Discount Giant

Incoterms

sev — Mon, 21 Dec 2009 10:08:01 +0000

Incoterms or international commercial terms are a series of international sales terms, published by International Chamber of Commerce (ICC) and widely used in international commercial transactions. They are used to divide transaction costs and responsibilities between buyer and seller and reflect state-of-the-art transportation practices.

Main carriage unpaid

FCA – Free Carrier (named place)
The seller hands over the goods, cleared for export, into the custody of the first carrier (named by the buyer) at the named place. This term is suitable for all modes of transport, including carriage by air, rail, road, and containerised / multi-modal transport.

FAS – Free Alongside Ship (named loading port)
The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export; this changed in the 2000 version of the Incoterms. Suitable for maritime transport only.

FOB – Free on board (named loading port)
The classic maritime trade term. The seller must load the goods on board the ship nominated by the buyer, cost and risk being divided at ship’s rail. The seller must clear the goods for export. Maritime transport only. It also includes Air transport when the seller is not able to export the goods on the schedule time mentioned in the letter of credit. In this case the seller allows a deduction of sum equivalent to the carriage by ship from the air carriage.

Main carriage paid

CFR – Cost and Freight (named destination port)
Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed the ship’s rail. Maritime transport only.

CIF – Cost, Insurance and Freight (named destination port)
Exactly the same as CFR except that the seller must in addition procure and pay for insurance for the buyer. Maritime transport only.

CPT – Carriage Paid To (named place of destination)
The general/containerised/multimodal equivalent of CFR. The seller pays for carriage to the named point of destination, but risk passes when the goods are handed over to the first carrier.

CIP – Carriage and Insurance Paid (To) (named place of destination)
The containerised transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.

Arrival

DAF – Delivered At Frontier (named place)
This term can be used when the goods are transported by rail and road. The seller pays for transportation to the named place of delivery at the frontier. The buyer arranges for customs clearance and pays for transportation from the frontier to his factory. The passing of risk occurs at the frontier.

DES – Delivered Ex Ship (named port)
Where goods are delivered ex ship, the passing of risk does not occur until the ship has arrived at the named port of destination and the goods made available for unloading to the buyer. The seller pays the same freight and insurance costs as he would under a CIF arrangement. Unlike CFR and CIF terms, the seller has agreed to bear not just cost, but also Risk and Title up to the arrival of the vessel at the named port. Costs for unloading the goods and any duties, taxes, etc… are for the Buyer. A commonly used term in shipping bulk commodities, such as coal, grain, dry chemicals – - – and where the seller either owns or has chartered, their own vessel.

DEQ – Delivered Ex Quay (named port)
This is similar to DES, but the passing of risk does not occur until the goods have been unloaded at the port of destination.

DDU – Delivered Duty Unpaid (named destination place)
This term means that the seller delivers the goods to the buyer to the named place of destination in the contract of sale. The goods are not cleared for import or unloaded from any form of transport at the place of destination. The buyer is responsible for the costs and risks for the unloading, duty and any subsequent delivery beyond the place of destination. However, if the buyer wishes the seller to bear cost and risks associated with the import clearance, duty, unloading and subsequent delivery beyond the place of destination, then this all needs to be explicitly agreed upon in the contract of sale.

DDP – Delivered Duty Paid (named destination place)
This term means that the seller pays for all transportation costs and bears all risk until the goods have been delivered and pays the duty. Also used interchangeably with the term “Free Domicile”. The most comprehensive term for the buyer. In most of the importing countries, taxes such as (but not limited to) VAT and excises should not be considered prepaid being handled as a “refundable” tax. Therefore VAT and excises usually are not representing a direct cost for the importer since they will be recovered against the sales on the local (domestic) market.

How to find a local freight forwarder in china

sev — Sun, 20 Dec 2009 17:47:31 +0000

If you want to import some products form China, one of the main points that you have to take into consideration is how to deal with your product freight. Even if you apply CIF terms, to avoid your lost and make maximum profit, you’d better know how to deal with shipping by yourself.

Decide whether you want to find a forwarder in your country or find a local forwarder in China.
Obviously, finding a forwarder in your country is much easier, but the service charge in developed countries is much higher than in China.
The lower labour cost, lower exchange rate and other factors make Chinese forwarders’ service charge much cheaper.
There are a lot of Chinese freight forwarders, but only a part of them are reliable and are able to offer high quality service.
Post a topic on an international business website or send quotation inquiries to listed forwarders.
You will definitely receive a lot of inquiries.
Carefully evaluate those forwarders.
Get in touch with the forwarders you have chosen.

Tips

Generally speaking, the service charge of Chinese forwarders are much cheaper. So you don’t need to pay much attention to it.
However, you should carefully evaluate the forwarder’s credit, reliability, and ability.
To find international freight forwarders, you can visit these major websites:
- www.fretonline.com
- www.freightnet.com
- www.alibaba.com

You can either contact forwarders directly or post your enquiry on-line (Please note: We in no way endorse these websites, they are merely here for informational purposes).
www.asiacalculator.com is also recommended since it provides freight quotes directly uploaded on the platform by international forwarders, for many different shipping routes. Registered importers can consult them on-line. The website also features automatic calculation of custom duties according to the type of merchandise imported (nature, buying price, quantity, weight), as well as exchange rates calculation.
Have a good level in English in order not to be mislead by terms and conditions proposed by freight forwarders.
Be sure that the freight quote you receive is all-inclusive and leaves no room for unexpected extra costs. Classical error at this level is the packaging, palletising and labelling costs being excluded from both contracts.
Review every detail; the forwarder must include all taxes and extra charges deriving from international shipping. If needed, you can ask forwarders to add insurance to the quote.
Confirm the incoterm used in quotation. Are you supposed to take possession of the merchandise once manufactured (ex-works) or when loaded on the cargo (Free On Board – FOB) ? The impact on total costs is obviously important, so pay attention because there are lots of incoterms.
Choose carefully your shipping mode, the 3 options being:
- Sea freight: cheaper but slower
- Air freight: more expensive but faster
- “Sea and Air” freight: combined freight solution

Take into consideration the total volume and weight of your shipment: air freight can prove to be a cheaper solution if you ship small quantities or very light products.
Check origin and destination addresses of your shipment: most of freight forwarders will give you quotes for a region but not necessarily for a specific city.
Finally, don’t forget to plan quality control of your goods before shipping: it’s the last time you will be able to refuse the merchandise. Remember to notify your manufacturer or forwarder about the inspection. Tell him when it will take place and who will carry it out.

Tips on importing from China

sev — Sun, 20 Dec 2009 17:43:54 +0000

Pay attention to the kind of business of your supplier; are they manufacturers, or 3rd party suppliers? Compare the advantage and disadvantage. Manufacturers may have a faster response in the process of product development, while 3rd-party suppliers have broader channels that can satisfy your other needs in the future.

Establishing healthy personal relationship with the key employees of your supplier is very important when doing business with Chinese people. Keep in mind that saving face is very important for Chinese people.

You need to have a good estimate of the landing cost before you make your order. Landing cost = cost of the goods fob + transport costs by forwarder + import duties (if any) + local transport costs + cost of service providers (inspections, agents, etc.). There may be many hidden costs (See additionsl Costs)and you can consult an import management company, but the best way to avoid bad surprises is by making a first order of a small quantity, and collect all costs and fine tune your landing cost estimate.

Pay attention to import duties. Import duties depend on Tarrif code of the goods you import, the countries of origin (China) and destination. If your Chinese supplier has some export experience, he shall know what is the Tarrif codes for your product, but do your homework and check the product description of the code corresponds to the product you import. Definitions are sometime vague. A wrong code may delay the custom clearance of your shipment.

A letter of credit is commonly used in trade with China. Go to your bank to get detail formality and cost.

Export agents in China are very commonly hired by Chinese exporters. Some of these export agents are also 3rd-party suppliers, others just provide export services.

Neglecting compliance can be very costly. This may force you to pay expensive and unexpected customs duty, such as anti-dumping duty, as well as risk delaying your customs clearance. This will cost you expensive storage fees at a railway station or container yard.

Visiting trade shows is a great way to see suppliers face-to-face.

If solid wood packaging material is used, talk to your broker. Sometimes pallet packing is necessary to reduce the transportation cost during the process of loading and unloading. Talk to your forwarder for details. All wooden packaging for export must follow the nimp15 treated wood specifications. If your supplier is using wooden packaging, make sure he delivers a nimp15 certificate with other export documentation.

Usually an initial deposit of between 30-50% will be requested by a Chinese Manufacturer to get your product/order into production.

Steps to import from China

sev — Sun, 20 Dec 2009 17:41:56 +0000

1. Find the products you’re interested in. There are many sources to find your products. The internet is the easiest one to start with. There are many web listing services, including here, you can register your username, post the products of your interest, and you will receive tons of products supply information and perhaps a price list.

2. Establish a relationship with potential suppliers. Select a few potential suppliers to communicate with. When contacting suppliers, provide information about your company. The good suppliers already have more business than they can handle – you want to market yourself so that they want to do business with you. When qualifying suppliers, you can ask them how long they’ve been in business, which trade shows they attend, how long they’ve been attending these trade shows and which companies they manufacture for. Check and confirm everything that you can.

3. Narrow down to the supplier that you really want to work with. Discuss the price and trade relationship. Obtain product samples and review them (and their packaging, instructions, and any other collateral) for quality – you may have to pay a nominal fee. Discuss shipping and payment terms. Gather all necessary information to prepare for placing a trial order. When placing the purchase order, include as many details as you can think of.

4. Understand trade terms and use them. Before placing any order, you need to understand and confirm with your suppliers about shipment terms. Most popular are “fob” and “cif”, as well as payment terms. These are closely related to your landing cost calculation and risk assessment. You can consult an import management company and a freight forwarder for detail break-down on the costs and risks. You can also use an import management company to negotiate the trade terms.

5. Understand payment terms. Somewhat common is to pay 30% at time of order, and the remaining 70% when the product ships. The down payment gives the manufacturer/supplier funds necessary to begin production. These terms are negotiable.

6. As the Importer of record, you (not the supplier) are legally responsible for making sure that goods brought into the country meet all national regulatory requirements. Goods that don’t meet requirements can be stopped at the border or can result in future legal suits. Don’t just take a supplier’s word that requirements are being met. Do your homework on compliance issues and make sure you know requirements are being met. You need to understand the relevant import compliance regulations beforehand. Compliance issues can be very complicated for some products. It is highly recommended to consult a good customs house broker or HMRC before placing any order.

7. Select a forwarder and customs house broker. Go to your local international trade organization/association and customs office to find the list. Visit them, and select the one you like. For the first time importer, use more individualized services, because you need more attention than you would expect. You may ask your local customs bureau for help on assessing custom duties amount for your products, or use online services such as AsiaCalculator

8. Place a trial order with a written purchase order if everything goes well. In the purchase order, besides typing out a detailed description of the products, product requirements, packaging requirements, etc., and trade terms, list all needed shipping documents.

9. Appoint an inspection company to check your goods on site in the factory, and give you a detailed report. It is very helpful to provide the inspection company details about what to check. Without such details, the inspection company may think products are okay even though you won’t. You may also consider having inspections done of components that are going into assembly early in the process. This can help avoid last minute quality problems. This is usually done a few days before the expected shipment, so you can address any issues that would be raised. This will allow you to avoid receiving defective or non-conforming goods.

10. Track the transportation and customs clearance. Your forwarder and customs broker should take care of your transportation and customs clearance. However, you also need to track the process and assistance, such as providing additional products information and endorsing bill of landing. (See Documents Required for Importing)

11. Receive the products and keep the records. Now you can go to your next step to sell your products and make profit.

12. Do not order counterfeit or branded products, unless the supplier can prove they are an authorized reseller. You can contact the brand owner to confirm the supplier is an authorized reseller.

Ways to import from China to the UK

sev — Sun, 20 Dec 2009 17:39:17 +0000

If you have decided that you want to import goods from China but don’t know where start probably the best point of call is to find some manufactures to see what kind of goods they sell to get an idea of what is available.

Such website as

Alibaba.com

Give you direct links with manufactures in China from which you can contact them directly who can organise the goods to be made and sent to you.

Good points with dealing direct with manufacture.

Deal direct cut out any middle man a good cost reduction.
Establish a direct relationship.

Bad points

Quality control may be an issue, samples sent may not be the same as goods received and goods not arriving in a good condition.

Communication can sometimes be a problem though majority of companies do have English speaking and writing staff.
Need to know all there is to know about importing that good and any associated costs involved in clearing it though UK customs.

Using an agent based in China

There are many agents based in China that facilitate sourcing shipping goods to over seas customers. They can be found quite easily in major manufacturing cities in China and on the internet.

Good Points with dealing with agents in china

Can help simplify the whole process of importing from China from sourcing, arranging samples, quality control, arranging necessary documents needed and organising the shipping of the goods.

Bad points with dealing with agents in china

Agent fees incurred

Finding a good agent to provide you with a good service some agents take kick back from manufactures to get clients to buy their goods.

Agents will acquire you your goods and get it shipped to you they can not advise you on any import taxes, legalisation you may need in order to get in out of customs in the UK (see associated costs)

Chinese agent kickbacks

sev — Sun, 20 Dec 2009 17:35:25 +0000

Before I went off to China I did a lot of research on Agents and looking to pick the right one. What I found was 2 things that concerned me from reading through blogs and articles the first one being how do I know I’m going to be dealing with a good agent. To me I always like to know personally who I’m dealing with, there is only so much you can get from someone over the phone and through emails. I like to see the whites of peoples eyes have them in front of them and talk things through face to face. Also I like to see what they are capable of and if they do have the facilities in place to deal with what I needed from them. The only way I knew I could satisfy my concern with this problem was to actually go there and meet them which is what I did.

The Second issue which going back to the title of this blog was the kick backs I had read about agents getting Kickbacks from manufactures in order to sell their goods. Thinking about it there was no way I could ever find out if they were. I could limit any difference there may be by speaking to different agents which I did, but what I seemed to find was that there were some discrepancies it the cost of the items between agents but then there was also discrepancies with the cost of the shipping or FOB. There was no real way to weed out this problem so I went for the agent that I felt more comfortable with and had developed the better relationship as there was not much difference between the costs. From working through the final figures I was still saving myself money and I could make it profitable to myself.

The way to look at it is that Kick backs from China does exist in some form or another, it shouldn’t let it put you off from buying from there. You just need to take it as part of the norm there. I guess you could say it’s similar to if you go to the states and have to tip everyone there for us in the UK we are not a tipping nation so not used to it… I never did understand going to my friends wedding in America and everyone tipping the bar tender $1 to open a bottle of beer when it was a free Bar!! (^_^)

The second best way to import from China to the UK

sev — Sun, 20 Dec 2009 17:33:46 +0000

You hopefully have read the article – The best way to import from China, this leads onto the second best way… Pretty simple…
Use us! (^_^)

The best way to import from China to the UK

sev — Sun, 20 Dec 2009 17:32:26 +0000

The best way to some one may be the cheapest the best way to some one may be the safest. There is no definitive answer as every ones tastes are different. So this is my best way to learn for the beginner looking to import from China.

The Best way to import from China for me is to go there! Its not quickest or the cheapest option and a lot more hard work but your more likely to make less mistakes. Having a hands on approach and seeing things for yourself you will understand better how it all works.

The best thing to do is if your just staring out is to go to a major manufacturing city such as Shanghai or Yiwu and see for yourself what you can get and do.

There are many agents in the cities so plan your time out with them, meeting with an agent will help you accomplish more form your time there.

Just from looking online in either city you find a number of agents that will be willing to source you products and help you out. Try to plan each of your days with one agent and if possible get to see their offices and how they operate.

Normally you can arrange to meet them in the morning they will meet with you to discuss your requirements and then arrange for a translator to accompany you to the markets.

Don’t be scared to tell the agents that you are also touring the Markets with other agents on different days as you are looking for the best agent out there, in the end it’s in their best interest to then give you the best service they can. Also get to see there operations and place of work. If it an established company you know that a lot of other people deal with them so they should be able to offer you a good quality of service the majority of the agents normally all charge the same fee which is usually 3% of the value of the goods. So its your best interest to go see the different agents and choose the one that you feel are more capable of meeting your needs.

If your not happy with an agent, don’t spend the whole day looking at items and booking them with them, don’t also look at this as a wasted of time. If this does happen. Use this time to familiarise yourself with the market and look at other items that you could be interested in and just take their business cards if you want to return there so you can go see it with another agent.

If you don’t choose to purchase anything with them most agents will charge a fee for the Translator which could be £20 – £30 for the whole day.

Keep the last 2 days free in your schedule so that once you have gone around the markets and met different agents and settled on the one that you think will give you the best service, you can go around with that agent and book items with them. You can book different items with different agents but they will all be shipped separately which will not work out cost effective it will be better to stick to one agent and have all goods shipped with them.

Once they have taken your order they should send over a Invoice for the cost of the goods. Don’t pay anything over till you get back to the UK and have number crunched some more (see associated costs).

Back in the UK take a look at the items you are looking to purchase. If you are close to purchasing a whole container load it may be more viable to order more goods so that the container is filled but important note make sure 100% that the agents has the correct dimensions for the products your looking to buy, leave room for packing and the boxes fitting in correctly.

Also most importantly if you haven’t already researched the items that you are looking to purchase prior to going to China in terms of VAT, Duty, safety requirements, licences and other documentation required for it to pass through customs make sure you do and can pay or have all the relevant documentation in place before you pay anything across the last thing you want is for your goods to be stuck in customs. (see documents required)

If you have done all your checks number crunched and have all the items you need to clear the goods through customs then it should be safe to place your order.

Import Licences

sev — Sun, 20 Dec 2009 17:27:49 +0000

The majority of goods can be imported into the United Kingdom without the need to apply for an import licence.
There are controls on imports including firearms, plants and animals, foods, medicines, textiles and chemicals. Whether you need a licence can also depend on where the goods are coming from.
Currently ILB issues import licences for a small number of goods mainly to implement:

BIS’ trade policy measures (these measures may be in the form of quantitive quotas where the volume will be restricted, or freely issued prior surveillance licences so that volumes imported may be monitored)

certain textiles from Belarus, North Korea and Uzbekistan
iron & steel

For safety reasons (these imports are generally issued only to those with domestic authority to possess)

firearms and ammunition

Imports – Firearms
Importers must be registered firearms dealers and have the appropriate licence from BIS to accompany firearms and ammunition.Find more information on the Import Licensing Branch page on the BIS website – Opens in a new window.

Imports – animals
Imports of animals and captive birds (excluding pet birds, poultry and birds destined for approved institutes and zoos) are controlled by the issuing of animal health certificates and post-import veterinary inspections. Captive birds arriving into England are also required to be taken to an approved quarantine centre for assessment and testing. Additional controls apply to endangered birds and animals. Read about importing animals and birds on the Defra website – Opens in a new window.

Imports of food are also controlled and must comply with regulations such as food safety, packaging, labelling and additives.
Imports of organic food may also need authorisation before they can be marketed as organic. Read about imports of organic food on the Defra website – Opens in a new window.

Imports – Medicial products
Imports of medicinal products are subject to licensing. Download guidance for wholesale dealers from the MHRA website (PDF, 273K) – Opens in a new window.

Read about importing unlicensed medicines on the MHRA website – Opens in a new window.

Anyone wishing to import controlled drugs will generally require licensing from the Home Office Drugs Branch. Read about import licences on the Drugs.gov.uk website – Opens in a new window.

Imports – Plants
Imports of plants are controlled by the issuing of phytosanitary certificates. Further controls apply to some endangered plants. Download a guide to plant passports from the Fera website (PDF, 1.6MB) – Opens in a new window.

Imports of wood and wood packaging material are controlled. Read about imports of wood and wood packaging on the Forestry Commission website – Opens in a new window.

Imports Chemicals
Importers of dangerous chemicals must identify the hazards, provide information about them and package the product safely. Under Registration, Evaluation, and Authorisation of Chemicals (REACH) legislation, importers or manufacturers of more than one tonne of chemicals a year must register with the European Chemicals Agency. Read about REACH legislation on the HSE website – Opens in a new window.

Read about the Notification of New Substances Regulations on the HSE website – Opens in a new window.
Imports of some dangerous products such as asbestos are prohibited or require special authorisation. For advice, call the HSE Infoline on Tel 0845 345 0055.

The Department for Environment, Food and Rural Affairs also controls trade in ozone-depleting substances (ODS). To import ODS, you must have a licence from the European Commission under Council Regulation (EEC) 2037/2000. You can request a licence from the European Commission using their online ODS-database on the Europa website – Opens in a new window.

Imports – Vehicles
You do not generally need a licence to import an ordinary vehicle. However, the vehicle must be registered and have a valid vehicle licence (tax disc) before being used or kept on public roads. Read about importing a vehicle on the Directgov website – Opens in a new window.

Other controls may apply to the goods you are importing. For example, imports of food are controlled and food products must also comply with regulations such as food safety, labelling and additives.
Imports of organic food may also need authorisation before they can be marketed as organic. Read about imports of organic food on the Department for Environment, Food and Rural Affairs (Defra) website – Opens in a new window.

Imports and exports of radioactive substances are subject to additional controls. Read guidance on radioactive substances on the Environment Agency website – Opens in a new window.

For more information, call the HMRC National Advice Service Enquiry Line on Tel 0845 010 9000.

Further Information

RoHS

sev — Sun, 20 Dec 2009 17:24:07 +0000

Restriction of Hazardous Substances Directive or RoHS was adopted in February 2003 by the European Union. The RoHS directive took effect on 1 July 2006, and is required to be enforced and become law in each member state. This directive restricts the use of six hazardous materials in the manufacture of various types of electronic and electrical equipment. It is closely linked with the Waste Electrical and Electronic Equipment Directive (WEEE) 2002/96/EC which sets collection, recycling and recovery targets for electrical goods and is part of a legislative initiative to solve the problem of huge amounts of toxic e-waste.

Manufacturers need to understand the requirements of the RoHS Directive to ensure that their products, and their components, comply.

The UK RoHS regulations apply to those businesses defined as producers that:

manufacture or assemble electrical or electronic equipment in the UK
import electrical or electronic equipment from outside Europe
re-badge electronic products as their own.

The RoHS Directive applies to products placed on the European market and each member state has its own legislation.

For further information see RoHS or download pdf