Import/Export in Hungary
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Hungary Import and Export
Exporting should be a natural step for any successful business. It not only abates reliance on your indigenous customers, but also allows for greater market reach and profit. But, as with most things in business, the theory is easier than the practical. Exporting can pose an entirely different set of problems than your business is used to.
Entering Hungary without any contextual knowledge can often lead to expensive errors. Fundamental to success, then, is a comprehensive analysis and research of your intended market. Your polar findings will be either an overwhelming or underwhelming response to a product or service, and it’s probably better to know this before parting with reluctant sums of money.
Naturally, you need to think about people. You need to think about places. You need to contextualise your product or service socioeconomically. Who will be buying your product? Can they find an easier or cheaper alternative? Who’s your competition? What’s the market situation in Hungary?
And it’s not just the basic relocation issues and protocol you have to consider. Indeed, it's pragmatics such as your route to market, logistics, regulation, barriers, tariffs and suppliers too. Many will differ vastly to your accustomed practices.
Planning & Preparation
In preparing to export your goods or services, you must not just assess, but scrutinise your potential, and prepare for the worst. This doesn''t mean you have to negate all optimism; just don’t get consumed by it.
These are the market essentialities to examine:
Structure of industry
Demand for your product or service
Your competition and how your company will forge itself alongside it
Acclimatisation - alterations your company, product or service may have to adapt to
Next is the process of market entry in Hungary, which will always seem simpler on paper. Your main considerations will be:
A market strategy that, if needed, acknowledges international trade development
Financial resources and backing
People, and how they can help develop your product for export / a new market
Erudition in local requirements: packaging, pricing, labelling, etc
Again, erudition, but in the costs and payment procedures of exporting
Some of these factors alone may establish an unsuitability for your intended market, so research them thoroughly.
Next, is your product cut-out for export? Think about:
The standards and regulations of products in your overseas market
The fees involved with altering your product, service and company for a foreign market
UK Trade & Investment (UKTI) is the Government organisation that helps companies in the UK succeed in the global economy. Offering services to UK based firms wanting to gain access to global markets through export and foreign expansion, UKTI offer a range of services tailored to the needs of individual businesses, helping them to maximise their international success.
Expert Trade Advice: The UKTI International Trade Team has 40 local offices around the UK through which they are able to meet business owners and offer advice and support on international trade and growing a business.
The Passport to Export Programme: The Passport to Export programme was devised to offer new and inexperienced exporters support and guidance in the following ways :
- Free Action Planning
- Support in Visiting Potential Markets
- Mentoring from a Local Expert Professional
- Customised and Subsidised Training
- Ongoing Support
Gateway to Global Growth: A free service to experienced exporters which offers a strategic review, planning and support to help grow your company''s business overseas. Solutions could be complex requiring both UK Trade & Investment services and those offered by other public or private sector organisations. It could involve the acquisition of specialist information and skills or guidance on how to achieve a specific objective. It may even involve sharing your experience and problems with other experienced exporters.
Business Opportunities: With a team of expert advisors located overseas within British Embassies, High Commissions and Consulates, UKTI publish overseas business opportunities open to British companies. To benefit from these Business Opportunities you must register your UK-based business on the website.
Access to UKTI Market Expertise: UKTI are able to provide help with the initial approach into a new market, offering help through research and advice through 2 principle services:
Overseas Market Introduction Services (OMIS): This service will put a business in direct touch with local UKTI staff in their overseas offices who are able to provide support and access to country and sector-specific advice.
Export Marketing Research Scheme (ERMS): Administered on behalf of UKTI by the British Chamber of Commerce, companies may be eligible for a grant for market research projects to obtain commercial intelligence.
Help with Visiting an Overseas Market: UKTI provide grant support for eligible Small & Medium Sized Enterprises to attend trade shows overseas and help arrange groups of UK companies to attend tradeshows and missions. This is implemented through their Tradeshow Access Programme, allowing entrepreneurs to test market, attract customers, appoint agents and distributors, and develop international business.
Selling & Distribution
To improve the chances of overseas success, you need to consider a few key issues. Sales presence, for instance, should be a top priority. Will you sell directly? Will you trade over the internet? Perhaps trade shows are more suitable? Could you benefit from a local partner who knows the market? Here are a few fundamental choices:
Get yourself a distributor in Hungary who can sell on a local or national level
Sales agents can either sell a product for you, or alternatively acquaint you with potential clients or customers
Joint ventures in Hungary with local companies have gained in popularity, primarily because of their knowledge and established presence in the market. It is often a pricey option, however
Of course, you can also set up your own office, ensuring maximum control on all operations. This is obviously the most expensive of all your options
A few things to remember. Firstly, when drawing up any contracts with agents or distributors, it is imperative to unequivocally define obligations such as delivery and payment
Next, your intellectual property (IP) may be jeopardised if it is not declared in each foreign country. This can often be a laborious process, so be prepared. Remember that patents are generally recognised only in their country of origin.
Oh, the minefield of marketing in Hungary. It’s no point squeezing a product or service into a new market with the shoehorn of indigenous merit. Your product or service must adapt, refine, alter, acclimatise, tailor and fashion itself to a market, not rely on some fatalistic hope of simply “fitting in.” Products are more pliable than people.
As aforementioned, the necessity to contextualise your product or service socioeconomically can’t be overstated. It will be a paradoxical balance of market sensitivity and exploitation. Does your product require a drastic change to its image? Can it be changed to flatter a national idiom?
Needless to say, a keen attention to laws, legislation and regulation is paramount. VAT rules should be considered early; some products may not qualify for the HM Revenue & Customs zero-rate policy.
Controls & Licenses
You’ll need to check if any of your products require an export license. Products such as chemicals and firearms, for instance, usually do.
Comprehension of the Law
Of course, upon entering a foreign country, a product or service is subject to, and must abide, national laws.
Developing Your International Trade Potential
This UK Trade & Investment (UKTI) programme was established to help novice entrepreneurs and exporters who are considering selling overseas. With its first-class knowledge of overseas business, it helps entrepreneurs through training, planning and continuing support.
Here are some of the features of the programme:
Free assessment of your preparedness for exporting and help devising an entry plan
Training in all the essentialities of overseas trading
Support and help with market research, and the possibility of financial assistance if needed
Expert advice and help with overcoming protocol, such as language and cultural barriers
Advice from specialist international trade advisors
Continuing support for overseas development and trading
You can join the Developing Your International Trade Potential Programme if you meet the following requirements:
Less than 250 employees
Less than 50 million Euro turnover
Your company makes 25% or less of turnover from exports
You are a new, novice or passive exporter
Are You Ready To Export?
Entering into the export market through an existing business may seem like an obvious way to increase your current revenue. In many cases, it is a viable means of expanding a business, and generating greater income. However, it is important to consider the logistics, timing and practicalities before jumping into the unknown.
Exporting can extend your market, boost your turnover and prevent you having too great a dependence on your UK-based customers. But it isn''t always an easy option. Starting to export poses a whole new set of challenges, from identifying promising markets and customers to ensuring that you can fulfil your export contracts. Developing new export markets takes time and money.
Exporting isn''t simply an add-on to your existing business. It should be part of an overall strategy to develop the business. Before you start exporting, it''s worth making sure you''ve developed a complete export plan looking at all the costs and risks involved. A well planned extension overseas can bring financial and reputational success, but a rushed job may just cause more damage than it is worth.
Planning is key, so consider the following before making any decisions:
Exporting presents all the normal challenges of marketing in the UK - it''s up to you to find customers and convince them to buy from you. Understanding the market and its requirements is very important. Don’t assume that because you know the domestic market, you automatically know foreign ones.
Exporting is usually a way of growing a successful business, rather than an easy way out for one that''s in trouble. If you''re struggling with limited finances or overworked employees, you may not have the resources to take on the extra work.
As an international business, you will need to cope with extra logistical problems, contractual issues and paperwork. You''ll probably want a contract drawn up using internationally recognised terms and conditions and standard commercial practices to make it clear what your responsibilities are.
There''s also a range of paperwork for sorting out transport, customs clearance and payments. These may take more time and effort than you expect, and must be dealt with in meticulous detail.
You need to comply with regulations in both the UK and overseas. For example, some goods that are allowed in the UK might not satisfy another country''s standards.
Exporting demands additional resources, both in terms of financing and skilled personnel. Be prepared for your expenditure on staff and expert advice and services to increase significantly before you start to see the benefits
With the additional costs, such as international transport, you may find you simply can''t compete with local suppliers. If the market only offers low margins, or you haven''t got the resources you need, you may decide that exporting isn''t for you. Make sure that you plan carefully and know that you could present a competitive product or service overseas.
Equally, if you''ve got a good product to offer and a well-run business, the chances are there will be opportunities for you out there in the export market. If the rewards you expect justify the investment and the risks, you should commit to your export plan and make it happen.
Assess your skills and resources
To start exporting successfully, you should take a systematic approach and decide what your export strategy is. You need to spend time and money planning, researching market opportunities and building relationships. You may also need to invest in modifying your product and service to suit overseas customers.
Buy in help
Once you''ve planned your exporting activities, you also need to devote extra resources to handling your exporting business. Marketing to overseas customers tends to be more demanding than selling within the UK. Exporting also needs special skills - such as organising international transport and handling customs clearance.
Many businesses find that the best way to get started is to buy in the services they need, and build in-house skills and resources later. For example, you might use a local agent to sell, and a freight forwarder to handle deliveries.
Source your capital
Exporting can also be financially demanding. Customers often want credit from the time they receive the goods. For a long distance shipment, this could be weeks after you produced and shipped the goods, so you get paid later than you would by a customer in the UK. At the same time, you may have to meet extra costs like transport and insurance.
The more successful you are, the greater the demands placed on your business will be. It''s worth planning ahead to be sure you have the capacity to handle the extra production, selling and after-sales support.
Organise your paperwork
When trading internationally the right paperwork is crucial. Missing or inaccurate documents can increase risks, lead to delays and extra costs, or even prevent a deal being completed.
Whether you are importing or exporting, you need to understand what paperwork is required. Even if you use a freight forwarder or an agent, it''s still up to you to make sure the right documentation is available. See our basic guide below for pointers to get you started.
This guide explains the key documentation you need to use. It outlines what should be in your contracts and what paperwork you need for customs, transport and payment.
Key documentation for international trade
There should be a clear written contract between buyer and seller, including details of exactly where goods will be delivered.
Specific documents may be needed to get the goods through customs and to work out the right duty and tax charges. Requirements of both exporting and importing countries should be addressed.
Documentation is needed to cover the transport of the goods and insurance during the journey.
The right paperwork can be an important part of the payment mechanism. It''s important to co-operate with your counterpart on getting the paperwork right.
NB: If you''re shipping goods to a customer overseas, they should tell you what paperwork they require at their end. If you are dealing with a non-English speaking country, it can be a good idea to provide one set of commercial documents in the local language.
International trade contracts and Incoterms
Different countries have different business cultures and even languages. It''s a good idea to make sure you have a clear written contract to minimise the risk of misunderstandings.
To avoid confusion, internationally agreed Incoterms should be used to spell out exactly what delivery terms are being agreed, such as:
where the goods will be delivered
who arranges transport
who is responsible for insuring the goods, and who pays for insurance
who handles customs procedures, and who pays any duties and taxes
As well as including delivery details, the contract should cover payment. This should include what currency payment will be made in, how much will be paid, when payment is due and what payment method will be used.
You may need an export licence to export goods. For example, there are controls on exports of chemicals and military technology. Licence requirements may also depend on which country you are exporting to.
If you are selling goods within the EU, most goods are in free circulation and can be easily moved from the UK to other countries without customs controls or charges.
If you are selling to customers outside the EU, you need to declare your exports to HM Revenue & Customs (HMRC). This is generally done electronically, using the New Export System (NES). The declaration includes details of the classification of the goods being exported and which country they are going to.
Alternatively, an authorised agent or freight forwarder can handle the customs declaration for you.
For VAT purposes, exports are generally zero-rated, but you should keep copies of your VAT invoices and proof of export. This helps you prove that the goods left the country and that you do not have to pay any output VAT on them.
If your sales to EU countries exceed £260,000 - you must also complete the Intrastat supplementary declaration.
Exports to countries outside the EU do not count towards the Intrastat threshold and do not need to be included.
You should check what documentation is required for import into your customer''s country. Typically, you need a commercial invoice and shipping documents such as an Air Waybill. Other requirements can include a certificate of origin.
Once you have considered the logistics of entering the export market – either with an existing business or a new venture – you can start planning. Just remember to be meticulous, and plan everything to the last detail, follow our pointers, and you should enjoy a lucrative business opportunity!
If you import goods from another European Union member state, it is not necessary to make a customs entry. That said, it may be necessary to file a Intrastat declaration if the goods you are importing goods which exceed an annual value threshold.
All EU member states subscribe to the common trade policy toward imports from third countries. As a union, the EU has a relaxed import policy. Typically, imports licenses are not needed for goods entering a European Union country, except in the case of certain sensitive items, such as tobacco, weaponry, agricultural products, surveillance, and goods dictated by quantitative restrictions.
As the imports license policy dictates, no import licenses are generally necessary. However, the Union has quantitative restrictions in position to oversee certain goods being imported from certain countries. Some goods may be liable under tariff quotas. Traders with Hong Kong should be particularly wary.
No matter how liberally traded the EU wants to be, it obviously has restrictions in place that prohibit certain goods, such as:
- Pirate or counterfeit items, which can not be imported outright. If they are, the importer could be subject to fines
- Chemical product restrictions: mercury, PCB, PCT , CFC and HCFC containing products are banned. There are further restrictions on other substances.
- Genetically Modified Organisms (GMO), which are restricted
- Restrictions on the importation of live animals and animal products
The European Union
An economic and political unification of 27 countries, the EU is just shy of 500million citizens, and has a total generation of roughly 30% of the world''s gross product. The unification has created a single market through a standardisation of laws, which all signatory states must abide. These laws ensure the freedom of movement of people, goods, products, services and money. The EU also boasts a common trade policy and regional development policies.
Sixteen member states have adopted the Union''s official currency, the Euro. The goals of the EU are not dissimilar to other free economic areas:
- Strengthen democracy and democratic governance of its participating members
- Improve efficiency between member states
- Further economic and financial unification and centralisation
- Create and develop the community social dimension
- Introduce a security policy for all member state
Current and full members:
- Czech Republic
- United Kingdom and Northern Ireland
The EEA & EFTA
The European Economic Area, or EEA, was established in 1994. Its original members were signatories of the European Free Trade Association (EFTA), the European Community (EC) and European Union (EU). It permits participants to part of the single market without actually subscribing to the EU.
Signatories of the EEA are EFTA members Iceland, Lichtenstein, and Norway.
The European Economic Area is modelled on same four principles as the European Community, which is the liberal movement of products, people services and money within EEA nations. Consequently, EFTA members which are also a part of the EEA can trade freely with the EU, but with strict adoption of some EU law practices.
European Free Trade Association members do not receive funding by the EU, or suffer the financial burden of membership. Conversely, they have little say in any EU policy making in Brussels.
Organisations that can assist with Import/Export
eBSI Export Academy specialises in the delivery of Certified International Trade and Trade Finance Certification Programs leading to certification from the Institute of Export UK.
Trading overseas brings a new set of challenges to the process of selling on credit terms.
Looking to start exporting to this country?
B2B International is a global market research agency that specialises in b2b markets. With experience in every industry sector and country imaginable, we are well placed to help you with overseas markets.
Freight Filter is an independent on-line service offering instant freight pricing and on-line booking from the best freight providers. Helping you find the best shipping options and saving you time & transport costs.
Funding Solutions UK Ltd offer independent and impartial advice to UK based businesses that are exporting goods and services. If you are currently exporting or you are considering exporting please contact us today.
Trust FedEx Express, the world's largest express transportation company, to help your new venture make international headway.
TFP is a provider of true trade finance to predominately UK based small and medium sized companies that have confirmed purchase orders for finished goods from credit worthy end customers.
Looking for a recession-proof way to make money? Start an Import/Export Agency Business now!
First Class Logistic Solutions since 1921. Worldwide seafreight services, Comprehensive Customs Clearance Services, UK Warehousing & Distribution Services
VAT Compliance Europe (‘VCE’) is a subsidiary of the VATit Group, an international indirect tax specialist firm.