Italy is one the UK’s top trading partners. Dealing with almost £11billion of British trade in 2018, it was our ninth largest export market. While figures for Italian-UK imports reached around £21billion. Although the unknown territory of ‘Brexit’ casts a shade of uncertainty over the logistics of future trade relations between the UK and the rest of the EU, the one thing that is certain is that trade of some kind will continue. Albeit with revised red tape. So, as a potential importer or exporter, what do you need to know about doing business in Italy?
Italy: A UK Importer/Exporter Guide
Setting up an import or export business between the UK and Italy requires groundwork. We’re not here to advise you on financials, but cash is key in any business. And it’s always a good idea to have a buffer. That way you can keep the business afloat even when there are delays in payments being cleared.
Once you have the bottom line of your business established your next steps are to research products and markets and to decide whether or not you wish to work with agents and distributors, or work directly with partners. Obviously, the more people involved in your sales pipeline, the smaller your overall return. However, without strong local knowledge and contacts, you may struggle to reach the audience you need to make your business a success. This largely depends upon the industry you’re working in, the products that you’re working with, and your existing knowledge base.
The things you need to consider
Trading with Italy is quite straightforward at the time of writing. Thanks, mainly, to the EU’s free trade agreement. But, as we all know, that will imminently change, with ‘Brexit’ scheduled to officially take place on January 31st, 2020. So, there are a number of things you need to consider.
Free trade or otherwise, customs rules have always been a consideration for importers and exporters. So, before you make any grand plans, it’s wise to familiarise yourself with the EU’s import regulations. Or, if you’re planning to import into the UK, read up on the British guidelines.
Tariffs and duties
This is a difficult area to factor in right now. New guidelines will be released as new trade agreements are finalised. For the time being, it makes sense to overestimate the potential monetary drain to ensure that your business is not left unexpectedly out of pocket.
Italy is one of our nearer neighbours. This means that you have a good choice of freighting options: road, rail, sea, and air. With every option a next day service is available. It is the type of goods and your freighting budget that will dictate the service you choose. Prices vary, but as a general rule, air freight will typically be the most expensive option. While road freight will be the most budget-friendly and the most flexible. Express road freight options can see your goods collected the same day and delivered the following day. While a value-added freight forwarding service can help remove the stress from transportation by taking the red tape out of your hands.
Being only one hour ahead of the UK, Italy is one of the easier countries to work with because our business hours are roughly the same. Although language barriers can cause problems if you are not prepared. It’s a good idea to plan for this.
Because Italy’s infrastructure and trade system are very similar to the UK’s, challenges are limited when dealing with imports and exports. However, there are a few areas that may cause problems.
- Payment terms. Italy’s payment terms are considerably longer than the UKs. In fact, the average payment time is about 80 days. This can be difficult to deal with when, as a British business, your suppliers will generally be working on a 30-day payment system.
- Legal considerations. As well as tax and customs, there are wide-ranging legal considerations to deal with before embarking on an import or export business between the UK and Italy. In addition to this, it’s good to keep in mind that a slow judicial system can mean that disputes take a long time to be resolved.
- Complex regulations mean that bribery and corruption is relatively commonplace in Italy. The UK Government have put together a helpful guide so you know what is expected of you and how to protect your business.
There are a huge number of opportunities for trade between UK and Italian businesses. It’s not an easy course. But importing and exporting never is to begin with. And the Department for International Trade is a fantastic resource for those looking for a way in. But if you’re prepared, do the necessary groundwork and find a good logistics company able to provide the flexible service you need, Brexit or no Brexit, you have every chance of success.
If you would like more information about sending freight to or from Italy, please contact Plexus Freight today.