Why Do Manufacturers with Foreign Trade Rights Want Agents? Leave a comment

Case

Our company agents the export of products from a machinery manufacturing factory in Jiangsu Province. Recently, I accidentally learned that the company also applied for the right to operate foreign trade last year. I don’t quite understand why this company has its own foreign trade rights but still through our company to export?

Analysis

Some foreign companies, only place orders to manufacturers, not through middlemen or agents. If manufacturers meet such customers, they can only apply for foreign trade rights to export products, and cannot export through others. The rate of export tax rebate is the same throughout the country. However, in the processing of tax rebate, the speed varies greatly among provinces. This difference will affect the speed of capital flow of enterprises. Therefore, many manufacturers and trading enterprises will entrust foreign trade companies in areas with faster speed to export. In this way, the tax refund formalities can be processed asap. In different regions, the time to complete the tax refund may differ by 3 to 6 months. Therefore, production enterprises prefer to pay agency fees to get the rebate earlier.

There is another reason. If a manufacturer has been exporting through an agent, which is in the supplier information of the final customer, it will be troublesome to modify the supplier information.

The manufacturer newly applying for foreign trade rights also faces the management and inspection of customs, commodity inspection, and foreign exchange verification. Moreover, many of them don’t know enough about the specific provisions of some national regulations, customs system, customs declaration, and write-off, etc. For some goods with tight delivery time, they will still export through the original foreign trade company, so as not to delay the delivery.

In some big cities, foreign trade agents are professional. Moreover, the bank audit of foreign trade documents is professional and efficient. Therefore, manufacturers with the right to operate foreign trade will still export through agents of big cities. So, they can enjoy some professional foreign trade agency services by paying certain agency fees.

 

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