IMPORTING

Take a look at the household items and equipment you have in your home. Made in West Germany; made in Japan; made in Korea. You may have clothing from India, shoes from Brazil, a leather wallet from Italy. Your car may be an import; your stereo equipment may be manufactured elsewhere. There are hundreds and hundreds of items manufactured all over the world, now being used by the Australian consumer.

There are many Australian firms looking for foreign-made merchandise to distribute. Some items are less expensive; some are better made; some are imported because they are made in a country now fashionable with the designers.

What can you tap into? Maybe you have contacts in Australia, distributors looking for certain goods. And you’ve already made contacts in the foreign countries that produce these goods. Follow through and get yourself an exclusive distribution agreement with those manufacturers.

Importing requires the same diligence and follow-up as exporting does. You’ll need a signed contract with the manufacturer to be the sole agent distributing to Australia – or the world, depending.

You’ll also need to obtain firm price quotes from the manufacturer in the quantities your distributor requests. These quotes should be converted into the appropriate dollar figures representing the currency exchange.

Investigate the reputation of the manufacturer and the reliability of the goods. If you import something like electronic components, check into the other distribution market the manufacturer has to assure the quality of merchandise.

Your commission will come through from the foreign manufacturer. Have your bank investigate the solvency of that company and the reputation of living up to agreements. Since it’s on foreign territory you’d have more trouble in any legal suits, even in light of the many international laws.

Prepare the price quotation. It is easiest if you request terms of delivery to the port of that country. Your freight forwarder can help you move the merchandise from that port, overseas, and through domestic customs.

Follow through with all the details of shipment. Be sure to include any insurance, dock fees, storage rates, and shipping overland. Overlook nothing so your price quotation to the American distributor is accurate.

Itemize the quotation and give it to the Australian distributor. Upon receipt of an authorized order, double check prices and follow through on delivery.

The letter of credit will go from the Australian distributor to the bank of the manufacturer. All terms and agreements regarding prices, freight and insurance will be defined. The manufacturer’s representative will confirm receipt of the letter of credit, which will release the goods for shipment.

Have your freight forwarder follow up on the shipment of goods. They may have to be freighted from the factory to the docks. Arrangements for shipping need to be carried out. Customs duties and unloading need to be followed through from the Australian port. Then, the goods may need to be freighted overland to the final destination.

As soon as the goods have arrived at the proper assigned destination, papers have to be documented and presented to the bank that holds the letter of credit. Then, all carriers and agents need to be paid, and you collect your commission.

DELIVERING THE GOODS

There are many combinations of people and methods that you can use to deliver the goods that were ordered. When you produced a price quotation for the goods, you had to go through all the steps the merchandise will follow. Now, before you proceed, check again.

Do you have a confirmed order signed by the authorized representatives of the distributing company? Has your banker approved the letter of credit from the company?

Compare the amount of the letter of credit to the amount quoted for the goods. Be sure they match exactly. Or, if the distributor chose a certain quantity of several offers, check the prices again and confirm the quantity.

Confirm the quotation and sale with the manufacturer, and do the same with the freight forwarder and any marine insurance agents you are working with. Then follow through.

In order to assure the quality of merchandise, some manufacturers prefer to handle freight to the loading docks, which makes it easier for you. If you handle overland shipping, follow through to be sure the merchandise is picked up and arrives safely at its destination.

Be informed of the date the goods are loaded onto the ship. The factory should have them freighted in time to avoid costly dock storage charges.

Since all conditions of the sale must be met to comply with the terms of the letter of credit, you need all the signed documents. Have your freight forwarder or other contacts get authorized bills of lading for the merchandise each step of the way – from destination to destination.

Once you have all the signed documents, present them to your banker. If all the terms are met, the funds will be released. Since your commission is part of the quoted price of the merchandise, you’ll usually collect your fees from the manufacturer.

When it is totally complete, you collect your money – and make a sizeable profit for simply making connections. Consider the commissions when you have dozens of orders coming and going.

THE LETTER OF CREDIT

A letter of credit eliminates financial risks for you, the manufacturer, and the distributor. When your distributor confirms the order, a letter of credit is drawn from that company’s bank to a branch in Australia or to your bank.

This letter of credit confirms that funds are available from the distributor to cover the same costs you quoted. An irrevocable letter of credit assures you the order will not be cancelled at any time. When that letter of credit is likewise confirmed by your bank to deliver the goods, the distributor is assured of delivery. Once the letter of credit is confirmed by the bank, the currency exchange is also confirmed, so you don’t have to worry about the fluctuation in currency.

Basically, the bank holds the money until all shipping documents are presented. The letter of credit states the terms and conditions to make it legal and negotiable into money, usually holding for proof of shipment of the goods. Your freight forwarder helps you attain all those documents. When you hand them to the banker, the letter of credit is turned into liquid assets for you to then pay the manufacturer and all other invoices from the transaction.

Never work on promises. Not only do you take a gigantic risk, but you create bad risks for everyone you are involved with. A letter of credit is the only sure way to transfer these payments.

THE FREIGHT FORWARDER

A freight forwarder is a person who takes care of the important steps of shipping the merchandise. This person quotes shipping rates, provides routing information, and books cargo space.

Freight forwarders prepare documentation, contract shipping, insurance, route cargo with the lowest customs charges, and arrange storage. They are valuable to you as an import/export agent, and they are important in handling the steps from factory to final destination.

They can be found by looking in the yellow pages or by personal referrals. Find someone who can do a good job for you. You’ll need someone who you can work with, since this may become a long-term business relationship

You’ll need the help of a freight forwarder when you make up the total price quotation to the distributor. Not only do you include the manufacturer’s price and your commission – usually added together, but you need to include dock and cartage fees, the forwarder’s fees, ocean freight costs, marine insurance, duty charges, and any consular invoice fees, packing charges, or other hidden costs.

Be especially careful when you prepare this quotation. It certainly isn’t professional to come back to the distributor with a higher quote including fees you forgot. You might go over the price quotation with your freight forwarder to be sure nothing is overlooked.

Usually the quotation is itemized into three main categories of cost of goods, which includes your commission; freight charges from destination to destination; and insurance fees.

Give a date the quotation is valid to, which should be the same as the date given on your quotes. You may also include information about the products, including any new sales literature.

A formal letter that accompanies the price quotation should push for the sale. You can inform the distributor of the shipping date as soon as the order is received and confirmed by a letter of credit. Send the letter and price quotation by registered mail to be certain of its delivery.

TERMS OF SHIPPING

You will become more familiar with the terms of shipping used in quoting prices and delivering goods as you gain experience. Your responsibilities vary with the terms of the agreements and orders. Check with your freight forwarder to be clear about your responsibilities.

A bill of lading is a receipt for goods shipped. It is signed by the agent of a ship or common carrier and assures the buyer that the goods were unloaded in the same condition as they were accepted. These are the documents you’ll need to produce for your banker to release the letter of credit.

FOB means free on board. The seller delivers the goods to a certain destination with no additional charges. The seller insures and takes the responsibility until that point. The buyer takes the responsibility and pays the charges after that. For example, FOB Sydney means the seller’s price quotation includes full responsibility and shipping to Sydney.

FAS means free alongside. The seller delivers the goods to the ship that will carry the merchandise. The buyer pays to load onto the ship and takes responsibility from there. FAS Sydney, for example, means that the seller will deliver and store the goods until they are ready for loading onto the ship.

C & F means cost and freight. The seller pays the freight charges. The buyer insures the merchandise and takes full responsibility after the destination.

CIF means cost, insurance and freight. The seller is responsible for the value and condition of the goods, and pays both insurance and freight charges to a certain point. The buyer is responsible from there.