International Trade Questions And Answers

Question:

I have read through you info on this site and found it very informative.

In regards to due diligence as well as doing the checks by cold calling and checking their website, is there a pack which I should put together to ensure the least risk possible.

Any pointers in the right direction would be much appreciated as these people can seem very trustworthy and I myself or employees of mine can have a set procedure in place to make sure we have covered ourselves as well as we possibly could.

Answer:

I am not aware of a 'package' of details that you can check, except for the resources we have compiled on our company page at: http://www.importexporthelp.com/company.htm which you and your employees are free to use any time - just scroll down the page until you see the "Due Diligence" sub-title.

These are not all that are available, I am sure, but if you follow that list you should be able to find any negative details on someone, if there are any on record.

I am not sure if you are in the USA or not, but the US has a program through their embassies that you can pay a couple of hundred dollars to have the embassy rep do a background check on the potential importer.

Another thing you can do is ask for references of other businesses they have dealt with and then actually contact those references. I know of one supplement manufacturer who would not even bother following up a lead if they would not provide them with at least one reference.

You will want to cross reference the reference also to make sure you aren't calling the guys brother or brother in law who is in on the deal with him.

Last, confirmed letters of credit (LOC) are about the safest way to go when it comes to payment, but they are often very difficult to get and much more expensive than regular LOC's.

Ultimately there are no guarantees of keeping you from getting ripped off. I have personally talked with several exporters and importers who had worked for some time with their buyers/sellersin smaller quantity orders. Then a larger order comes in and they end up never getting paid for it or if they are the importer, they send the money and never receive the merchandise.

This last type of deal is the old confidence game where they use small orders to gain your confidence, pay for them up front or shipthem right away and then hit you with a big order which is never paid for and you can never seem to find the person in their office at any time.

It is an unfortunate fact of business life (and personal) that you have to approach every transaction as if it is a fraudulent one and be very firm in your requirements of the other party.

Fraudsters are everywhere - in every country - unfortunately much of the scams come from the very countries that need legitimate trade the most and they are in Africa.

Many (not all) people have come to realize Africa is the main origin for the fraudulent activities so many of the fraudsters have now resorted to faking emails and other correspondence with actual names of legitimate companies in China or India.

The fraudsters will use the actual graphics or letterhead from a legitimate company but place their (the fraudster's) email or phone number (which is usually forwarded) in the correspondence.

Another fraudster technique is to use a color copier to duplicate an actual money order or cashiers check from a legitimate bank. Looks legit, you deposit it, have the goods shipped only to find out about 3-4 weeks later when you get a call from the bank telling you it has been returned. Guess what - it isn't the bank's responsibility and they will take you to court, if necessary, to get the funds from you.

Your qualification requirements have to be so firm that most fraudsters will consider them not worth the effort and crawl back under the rock from which they came - these strict requirements may cost you a real transaction from time to time but it is better to walk away.

Fraudsters know most companies and individuals are desperate to make a sale and they use this against you. If a deal seems too good to be real - it is. If you ever run into a deal that you just can not seem to resist but would like my input, feel free to call me and tell me the details without revealing who the party is and I will be happy to give you my opinion.

In most instances, you will probably not like my recommendation but you always have the final decision.

Hope this has helped and I wish you the best.

Import Export Business Questions & Answers Continued

Question:

I’m interested in the import-export training materials you have on
offer, but concerned about how applicable the material would be for
starting up an import-export business outside of the US. I’m South
African - do you think the material would be of the same value when
applied within SA? How about differences in the legal system, import /
export procedures, information sources, etc. Or are those things pretty
standard across the board?

Basically, do you think it will be of as much value to me as it would be
to a US startup? I don’t want to spend money on information that
doesn’t apply in SA. Please advise.

Answer:

We have sold a number of packages to new traders in South Africa. Yes, the
export training products have a USA slant but if you access the Internet, it
really doesn’t matter where you’re located. In fact, many of the resources I
recommend to U.S. traders can be accessed by non-U.S. traders as well.
The tactics or processes for exporting work in any country.

Normally I don’t recommend non-U.S. traders purchase the import package.
There is information that is useful but much of it has to do with U.S. Customs
and may not be applicable in your country.


Question:

How are you? I figure I email you instead of calling since you have such
a busy schedule. I like the import and export business tool kit very much
and I’m thinking in buying it. But I have one concern, all the import/export
books I have read previously did not discuss how to check if the products
you are importing is actually legal to sell it in the states because some
company might hold a patent on the product that you are importing. How
do you avoid running into situation where you are importing some
product and you think that no companies in the states hold a patent on
that particular product but later on a lawsuit is being file on you because
a company actually holds a patent on the product that you are importing
without you knowing.

Does the IMPORT AND EXPORT BUSINESS TOOL KIT talk about this?

Answer:

The short answer is no, it doesn’t. From what I can tell, most patent issues
with imports deal with pharmaceuticals. I haven’t had this come up before
except in the case of importers who buy items (ball caps in the case I know
about) that had unauthorized team logos and trademarks and legal action
followed. Actually, the goods were held in Amsterdam on the way to the U.S.
by customs people there due to illegal trademarks.


Question:

I am working a deal and I have a question if you wouldn’t mind answering?

I am having some laptops built to be shipped overseas.
the customer will wire me the money and I will then have the money sent
to the supplier to build the goods.

what documentation should I get?

I was thinking an RFQ from the supplier

I can then send a PO along with payment.

I want to make sure the transaction is documented properly so if anything
happens I have records.

Answer:

Do you know if your potential buyer is in agreement with this arrangement?
Is he willing to pay you in advance for product even though he has not done
business with you before? What kind of time delay is anticipated (for
production) and will the buyer agree to this?

I would suggest that what is probably more workable is a pro forma invoice
with payment made through a transferrable letter of credit (check with your
international bank on particulars). Conditions cited should meet the time
frame of the manufacturer to prepare and ship the computers.


Question:

I have a question related to export and hope you have answer for it.

I’m based in US, and interested in selling a US company’s product in China,
this company has a branch office in China, and they requires anyone who
wish to sell their product in China go through its Chinese branch office.

However due to the price difference between its products sold in US and
those in China, I would like to buy its product in US with the US wholesale
price and export/ship the product to China myself.

My question is that if this US company has the right not to sell me the
produce in US and force me to go through its Chinese branch office,
buy the product there in China with Chinese whole sale price. Is there
any regulation about this?

Answer:

Basically a company can sell their products to whomever or thru whomever
they choose - yes, that is their right.

You would potentially be setting yourself up for a lawsuit by this company if
they discovered what you are doing and in reality you could be jeopardizing
your Chinese counterpart with regards to their legal problems with the US
company’s Chinese authorized distributor.

Bottom line (I know this is not what you wanted to hear), but I would not try
to circumvent a company with regards to their approved lines of distribution,
you are really asking for trouble and legal problems if you attempt to do so.

Import Export Business Q&A Continued

Original Question:

What is the percentage of your customers that are actually making a living from your product? What is the average income per year for the customers that are making a living from your product?

Original Answer:

Thanks for the inquiry.

Let me ask you a question? or two. Please do not take what I am about to say as being sarcasm, it is simply the way I am trying to get my point across for the questions you have
asked.

If you own property, you are probably paying thousands of dollars in real estate taxes to support the local school system. Do you know the percentage of students that get a job paying above minimum wage? Do you know the average income per year of the students with whom you invest so much of your hard earned dollars??

Literally you are asking questions that cannot be answered. My primary business is export marketing and promotion. If you have read my Import Export Business blog, you would have learned that I started selling training materials and import export business resources early on to help support my "habit" of getting started in this business.

I spent hundreds of hours.....I've said all this before in the blog - go read it....I sell a course or courses, period. Why, because I do marketing of other import export business materials, people call me asking for solutions to the problems they got themselves into by trying to get into this business without proper training. My time is valuable and even more so at the age I am now. Now they could either pay me $200 an hour or they can buy the courses I recommend.

I have reviewed "many" different training materials in my 20 years in this business - the courses we offer now are the "best" I have found, period. They work if the person buying them has any amount of reasonable intelligence, can speak and write well enough to be understood and realizes that it
will take time and much patience to succeed.

If we were charging $8000 like some programs do which are being advertised on the Internet at this very moment, then your question is a valid one for them to answer and come up with some proof.

I have put on my web pages "Exactly" what you get with our courses, line by line, piece by piece and for an importing course priced at $160, an exporting course priced at $316 and a combination of the two at only $424.00, do you really think that I can take the time to follow through with all the people who have purchased our courses over the years? They are getting outstanding packages of valuable information, some of it proprietary, some not, but so much of it that you could spend hundreds of hours trying to compile it yourself - what is your time worth??

The sad fact is with any business - 95% or more of the people who buy courses or materials to help them start "any" business, NEVER do more than glance at it and forget about it.

Quite frankly, I doubt there are many universities that know how many of their students are actually making a living doing what they majored in or let alone what the average income is of those who were lucky enough to get a job in that major. So bottom line, for $160, $316 or $424, why am I expected to keep track of this kind of information.

Again, if you read my import export business blog, you will see I have stated many times over, there are NO ABSOLUTES in this business or any business or life for that matter. It really does not matter what someone else does with their life - what matters is what you do with yours - their success is in no way a guarantee of your success and by the same token, their failures, for whatever reason, are in no way a reflection on anyone else but themselves.

Sorry but I just cannot answer your questions - honest enough?

Follow Up Question:

I was hoping some of your customers would reply and tell you how well they are doing with your product and the income they were making. Before I get myself into this business, I would like to know the average salary. I'm not looking for a multi-million business, but I do have a mortgage and bills to consider. From your background and experience, would you know the median salary for this kind of work? I would truly appreciate your information regarding this issue.

Follow Up Answer:

I am sending you two references you should read - you should also scan through each post I have made on the import export business blog - there is a wealth of information there among all the ads, many questions and answers from the past 20 years.

I do not wish to seem vague but it is against FTC (federal trade commission) regulations to provide someone with any form of income claim in relationship to a business opportunity - I never have, nor ever will.

The first thing you have to change is your mindset about being in business for yourself and asking what the "median salary" is? Salary entails working for someone in a job, that is predictable, believe me a business is not.

The export business is even more variable - there are 10's of thousands of products you might choose to work with, each one offers different profit margins and/or commissions depending upon what level you work your business.

Therein lies another variable, most books, government and private write about an export business in terms of an export management company. Although our exporting course will teach you what you need to operate an export management company, it is not what we recommend you start out pursuing unless you have a very large credit line.

So we go back to what we recommend the most, starting out as an export agent/broker. In this area you match buyers to sellers and collect a commission from the seller. Each product of the 10's of thousands out there carry a varied profit margin as well as size of the market.

I currently have contracts with 3 manufacturers of a particular line of products, one started out offering me 20%, I negotiated it down to 10% because I did not want to be involved in the day to day responsibilities a sales rep has to endure. The commissions are payable, basically for as long as we are as under agreement and on for a period of 2 years after. The 2nd company is 5% for the first year because of different circumstances concerning the targeted leads we are providing them. The 3rd is basically like the 1st but starting out at 7% with a raise to 10% after a year.

I have worked with other companies where they paid a set dollar figure per item sold.

I just signed an agreement with a new company that agreed to 10% - another is an exporting business that has offered 20% of his net profit which can be $1000 or 500 for each product sold depending upon the number of these items sold.

Can you begin to see why I cannot and will not provide you a dollar figure?

I would say this, if you need income now or for the next 6 months, this is not the business to get involved in. Sell stuff on Ebay, at least your money is almost immediate.

Second, I would never quit your day job (if you have one) before you have a business generating at least the same amount as your job pays you or more.

Now if you wish to go forward, then read the old archived newsletter from 2001 at:
http://www.importexporthelp.com/b2bv1i6.htm
it contains an interview with an importer exporter who reveals his business income.

Next, the blog post in which I cite some examples of actual exporters I have spoken with and some of the deals they put together, go here:
http://importexportbusiness.blogspot.com/2006_02_05_archive.html

I would then continue through the blog looking at each post - some are more advertising than others but in there is literally a "wealth" of information you need to use to help you make the most informed decision possible. That is the first decision of a business person, i.e., making an independent decision - not having a boss, supervisor, wife, husband, teacher, coach, professor or other authority figure, just you and your future, your decision.

Import Export Business Agent Value

The following question was sent to me over the weekend, I thought it was about time for an update to the blog and this would be a good question to answer here.

Here is the inquiry:

If your job is to find buyers for your sellers (or sellers for your buyers) and you ask for commission when you set up the connection, is it reasonable to expect commission on every shipment from the point forward? After all, the two businesses are now in contact and they don't need you anymore. Surely it'd be less of a hassle (and cheaper) to deal with each other directly.

My Answer:

The question touches on a common misconception and undervaluing of one's efforts in obtaining new business for a company.

The first part asks if it is reasonable to expect a commission on every shipment from the beginning point forward.

My immediate answer is yes, it is reasonable. Consider an insurance company agent. In most instances the agent brings new business to the insurance company in the form of a new customer and in the case of life insurance, auto insurance, homeowner's insurance and just about every form of insurance, the agent continues to receive a residual commission for many years into the future (often 10 or as long as the agent is active and the policy is active).

Often in the case of insurance, an agent does little in the way of future work to maintain that policy other than to contact the insured periodically (usually to try and sell them something else), but there is a small amount of servicing most do provide, but the large amount of service comes direct from the insuranc company.

The insurance company is very appreciative to their agents and understand who butters their bread or puts the food on the CEO's table. Without that agent bringing that new business to the table, no one eats.

Getting back to the import export business, if a manufacturer or supplier did not hear from an agent/broker with new business, they would not have that business. Thus, if an agent brings $10,000 in new business to the manufacturer each year or each month, that is $10K or $120K or more they "would not" have without the work of the import export business agent/broker.

Everyone is different when it comes to assigning the value of one's services. Some, expecially owners of small to medium size businesses recongnize the value of having new business brought to their table while larger corporations are less likely to see that long term value.

In reply to the last part of the questions about having the supplier deal directly with the buyer, the assumption is correct, the more direct, the better. The value of the import export agent/broker still resolves back to the conclusion that this direct business relationship would never have happened had it not been for the work of the agent/broker.

Affixing that value is often interesting. I personally have been offered 20% commission to perform as both agent/broker in bringing new business to a company and acting as a laison for that relationship.

I countered with 10% and the company handle the one on one relationship and the residuals are paid on all business, both new and future purchases. In another similar situation, we accepted 20%, have no follow up responsibility and receive 5% on all future sales for one year (hey, we all have to be negotiable).

Still another company sends us a check about every quarter for work that we performed in 1997. It is a family run business doing over $10 million a year but they understood (and still do) the value of the new business we brought to their table.

So the bottom line is, in my opinion, one of how much does a company value new (and ongoing) business?

If you are a finder, import export business agent/broker and you are developing new business, always shop around for the best deal for both you and your potential referrals to a supplier. Remember that without you and your efforts, the manufacturer/supplier will most likely never get the new business you are bringing to their table.

Ron Coble
Coble International Marketing Services