Export Import

CHAPTER - 3 

Hi

Here next, I will tell you the initial process after selection of good market and good buyers for your product, one should move carefully following the international trading norms. Next stages are –

-          Sampling

-          Costing / Price offer

-          Creditability check and risk cover through ECGC

-          Negotiation with buyers

These are tools from which one should connect with buyers and materialized a good deal.

Sampling -

The first and the very import part of the business is to provide a good quality product infront of customers. You are aware that in the international trade, it is a bit hard to interact with the customer face to face frequently. So the sample which will be eye catching for the buyers at the first instance. It should be good in all aspects such as quality, design and making.

Costing & Price Offer - 

Costing of the product is the next important part. You should consider all the making and selling cost as well as the other shipping, transportation, testing cost, ECGC premium etc.

After getting final ex-factory cost for the product, you should offer the price to the buyer keeping the following aspects in mind –

-      Delivery Terms : As per the freely moveable international trading terms which are –

-          A) FOB (Free on Board) – Goods is handed over to the forwarder without payment of freight. Buyer has to pay the sea / air freight.

-          B) C&F (Cost & Freight) – Goods is handed over to the forwarder with payment of freight. Buyer has to pay the insurance on arrival of the goods at destination port.

-          C) CIF (Cost, Insurance & Freight) – Goods is handed over to the forwarder with payment of freight. Exporter has to cover the insurance as well. Once goods reach at destination port, buyer has to clear the goods by paying duties.

-        Payment Terms : As per the freely moveable international trading terms which are –

-          A) L/C at sight, L/C at 30 days, 60 days, 90 days and so on. You can discuss the suitable payment terms with buyer as per your financial capabilities.

-          B) CAD (Cash against Documents) – This way, once the original documents (invoice, packing list, certificate of origin, bill of lading or airway bill along with other required documents) is sent by shipper through own bank to buyer‘s bank. Once documents reach to buyer’s bank, buyer collect the documents from their bank after paying invoice value.

-          C) DA 30 days, 60 days, 90 days and so on. You can discuss the suitable payment terms with buyer as per your financial capabilities. Once original documents is sent by shipper through their bank to buyer’s bank, buyer collect the documents from their bank after giving approval to bank for paying the invoice value at the agreed time frame.

-          D) Advance or T/T Payment – You can get the advance payment from bank along with order copy to start the production . Alternatively Telex Transfer (TT) payment is also a way to get payment directly to your bank through buyer once goods are handed over to the forwarder or as per the time frame agreed with buyer.

Creditability check and risk cover through ECGC -

ECGC (Export Credit Guarantee Corporation of India) – ECGC plays a vital role in export shipments. It play like insurance which start applicable once goods is shipped from India. Before negotiation with the buyer, one should check the creditability and risk of the buyer from the EXGC after paying a nominal fee. They check buyer’s financial position and provide us a detailed report if one should go business with buyer or not and their shipment to the buyer would be safe or not. ECGC cover shipments individually or all your shipments at consolidated more better price. This is a good way for any shipper to safe their transaction and in case of difficulty in getting payment from the buyer, we can claim it from the ECGC department.

Negotiation with buyers  -

After going through all above facts carefully, one should work out their best cost and adding their profit margin and should offer the price to the buyer with suitable delivery and payment terms. In the export, please make sure that the quality should be well checked and deliveries should be on time because most of the exports fail to fulfill their commitment and creates hurdle creating long business relations.

At last, we must say –

THERE IS A WILL THERE IS A WAY

In the next chapter, we will come back the further process.

G. GANESHA

http://exportimportway.blogspot.com