How to Agent Domestic Factories to Export Their Products? Leave a comment

Case

I have just entered an international trading company. There is a domestic factory that produces a kind of mechanical parts. And foreign customers find the factory and want to purchase these products. However, the factory itself does not have the right to export and intends to export through our company. So I am asked to do agency work. What preparations should I do for the negotiation? Do I need to know their products or prepare an agency contract in advance?

Analysis

Before talking about the agency contract, you should know some basic conditions, like product materials, HS code, tax refund, relevant inspections, and packaging requirements. You also need to know in advance the factory’s situation, credit information, and other business dealings with your company.

Knowing the product condition and the HS code is the basic skill that the foreign trade person should master. With HS code, you can know the cost accounting of the product. Then you can report the FOB or CIF dollar price to them in negotiation (including the agency fee). You also need to confirm whether the supplier has export experience and is familiar with export standards, packaging, etc. If he is familiar with this process, it is relatively simple. But, if not, you need to spend time introducing the difference between foreign trade and domestic trade.

Suggestion

You can refer some contract templates for export agents, and learn about the responsibilities, capital flows, logistics, and information volume of both parties. You can also obtain the relevant information and requirements of the customer from domestic suppliers. And you should introduce them to some aspects of the agency agreement, such as agency fee, payment methods, price calculation, invoice document transmission, etc. Also, you need to confirm the product information you know with them. Try to confirm the customs declaration name and HS code according to this information, and determine the calculation price formula. When negotiating with the supply, it is best to determine who is in contact with the customer and sign an export contract, avoiding customers feeling confused.

After the negotiation, if you want to export the relevant products immediately, you should reflect the relevant content in the agency agreement, and let the other party sign for confirmation.

When acting as an agent, there is a situation to pay attention to. Some domestic suppliers do not know much about exports. They believe that after getting a foreign trade company to act as an agent, they need not care about anything. Many agencies feel that their main task is to ship goods, prepare customs declaration documents, write off tax rebates, etc. Other things, like contacting customers, confirming the shipment, and confirming the shipping document with customers, are the tasks of suppliers. Therefore, when talking to suppliers for the first time, it is necessary to clarify the respective responsibilities and contacts. The basic cooperation framework is straightened out that specific operations can be efficient. If the foreign trade company does more things and has more responsibility, the corresponding agency fee is also higher.

 

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