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Import/export guide: Canada

If you’re a people person with a love for Canada, an import/export business could be for you.

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Do you have connections in Quebec? Have you ever lived in Toronto? Maybe you simply love the spirit of Canada. In the import/export industry, you can use your individual competitive advantages to serve as a matchmaker for companies in Canada – matching product manufacturers with markets that want and need to purchase the goods they produce.

If businesses in Canada want to export their goods, you help them find buyers. And if they’re looking for specific merchandise, you help them find sellers.

Types of import/export businesses

There are three basic types of import/export businesses. Starting out, it’s a good idea to pursue the one that interests you the most.

Export management company

Let’s say a company in Canada wants to export machinery. That’s where an export management company (EMC) can help.

An EMC handles all of the details for the company to ship goods overseas. This could include hiring distributors, creating marketing materials and preparing shipping logistics.

Export trading company

An export trading company (ETC) finds out what foreign buyers want and then locates domestic companies that can export the goods.

Import/export merchant (or free agent)

Import/export merchants buy merchandise from a manufacturer – foreign or domestic – then resell that merchandise around the world. There’s heavier risk involved in being a free agent – but with fewer middlemen, the potential for higher profits as well.

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Startup costs

You can start your own import/export business with little upfront costs.

At a minimum, you need a phone and a reliable Internet connection. You’ll also want to invest in business cards, a website and a fax machine. And it doesn’t hurt to hire somebody for your branding, including a unique business logo.

Narrowing your market

Once you’ve decided on the type of import/export business you want to run and calculated your startup costs, it’s time to narrow your market focus.

By niching down, you can focus your attention on a market you can serve best. Think about the following:

  • Customers you want to serve.
  • Areas of the world you’ll target.
  • Types of goods you’ll offer.

Take your time to dig deep with your research. The extra time you spend finding profitable niches will pay off in the long run.

Your customer

Your target customer will be someone who wants to trade globally. They’ll either want to sell goods overseas or buy goods from international sources.

Beyond that, you can choose any type of customer you wish. Maybe you’ll cater to companies that sell Canada’s No. 6 export, plastic goods, or you could decide to work with wood or paper goods.

If you can identify a need, you can target a group of companies as customers.

Canada’s top 10 exports

  1. Oil
  2. Vehicles
  3. Machinery
  4. Gems and precious metals
  5. Wood
  6. Electrical machinery
  7. Plastics
  8. Aircrafts and spacecrafts
  9. Aluminium
  10. Grains, seeds and fruit

Source: Trade Map, 2017

Regulation, licences and permits

Imports

Machinery imported into the Philippines has to pass strict biosecurity rules. If it doesn’t pass, it’ll be exported back out of the Philippines at your own expense. These rules boil down to:

  • The machinery must be free of all contamination like soil or plants.
  • If the machinery has been used, you’ll often need to organise an import permit before it arrives.

For the guidelines on specific machinery, you can find out more on the Department of Trade and Industry’s Import Facilitation website.

Exports

Before you can export your goods, you’ll need to register your business with the DTI. You can get started by registering your company name with DTI’s Business Name Registration System and choosing the right business license. You will then need to secure various permits from your local government unit, then apply for a business tax identification with the Bureau of Internal Revenue.

A note about importing goods into Canada

Before you can begin importing goods into Canada, you’ll need to obtain a business number from the Canada Revenue Agency. It’s free, and you can typically get one in minutes.

Canada requires a bit more work than other countries do, including tariff classification numbers for each item you import.

Become familiar with trade incentive programs, and contact a professional to learn more about registration, tariffs and restrictions that could affect your business.

Charging for your services

Import/export business typically charge based on commission or retainer.

Commission structure

With a commission structure, you earn a percentage of any trade deal you close – usually around 10%. For example, if you sell a manufacturer’s smartphone for US$300, you’ll make a US$30 commission. On top of your commission, you’ll also want to charge for expenses like packaging and shipping.

Retainer model

On a retainer model, your client pays you a monthly fee to be on call when they need your services.

To find the right amount for your retainer, consider your costs – these may include labour, supplies and overhead.

An alternative model

Beyond a commission or retainer structure, you can simply buy goods and sell them. In this case, your revenue will come from the profit you make from selling merchandise.

Get more tips on starting your own business

Which business model should you choose?

A rule of thumb is to pick a commission model if you think a product will be easy to sell. However, if you think a product will be difficult to sell, price your business based on a retainer.

Basically, if you’ll sell a lot of product, you want to be paid based on performance. If you believe sales will be slow, using a retainer model could ensure that you’ll be paid even in the downtime.

Finally, if you’re confident in your ability to sell products you acquire, you don’t have to negotiate a payment structure with manufacturers. All you’ll have to negotiate is how much you’ll buy the product for and then find a way to profit from the merchandise.

International billing and payments

Your new business will require you to make and receive international payments, which means you’ll make transactions between currencies and across borders.

You can safely and affordably manage your business payments – with lower fees and stronger exchange rates – by comparing the services of a money transfer specialist.

How can I send money to Canada?

Laws and legal documents when transferring large sums of money into Canada

Shipping the goods

You need to send and receive goods from other countries, so you’ll need to arrange shipping details.

First, contact a freight forwarder – a company that helps you transport goods safely and efficiently. They will help you handle the logistics of completing shipping documents, finding cargo space and securing cargo insurance.

Find a freight forwarder by looking in state-specific business directories.

After you’ve hired a freight forwarder, read our shipping guides to learn how to ship merchandise.

Risks and how to avoid them

Unpredictable shipping logistics

Needless to say, your success hinges on whether you can ship goods safely and efficiently. If you’re exporting goods, for example, you’re responsible for ensuring they leave your local port and arrive at the correct destination on time.

You’ll also need to account for anything else that could go wrong, such as damage to the cargo. Staying organised and partnering with a reputable freight forwarder will help you ship goods without a hitch.

Not knowing enough about markets

It’s a good idea to thoroughly research a market before entering into this business, though even that may not be enough.

Consider hiring experts who understand the tastes and cultures of your specific markets. You’ll need to sell products that resonate in countries you’re unfamiliar with.

Running into problems at the border

Customs rules aren’t uniform throughout the world. Instead, you’ll encounter a mass of different regulations while transporting goods. To avoid drowning in a swamp of border regulations, hire experts in customs law and trade compliance.

Bottom line

The import/export business is for people who love building relationships in other countries, but it also requires an organised mind that can handle logistics.

If you have those qualities, take the plunge into creating a thriving import/export business.

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