The Importer Manufacturer's role in the international trade business is to create
or manufacture products in one country (usually foreign) for exporting around the
world. Compared to other simpler roles (Import Agent or Import Distributor), the
Importer Manufacturer is the most complex and the most resource intensive. However,
it can also be the most lucrative because the Importer Manufacturer owns and controls
the majority of the import process.
Example of Importers Manufacturers
Here is an example of how someone may have chosen the Importer Manufacturer path.
Mary loves leather boots especially cowgirl boots. She knows that there is a high
demand for quality cowgirl leather boots in the United States.
She decides to start her own manufacturing plant in China to create a line of leather
She exports the boots from China and imports them into the U.S. where she ships them
to boot wholesalers serving the specialty shoe market.
In this example, the manufacturing, the importing and finding wholesaler customers
are all Mary's responsibilities.
Challenges of Importers Manufacturers
The complexity of the Importers Manufacturers role poses challenges:
Importers Manufacturers must ensure that there is enough startup capital to carry
the operations throughout the early phases of the manufacturing operations. Without
enough working capital to properly startup the company could mean early failure.
Importers Manufacturers need to confirm through research to make sure that the market
potential is strong. Before venturing down the Importer Manufacturer's route, confirm
your gut feel that there is a large enough market for you to make a healthy living,
Importers Manufacturers need to develop a product plan through research with consumers.
What benefits are they looking for? Which product models are the most popular? How
will you roll out your product line if you have multiple products?
Drawback Program for Importers Manufacturers
For products coming into the United States, you may be eligible to participate in
the Drawback program. It entitles you to receive up to 99% of your import taxes
back if you plan to export your products to other countries again.
Here are the two major types of Drawback programs:
Direct Identification Manufacturing Drawback - When goods are imported as raw materials
for further production within the U.S., the tariffs paid are eligible for the Drawback
program. The tariffs are paid out only if the finished goods are exported again.
This government policy encourages U.S. exports and businesses to keep manufacturing
jobs within the United States.
Substitution Manufacturing Drawback - This program allows drawbacks on raw materials
brought into the U.S. for manufacturing but they were never used. Components from
the U.S. are used instead and the foreign raw materials are returned.
In order to work effectively with Customs, detailed documents are required to trace
back to the raw material components of your products. Reimbursements are also time
bound. So make sure everything is dated.
This gives you an idea of the scope and complexity of your responsibilities as an
Importer Manufacturer. Some import entrepreneurs are overwhelmed by this position.
Many of them begin their career in importing from China by becoming an Import Agent
or Import Distributor first. Once they learn the process and the rules of importing,
it is only then that they will consider being an Importer Manufacturer.