Championing Entrepreneurship, Content Type | October 30, 2014
Written By: Francisco Lingad, ANCL Partners BC, Vancouver BC, Futurpreneur Canada Mentor
Understanding international trade is about knowing all the stakeholders in the industry. Here are some to get started with:
1) Your suppliers
The supply chain starts from your raw materials to finished goods. If you are into manufacturing, work well with your raw materials sources, they can give you good tips to improve your finished products. Likewise if you are into trading, your best bet to give you the superior information on your product is your source, or your suppliers.
Your buyer is in a better position to give you details on your labels, packing information, plus do’s and don’ts. After all they will be the ones who will clear your products through customs or the docks. Packaging is an important presentation to entice your customers to buy your products, it should adapt to your market environment, requirements and conditions.
3) Import/export agents, professionals/consultants
These people will share and teach you the various incoterms, shipping terms used for land, air and sea. These will come in handy when you quote prices to your customers and will impact trade documentation.
FOB (free on board): cost of goods from your warehouse to the ports.
CnF (cost and freight): cost of your products including the packaging (if you incur additional cost of packing as per requirements of your buyer, and/or tracking and handling until the goods are on ship side) plus the freight from your port to the port of destination.
CIF (cost, insurance and freight): the cost of your products ship side, insurance and freight – you include the cost of insurance on your price offers.
4) Banks, terms of payments, letters of credit
Your bank is the key factor here. They can give you term credit for your purchase or credit as you receive the letters of credit (L/C) or purchase order from your customers. Likewise they can guarantee payment if your customer demands cash against presentation of documents (CAD), or your bank will be the conduit for fund transfers or TT remittance payment.
They are export traders, or import representatives acting as buyers for specific products. They also function as quality control inspectors and buyer representatives looking for new products for companies they represent in certain markets.
They insure the cargo in case the cargo or the shipment are damaged during the transport or transshipment.
7) Freight forwarders and shipping lines
Book the cargo for shipment to destinations specified or per instruction from the buyers.
8) Non-governmental organization (NGO)
Certifies documents which need authentication. The Canada Chamber of Commerce and Board of Trade issues the certificate of origin, authentication etc. The Chamber of Commerce can act as arbiter in case there are disputes related to international trade or claims.
9) Embassies and government organizations
Embassies and government organizations will authenticate the documents as needed to release the ordered goods or cargo.
10) Couriers and Canada post document carriers
They will deliver the documents as issued by the shipper (invoices, packing list certifications, insurance coverage, and Bill of Lading (B/L), etc.
Imagine the ripple effect of the business generated in the international trading, the contribution to direct employment and the economy, the income stream cascading through the various industries and touching directly your community. Take care and interact with your buyers/suppliers and possibly all the stakeholders of your international business.