Importing and exporting doesn’t have to be rocket science. Sometimes a simple idea can kick-off a successful career and doesn’t need to be over complicated.
In November 2017 a young lady, 23 years of age, enrolled on an online import export training course, which she completed and gained the understanding she needed to move goods around the world.
To Or From China? Research Is Key
This young entrepreneur had been looking at China, as many do, to import goods to sell to Europe and on doing more and more research, came across an idea where she saw a gap in the market. This gap however, was in the reverse direction, rather than import from China, she believed that exporting to China was more advantageous, in particular, exporting Spanish wine to China.
A simple product, a simple idea and something that can be relatively easily filled. Sometimes we don’t have to find some far out there, brand new product that no one has ever seen. Keeping an open mind and let your research tell you what’s needed. Then trust your research and your gut feeling!
With alcohol sales increasing significantly year on year and China’s middle class expanding, finer wines are more in demand. Also the explosion of Chinese tourism across the globe means that Chinese are travelling further abroad and finding a taste for quality wine and spirits.
With further research, our entrepreneur selected 3 wine producers in Spain and was grounded in negotiation techniques, therefore able to negotiate a solid and successful contract with them. The wine supplier as you may imagine, was only too happy to help her penetrate the Chinese wine market and was very helpful.
In China, after talks with several potential stockist agents, she selected one that fit her personal criteria and potential future expansion plans.
The first deal was agreed and signed and the stockists agents terms of delivery were CFR Chinese Port subject to Incoterms 2010. Our entrepreneur was familiar with and understood these Incoterms and able to make the necessary arrangements for the delivery.
She promptly contacted a freight forwarder in the UK and negotiated a freight rate for collection from the Spanish wine supplier and delivery to the specified Chinese port. Her knowledge of Incoterms 2010 and the research she had conducted ensured she accepted a fair price for this delivery therefore maximising her profits.
Method Of Payment
The final part of the contract was to negotiate with her Spanish wine supplier, a 60 day payment against a Bill of Exchange, availed by her bank and a 30 day bill of exchange, availed with her stockist agent thus enhancing her cash flow, giving plenty of time to receive funds from her stockist agent and make the payment to the Spanish vineyard.
The initial trial order was for 4 pallets of wine by LCL service, with the bills of lading to be produced and forwarded to the stockist agent, together with other commercial documents as a Cash against Documents Transaction.
Bring in a Range
After this successful shipment, the first consignment was sold to one outlet by the selected Chinese stockist agent and a partnership has now been agreed and contracted to jointly finance and purchase a Full Container Load (FCL) of Spanish wine.
With the potential to supply a range of products, negotiations are underway to bring in more related products to maximise this business relationship as joint profit margins.
You can turn a relatively simple idea into reality if you follow some simple rules:
- Identify the product(s) you wish to buy or sell through solid research.
- Research the market you intend to sell to.
- Research and find several suppliers. Just one is risky as if there are any issues or problems, you may find yourself with no stock to sell.
- Negotiate commercially and legally sound contracts.
No business and making profit, doesn’t come easy. Be prepared to put in the hard work, stay focused and keep yourself driven. Once you’ve navigated your first deal and made your first delivery, you’ll continue to learn and it will get a little easier each time.
Above all don’t “wing it” get trained in the practical aspects of importing and exporting or the risks of losing money are significantly higher.