A Guide For Small Businesses In Australia Importing From South Korea

If you are thinking of importing from South Korea, this article will guide you to identify, source, and import goods from South Korea to sell in Australia.

Many Australian businesses turn to imports as manufacturing and labour costs are comparatively cheaper in South Korea. Data from The Department of Foreign Affairs and Trade shows that South Korea is ranked 4th in countries that Australia imports from. The items most imported include refined petroleum, passenger vehicles, civil engineering equipment and heating and cooling equipment.

How to import from South Korea

Here’s what you need to do if you want to import from South Korea.

 

  1. Obtain information on the types of goods you are allowed to import and carry out market research.
  2. Explore online marketplaces of manufacturers and suppliers to source the goods you want.
  3. Carry out due diligence on your supplier and sign a contract with them.
  4. Arrange for shipping and logistics from South Korea to Australia.
  5. Understand the various regulations, tariffs, and licenses you need to export.
  6. On arrival of your goods in Australia you pay the necessary duty, tariffs, and any other fees.
  7. Market your goods for sale in Australia.

 

Dealing with importing, international shipping, tariffs, licenses and more can be tricky. We strongly recommend bringing someone into your business who has experience and knowledge in the field.

What can you import from South Korea to Australia?

Firstly, identify what you want to import. It’s key to perform some market research before making a decision. Explore Australian market trends and analyse your competitors.

Here are some hints and tips:

  • Avoid food and perishables — Importing goods that can become rotten could be very expensive as special containers are required
  • Avoid importing products that are widely available already — It’s likely those types of items are purchased in bulk by big importers, and you’ll never be able to match them on price.
  • Source items based on your prospective market, not the other way around — Explore what your customers are looking for and look for products based on those conclusion
  • Understand your margins and pricing — Importing can make your margins thinner. Take time to understand all of your costs (variable and fixed) so you can incorporate them into your pricing strategy and make a profit.

Sourcing goods from South Korea

There are a selection of South Korean suppliers to choose from. These include:

 

 

Once you know the types of products you’re after, make a shortlist of suppliers.

 

Next, you’ll want to:

 

  • Read reviews on the suppliers including their customer service, the quality of the goods they provide, and any issues others have had with them.
  • Contact the suppliers and request a sample of the goods you’re interested in. When you receive the sample have it independently appraised to make sure you’re getting what you pay for.
  • Ask the supplier about their terms for payment, how long it will take them to send the product to you, what protections and guarantees you have, and what their policies are on returns.
  • Complete any other due diligence, and if you’re satisfied, sign a contract with them.

Typical container costs — shipping from South Korea to Australia

Firstly, identify what you want to import. It’s key to perform some market research before making a decision. Explore Australian market trends and analyse your competitors.

If you’re only purchasing a small quantity or your items aren’t too heavy or bulky, consider air freighting them back to Australia. However, if you’re buying larger quantities, you should use a shipping container.

 

The Sea Freight Calculator lists the cost of renting a full container from South Korea to Australia as approximately:

 

  • 20 ft container — $1,550 USD
  • 40 ft container — $2,000 USD

 

And according to Australia Trade, renting part of a container will cost you between $150 and $250 AUD per cubic meter or 1,000 kilos, whichever is greater.

 

However, these are purely the costs to ship goods from South Korea to Australia. Once you get them here you’ll need to pay for getting your goods to a warehouse, storage, insurance, duties, and other fees.

Understanding government regulations on imported goods from South Korea

When importing to Australia, it’s important to know the regulations imposed. To learn more, read this comprehensive guide.

 

Some of these include:

 

  • Application for a special permit when importing certain chemicals, pharmaceuticals, produce and others.
  • Quarantine may be required when importing plant and animal good.
  • Tariffs, duties, and taxes may apply — More on that below.
  • Some importers may be due for concessions from the government.
  • Free trade agreements could work to your advantage.
  • Be aware of additional costs.
  • Label goods correctly.

 

For full details, please do check out our guide to importing into Australia.

Understand costs to import from South Korea

It importing is new to you, it’s crucial to understand import costs. These include:

 

  • The cost of buying the product.
  • Shipping, logistics, and distribution costs.
  • Tariffs and duties due to South Korea on export and Australia on import.
  • Taxes and tariffs on your imported goods. Spend some time learning about:

 

Generally, you will have to pay import duty and GST on goods valued over $1,000 AUD.

 

  • Import entry costs and processing charges – Customs will charge you a fee (typically under $200 AUD) for processing your goods.
  • Customs import duty is calculated as a percentage of the price you paid for the goods. The duty rate can range from 0% to 10%, but the rate for most goods is 5%.
  • Goods and services sales tax (GST) will also be charged based on the following:
  • The valuation of the goods plus;
  • The customs import duty amount plus;
  • The cost of insuring the goods and transporting them to Australia.
  • GST is charged at 10% of the final amount.

 

This is just intended as a general guide – These charges can be influenced by what you’re bringing in, excise taxes, free trade agreements, and many other factors. Please do check with customs for your individual circumstances.

 

Some types of goods are eligible for concessions (reducing the amount of duty you need to pay). You can find a factsheet through this page, just look for “List of current tariff concession orders.” You’ll also find additional details on concession schemes here.

Selling your products

When your goods arrive from South Korea, commence your marketing and sales efforts. Continue the process of market research, sourcing for goods to make a nice profit.

Paying for your goods in foreign currency

Doing import business from South Korea is usually done in US dollars or South Korean Won.

If you are bringing goods in from South Korea, consider using OFX.

They specialise in international payments and receipts for Australian businesses. Each client has a personal manager and access to a range of useful products like Forward Exchange Contracts, Options, Limit Orders and Currency Options.

OFX is a trusted partner of The Currency Shop. Click on this link , sign up and never pay a transfer fee for your international money transfers. Ever.

OFX charges no transaction fees. Minimum transfer A$250. Third party intermediary fees may still apply.

Learn more about OFX

What about receiving money in foreign currency?

Until recently, Australian businesses had 3 options to receive money from overseas customers:

 

  1. Get paid into a local Australian based, Australian dollar account.
  2. Open a Foreign Currency Account, usually with a bank
  3. Use a payment gateway like PayPal, Braintree or Stripe

 

Unfortunately, these options are usually filled with fees, balance requirements or massive exchange rate mark-ups.

In October 2017, TransferWise released the Borderless account in Australia and it’s really impressive. It allows you to receive, hold and transfer 27 different currencies.

 

The unique feature though, which is particularly useful for businesses, is the ability to have local bank account details in USD, EUR, GBP or AUD. This makes receiving money from overseas customers exceptionally easy.

 

For the full review of the TransferWise Borderless Account, click here

Learn more about the Borderless Account