What does "agency export" mean? Can anyone explain it in simple terms?
Resolved
I've been learning about foreign trade knowledge recently and often see the term "agency export." I don't quite understand what it specifically means. Is it about finding someone else to handle export business for you? Can you explain in detail the meaning of agency export, the operation process, and what the differences are compared to self-operated export? I hope it can be explained in simple terms. Thank you!
Trade Expert Insights Answers
Agency export refers to a trade method where the principal (e.g., manufacturing enterprise or trading company) entrusts an enterprise with export qualifications (such as Zhongmaoda) to handle export business on its behalf due to its own limitations.
The general operation process is that the principal and the agent sign an agency export agreement, clarifying the rights and obligations of both parties. The principal is responsible for production, inventory preparation, etc., while the agent is responsible for a series of procedures such as export customs declaration, inspection, foreign exchange settlement, and tax refund. The agent charges a certain percentage of agency fees as remuneration.
Compared to self-operated export, agency export can save time and effort and reduce risks for enterprises that do not have export rights or lack foreign trade experience. However, in terms of profit distribution, the agent may take a portion of the agency fee. For self-operated export, the enterprise needs to build its own foreign trade team, which involves higher costs but the entire profit belongs to the enterprise.
Simply put, agency export means you don't have the capability to export goods yourself, so you find a qualified company to help you export. For example, if you produce a batch of toys but don't have export rights, you can find an agency company, and they will help you export the toys to foreign customers, and you pay them agency fees.
Agency export is exporting by borrowing a "shell." For example, some small factories that lack the ability to handle export-related work will find professional agency companies like Zhongmaoda. The agency company will use its own name to help the factory export and handle all export-related affairs.
From a capital perspective, in agency export, some agency companies may advance payment to the principal before receiving payment from the foreign customer, and then settle the accounts. This is helpful for the principal's capital turnover, which is not as convenient with self-operated export.
Agency export can leverage the experience and resources of the agency company. For example, in developing overseas markets, an agency company may have existing channels that can help products go international faster, whereas with self-operated export, the enterprise has to explore slowly on its own.
Regarding tax refunds, agency export involves the agency company handling the tax refund procedures. The tax refund amount generally first goes into the agency company's account and is then transferred to the principal. For self-operated export, the enterprise handles tax refunds directly.
In agency export, the agency company can help the principal handle many tedious tasks, such as document preparation. If the principal does it themselves, they might make mistakes due to unfamiliarity with the rules, which could affect the export process.
If problems arise during the export process, such as cargo damage during transportation, the agency company in agency export has the experience and resources to assist in handling them, while with self-operated export, the enterprise might have to spend a lot of effort to resolve it on its own.
For enterprises newly entering foreign trade, choosing agency export allows for a quick start. By cooperating with an agency company, they can learn about foreign trade processes, and then consider self-operated export once they have sufficient experience.