International Trade is a complex activity that cannot be taught in one day. But this one page might help you a lot.
A cell phone, internet account and friends over facebook are not the best requirements to trust your needs. It’s true that a lot of business is being conducted more informally due to the many COvid-19 Pandemy needs, but beware. If trust is at at the heart of all comercial activities, it’s in the soul of international trade. This is a short list for International Trade beginners.
This is an easy 9 step guide into the very basics of buying one thing in China and sell it in the US. CIF and FOB are just two little words in a vast complexity of terms and acronyms. Il all starts with a need and ends with a sale and yes! It’s true: probably you gonna need a ship!
- REQUIREMENTS First step is to “Identify the requirement.” Identify the product required or as we call it in trade terms, the ‘Fast Moving Consumer Goods’ (FMCG). In today’s scenario, medical face masks, gloves, and hand sanitisers. Find out the extent of requirement, the level of demand of each product, the quantities, and the market.
- MANUFACTURERS “Locate manufacturers, suppliers or distributors.” Find out who are the main sources for these products. Where are they located? Are they domestic or International? Is it possible to trade with these countries? Will it be possible to ship their products into your country? Are there any trade or import restrictions? Will their products meet the quality standards? Will they be able to meet the demand, and within the specific timeline?
- SUPPLIERS Now you need to get into a conversation with the specific suppliers you wish to work with. Once this contact has been established, the next crucial step is to work out the specifics of the purchase agreement.
- AGREEMENT This is the single most important document in any import or export transaction. Every purchase agreement should be comprehensive and cover the terms of sale, the passage of title, risk of loss, risk of price and payment terms. With a suitable and complete purchase agreement in place, you can eliminate or greatly reduce most of the problems that might occur especially in today’s uncertain times.
- DUE DILIGENCES However, before you enter into a purchase agreement, it is important to perform due diligence on your vendors. If dealing with an exporter in a foreign country, who is essentially unknown to you and with whom you have no prior payment experience, you need to seek some secured method of payment like a Letter of Credit (L/C).
- INSURANCE Also, when you import, a payment term that offers assurances that the goods received are exactly as ordered and in good condition is also critical. Being an importer to avoid potential problems in the clearance of your merchandise, familiarize yourself with local customs policies and procedures prior to importing your goods.
- CONFIRMING Also be aware of any entry requirements and documentation specific to the commodity you are importing. International Trade terms of sale can differ from those used in domestic transactions, so become familiar with the technical the language of international commerce.
- INCOTERMS Incoterms is the universal trade terminology developed by the International Chamber of Commerce. From EXW to DOP — see and download the table below — depending on the amount of responsibilities and risk each part agrees, there are 12 degrees os separation between seller and buyer, origin and destination. A long way to run.
- SALE The “Terms of Sale” are conditions that specify who will be responsible and for which expenses, as the goods move from buyer to seller. In international purchases, it is customary to use methods of payment designed to give the both exporter and importer a greater level of protection from factory to destination.