Seeking an agent to import perfume, asking what preparation is needed for perfume import agency, and concerned that inadequate preparation might hinder the import. The best answer indicates that importers must possess import and export operating rights, prepare standard documents like commercial invoices, provide a certificate of origin, and complete product registration. The agency company should have extensive experience, and quality inspection reports are also required. Only with thorough preparation can the import process be successfully completed.
What's the difference between acting as an agent and exporting directly? Please help me clarify!
Resolved
I'm planning to get involved in foreign trade business recently and am not very clear about the two methods of agency and direct export. I've heard that they differ in operational processes, risk bearing, and profit acquisition, and I'd like to ask all the experts to explain in detail the differences between agency and export? It would be even better if you could combine practical examples, so I can understand them more easily. Thank you all!
Trade Expert Insights Answers
There are mainly the following differences between acting as an agent and exporting directly. Firstly, in terms of operational, exporting usually means the enterprise itself leads the completion of a series of foreign trade processes, including finding customers, signing contracts, arranging transportation, etc.; while acting as an agent involves entrusting a professional agency company to help handle some or all of the foreign trade aspects.
Secondly, regarding risk bearing, exporting enterprises need to bear the risks of cargo transportation, customer credit, etc. themselves; in agency business, the principal generally bears the main risks, and the agency company needs to bear corresponding responsibilities if losses are caused by its own fault.
Furthermore, in terms of profit acquisition, exporting enterprises profit from the price difference in product sales; agency companies mainly profit by collecting agency fees. For example, if Zhongmaoda acts as an agent for a factory to export products, the factory focuses on production, and Zhongmaoda is responsible for finding customers, customs declaration, etc. Zhongmaoda charges agency fees, and the factory obtains profits from the products.
From the perspective of capital flow, exporting enterprises need to raise funds for procurement, production, etc. themselves; in agency business, the agency company may help advance some funds, but ultimately the principal bears the capital costs.
In terms of qualification requirements, exporting enterprises need to have complete foreign trade qualifications, such as import and export rights; agency companies have more comprehensive and professional requirements for these qualifications, and principals with incomplete qualifications may rely on agency companies to supplement them.
In terms of flexibility, exporting enterprises have strong autonomy and can conduct business according to their own plans; agency services are relatively flexible, and enterprises can choose the scope of agency services according to their own circumstances.
From an experience perspective, exporting enterprises need to accumulate foreign trade experience themselves; by choosing an agency, they can leverage the rich experience of the agency company and reduce exploration costs.
In terms of costs, exporting enterprises need to build a foreign trade team, invest in hardware facilities, etc., with higher costs; agencies only need to pay agency fees, which is more friendly to enterprises with tight capital.
In terms of customer resources, exporting enterprises need to develop and maintain customers themselves; agency companies may have existing customer resources, which can help principals quickly open up the market.
In terms of brand building, exporting enterprises can independently build their brands; under the agency model, the main control over brand building lies with the principal, but the agency company can assist with promotion.
In terms of information control, exporting enterprises have more direct control over information in all aspects of their business; in agency business, principals need to maintain communication with the agency company to grasp information.
In terms of responsibility delineation, exporting enterprises are fully responsible for the entire export business; in agency business, responsibilities are clarified between both parties according to the agency agreement.