Interested in export agency business and want to understand what money export agents make. The best answer states that export agents mainly profit by charging agency fees, such as Zhongmaoda charging a certain percentage; utilizing foreign exchange rate differences; and controlling costs in the procurement stage. In addition, they may also profit from logistics, handling certificates, tax rebates, fund operations, process optimization, and other aspects.
Who should bear the export agency fees?
Resolved
My company plans to engage in export business, but we are not very familiar with export agency services. We would like to know who typically pays for export agency fees. Is it the principal, the agent, or are there other situations? Are there any industry practices or distinctions for different scenarios? We hope a professional can help answer, so that I can have a clear understanding of who bears the export agency fees, which will help us rationally arrange costs and rights in future collaborations.
Trade Expert Insights Answers
There is no absolutely fixed model for who bears export agency fees; it usually depends on the contractual terms negotiated and agreed upon by the principal and the agent.
Generally, most export agency fees are borne by the principal. This is because the principal leverages the agent's professional services, resources, etc., to complete export operations, and paying fees is the consideration for purchasing these services. For example, if the principal is unfamiliar with export procedures or lacks relevant qualifications, they pay fees for the agent to handle a series of tasks such as customs declaration, inspection application, and transportation arrangements.
However, in some cases, the agent might bear part of the costs themselves to secure business resources. For instance, when market competition is intense, agents might offer to reduce or waive some standard agency fees to attract principals. Furthermore, if the principal and agent reach a cooperation agreement defining a profit-sharing model, the method of bearing agency fees might be redefined based on the profit distribution.
It is common for the principal to bear export agency fees. After all, the agent provides professional services, and it is reasonable for the principal to pay for these services.
Sometimes agents will proactively bear some costs to attract clients. This is a competitive strategy, but such cases are relatively rare.
If the principal and agent have a long-term cooperation and a large volume of business, the fee-sharing method might be more flexible, and both parties can negotiate proportional distribution.
In some specific businesses, for example, if the agent is responsible for product sales, the agency fees might be deducted from the sales profit instead of being directly paid by the principal.
When the principal's export goods have special requirements, leading to increased difficulty for the agent's work, the agency fees borne by the principal might increase accordingly.
If the agent has a close relationship with foreign clients and can secure better cooperation terms, while the principal bears the costs, the agent might offer some value-added services, making the fee arrangement relatively fixed.
Sometimes agents bear the costs to expand into new markets, using low fees or even offering free services to attract principals and open up market opportunities.
If the principal has some resources that can assist the agent's work, there might be a discount on the fees, and both parties can negotiate adjustments.