When purchasing materials or other requirements for exportation, overseas buyer must take cognizance of the following:
Duties and Tariffs
He must be aware of both import and export duties/tariffs and any internal taxes that may be imposed on the ultimate cost of the goods to the overseas customers.
Grants and Relief
He must also be aware of drawbacks, temporary exception, subsidies, grants or relief which may apply to either importation or exportation or both.
Export Procedure and Documentation
He must also be aware of a set of sequential steps to be taken to get his goods or services from home to foreign buyer. He must also understand the various documents used in this connection.
Exports’ Problems
Export business demands a knowledge not only of business conditions in remote markets and of customs and other regulations that constantly fluctuate, but also of consumer preferences and prejudices. The requirements of different countries vary considerably and need to be studied individually.
Language barriers and political risks must be recognized. Government may place restrictions on imports after the goods have been ordered, or block payment when they have been supplied, they may even seize or requisition the goods. The buyer must understand all these. Overseas Market Research
Research into overseas market is necessary where competition is high and requisitions are complicated. Personal visits abroad provide valuable first hand information but much of the research can be done at home. The Export Handbook which may be obtained from the Ministry of Trade, provides a useful information not only on the export services available through government offices, but also on those available from trade associations, chambers of commerce other non-official organizations with which the ministry collaborates in the export promotion field.
Export
The exporter must understand and constantly review the channels open to him, bearing in mind their relative claims.from the standpoint of cost, convenience, efficiency and prospective development. He must make use of a channel best suited to his needs and circumstances or even more than one, as where he may sell direct to an export merchant and at the same time use the services of a commission agent. The main channels of export distribution from which he may include:
(1) The export merchant house or merchant shipper
(2) The overseas buyer’s commission agent in the seller’s country
(3) The confirming house
(4) The manufacturer’s export agent in the buyer’s country.
(5) The manufacturer’s export department.
(6) The manufacturer’s organisation abroad
(7) Group marketing
(8) The traveling salesmen
(9) The shipping and forwarding agent
Export Procedures And Documentations
The following procedures are covered:
The exporters sends quotation and receives order to supply the foreign buyer
On the basis of request for quotation, the exporter must quote in the exact terms required by the foreign buyer. Such terms may include:
(a) The description or specification of the goods or materials
(b) The price and currency for payment
(c) The delivery date
(d) The payment terms
(e) The packaging particulars and distinguishing marks
(f) The delivery terms such as CIF, FOB, FAS C&F and EX.
Obtain Export License
The exporter must inquire whether the goods to be exported require export license or not, whether his goods are exportable or not.
Specify, Payment terms
The exporter must specify how the overseas customer will be required to pay for the goods (letter of credit, etc) depending upon his knowledge of the customer (importer), the period of credit he is prepared to give, etc.
Shipment of the Goods
The exporter undertakes the responsibility for packaging the goods. The other responsibilities are divided between exporter and importer depending upon whether the goods are quoted CIF, FOR, etc. The exporter may use shipping agents to arrange for the shipment.
Customs Clearance
Procedures and documentation for customs clearance differ in some countries and sometimes for different classifications of goods. The importer will normally advise the exporter what the exact requirements are, and these should be satisfied precisely so that the goods can be available to the importer as expeditiously as possible. As with importing, the timing of licenses, letters of credit and delivery should be planned to coincide so as to avoid having to apply for extensions or unnecessary delay in payment.
Packaging And Protection Of Goods For Export
Export goods travel long distances in hazardous conditions with several trans-shipments out of the control of either the exporter or the importer. Therefore, great care need to be exercised in determining the most of efficient but economical method of packaging and protection of exportable goods.
Goods, are a matter of practice, are usually dis-assembled and packaged in heavy boxes or crates protected by water proofing and straw-packaging. These days sophisticated containers are in use under the containerization programme.
The following factors must be considered in choosing the methods of packaging to be used:
1. The nature of the product with regards to its weight, size, strength, etc.
2. The kind of hazards that are likely to be involved, especially in storage, handling, corrosion, etc.
3. The skill or expertise that will be required to pack materials correctly.
4. The attendant costs of packing, transporting, unpacking and re-assembly of the product for use.
5. The methods available suited to the product; also covering the necessary equipment for handling them.
6. Any government regulations in force in the port of entry about packaging methods.
Specialist packing firms may be use to effect packing effectively. Countries in bilateral trade agreements served by roads, now use modular vehicular containers by road instead of seas or air so as to reduce transportation costs.
Use Of Import And Export Agencies
Import and export agencies are firms that provide advise and professional assistance to importers and exporters. In many cases, the advice is free and can easily be obtained by a telephone call or a visit to the organisation concerned. Where the agency is required to undertake some responsibility on behalf of the importer/exporter, he will be doing so in his professional capacity and will require payment.
Such payments will definitely add up to the cost and should be covered in the prices paid in the true cost incurred by them. Some of the agencies whose services may be used include among others
1. Chambers of Commerce: Their foreign department can give information and advice on many aspects of importing or exporting
2. Government Departments: Examples are the Ministry of Commerce and Industry, customs and excise that will provide up-to-date details of regulations, etc.
3. Banks: The organizations own bank will make the arrangements for letter of credit, etc.
4. Shipping and forwarding Agents: For the exporter, the shipping or forwarding agent can arrange for space on suitable ships. Arrange for shipment for a fee. These agents can also clear goods on behalf of importer. Such clearing agents in Nigeria include: the government coaster agency, Nigeria National Shipping Line Limited, Nigerian Forwarder Limited, Continental Lines (Africa) Limited, Elder Dempster Agencies, John Holt Shipping Services, Anglo Norman Shipping Nigeria Limited, etc.