In this Case Study on Duty Suspensions with see how a SME with a well established product adapt a struggling international strategy to the trade environment and win new customers.
The transaction: loss of business due to a change in duty
The sales team had established a clear international strategy with market entry, milestones and expected sales. Unfortunately, as this is often the case in international trade, geopolitical events and trade disputes disrupted this perfect plan. While they were focusing all they energy on the Australian market, they started losing business to the competition in Brazil. This due to a change in import duty. They asked Alegrant to provide an analysis of the situation and an advice on how to respond.
The solution: Temporary Duty Exemptions
We reported to the client that Brazil had introduced, for one year only, a temporary reduction of import duty rates. This reduction is affecting their product. Instead of the 25% duty rate, the temporary reduction was bringing the import duty to 0%. As a result, our client’s competitors rushed to contact Brazilian buyers to offer their products. Our client, being focused on their Australian market entry had initially missed this opportunity.
The implementation: Alegrant’s experts in action
We have verified the customs classification of the product to ensure the goods fit within the rules of the duty suspensions. As a result of our analysis, the client changed their focus to Brazil. They not only preserved their business but also won substantial new business from competitors. A Brazilian entity has been set up. They have imported products to store locally before the end of the duty suspension to serve the market after the temporary reduction of duty has expired. This Case Study on Duty Suspensions shows that business must monitor their trading environment regularly as opportunities such as suspensions or risks such as sanctions can arise suddenly.
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