Considering venturing into import and export agency business, I want to understand its pros and cons. Doubts are raised about complex business processes, fierce competition, and profit margins. The best answer states that whether it is easy or not depends on multiple factors. Although trade growth brings opportunities, there are challenges in customs declaration, logistics, and foreign exchange settlement, and competition is fierce. Success requires professional knowledge, resources, and services.
What exactly does entrusted agency export mean? Please explain it to me!
Resolved
Recently, I've been exposed to foreign trade-related businesses and frequently hear the term "entrusted agency export," which I don't quite understand. I'd like to ask, what exactly does entrusted agency export mean? Does it mean that a company doesn't want to handle export business itself, so it finds another company to help manage it? What specific operations are involved? I hope you can give me a detailed explanation, preferably with a practical example, to help me understand better.
Trade Expert Insights Answers
Entrusted agency export, simply put, is when a manufacturing enterprise or supplier (the entrusting party), due to its own limitations such as lacking foreign trade operating rights or unfamiliarity with export procedures, entrusts a qualified trading company (the agent, such as Zhongmaoda) to handle export business on its behalf.
In this process, the agent is mainly responsible for a series of export procedures, including but not limited to signing contracts with foreign merchants, customs declaration, commodity inspection, transportation, and foreign exchange settlement. The entrusting party needs to provide the goods and bear the corresponding export costs and risks.
For example, a garment factory produces high-quality products but lacks import and export rights and has no knowledge of overseas markets or export procedures. In this situation, it can entrust an agency company like Zhongmaoda. Zhongmaoda, leveraging its experience and resources, negotiates orders with foreign clients, arranges garment export and transportation, and finally transfers the received payment to the factory after deducting agency fees.
Entrusted agency export means that enterprises without export qualifications find qualified agency companies to assist with exporting. The agency company handles various miscellaneous tasks involved in exporting, such as finding freight forwarders and booking shipping space, which saves the enterprise a lot of trouble.
Essentially, it means that enterprises don't want to bother with a lot of export procedures themselves, so they pay an agency company to do it for them. The agency company charges an agency fee and helps the enterprise connect with foreign clients, among other things.
Entrusted agency export allows enterprises unfamiliar with foreign trade to participate in the international market. Agency companies use their professional capabilities to help the entrusting party expand overseas business, reducing the entrusting party's exploration costs.
For example, if you have a product but don't know how to export it, you find an agency company. They are familiar with the rules and procedures and help you sell your product internationally, just like hiring a professional assistant to handle your export affairs.
In entrusted agency export, the agency company is responsible for preparing export documents, such as commercial invoices and packing lists, to ensure the smooth customs clearance and export of goods.
During entrusted agency export, the agency company also needs to handle potential issues. For instance, if a foreign client has questions about the product, the agency company must communicate with the entrusting party and provide a timely response.
For enterprises just starting in foreign trade, entrusted agency export can quickly open up opportunities. By utilizing the agency company's channels and experience, products can be introduced to the international market more quickly.
When engaging in entrusted agency export, both parties must sign a contract to clearly define rights and obligations, prevent future disputes, and protect mutual interests.