How to import garments from Bangladesh & How trade instruments can help ease the process?

1. How to import garments from Bangladesh & How trade instruments can help ease the process? In recent years, Bangladesh has emerged as a major exporter of garments. In fact, the country is already exporting garments to 175 countries around the world. Bangladesh already has more than 3,200 factories producing clothes. In addition to this, the Asian country also has more than 1,400 textile mills. The clothing industry in Bangladesh employs around 4.4 million workers. Germany is the largest market for Bangladeshi textile exports, accounting for nearly $5.57 billion worth of exports during 2017–18. The biggest driving factor behind this is that Bangladeshi garments are duty-free in the European Union. However, despite this growth, many importers in the EU and other Western countries are unaware of how to import garments from Bangladesh in a secure manner. Similarly, various exporters in Bangladesh are not aware of the nuances of international trade. This article will help you in understanding how the export-import process works and how trade instruments can help ease the process.

2. The first step of the process is to keep the documents in order. Every trade requires a Single Administrative Document (SAD), which has information regarding the goods. The SAD is essential for trading outside the EU. A customs declaration also needs to be submitted by the importers. Further, an invoice needs to include the names of the buyer/seller, the place and date of issue, the number and types of packages, the description of the articles, the volume of the goods, the pricing details, as well as the terms of delivery. A certificate of origin may also be included. These documents ensure that transactions take place seamlessly. Importing garments from Bangladesh can be streamlined if traders to make use of trade instruments. Trade finance is one of the most important aspects of the international movement of goods and services. There are several financial instruments available in the market that can help importers as well as exporters. The first set of instruments are bank guarantees. These bank guarantees allow traders to import or export goods without any worries. A bank guarantee is a promise that the bank would cover the loss in case of loan default. For example, if a German trader is importing goods on loan and he signs a bank guarantee, then the exporter will be compensated in case of default. In such a case, the bank guarantee would reduce the losses that have been incurred if the transaction is not completed. In return, the bank charges a small fee. The second set of instruments are letters of credit. These letters allow exporters and importers to engage in trading activities without worrying about defaults in payments. If one of the party’s defaults, the bank steps in and covers the remaining amount. A letter of credit is also known as a letter of undertaking. The bank charges a small fee in lieu of issuing the letter. The major difference between a letter of credit and a bank guarantee is that the letter of credit ensures that the transaction is completed, even if the bank has to pay immediately. Such an arrangement helps the importers and exporters in minimizing their risks. If a letter of credit has been issued, the transaction between the two parties will go ahead in any case. Overall, there are three major advantages of an LC for an importer. Firstly, an LC ensures that they can make the payment only if all the terms have been met. Secondly, they have the right to reject goods of lower quality. Thirdly, in the case of an LC payment, the importer can negotiate favourable trade terms. Thus, it is clear that LCs are extremely useful instruments.

3. Finally, several institutions also offer advisory services that could help the importers and exporters in conducting the transaction in a smooth manner. Such advisory services enable transactions by simplifying the entire trade finance process. Advisory services can be chargeable or may also be provided for free. Importers in Germany can make use of the Letter of Credit services offered by Euro Exim Bank. The bank facilitates international trade by offering multiple types of Letters of Credit (LCs). The most commonly used LCs allow importers to trigger payments to the exporter only when the required documents have been sent to the bank, and the quality of the products are up to the expected standards. If there is a discrepancy in the quality, or if the documents are not complete, then the importer can refuse the payment. The exporter need not worry because the LC has been provided in this case. Euro Exim offers various types of LCs, including revolving LCs, deferred LCs, and commercial LCs. The various LC offerings of the bank can be compared here.