Why Importing Occurs

“Importing” refers to the inward reception of goods into the domestic market for consumption in that market or incorporation into unfinished goods. “Imports” typically denote goods that are ordered by customers in a country other than the country in which the goods are manufactured or in which the selling company is headquartered.

10 Reasons for Importing

1. Domestic unavailability of products (in the case of complex products especially, not all product parts will be available inside national borders, hence some acquisition from foreign-based companies is inevitable).
2. Price: labour cost differentials, buyer-favourable exchange rate, higher quality products through seller’s use of superior equipment and processes, products and pricing concentration – the infrastructures and resource wealth of certain countries supports the efficient production and competitive pricing of particular goods.
3. Government pressure in the form of offset agreements, which give preference to the purchase of certain categories of products from particular countries.
4. Quality: international suppliers can be world leaders in the quality of a certain class of product – to achieve competitive advantage, firms may seek to acquire that quality through purchases.
5. Rapid delivery and supply continuity (related to 1): domestic products may be available locally but logistics infrastructure issues complicate delivery, making it cheaper and more efficient to source overseas.
6. Superior technical services/product support/product quality assurances (related to 1, 4, and 5).
7. Technology specialisations (see 6).
8. Marketing advantages: agreements with certain countries drive purchasing of specified amounts from suppliers inside those countries.
9. Tie-ins with offshore subsidiaries: multinationals operate manufacturing, distribution, or natural resource extraction in a range of countries – there may have been a decision made to support the local economy of those countries by purchasing their exports for consumption in the multinational’s home nation or other national markets.
10. Competitive force: national and international competition pressures firms to apply strategic supplier management-based strategies, which are characterised by the identification and utilisation of low-cost and/or high-quality suppliers, wherever those suppliers may be located worldwide.