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Exporting and Product Liability for Manufacturing Businesses

Last Updated
August 22, 2009

Exporting

If you plan to export your product, there are many potential difficulties you need to be prepared for:

Is the product suitable? – Some types of product are restricted or will need licensing by the country you are exporting to.

Will the product work? – Do you need any extra equipment, converters or product changes to make it work properly in another country? Can you produce adequate instructions to allow safe and correct usage? – It is against the law in some countries to produce consumer products without instructions in that language. If you sell certain types of goods within the EC, you need to meet the Conformity Europe (CE) standards, and place the mark on the product to show this,

Selling – Will you sell the products yourself or sell them to an importer in the country who will then sell them on? If your product is unique and patented in the relevant country, you could consider licensing it to another company, who will produce and sell it, paying you a fee for the rights.

Taxation – The rules on VAT and other export taxes are different depending on the country you are exporting to (e.g. Non EU countries). Most exports outside the EU will also need to be declared to customs.

Payment – Can you arrange and be sure of receiving payment in a suitable method? Who will pay for currency conversion costs; it is usually the importer, but they may want you to bear the risk as part of their sales deal. Are you prepared for currency fluctuations which could lose you money, or will the prices of your products appear to go up in other countries, losing you sales ?

Product Delivery – Can you be sure of the products arriving safely ? You can take insurance, but this may lower your profit margins.

Exporting can provide you with many new sales opportunities, but you must look at your options carefully and plan thoroughly first; otherwise you could end up w asting a lot of money.

Product Liability

Under the Consumer Protection Act 1987, you are liable f or any harm caused by your products being faulty or defective. For example: If in production a sharp edge was mistakenly left on your product, and a child accidentally cut themselves on it, you would be liable for damages. Even if the f ault w as caused by a component manufactured by someone else, you would still be jointly responsible.

“…be certain of your product’s safety, or you could face large fines.”

This liability means that you must be certain of your product’s safety, and that no potentially dangerous items are ever sold. Otherwise you could face large claims in the event of an accident caused by a fault in your product.

You can take insurance to cover you for product liability, this is generally recommended to all manufacturers, although it is not a legal requirement.

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