Getting ‘Fashion Forward’ on Customs
By David L. Cunningham Jr.
Chief Operating Officer, FedEx Express
For start-up fashion designers and small-scale entrepreneurs, global sourcing is often a must. Malaysian shoe entrepreneur Christy Ng cites “fresh design, distinct artisanship and competitive pricing” as motivations for buying raw materials internationally. For Juan David Martinez of the Colombian cycling wear manufacturer Industrias Suárez, the quality and pricing of overseas-sourced zips, dyes, adhesives and reflective tapes are integral to their cost model and product integrity.
However, understanding customs rules before you take the leap into global sourcing is key, as Ng and Martinez will attest. Customs rules are fluid and differ markedly from country to country. Long hold-ups and penalties can ensue if rules are not followed. Ng has experienced the pitfalls first hand, where complex or changing customs rules have resulted in “unprecedented financial losses with garments left on the docks for weeks at a time.”
If you’re a fashion entrepreneur ready to take the next step of either sourcing or selling items internationally, here are some tips on navigating customs to get you started.
Check textile quotas and licensing requirements.
The textile industry has long been the subject of global trade negotiations. Some countries still maintain select quotas,1 such as Costa Rica, which controls trade in certain wool fabrics. Markets such as Mexico require textile or material importers to hold a license or visa.2
Review banned or restricted substances lists.
Many materials used by the fashion industry contain plastics or chemicals that are subject to bans or restrictions, such as textiles containing formaldehyde in Europe. Obtain a list of banned substances from local authorities, and check with vendors that textiles and materials pass the test before purchasing.
Be sure valuations are accurate and goods are well labeled.
When importing or exporting goods, make sure to provide an accurate valuation along with a detailed description of the contents of a shipment — for example, rather than ‘bolt of silk,’ the description should read ‘bolt of blue silk with embroidered detail.’ This will help customs officials calculate duties and taxes.
Check for authenticity and report any counterfeit products.
The sale of counterfeit goods makes up an estimated 10% of fashion trade, with belts, handbags and shoes being the most popular items.3 Today’s counterfeit goods can be hard to detect. You may inadvertently find yourself sourcing (or being subject to) ‘knock-off’ merchandise to complete a seasonal line-up.
Be clear on conventions and local rules for animal products.
The Convention on International Trade in Endangered Species (CITES) is an international governmental agreement prohibiting the trade of wild animals.4 In addition to this, many countries have supplemental laws, which differ between markets. For example, importing dog or domestic cat hair is illegal in Europe, but permissible in some parts of Asia.5
Sourcing or selling goods internationally can seem complex, however there are a range of organizations that can assist, from government agencies to transportation partners. Once you’re on your way, talk to your transportation provider to find out how tools such as FedEx Global Trade Manager can help estimate duties and taxes, manage documentation and gain up-to-date insights into local market conditions.Sources