Economies of Scale: By exporting goods and services, companies can take advantage of economies of scale, which can help them reduce costs and increase efficiency. This can help them lower their prices, making their products more affordable for customers.
- Improved Relationships with Suppliers and Customers: Export-import business can help companies build strong relationships with suppliers and customers, which can help them maintain a steady supply chain and secure long-term contracts.
Almost all the goods exported from Bangladesh or imported into Bangladesh have different associations that provide all kinds of assistance to new exporters or importers. For example, Bangladesh Frozen Food Exporters Association (BFFEA), Bangladesh Ceramic Manufacturers & Exporters Association (BCMEA), Bangladesh Jute Goods Exporters Association (BJGEA), Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Fresh Fruits Importer Association (BFFIA), Bangladesh Chemical Importers and Merchants Association (BCIMA), etc. So, even if people face many problems while running the business, they are now able to operate the business smoothly due to the help of these associations.
How To Start An Export Import Business In Bangladesh
Market Research and Analysis
In Bangladesh, if a product is in short supply, it is considered a good product for the business. However, you can also create demand for a product, import it and make a business out of it. Since Bangladesh is largely dependent on imports, including various food and construction materials, raw materials for industries, machinery, transportation equipment, televisions, air conditioners, ovens, refrigerators, and other household appliances, mineral oils, edible oils, fats, chemicals, medicines, food grains, baby food, soft drinks, and many other products from other countries. You can also import these products and sell them within the country, but it’s important to ensure that the imported foreign goods do not harm the domestic market and meet the needs of the people.
Again, in Earlier days, there were only a few products that were considered exportable such as jute and jute products, leather, tea, and garments items, etc. However, this has changed in recent times, and now even obsolete products in the country have high demand abroad, and those can be exported to earn foreign currencies. In addition to fresh and dried fish, you can also export various non-traditional products such as frog legs, crabs, shrimps, butternut squash seeds, betel nuts, vegetables, fruits, coconut husks, and tree roots.
Another important aspect of the business is competitor analysis. Understanding the product’s consumer base you are importing or exporting is more important than identifying your competitors. In the export-import business, it’s essential to analyze both domestic and international market competition. If your product is unique, your number of competitors will be fewer, and you can examine their service and operational infrastructure to see how you can better attract customers by providing better service. If you’re not dealing with a unique product, you can conduct target market analysis to understand the overall sustainability of the business by researching the demand for the product in the market and how well your product can meet that demand.
Starting an export-import business in Bangladesh requires compliance with several legal requirements. It’s important to note that these legal requirements change over time, so you should stay up-to-date with the latest regulations and requirements. Moreover, you also need to seek professional legal advice to ensure that your business is compliant with all the legal requirements of the country. Here are the must have documents that you need to operate an export-import business in Bangladesh.
- Business Registration: You need to register your business with the Registrar of Joint Stock Companies and Firms (RJSC) and obtain a Trade License from the local government office.
- Import and Export Licenses: Depending on the type of products you are importing or exporting, you may need to obtain licenses and import registration certificates (IRC) or export registration certificates (ERC) from relevant government agencies, such as the Bangladesh Bank, Bangladesh Tariff Commission, or the Ministry of Commerce.
- Tax Identification Number: You need to obtain a Tax Identification Number (TIN) from the National Board of Revenue to start an export-import business in Bangladesh.
- Compliance with International Trade Agreements: Bangladesh is a member of the World Trade Organization (WTO), and you need to comply with the rules and regulations of the WTO and other international trade agreements.
- Customs Clearance: All imported and exported products must be cleared by the Bangladesh Customs Authority. You need to comply with customs regulations, including paying the relevant duties and taxes.
- Labor Law Compliance: You need to comply with Bangladesh labor laws, including the minimum wage laws, working hours, and other employment benefits.
Apart from these documents, you might also need a fire service license, environment clearance certificate, membership certificate from relevant association, etc based on your export-import business. Always try to keep your paper updated, otherwise, you might be enquired by law enforcement agencies.
Sourcing and Procurement
Sourcing and procurement are critical aspects of an export-import business. The following steps can help you effectively manage the sourcing and procurement process:
- Identifying Suppliers: You need to identify suppliers who can provide the right products at the right price and quality. You can use various methods to identify suppliers, such as online directories, trade shows, and industry associations.
- Negotiating Contracts: Once you have identified a supplier, you need to negotiate contracts that cover the terms of supply, payment, and delivery. It’s important to have a clear understanding of the supplier’s capabilities, such as lead times, production capacity, and quality standards.
- Managing the Supply Chain: You need to manage the entire supply chain, including sourcing raw materials, manufacturing products, and delivery to customers. This involves coordinating with suppliers, freight forwarders, customs agents, and other stakeholders.
- Monitoring Quality: Quality is an important factor in an export-import business. You need to monitor the quality of the products you receive from suppliers and ensure that they meet the quality standards of your customers.
- Managing Inventory: You need to manage your inventory effectively to ensure that you have enough products to meet the demand of your customers. You may need to implement inventory management systems and processes to keep track of your inventory levels and manage stock efficiently.
- Cost Management: Sourcing and procurement can impact the cost of your products. You need to manage your costs effectively to ensure that you can offer competitive prices to your customers. You may need to negotiate with suppliers to reduce costs, or look for alternative sourcing options.
By following these steps, you can effectively manage the sourcing and procurement process in your export-import business and ensure that you have the right products, at the right price, and at the right quality.
Managing logistics is a critical aspect of ensuring the success of an export-import business. To effectively manage logistics, it is important to define the supply chain, choose the right carrier, and have effective document management. A freight forwarder can also assist with the transportation of goods, customs clearance, and documentation management. Inventory management is also crucial, as it involves keeping track of the products in stock, on order, and in transit. Real-time tracking of shipments is also important, as it allows for monitoring the status of shipments, including location, expected delivery time, and any potential issues that may arise. By regularly reviewing and adjusting logistics processes, the export-import business can ensure that their logistics are efficient, effective, and meet the changing needs of the business.
In Bangladesh, the majority of international trading takes place through shipping ports. However, if the product being exported or imported is perishable or has a limited shelf life, air cargo is used instead. When importing, usually, the exporter sends the product to the importer through their own agent or a freight forwarder. Ordinary, non-harmful products, such as clothing, leather goods, and soap, are usually packaged in standard containers. In order to transport hazardous goods such as chemicals and gas oil, specialized International Maritime Dangerous Goods (IMDG) containers must be used. Products that are perishable or temperature-sensitive require frozen or reefer containers. Upon arrival at the port, the freight forwarder hands over the container to the port authority after completing all necessary paperwork. The shipping agent then provides the necessary documents to the shipping line, and collects the bill of lading, and the exporter origin certificate issued by the Chamber of Commerce. These documents are then sent to the importer, who uses these documents for clearance while receiving the product.
Marketing and Sales
In order to effectively market your products, it’s important to understand the market trends and consumer preferences in your target market. Develop a marketing strategy that highlights the unique selling points of your products and targets your audience effectively. Utilize a mix of traditional and digital marketing tactics such as advertising, email marketing, social media, and influencer marketing. Having a strong online presence, including a professional website and active social media accounts, is also important in today’s digital age. Additionally, networking can help you make valuable connections in the export-import industry. Try to attend trade shows and conferences to meet potential customers, suppliers, and other industry professionals.
Once you have found your potential customer, offering competitive pricing and flexible payment options can help you stand out from the competition and attract more customers. Moreover, Providing excellent customer service can help you build a positive reputation and establish loyal customers. Respond to customer inquiries and complaints promptly and professionally to ensure customer satisfaction.
Frequently Asked Questions (FAQ)
Q. How to get a trade license in Bangladesh?
A. You can obtain a trade license from the nearest city corporation office or city council office. Simply collect the trade license form and fill it with the necessary information. You need to attach some other documents with this form like a NID copy, holding tax payment receipt, company incorporation certificate, TIN certificate, etc and pay the fee which varies depending on your operational capital. For example, if you want to import goods valued at BDT 5 lac, then the initial registration fee will be Tk. 5000 and the renewal fees will be Tk 3000.
Q. What is the export business risk factor and how to reduce export risk?
A. In the case of export business, it often happens that the importer trouble to pay for the product exported to him. So, as an exporter, it is better to buy credit insurance in advance because with its help you stay free from major risk factors like importer bankruptcy, order cancellation, currency conversion issue. Also, it is possible to stay away from the risk factor by diversifying the export business.
Q. How to find customers for my export-import business?
A. If you can’t identify a prospective buyer for your trading agency, exporting or importing any product becomes a bit difficult. Here are some practical tips on how to find buyers for your business –
- Research the market.
- Attend trade show and seminars
- Use online directories & search engines
- Use social media to connect with buyers
- Build relationships with foreign buyers by hosting them
- Maintain good relationship with the Chamber of commerce