Import-Mobile-Repairing-Tools

Import Mobile Repairing Tools & Open Mobile Servicing Shop: Complete Guide

by with No Comment Air ShipmentIMPORTOcean Shipment

Why will you invest in importing mobile repairing tools and open a mobile repairing or servicing shop?

You can actually open the whole store with an investment of around $300 only and start the business. The machines, tools, materials and equipment that you need are not at all high prices and pretty cheap and easy to import if you want to import by yourself from China or any other country. At the end of the day you will have a high profit margin with very low investment.

In this blog I will tell you from my own experience in this mobile repairing or mobile servicing shop business the A to Z details you need to open the shop. This blog will be with all the information with a complete solution of opening a mobile repairing or mobile servicing shop and the machines, tools and mobile parts that you can import from China.

Table of Contents

Increasing Demand of Mobile

So we see the mobile demand has increased many fold at present times with pandemic increasing the demand to a high extent. You see, you need to have a mobile now for all the activities, starting from studies, shopping, playing, watching entertainment. You name it and you need the mobile. So more mobile means more mobile will have technical problems and shut downs and need repairing but we can see the shortages of mobile technicians and more repairing shops. I can see in my shop many customers are waiting now more than before to repair their mobiles.

Steps to Open a Business of Mobile Repairing or Mobile Servicing Shop

So now you have an opportunity in hand to open a business in a mobile repairing or mobile servicing shop. You have decided your objective. So now the steps start.

Step 01: You need to learn the skills to repair

You need to learn the skills to repair. You can enroll in a practical course in your locality or learn from the person who is in the business of mobile phone repairing or servicing. For me, I learned from an instructor who takes the course in 4 months. Actually 4 months or 6 months training is ok for you to get the basics complete. After that you can work on your own to develop your skills. As you know, there are different types of mobile in the market. The basics are the same for all the mobiles. You will have a PCB (printed circuit boards) and all the components are connected around it. So in summary, Learning the trade is important and developing the skills. This technical know-how is very important to start a mobile repairing or mobile servicing shop.

Step 02: Rent a Small Shop in a Good Location

The space of the shop need not be big as you do not need a big space to run the business. The shop can be in a good location where you will be seen by many people. This is important because you are providing a service and people have to know where your location is. At present, you can also make your shop be promoted in facebook pages and other social media to promote your shop. You can also do “ Google My Business “ which is an easy-to-use tool for businesses and organizations to manage their online presence across Google, including Search and Maps. To help customers find your business, and to tell them your story, you can verify your business and edit your business information.

Step 03: Buy Different Tools from the Local Market or Import those Tools

  • Screw drivers, you need to have a range of small drives. Precision Screwdriver T4, T5, T6, and T7 are mostly needed. Screwdrivers to open the mobile phone like T4 screwdriver, most mobiles at present are opened by this screwdriver. To open a Nokia phone u need mostly T6, To open Iphone you need T3 and with that supporting other screwdrivers.
  • Need tweezers to hold very small parts, Tweezers are small hand tools used for grasping objects too small to be easily handled with the human fingers. Tweezers are thumb-driven forceps most likely derived from tongs used to grab or hold hot objects.
  • To open the casing of the mobile you need 2 types of mobile phone opener.
  • Scissors to cut wires and other things, this is a thing you will need a lot for every other purpose.
  • To clean everything including the motherboard of the mobile you need a brush.

Step 04: Materials you Need to Repair Mobile Phones

  • Soldering Wire to connect all the circuits of the motherboard. Solder wires are generally two different types – lead alloy solder wire and lead-free solder.
  • To melt the soldering wire with heat you need soldering paste or rosin.
  • Solder paste is commonly used to create electrical connections and mechanical bonds between printed circuit board pads and surface mount devices, such as resistors and capacitors. It is made up of powdered solder in a flux paste.
  • To join one assembly to another assembly u need jumping wire. A jump wire (also known as jumper, jumper wire, DuPont wire) is an electrical wire, or group of them in a cable, with a connector or pin at each end (or sometimes without them – simply “tinned”), which is normally used to interconnect the components.
  • To remove excess soldering in the circuit you need desoldering wire. Desoldering braid or desoldering wick is a pre-fluxed copper braid that is used to remove solder allowing components to be replaced and excess solder (e.g., bridging) to be removed.
  • To stop high heat to fall in Circuit board from the hot gun, use a heat protector tape. Heat protector tape is very important to protect the circuit boards and other heat sensitive components of the mobile circuit.
  • To repair the display and to attach the battery to the motherboard we use a double tap with both sides glued and sticked.
  • To prevent jumper wire to connect in different circuit use paper tape
  • To hold the display and motherboard need adhesive glue. Adhesive, any substance that is capable of holding materials together in a functional manner by surface attachment that resists separation. “Adhesive” as a general term includes cement, mucilage, glue, and paste—terms that are often used interchangeably for any organic material that forms an adhesive bond.

Step 05: Equipment that is needed to repair mobile phones

  • Soldering Iron to work on the motherboard. A soldering iron supplies the heat that melts the solder. It consists of a tip, which you apply to the metal parts you want to solder together, and an insulated handle so that you can hold the iron.
  • A Meter or multimeter for current. A multimeter is a measuring instrument that can measure multiple electrical properties. A typical multimeter can measure voltage, resistance, and current, in which case it is also known as a volt-ohm-milliammeter (VOM), as the unit is equipped with voltmeter, ammeter, and ohmmeter functionality.
  • DC power supply. A DC power supply provides direct current (DC) voltage to power a device under test such as a circuit board or electronic product. A DC power supply typically sits on an engineer’s work area or bench and is often referred to as a bench power supply.
  • Hot Air Gun to remove the SMD in motherboard or replace or take out: A Hot Air Gun is needed to blow hot air in the circuit in the SMD to remove them or replace them.
  • What is SMD? SMD means surface mounted devices. SMD is a term used for all the components that don’t have pins going to the other side of the PCB, but have their electrical connections on the edges like the resistors, bios, audios and sata chips, as well as the chip set itself.
  • Battery booster to recharge the voltage of the battery. A portable battery, fitted with cables and a charger, used to charge a dead battery.
  • Display separator to separate display and the touch of the smartphone.
  • Gum remover to remove the gum from the display and the touch of the smartphone
  • Digital microscope or mini microscope to see the small SMD of the latest smartphones
  • PCB stand: This is used to hold the PCB
  • Thinner: To clean the PCB.
  • Blade Cutter: A blade is the portion of a tool, weapon, or machine with an edge that is designed to puncture, chop, slice or scrape surfaces or materials. Blades are typically made from materials that are harder than those they are to be used on.
  • Ultrasonic Cleaner: To clean PCB and electronic components.
  • BGA Kit: To reball and repair ball type IC
  • Magnifying lens: Magnifying glasses are a simple optical device used for viewing details of objects with some magnification. To get a magnified view of PCB and other small mobile components.
  • Cleaning Sponge: To clean the tip of the soldering iron.

Step 06: Some of the Parts of a Mobile Phone

  • Touch Screen: A touch screen is any display that you interact with by touching it. A touchscreen works by having the top of the display that you touch come in contact with an electrically conductive layer underneath it. That layer below always has an electrical current running through it. When the two layers touch, the stream changes and registers your touch.
  • Ringer of a mobile phone: The ringer alerts the user to an incoming call by emitting an audible tone or ring. Ringers are of two types, mechanical or electronic.
  • Speaker of the mobile phone: The speaker is typically located at the bottom of the phone to the right of where you plug in your charger.
  • Microphone of the mobile phone
  • Vibrator of a mobile phone: Vibrato of a motor for achieving the phone’s vibration feature, when you receive a text message or phone, the motor starts to drive high-speed rotating eccentric done, resulting in vibration.
  • Charging connector of a mobile phone
  • Headphone connector: A phone connector, also known as phone jack, audio jack, headphone jack or jack plug, is a family of electrical connectors typically used for analog audio signals. The standard is that a plug (described as the male connector) will connect with a jack (described as female).
  • Battery of a mobile phone
  • SIM Card: A SIM card, or subscriber identity module, is a small card in your cell phone that connects you to the network. Your SIM card contains your phone number, and lets you make phone calls, send text messages, and more.
  • SIM card connector
  • Memory card of a mobile phone: An memory card, short for Secure Digital card, is a type of removable memory card used to read and write large quantities of data in a wide variety of mobile electronics, including mobile phones.
  • Memory card connector
  • Camera of a mobile phone: A camera phone is a mobile phone which is able to capture photographs and often record video using one or more built-in digital cameras.

You can see in the Covid lockdowns and our everyday usability of mobile phones has taken a pivotal role. We need mobile phones at every step in our life. Let’s say waking up in the morning with a mobile ringing alarm. Seeing the mails and while taking exercise we counted our steps we walked with the apps of the mobile phone.

Mobile servicing is a crucial need in our economy and this profession has the ability to generate many employments with very low initial cost and time to learn. It is not needed that you have to only do the mobile repairing, you can also import the repairing parts from China or any other country and start a trading business. Apart from the mobile repairing you can keep many mobile accessories like headphones, mobile back covers, chargers and many other things in your small shop that interested customers can buy and you can also import those parts.

This mobile phone repairing sector will grow in the days to come and we have to employ more technicians to take advantage of this sector.

The necessity of the mobile accessories in the market is growing and the new accessories are coming in huge numbers. Apart from very essential mobile phone accessories we have fancy accessories. All this will bring more customers to your mobile repairing shop and increase your business growth.

At present days smart phones are taking the pivotal role in all the steps in our life. We need it and it is essential. So now is the time to learn the mobile repairing or servicing business and develop yourself as a business man in your field and also start importing and expand the business by trading.

Import-Mobile-Repairing-Tools
Import-Mobile-Repairing-Tools

Import-from-China

Import from China best process: 5 parties (Buyer, Seller, Bank, Shipping, C&F)

by with No Comment Air ShipmentIMPORTOcean Shipment

In the process of import from China, 5 parties are involved; Importers, Suppliers, Banks, Shipping agents/freight forwarders and Customs clearing agents. We will know in details how to communicate and work with them to import any kind of products from China and do a profitable trading business. I will also share my practical experience of import trading.

The rule is simple, if you buy and import in a good price from China, you can sell the products in a high profit and earn good money in your business. I import directly from China electronic products, without using any agent and do not pay any big commission. In this write, I will clearly in a detail way share you my process of import so that you can also import in the most cost effective way and start your business and make a good profit and do the trading. So let’s start!!

Table of Contents

5 Parties are Involved in the Import from China Process

5 parties are involved in the import from China process for electronic gadgets import. You have to know the detail roles of these 5 parties.

  1. Importer
  2. Supplier
  3. Banks
  4. Shipping agent/Freight Forwarder
  5. Customs Clearing agent

Importer

You are the importer and you have to decide what kind of electronics or products you want to import from China.  You have to do the market research and find out what is demandable in your market. This is very important because your decision in here will make you ready for all the expenses that will happen to import in the later stages.

So how do you do the market research?

  1. You have to identify the problem that you want to solve with the products that you are importing from China
  2. List the number of similar products you can get in the market
  3. List the quality and the prices of the competing products
  4. Visit the market and talk to the retailers and wholesalers
  5. Collect as much data as you can and find out what are the similar products that you can import in the target segment
  6. Organize the data that you got in a very clear way so that you can analyze it and find out the demandable products in the market
  7. Buy and try all the similar and competing products of your segment so that you can test which products work best at what price range
  8. Make sure to note, importing cheap products is not a guarantee that you can see huge sell and good profit. Quality is the king, so make sure you import a good quality product to sell in a higher price if it requires. So do the research on which product is demandable in the market and import that kind of quality product, rather than running after price.
  9. See whether the segment you are targeting to import have a strong popularity of a brand in your local market. For example, you want to import a speaker and your market has a very famous brand which every consumer like with brand name ABC. This means it will be really tough for you to sell this similar product in this market as you have a famous brand existing. So, my personal suggestion from the experience is to go with the segment that does not have much of a strong brand existing in the market, so that you can sell your products with a less competition providing a quality product in a competing price
  10. Analyze the data that you get after the market research in details and take a logical decision to import the segment you want to focus to import from China

So, after you have decided what electronic product segment or any products you want to import from China after the market research, you have to know the total cost that is needed to import the whole product in your country to your warehouse. Actually the overall cost you have to find out till you sell the product to your end consumer. The total cost to import till you sell the product to your desired customers.

You have to know the cost of the product that you will buy from the supplier. Further, you have to know the terms of the payment of the goods you are buying to the supplier in which payment terms you want to buy: FOB, CFR or Ex-Works. Let me go into details of these 3 terms. This is very important to know in the international trade.

FOB: Free On Board

FOB (Free On Board) applies to goods transported by ships and boats through seas, rivers, and canals. The seller is responsible for transporting the goods to the departure port and pays for all associated costs and risks. The seller acquires the necessary export permits and other documentation to export from the origin port. The seller also does the customs clearance in the seller port. The seller’s responsibility ends after the goods have been loaded on to the vessel, as shipped onboard, if the contract is free on-board Shipping Point.

CFR: Cost and Freight

CFR (Cost and Freight) is wherein it is the seller’s sole responsibility to arrange for the transportation of the goods to pay for transporting the goods by waterways, either by sea, river, or canal, to a destination port specified by the buyer. In addition to paying for the transport of the goods, the seller has to pay for delivering the goods to the agreed upon departure port. The seller must also pay for acquiring export licenses and for loading the goods on to the transport vessel. The seller does everything from making the goods, customs clearance in the seller port and shipping payment. The seller’s liabilities end here as the CFR contract does not require the seller to insure the goods for further transportation. The buyer will have to insure the goods if they think it necessary.

EXW: Ex Works

Ex Works contract, the buyer transports the goods from the seller’s premises to the buyer’s destination. The transport mode may be whatever is convenient for both parties, road, rail, air, sea, or waterways. The buyer is responsible for loading the goods for transportation, acquiring export and import licenses, getting security clearances, paying taxes and customs duties, unloading the goods at the destination, storing the goods at a warehouse at the destination, and all other costs and liabilities. The buyer is also responsible for insuring the goods while they are in transit. The only responsibility the seller has is to make sure that the goods are properly packaged and available for transport, and that all the documentation for customs and shipping are in correct order. In this payment term method, the seller only makes the product and the rest is done by the buyer.

Then you have to find out the payment system you want to use by LC or TT payment and communicate with the supplier accordingly to pay for the products you want to buy. So what is this LC and TT payment? There are many other payment system used in the international import system but these 2 system are very commonly used.

LC payment: A letter of credit, or “credit letter,” is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. So in here the bank is taking the responsibility of the payment against the buyer to the supplier. This is a bank to bank guarantee. The importer bank is giving the guarantee to the supplier bank, so the risk is minimal in this transaction.

TT payment: T/T payment stands for ‘Telegraphic Transfer.’ This is a payment method where the payment can be made in advance or in the middle of the production or at the end of the production to the supplier, as per the agreement between the buyer and the suppler. In other words, we can say TT payment is an international wire of funds from the buyer’s bank to the seller’s bank.

Next you have to communicate with the shipping agent to find the vessel to import the goods from China to your country. You have to know the cost of the shipping line and the different rates they will provide. Also know the time need to come the vessel from China to your country which is called the transit time. All these information and the cost of the transportation need to be keep in mind.

Then you have communicate with the customs clearing agent in your country to know the customs duty and VAT that you have to provide for different products to your country government while importing that product from China. There are many other costs in customs clearing in your country. Communicate with the clearing agent to know all the cost and calculate.

Getting Suppliers from China through Alibaba.com

You can get the best manufacturers and suppliers in China from Alibaba.com. When I imported my first consignment of electronics mainly mobile repairing tools. I searched through Alibaba.com to get the suppliers and imported from there. So how do you know which a good supplier is and why do you use Alibaba.com to get your suppliers?

  • You get direct factory suppliers and their direct trading agents
  • High number of suppliers to choose from.
  • The suppliers are organized categories to find products fast.

There are many different types of suppliers in Alibaba.com but below 2 are very important. Let us go into details:

  • Manufacturers: A manufacturer is a company that produces items for use or resale. The majority of AliBaba suppliers are manufacturers. Manufacturers are the direct creators of the products, they can offer very low prices on items. However, their minimum order quantities (the minimum number of products you can buy in one shipment) are often very high.
  • Wholesalers: When you buy products from a wholesaler, you don’t have to buy in bulk. Wholesalers are able to house a lot of products for you which means, you’re getting products at a discounted price. In other words, the more you buy, the better the price! A manufacturer is able to pass on better prices to a wholesaler because they typically buy in bulk and have the storage space to house the goods until they’re sold.

Further, you can also filter suppliers and manufacturer with supplier filters that Alibaba.com supports, to avoid the scams and general low-quality suppliers, AliBaba provides some supplier filters you’ll want to use.

  • Trade Assurance Suppliers: Trade assurance means you’re covered if…
    • The products you ordered aren’t shipped on time
    • Your products don’t meet the quality standards

If either of these happen to you, AliBaba will pay for the goods and you’ll get a full refund.

  • Gold Suppliers: “Gold” is a premium membership for suppliers on Alibaba. Suppliers who pay the fee ($10,000 USD) are provided with comprehensive ways to promote their products which, in turn, maximizes product exposure and increases their ROI. Because gold suppliers have to pay such a large amount each year, it basically weeds out scammers who are only after your money.
  • Assessed Suppliers: These suppliers are inspected onsite by a third-party inspection company. They offer all the information for Alibaba’s Factory Audits, including…
    • Assessment Reports
    • Verified Videos
    • Verified Main Products.

So after you have got your desired suppliers, ask them to communicate with you through mail or whatsapp or wechat. I personally ask them to chat with me in whatspp or wechat as this is fast communication with 2 way questions and answers in quick time rather than in email, which is a slow process. After you get a good supplier for your product. You can ask suppliers the questions listed below:

  1. What is the minimum quantity you sell in a lot?
  2. What are the different products you have?
  3. What is the FOB price of the product?
  4. How many days will it take to make the product?
  5. Can you please provide me a sample of the product? You give me the sample free and I will bear the courier charge.
  6. Show me video footage of your factory?
  7. Share me the catalog of your products?

Banks

Bank to open Letter of Credit (LC) or Telegraphic transfers are also known as telex transfers (TT) payment system to pay to suppliers from importer’s bank in the import of Goods from China

Banks facilitate international trade by providing financing and guarantees to importers and exporters of the payments. In import, your bank which is importer’s bank guarantees the supplier’s bank which is the exporter bank that the payment of the export product will be done by your bank. So the supplier is guaranteed of the payment. Let us go into details of the 2 payment process we discussed before for the import from China of the goods.

Letter of Credit (LC) payment system process:

Step 1 – Issuance of LC

After the parties to the trade agree on the contract to buy the products and the use of LC is used in the payment system, the importer applies to the issuing bank to issue an LC in favor of the exporter. The LC is sent by the issuing bank to the advising bank. The latter is generally based in the exporter’s country and may even be the exporter’s bank. The advising bank (confirming bank) verifies the authenticity of the LC and forwards it to the exporter.

Step 2 – Shipping of goods

After receipt of the LC, the exporter is expected to verify the same to their satisfaction and initiate the goods shipping process. The LC guarantees that payment will be done to the supplier after exporting the goods. After getting the LC, the exporter starts the production of the goods.

Step 3 – Providing Documents to the confirming bank

After the goods are shipped, the exporter (either on their own or through the freight forwarders) presents the documents to the advising/confirming bank. All the docs like commercial invoice, packing list, Bill of Lading all the shipping documents are provided.

Step 4 – Settlement of payment from importer and possession of goods

The bank, in turn, sends them to the issuing bank and the amount is paid, accepted, or negotiated, as the case may be. The issuing bank verifies the documents and obtains payment from the importer. It sends the documents to the importer, who uses them to get possession of the shipped goods

Telegraphic transfers are also known as telex transfers (TT) payment system

Telegraphic transfer or telex transfer (“T/T”) is the electronic transfer of funds from a buyer/importer to a seller/exporter, via a bank or a similar institution.

You should never pre-pay 100% of the order before production starts, unless you know the supplier very well and have done a lot of business with him and trust him.

The best process for TT payment you can follow is:

  1. You have the supplier develop sample(s) until you are confident they know exactly what you want.
  2. You send a 30% or 20% or 10% as agreed by you and the supplier deposit (by T/T) before production starts.
  3. Your supplier (the manufacturer & exporter) purchases the components and/or materials and arranges the production
  4. You work with a quality assurance firm to inspect product quality (this is optional but usually a good idea).
  5. Once the goods are on the ship, the supplier gets the Bill of Lading (B/L), and sends you a copy of it
  6. If the product name, quantity, etc. are all fine on the bill of lading, you send the final payment to the supplier
  7. Once the supplier receives the payment, they send you the original B/L to you to release the goods from your country port

Shipping agent/Freight Forwarder is used to transport the goods from China to your country

A shipping agent/freight forwarder is an agent who acts on behalf of importers, exporters or other companies to organize the safe, efficient and cost-effective transportation of goods.

A shipping agent manages all the shipping formalities on behalf of the supplier and the buyer in the international trade. The list goes:

  • Managing freight costs
  • Port charges
  • Costs of a special document
  • Insurance costs
  • Terminal fees handling
  • Managing transportation by air or sea despite the number of countries and manage multimodal transportation too
  • Stand for customer’s interest while negotiating logistics agreement rates with carriers that can be NVOCC or and Ocean carrier
  • Billing
  • Offer distribution facilities
  • Arrange inland transportation of the goods
  • Completion and processing of the documentation required for the movement of goods such as Bill of Lading, custom related documents, port documents, etc.
  • Booking or the confirmation the space on the ocean vessel
  • Issuing approved HBL
  • Arrangement of the transportation of cargo to the port by rail or truck
  • Helping out their clients with documents like Incoterms, letters of credit. Assist the customers with bank clearance, and give advice about the most efficient way to move their cargo.
  • Warehouse facilities for storing customer’s products before and after shipping.
  • Arrangement of insurance on behalf of the shipper

Customs Clearing Agent in the Importer Country to release the Imported Goods from the Destination Country Customs

Customs clearance and the approval and co-ordination with the customs of the importer country of the regulatory authorities to affect the imports is done by the Customs Clearance Broker.

Customs Clearance agent who would know the working of all the Customs Rules and Laws and ensure compliance of the same in a speed manner so as to ensure that the import consignment is cleared within the allotted free period and does not incur demurrage.

On arrival of the import consignment in the buyer country port. The Customs carries out physical inspection as well as valuation of the import. Valuation of the import consists of ascertaining the correct description of the items, classification of the items under relevant Customs Chapter and Tariff, Ascertaining that there is no case of under invoicing and certifying the valuation of the consignment and arriving at the Customs Duty required to be paid. The clearance agency proceeds to advice and co-ordinate with the importer C&F to make necessary Customs Duty Payments and takes physical delivery of the Consignment and delivers it to the Importer at the designated place along with the set of Original documents.

You as an importer cannot be expected to spend his time on getting the consignments cleared after ensuring that he is compliant with all the processes. Hence the role of the Customs Clearance Agency comes into the picture for he undertakes to represent the Importer with the Customs Department and follow through the process.

Finally, we have seen the role of all the 5 parties in the import process of electronics or any other goods import from China. The 5 parties work simultaneously, depending with each other in the whole supply chain to move the goods from China to the importer’s country.

To sum up the steps while importing from China of any products to your country to start a business is.

Firstly, as an importer, you have to get the product you want to import and take the necessary import licenses to import in your country

Secondly, find a supplier from Alibaba.com platform with good profile background

Thirdly, after the negotiations are done with your chosen suppler from Alibaba.com platform, then open LC or TT to pay the supplier for the supply of the goods to be imported

Fourthly, Communicate with a shipping agent to transport the goods from China to the destination country.

Last, once the goods reach the destination port, communicate with your Clearing and Forwarding agent to represent you in the importer country customs to release the goods after paying all the duty.

Now after the goods are released from the customs, transport the goods in your warehouse or any other safe place and crosscheck all the imported goods from your end.

All OK. Now START you sales in your country and WIN the market.

Again, repeat the whole process to import with your next shipment in a very cost effective way and sustain in the market with a strong position.

Import-from-China
Five-Best-Product-Segments-Import

5(Five) Best Product Segments to Import & How to Import ? 2023

by with No Comment Air ShipmentIMPORTOcean Shipment

The list of product segments to import in 2023 are: Consumer electronics items, Household items, Capital machineries, Chemicals, Food items. We will describe in details the process to import all these products segments in this blog, so that you know how to import these products in a most cost saving way and make a good profitable business out of it.

Table of Contents

Consumer Electronics Items

Consumer electronics or home electronics are electronic (analog or digital) items made for everyday use, typically in homes or personal use. Consumer electronics include devices used for entertainment, communications and recreation. Consumer electronics have a very big market in all the countries and is very demandable and a lucrative segment to do business.

But in this segment the competition is high as high demand brings more import traders to meet the demand of the electronic gadgets.

From the experience in importing consumer electronics, quality takes an important role in the product segment. Importers get convinced to import low quality products at a cheap price and assume to make a quick profit. But in reality this does not work. Consumers can understand the quality of the product after one buy or by examining the product and they will not make a repeat purchase of the low quality electronics and you will not have a repeat sell and no loyal customer base to import again and sell.

It is seen that consumers are willing to pay extra on a good quality consumer electronics to get a good quality product that they can use minimum of 1 year or 2. So focusing on the quality of the consumer electronics is important for a trader to import with a competitive price that is within the purchasing power of the consumers.

So how do you Import Consumer Electronics?

First and the foremost, you need to register your IRC-Import Registration Certificate and other governmental approval in your country to import the electronics.

Then get to know the electronic segment that you are targeting. The consumer electronic segment is big and you cannot import all the items in there. So focus on the one segment within the segment. Let’s go with the example: LED TV.

So do the local market research on this segment. Find out all the details of the LED TV. Starting from which screen sizes is popular in your country, what kind of mother board you want to put in the LED TV, the sound quality, the color of the TV outer face. How long you want to give the guarantee? How much price range in the market? What kind of after sales service the market is providing at present? What are the existing brand in the market?

You have to find every details of the segment of the electronics you are targeting then communicate with the supplier in that country that you are targeting to import from.

You can use google search to find the supplier in that country or use the database of the import and export governmental websites of that country or trade sites of that country like you can use Alibaba.com for import from China, you can get the details from the link How to import. Of how to use trade sites in China to find goods suppliers and manufactures

For electronic goods there is a chance that the products may have lithium batteries installed inside the electronics. Sometimes the shipping agent may declare the electronics as DG-Dangerous Goods.

DG-Dangerous Goods: A dangerous good (also known as hazardous material or hazmat) is any substance or material that is capable of posing an unreasonable risk to health, safety, and property when transported in commerce.

So it is important to know that the electronics product you are targeting to import will fall into DG goods segment or not. Communicate with your shipping agent while you are making the decision to import. For DG goods many countries have many different ways of physically checking the goods, as per the goods category.

So if your electronic products falls into DG category, communicate with your Customs clearing agent to know what are the extra necessary steps need to do to release the goods in the destination port when the goods come to the destination port. So if you know the things beforehand, you can prepare yourself for the coming steps to take while importing the electronics.

So in the further process after your selection of the product communicate with the supplier in the foreign country to import. After you get the supplier and satisfied with their products open LC or TT with the bank and communicate with the shipping agent to import and customs clear in your port to release the goods to makes sales.

How do you Import Household Items?

The same goes in here with taking IRC and all other government documents to prepare yourself to import.

Then goes the market research of the product you want to import.

Also, find the HS code of the product you want to import. Finding correct HS code of the product is very important in all the items import. As with the unique HS code of the products the import and export country customs can determine the product category and the Duty, Vat and Tax of the product.

What is HS code?

HS codes are unique codes of numbers to identify product categories and products with a standardized two- to six-digits mostly. The first two digits of the code indicate the product category. The next four to six digits indicate the subcategories the product fits into. Different Countries can add digits to identify products even more specifically, taking the code up to 10 digits. These additional country-specific codes can be changed at any time by the country using them. The eight- or 10-digit HS Code used by a country is called a “tariff line.”

So after the importer finds the HS code of the products. The importer must take the help of his Customs clearing agent to find the HS Code. To know what is Customs clearing agent in the import process. Please visit the link…………..

The chosen HS code of the products is important to be correct as all the customs duty, vat and tax and a high cost is dependent on the product HS code and if wrong, the importer governmental customs will claim that the importer has miss declared the HS code to avoid paying customs duty and miss declaration fine will be imposed on the imported products.  

After confirmation of the chosen household product to import, follow the above process to communicate with supplier, banks, shipping agent and customs clearing agent to import.

How do you Import Capital Machineries/Equipment?

Let us first see what we call capital Equipment

Equipment that you use to manufacture a product, provide a service or use to sell, store and deliver merchandise. This equipment has an extended life so that it is properly regarded as a fixed asset.

Let us take a scenario of a businessman wants to start a production unit of making Shoes. So for making shoes he needs to import machines to cut leather, stitching shoes, washing plant to clean the shoes.

So to run the factory and to make shoes he needs many machines. So capital machineries or equipment are needed to make shoes.

In this way many factories are developing in the country to manufacture or producing many different types of goods. So in all these places machines are needed and these machines need to be imported from another country if not produced in the importer country.

What are the things to keep in mind to Import Capital Machineries as a product segments to import?

Firstly, you have to take industrial IRC. In most cases in your country you may have 2 types of IRC-Import Registration Certificate.

Commercial IRC: To import products for trading business.

Industrial IRC: To import products to produce another product in the importer’s country with those imported products. So with industrial IRC you are not just importing and selling. But rather you are importing machines and raw materials to make another new product in your country.

In most cases the importer’s government of industrial IRC gives facilities to import and make products in country. The facilities the government gives are like exemption of importer’s country Duty, Vat and Tax to import capital machineries and raw materials.

The government provides this benefits to industrial IRC holder because the industry and making of goods need many work force and creates many job opportunities in the country and people get job which is good for the country and the business. So government supports industries and industrial IRC holder in the import.

So to get the Vat, Duty and Tax exemption benefits the industry IRC holder needs to follow government guidelines by maintaining all the necessary documents to show to the import customs while importing. Many countries will have different rules, and it is wise for the importer to talk to his clearing and forwarding agent to know what are the docs to be updated to get the full benefits of the industrial goods import.

Importer can also open deferred LC-Letter of Credit with the supplier to give payment to the supplier. There are many LC types to open. One of them is deferred LC-Letter of Credit. So what is deferred LC-Letter of Credit?

A deferred payment letter of credit, also known as a usance letter of credit, is a commercial letter of credit that provides that the beneficiary/supplier will be paid, not at the time the beneficiary makes a complying presentation, but at a later, specified, maturity date. The maturity date may be:

  • A specified number of days after the beneficiary’s presentation, for example 45 days. In this case the letter of credit would state that it is “payable 45 days after sight.”
  • A specified number of days after a particular event, often the date of the bill of lading.

The supplier may give this benefit in LC payment because the capital machineries are very high in price and the importer will pay the money after making some production out of the machineries and sell of the goods

Another reason can be because the machines need to be installed and run in the factory to see whether it is working as claimed by the supplier. So time given by the supplier to do the payment in delay time after seeing all the machine is working.

All other process remains almost the same with finding the supplier of the machines, opening the LC, communicating with the shipping line and customs clearance.

How do you Import Chemicals?

Chemicals are sensitive products to import as they are hazardous and prone to have strong chemical reactions to catch fire in the ship and also in the warehousing. So shipping authority mostly declares chemicals as DG goods-Dangerous Goods

In the case of importing chemicals apart from doing the basic procedures of import you need to provide customs and shipping line with additional chemical documents. Below are the two extra documents that customs and shipping authority may ask for.

  • MSDS: A material safety data sheet (MSDS) is a document that lists information relating to the chemical occupational safety and health and usability. MSDS are a widely used system for cataloguing information on chemicals, chemical compounds, and chemical mixtures. MSDS information will include instructions for the safe use and potential hazards associated with a particular material or product, along with spill-handling procedures.
  • TDS: A technical data sheet (TDS) is a document provided with a chemical product that lists various pieces of information about the chemical. Oftentimes, technical data sheets include chemical composition, methods of use, operating requirements, common applications, warnings and pictures of the product.

As chemical is mostly a DG product the destination importer customs will chemical test the products to see whether the chemical declared in the invoice and the packing list and all other shipping documents matched with the original chemicals imported.

The testing of the chemicals and the approval may take some time so it is very important for the importer to keep in ready all the necessary shipping docs before the chemicals come to the port to reduce as much time as needed to complete the paper works and tests and release the chemicals.

To note, the more time you keep the goods in the destination port the shipping detention charge and ports demurrage charge will increase and you have bear more cost with the imported products. So it is always wise to release the goods fast within free time from the port.

All other process remains almost the same with finding the supplier of the machines, opening the LC, communicating with the shipping line and customs clearance.

How do you Import Food Items?

Food items are mostly perishable item. So what is mean by perishable item?

Perishable foods are those likely to spoil, decay or become unsafe to consume if not kept refrigerated at 40 °F or below, or frozen at 0 °F or below. Examples of foods that must be kept refrigerated for safety include meat, poultry, fish, dairy products, and all cooked leftovers.

So while importing food items you need to import it by refer containers with refrigerated facilities. Also have to make sure that your food temperature do not fluctuate and decay will occur in the food.

As food items is an edible product, special permission may be needed to take in all the countries form the ministry of Agriculture for the import permit with necessary testing required.

Further, after the food comes to the destination port, formalin and radiation tests may be done in all the countries to make sure the food is safe to eat.

The importer of the food items need to communicate with his Clearing and Forwarding agent to know what are the documents needed to collect to release food items in quick time.

All other process remains almost the same with finding the supplier of the machines, opening the LC, communicating with the shipping line and customs clearance.

Five-Best-Product-Segments-Import
5(Five)-Best-Product-Segments-Import
Proforma-Invoice

What is Pro forma invoice (PI) in Import and Export- Complete Guide 2023

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A pro forma invoice is essentially an estimated invoice issued by the seller/exporter in advance of a shipment. This is mostly given by the seller/exporter to the buyer to open the Letter of Credit (LC) or Telex Transfer (TT) from the buyer’s end. Pro forma invoice can be seen as a commitment from the seller to supply goods to the buyer.

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Function of Pro Forma Invoice

Sometimes we hear the term “pro forma invoice” used interchangeably with “commercial invoice,” but these are not the same things and we need to know the difference between the two. It is important to know the difference between the two shipping documents, pro forma invoice and commercial invoice, as both have different functions in the international trade.

If we see, pro forma invoice contains the similar information as the commercial invoice does (description, origin, quantity, value, terms of delivery and payment) but it is not a final invoice, nor a request for payment. It can be seen as a commitment from the seller to supply goods and when accepted by the buyer by way of LC or TT, it becomes legally binding.

Pro forma invoice are documents used as preliminary invoices in support of a proposal or for financial purposes (enabling a buyer to apply for foreign exchange or to open a letter of credit or Telex Transfer).

We also use a pro forma invoice to accompany shipments of no commercial value, for example, gifts and samples for free distribution at trade shows. While making a pro forma invoice, an exporter uses many shipping terms like ex-work, fob, cfr.

Let us see the details of the terms here.

FOB: Free On Board

FOB (Free On Board) applies to goods transported by ships and boats through seas, rivers, and canals. The seller is responsible for transporting the goods to the departure port and pays for all associated costs and risks. The seller acquires the necessary export permits and other documentation to export from the origin port. The seller also does the customs clearance in the seller port. The seller’s responsibility ends after the goods have been loaded on to the vessel, as shipped onboard, if the contract is free on-board Shipping Point.

CFR: Cost and Freight

CFR (Cost and Freight) is wherein it is the seller’s sole responsibility to arrange for the transportation of the goods to pay for transporting the goods by waterways, either by sea, river, or canal, to a destination port specified by the buyer. In addition to paying for the transport of the goods, the seller has to pay for delivering the goods to the agreed upon departure port. The seller must also pay for acquiring export licenses and for loading the goods on to the transport vessel. The seller does everything from making the goods, customs clearance in the seller port and shipping payment. The seller’s liabilities end here as the CFR contract does not require the seller to insure the goods for further transportation. The buyer will have to insure the goods if they think it necessary.

EXW: Ex Works

Ex Works contract, the buyer transports the goods from the seller’s premises to the buyer’s destination. The transport mode may be whatever is convenient for both parties, road, rail, air, sea, or waterways. The buyer is responsible for loading the goods for transportation, acquiring export and import licenses, getting security clearances, paying taxes and customs duties, unloading the goods at the destination, storing the goods at a warehouse at the destination, and all other costs and liabilities. The buyer is also responsible for insuring the goods while they are in transit. The only responsibility the seller has is to make sure that the goods are properly packaged and available for transport, and that all the documentation for customs and shipping are in correct order. In this payment term method, the seller only makes the product and the rest is done by the buyer.

Making the Pro Forma Invoice

The pro forma invoice is made in supplier pad, directing the invoice to buyer with buyer’s name in To: Buyer.

The pro forma invoice number is also given and the date.

To note, before the supplier provides a pro forma invoice, the buyer provides the supplier with purchase order(PO), which is the details of the goods the buyer is willing to purchase for the seller. So, in the pro forma invoice the PO date number and date is provided.

This is very important to note that the date of the documents must be aligned with the chronological sequence of the documents.  PO comes ahead of PI, so PO date will be earlier than PI.

The PI also contains from where the goods are shipped and the destination port and also the terms of the shipments.

Further, in the PI we can see, the description of the goods with the HS CODE of the goods, the amount of the goods the buyer is purchasing and the price.

We can also find the terms of payment are clearly mentioned. We can see 2 common payment methods that are used in international trade, which are LC and TT payments.

LC payment

A letter of credit, or “credit letter,” is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. So in here the bank is taking the responsibility of the payment against the buyer to the supplier. This is a bank to bank guarantee. The importer bank is giving the guarantee to the supplier bank, so the risk is minimal in this transaction.

TT payment

T/T payment stands for ‘Telegraphic Transfer.’ This is a payment method where the payment can be made in advance or in the middle of the production or at the end of the production to the supplier, as per the agreement between the buyer and the suppler. In other words, we can say TT payment is an international wire of funds from the buyer’s bank to the seller’s bank.

The terms of payment can take many forms like: 100% LC, 100% advance TT, 50% advance TT and 50% LC or any other terms as per discussion between the buyer and the seller.

The pro forma invoice also contains the details of the supplier including the address of the address of the supplier, Supplier/Beneficiary bank, bank address, bank swift code, account number and any other information that is necessary by the supplier to inform the buyer.

The pro forma invoice is sealed and signed by the supplier and send it to the buyer through mail by scanning the original PI.

Difference between Pro forma Invoice and Commercial Invoice

Finally, let us see the difference between pro forma invoice and commercial invoice in a chart.

Pro forma InvoiceCommercial Invoice
A pro forma invoice is essentially an estimated invoice issued by the seller in advance of a shipment.It is a contractual document between buyer and seller, whereby the seller supplies a certain quantity of a specific product at an agreed price with some conditions, i.e., terms of delivery (Incoterm®) and terms of payment. Commercial Invoice is the final quantity that is actually exported from seller end.
It contains the similar information as the commercial invoice does (description, origin, quantity, value, terms of delivery and payment) but it is not a final invoice, nor a request for payment.It is the accounting document against which the buyer pays the seller
It can be seen as a commitment from the seller to supply goods and when accepted by the buyer by way of making LC or TT, it becomes legally binding.It is also the main document used to support the customs declaration, since it provides the information on the commodity description (which determines the Harmonized System (HS) code), the origin (which determines the customs tariff treatment), the quantity and the value (which determines the value for customs, on which duties and taxes are calculated).

After the buyer gets the sealed and signed pro forma invoice from the supplier, the buyer starts the processing to open the LC or TT to bind the contract to import from the supplier.

Proforma-Invoice
Proforma-Invoice
Packing-List

What is Packing List (PL) in Import and Export- Complete Guide 2023

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A packing list is a document that details the list of products that is exported. The packing list contains the items like quantity, description, item numbers, model numbers and weight of the contents, as well as dimensions, and net and gross weights of the shipping packages. It is prepared by the supplier and used by the importer/consignee for customs clearance when the goods are delivered, and also can be used for inventory management.

The exporter and the importer must know what information is put into the packing list before the final packing list is approved, as it is very important to ensure that PL conforms to the requirements of the importer/consignee and the regulations of the country of import.

It is to be noted that some countries require that the packing list for a container be put at the door inside the container, to facilitate the unloading. So we must always check both the exporter’s and the importer’s individual requirements, as well as the destination country requirements.

Packing list must be made in such a way that it easy for all the parties in the trade to clearly understand what is inside the box or the container.

Let us Highlight the Importance of Packing List in Import and Export

  • PL provides a means of quickly identifying merchandise within the shipment in the event of a customs inspection. Customs officers can easily identify what kind of products exists in the shipment and if necessary for products inspection, they can physically detect the products as per the packing list.
  • As a supporting document, the packing list is essential to support the insurance claim in the event of loss and/or damage. This is very important in the case of cargo lost in the shipment.
  • It gives the importer a means to quickly unpack/check the contents by package (i.e., a piece count); and It helps in planning pick-up and delivery, as it provides weights and measurements.

It is very important to note that Commercial Invoice and Packing List are the two vital documents that provide all the important information necessary to complete all other shipping docs in both import and export shipments.

Packing list can look slightly different depending on the product you are importing. For different products the measurements can be different in weight or pieces.

The packing list is made by the exporter. It is made in the exporter pad addressing it to the importer.

In the packing list you need to add the description of the goods, the HS Code of the goods, each item quantity in pieces or weight, total carton, total net weight, total gross weight and the CBM.

You can add many more details depending on the goods you are importing.

The packing list is signed and sealed by the supplier to send to the buyer.

Below is a demo of the packing list send by the supplier Koocu Technology Co.,Ltd to the buyer M/S Nahar for the 4 products import of mobile repairing tools.

Packing-List
Packing-List
Commercial-Invoice

What is Commercial Invoice (CI) in Import and Export- Complete Guide 2023

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The commercial invoice is a legal document between the exporter and the importer that clearly describes the final goods sold by the supplier, the payment amount needed to be paid against the sold goods; it also contains the HS codes of the products, quantity amount sold, unit price of the products and other necessary details. The commercial invoice is one of the main documents used by customs in determining customs duties for the imported goods.

It should be noted that commercial invoice must correctly identify what is being exported as well as the currency value, which is taxed accordingly.

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Purposes a Commercial Invoice serves in an International Trade

Let us see what purposes a commercial invoice serves in an international trade.

  1. It is a contractual document between buyer and seller in the international trade, whereby the seller supplies a certain quantity of a specific product at an agreed price with some conditions, i.e., terms of delivery (Incoterm®) and terms of payment. The terms of delivery can be Ex-works, FOB, CFR and others are agreed between the importer and the exporter. The terms of payment can be TT, LC and others as agreed between the importer and the exporter.
  2. It is the accounting document against which the buyer pays the seller. The buyer after getting the commercial invoice pays the due amount through banking channel to the seller. Commercial invoice accounting amount is the final due amount the buyer needs to pay to the supplier for the goods purchased.
  3. It is also the main document used to support the customs declaration, and for the customs clearance, since it provides the information on the commodity description (which determines the Harmonized System (HS) code), the origin (which determines the customs tariff treatment), the quantity and the value (which determines the value for customs, on which duties and taxes are calculated), the unit price of the products, the terms of payment and the delivery terms.

For making commercial invoice almost all countries allow the use of English since this is the international language of trade, but it can be a good practice for the exporter to translate the commodity description in the language of the importing country. For example, some countries, in particular in Latin America, like to see statements as to the correctness of the commercial value in Spanish (or Portuguese for Brazil) right on the invoice.

Why Complete Accuracy of the Information on the Commercial Invoice is Essential ?

It should be noted that no matter what the language or languages of the document are, complete accuracy of the information on the commercial invoice is essential to avoid excessive duties and/or penalties. The commercial information is important to accurate as customs officer will charge huge fine to the importer if the quantity and declaration is not same as the physical goods examination. It can be seen that many times, the declaration of the goods in the invoice is ABC with HS CODE: 8392 00 67 with duty 37% but the original goods imported is XYZ with HS CODE: 9867 00 01 with duty 58%. So the goods are mis-declared in invoice to provide lower duty by the collaboration importer and exporter. Once the products are examined by the customs officials after arriving in the destination port, the customs find the mis-declaration after the physical examination and gives huge fine to the importer. So the importer now needs to pay both the original 58% duty as well as the huge fine incurred by the mis-declaration of the goods.

So it should be cautiously seen that accurate information is must in the commercial invoice in the international trade

How to Make a Commercial Invoice and What are the Information that exists in Commercial Invoice ?

Let us go into details of how to make a commercial invoice and what is the information that exists in commercial invoice.

To note, the commercial invoice does not need to be in a specific format and the seller can lay out the information freely, as per seller format; but it should be in mind that, the information on commercial invoice must be clear, legible, complete and accurate.

Below is an example of the minimum requirements for a commercial invoice. Note that additional information may need to be added, depending on requirements in the destination country. So once the supplier makes the commercial invoice, it should be checked by the buyer for confirmation from the buyer end. The buyer may have any information that needs to be included as per the buyer country customs in invoice. So after final confirmation from the buyer end the final commercial invoice is sealed and signed.

The commercial invoice is made in supplier pad and it is made by the supplier after all confirmation of the final quantity and invoice amount.

The commercial invoice is directed to the buyer of the goods, with buyer name, address, Tax Identification number, VAT number.

The commercial invoice is given a commercial invoice number and date. The date should be later than the date of pro forma invoice and LC date, as commercial invoice is generated after making the pro forma invoice and LC.

Also the mention of goods going from which origin port to destination port is mentioned and the mode of transportation it is taking, that is weather by sea, air or land.

Then details of the description of the goods are provided, HS Code, quantity in pieces and kg, unit price in pcs, kg, m or any other measurement needed as per product dimensions to determine the price is provided, total invoice amount.

Then the product origin is clearly mentioned.

Then the LC reference number or any other bank payment reference number is mentioned.

Finally the commercial invoice is sealed and signed by the supplier to send it to buyer.

To note, every bit of information is critical on the commercial invoice. An omission, an error, or a discrepancy could stop the goods before they even leave the country, delay the goods in the country of transit, delay the goods in the country of importation, or delay the shipper receiving payment.

Commercial-Invoice
Commercial-Invoice
Certificate-of-Origin-COO

What is Certificate of Origin (COO) in Import and Export- Complete Guide 2023

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The certificate of origin (COO) is used to identify the country of manufacture of the goods in the export shipment. The COO is completed by the exporter and certified by a recognized issuing body of the exporter’s country, attesting that the goods in a particular export shipment have been produced, manufactured or processed in that particular country.

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Let us discuss the two main types of certificate of origin:

The “generic” COO also called “ordinary” COO or “non-preferential” COO

In this form of COO there is no specific format which is required. We can see this kind of COO is required in many countries accompanied by other shipping documents. The COO supports the commercial invoice in attesting the origin of the product for customs clearance purposes. This compulsory document is not tied to a specific customs treatment and no special benefits can be approved based on this generic COO. This COO is used to recognize from which country the product is produced, manufactured or processed.

The “preferential” COO

The “preferential” COO enables products to enjoy customs duty reductions or exemptions under a preferential tariff treatment or a specific free trade agreement and must be issued on specific forms and formats.

The preferential benefits are received in the trade of goods because of different regional trade agreements between countries and being the member of the trade blocs.

Also, Least Developed Country (LDC) enjoys duty free market access or reduced tariff rate facilities to export to various developed and developing countries in the world.

Let us see an example of a LDC country, Bangladesh, and the preferential benefits the country is getting because of the different trade agreements and being a LDC country.

Generalized System of Preferences (GSP)

GSP is a facility on preferential reduced or 0 tariff on various exported products by the LDC country. The developed and developing countries give this benefit to the LDC countries, by excluding the tariff on the imported goods. So giving the LDC countries a benefit on price competitiveness in the market and facilitating the increased export of goods from the LDC countries.

Generalized-System-of-Preferences-GSP
GSP

If we see the developed and developing countries that provide GSP benefit to Bangladesh are:

Country
Australia
Canada
European Union
Iceland
Japan
New Zealand
Norway
Switzerland
Russian Federation (2012)
United States
DFQF access of selected Developing Countries:
Country
Chile
China (2013)
India
Korea, Republic of
Chinese Taipei
Turkey (2011)

Bangladesh besides getting GSP facility for being a LDC country also has different trade agreements between countries like South Asian Free Trade Agreement (SAFTA) and Asia Pacific Trade Agreement (APTA).

Common Characteristics of a Certificate of Origin

Now, we can see some of the common characteristics of a certificate of origin:

  • The exporter/shipper/manufacturer or its legal representative completes and signs the certificate of origin declaring that the goods are of the origin shown in the COO
  • A legally authorized witness in the country of origin countersigns it, if it is required as per the export country regulations.
  • A local governing body in the country of origin then certifies it. As like, local Board of Trade, Export promotion bureau, Chamber of Commerce or similar organization for certification.

How to get the “generic” COO and what the generic COO contains

Let us see how to get the “generic” COO and what the generic COO contains:

The freight forwarder who represents the exporter can prepare “generic” certificates of origin and sign it on behalf of the exporter, as long as the freight forwarder is authorized to do so by the exporter.

The origin form together with a copy of the commercial invoice, packing list is sent to a local Board of Trade, Chamber of Commerce or similar organization for certification and approval.

Certificate-of-Origin-COO
Certificate-of-Origin-COO

Now we see what a generic certificate origin contains.

  1. The exporter name and address
  2. The consignee/buyer name and address
  3. The means of transport and route
  4. Country of destination
  5. Description of the goods
  6. HS code
  7. Quantity
  8. Commercial Invoice and Date
  9. Sealed and signed by the supplier or the authorized representative of the supplier
  10. Sealed and signed by the export country local Board of Trade, Chamber of Commerce or similar organization.
Certificate-of-Origin-COO
What-Certificate-of-Origin-COO
Letter-of-Credit

What is Bank Letter of Credit (LC) in Import and Export- Complete Guide 2023

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A Letter of Credit is the written promise of a bank, undertaken on behalf of a buyer/importer, to pay a seller/exporter the amount specified in the credit, provided the seller complies with the terms and conditions set forth in the credit.

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Function of Letter of Credit (LC)

The letter of credit provides assurances to both sides of the sale: the applicant (importer/buyer) and the beneficiary (exporter/seller). The essence of the letter of credit is that payment is made against documents attesting that the goods have been shipped (commercial documentation and ocean bill of lading/air waybill/truck waybill), the quantity (packing list), and insurance coverage (insurance certificate). Any dispute over the condition of the goods is a separate issue. It is not the banks’ responsibility to guarantee the physical condition of the goods; banks deal only with documents. Correct presentation of the export documents by the exporter to the exporter’s bank is important for the payment of the money.

Parties Involved in a Letter of Credit Transaction

Now let us see the parties involved in a letter of credit transaction:

  1. The applicant (importer/buyer)
  2. The issuing bank
  3. The beneficiary (exporter/seller)
  4. The advising bank
  5. The confirming bank

The Applicant

The applicant is the buyer who starts the process of opening a LC. The applicant causes the contract to be created between the issuing bank, the advising/confirming bank and its customer.

The Issuing Bank

The issuing bank is the bank that the buyer applies to open the LC and issues the LC. The issuing bank undertakes a commitment on behalf of the buyer for payment to the beneficiary (exporter/seller) upon satisfaction of the credit terms and conditions. The issuing bank draws up and issues the letter of credit and then makes payment according to its conditions.

The Beneficiary (Exporter/Seller)

The beneficiary is the party who will receive the payment of the LC that the buyer opened in the issuing bank as stipulated in the letter of credit.

The Advising Bank

The advising bank is usually located in the exporting country and transmits the documentary credit to the beneficiary/exporter. The advising bank accepts a letter of credit opened by the importer from the issuing bank, verifies its authenticity, and forwards it to the beneficiary. The advising bank does not take on any payment obligations.

The Confirming Bank

The confirming bank is a bank that accepts the same responsibilities for payment to the beneficiary that are held by the issuing bank, adding a statement of confirmation to the letter of credit of the issuing bank. In the LC copy in the section of “confirmation instructions” it will be mentioned CONFIRMED.

Types of Letter of Credit

In this section we will see different types of letter of credit and the flexibility the LC provides to different parties in the trade to adapt to special circumstances.

Irrevocable Letter of Credit

An irrevocable letter of credit will not be annulled, revoked, recalled, cancelled, amended, altered, or changed in any way without the express approval of the beneficiary/supplier or applicant/importer.

It constitutes a definite undertaking and responsibility taken by the bank; secures the importer because the exporter will not get paid unless he has shipped the goods and presented the original shipping documents to the bank, and it secures the exporter because he is sure to get paid and not be defaulted because the letter of credit is an irrevocable instrument, i.e., the importer cannot change his mind in the process and cancel the order.

As long as a letter of credit is subject to the UCP 600 international rules of the banking system, it is by definition irrevocable.

If we see revocable letters of credit, it should not be processed and approved as they pose a high risk to the exporter with little or no guarantee that the transaction will be completed.

Transferable Letter of Credit

A transferable credit is one by which the original beneficiary transfers all or part of the proceeds of an existing credit to another party, typically the ultimate supplier of the goods.

Second beneficiaries can be located in the country of the original beneficiary or any other.

Letters of credit can be transferred only once. To be transferable, the original letter of credit must contain a provision that it is “transferable” and this need to be mentioned in the LC.

Revolving letter of credit

A revolving letter of credit is a single letter of credit that covers multiple transactions and shipments over a long period of time.

The revolving letter of credit allows the beneficiary to draw a specified amount over a specified time, with the full original amount becoming available again at the expiry of that time.

Standby Letter of Credit

Standby is a term used for a form of credit that functions only as a guarantee that payment will be made by the applicant/importer to the beneficiary without the usual documentary requirements at the time of shipping.

This letter of credit is drawn on only if the applicant does not pay the agreed-upon amount at the specified time. This type of credit is often called a non-performing letter of credit.

Collection on a standby credit usually involves a simple affidavit of the beneficiary certifying non-receipt of payment, plus copies of regular shipping documents.

Upon presentation, the issuing bank pays the LC amount. The actual shipment is to be consigned directly to the applicant and not to the order of the bank; all documents are forwarded directly to the applicant, as well.

Red Clause Letter of Credit

A red clause letter of credit includes a special condition that allows the beneficiary/supplier to receive a part of the LC credit amount as an advance payment before the fulfillment of all the conditions stated in the LC credit.

This type of LC credit is used when the beneficiary needs funds for the purchase, manufacture, or transport of goods.

The applicant guarantees the advance payment; thus, in order to use a red clause documentary credit, the importer should trust the exporter.

Back-to-Back letter of credit

A back-to-back letter of credit consists of two entirely separate documentary credits, but one credit act as security for the other.

The master LC acts as a security to the back to back LC that is opened against the master LC.

Types of Payment in Letter of Credit (LC)

1. By sight payment: payment on receipt of the documents by the issuing bank or the bank nominated in the letter of credit by the importer

2. By deferred payment: payment after a period specified in the letter of credit, often calculated as the number of days after the date of presentation of the documents or after the shipping date/onboard date

3. By the acceptance: acceptance of a draft (not to be presented together with other documents) by the issuing bank or by the bank nominated in the letter of credit, and the payments thereof at maturity time

4. By negotiation: the giving of value by the nominated bank to the beneficiary for the documents presented, subject to receipt of cover from the issuing bank.

Advantages of a Letter of Credit

  1. The exporter is assured of payment as long as he complies with all of the terms and conditions of the letter of credit.
  2. The letter of credit identifies which documents must be presented and the data content of those documents.
  3. The credit risk is transferred from the importer to the issuing bank of the LC.
  4. The exporter can enjoy the advantage of mitigating the issuing bank’s country risk by requiring that a bank in his own country confirm the letter of credit (confirming bank). That bank then takes on the risks of the issuing bank and protects the exporter.
  5. The exporter minimizes collection time, as the letter of credit accelerates payment of the receivables.
  6. The exporter’s foreign exchange risk is eliminated with a letter of credit issued in his currency.
  7. The buyer can stipulate times for shipping and documentary requirements to ensure the goods are as ordered.

Risks involved in a Letter of Credit

  1. Since all of the parties involved in the letter of credit deal with documents and not with goods, the risk of the exporter not shipping goods as mentioned in the letter of credit still persists.
  2. The letter of credit as a payment method is costlier than other methods of payment such as open account or documentary collection.
  3. The exporter’s documents must comply 100% with the terms and conditions of the letter of credit for the issuing bank to make the payment. For example, if the letter of credit contains spelling mistakes, they must be reproduced in the documents, unless an amendment is requested by the beneficiary.
  4. Unless the letter of credit is confirmed, the exporter is exposed to the commercial risk of the issuing bank, the political risk of the issuing bank’s country.

How to Avoid Risks Involved in a Letter of Credit

  1. Good to conduct business with a reputable financial institution.
  2. Known sellers (exporters) and buyers (importers) pose less risk.
  3. An importer can ask the exporter to ship samples of the goods prior to the actual shipment.
  4. Insure the goods against “all risks.”
  5. Pre-shipment inspection is also a good solution to ensure the goods are as ordered.

How to Open a Letter of Credit and the steps to follow?

  1. An agreed order is finalized by the importer and the exporter with the total amount to be imported and the total value with the mode of payment
  2. The importer receives the PI from the supplier and after making all the necessary banking documents instructs a bank (the issuing bank) to issue a letter of credit in favor of the exporter. At this time, the importer becomes the applicant.
  3. The issuing bank, which is the buyer’s bank, transmits the credit to the exporter through a bank (the advising bank) in the exporting country.
  4. The advising bank informs the beneficiary/exporter of the details of the letter of credit, exporter carefully checks the letter of credit for its requirements. The advising bank informs the issuing bank of the acceptance of the letter of credit by the beneficiary.
  5. The exporter after getting the LC starts the production to export the goods
  6. After the production of goods is complete or in the process of production, the beneficiary prepares the required export documents and ships the goods to the importer.
  7. The beneficiary presents the required documents to the advising bank (exporter’s bank).
  8. The advising bank confirms that the documents presented by the exporter fulfill the terms of the letter of credit.
  9. After confirmation the advising bank, then forwards the documents to the issuing bank.
  10. The issuing bank confirms the fulfillment of the letter of credit, transfers the title of the shipping documents to the applicant/importer by stamping the shipping documents with “To the order of the importer”, and makes reimbursement to the advising bank according to the terms of the credit or issues the payment to the beneficiary.
  11. The issuing bank debits or secures payment from the applicant/importer in the manner agreed prior to issuance of the letter of credit.
  12. The issuing bank releases the shipping documents to the applicant/importer, who can in turn, claim the goods from the carrier and take delivery.
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Warehousing-Efficient-Supply-Chain-1

Warehousing for Efficient Supply Chain: Public or Private Storage?

by with No Comment EXPORTIMPORT

It is very important to have an efficient supply chain and warehousing facilities to gain a competitive advantage in your business among your competitors.

Efficient warehousing and storage reduce cost and time management to deliver the product to the customers.

Table of Contents

Warehouses and Storage Facilities Categories

Warehouses and storage facilities can be divided into 2 categories:

  1. Public: A public warehouse offers services to a broad clientele of companies who need the facility of the warehousing. Public warehousing companies offer a broad range of services for the storage and distribution of goods, including inventory management, shipping and storage, insurance, claims inspection, transport documentation, freight consolidation, and cartage.
  2. Private: Private warehouses are operated as a division of a company whose core business is other than warehousing.

Different Types of Public Warehouses

Let us analyze the different types of Public warehouses we can get:

  1. General non-food-merchandise warehouses tend to be large, one-story facilities with high ceilings, equipped with sprinklers and burglar alarms. The facility will have multiple truck-level doors to handle the in/out activity of the merchandise.
  2. Temperature-controlled warehouses (to keep goods heated, refrigerated, cooled or frozen).
  3. Controlled drugs and narcotics warehouses have a high security requirement because of the sensitivity of the goods. The warehousing company must have a pharmacist on staff to handle product. Accurate record-keeping is also necessary.
  4. Tire and odor-producing-product warehouses.
  5. Dangerous goods storage warehouses. Warehouses facilities must comply with strict environmental laws and the Storage of Dangerous Goods Act. The cost of operating this type of facility is very high; therefore, operators can command premium rates for their services.

Advantages of Public Warehouses and Storage Facilities

  1. No initial big capital investment from the client end: The client avoids tying up his capital in buildings, land, and handling equipment, as well as costs associated with starting up the operation and training his own personnel.
  2. Flexibility in space and distribution requirements: The public warehouse option allows the user to contract for as much storage space as needed to meet practical requirements.
  3. Reduction of capital risk because of variable cost
  4. Economics of scale is met in public storage: Public warehouses are able to achieve economies of scale that would not be possible for a small firm. This is because public warehouses handle the warehousing requirements of a number of firms, and their volume allows the employment of full-time warehousing staff.
  5. Flexibility from the client end on taking the service: Public warehouses require only short-term contracts
  6. Prior knowledge of storage and handling cost to benefit in forecasting the total cost.

Disadvantages of Public Warehouses and Storage Facilities

  1. Control is less on the client hand in using public warehouses
  2. Specific needs of the client may not be fulfilled in public storage

Private Warehouses and Storage facilities

Advantages of Private Warehouses and Storage Facilities

  1. Control of the work: Control is the major advantage private warehouses have for the manufacturer, the importer, and the distributor over their public counterparts. This greater degree of control allows the firms to more easily integrate the warehousing function into the total distribution system of the company.
  2. Flexibility of the design and operation of the warehouse, to more efficiently develop the supply chain.

Disadvantages of private warehouses and storage facilities

  1. Lack of flexibility to expand the facility in rush period or contract the usage when not in demand.
  2. High initial cost and capital

It is seen that many major manufacturers or importers find it advantageous to use a combination of public and private warehouses. Private warehouses are used to handle the basic inventory levels required for least-cost distribution and public warehouses used to store peak season volume goods requirements.

Factors Influencing the Public or Private Warehouse Decision

FactorsPublic WarehousesPrivate Warehouses
Initial InvestmentNoneHigh: Large facility, equipment and employee cost
ControlModerateHigh
Operating CostHigh, due to profit margin taken by the independent warehousing company that provides the warehouse facilityLow, if have the sufficient volume
RiskMinimumHigh, due to demand and supply of sales fluctuation
Economics of ScalePossible, due to serving many customersDependent on company’s size and volume
Storage and handlingKnow exact charges for decision makingGeneral, can only estimate

The Functions of Warehousing

Warehousing has two basic functions: storage and movement.

Storage: Storage may be either temporary or permanent.

  • Temporary storage emphasizes the movement function of the warehouse and involves only the product that is necessary for basic inventory turnover.
  • Permanent storage is the storage of inventory in excess of that required for normal replenishment. Permanent storage may be required because of seasonal or erratic demand, the conditioning of products such as fruits and meats.

Movement: Movement of the goods includes receiving, transfer, customer order selection and shipping.

Warehouse Layout and Design

A good warehouse facility will have the functions to increase output, improve product flow, reduce costs, improve service to customers, and provide better employee working conditions.

Below is a possible layout for a warehouse to construct:

GOODS ENTRY GATE
RECEIVING AREA
STORAGE AREA
ORDER PICK STORAGE AREA
PACKING AREA
STAGING AREA
EXIT GATE FOR SHIPPING OUT

No matter what layout is selected, it is vital that all available space be utilized as fully and as efficiently as possible, in order to maximize the space utilization and the subsequent return on investment.

Equipment Selection for Warehouse Handling

Warehousing

The forklift truck is a vital part of almost every warehouse operation. It is the basic piece of equipment in every warehouse. Other examples of standard systems include hand trucks, electric tractors, carts, cranes, and platform trucks. In each, there is direct human involvement (operation) with the piece of equipment.

Importance of Efficient Warehouse handling Systems

  • Increased productivity per employee through increased output.
  • Reduced operating expenses.
  • Optimized machine utilization.
  • Increased space utilization.
  • Reduced damage to inventory.
  • Increased customer service levels.
  • Reduced employee fatigue.
  • Reduced accidents.
  • Improved flow of material.

Overall the importance of warehousing and storage facilities are immense in overall supply chain process. The decision to choose public, private or mixture of both warehousing facilities depends totally on the task and operation of the company.  

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Warehousing
Types-Products-Carried-by-Ocean-Vessels

Types of Products Carried by Ocean Vessels Through Waterways in Export_2023

by with No Comment EXPORTIMPORTOcean Shipment

Products Carried by Ocean Vessels Through Waterways has been and still is the cornerstone of the international trade.

Around 95% of the world’s commodity volume is carried in ships.

In this article we will see how the different commodities carried by ocean freight are link with the different types of vessels and handling containers that are used:

Table of Contents

Bulk Cargo

Bulk cargo refers to commodities that are transported unpackaged in large quantities, usually pumped and blown into ships’ holds. It represents the largest volume of maritime commerce.

Materials are either in liquid or granular form and this category is divided into two sub-sections:

  • Dry bulk cargo: minerals (bauxite, copper, limestone, salt, etc.), cement, resin powder, fertilizer, coal, flour, sugar, grain, iron ore, scrap metal, wood pellets, etc.
  • Liquid bulk cargo: petroleum products (oil, liquified natural gas, gasoline), chemicals, edible liquids (cooking oil, vegetable oil), rubber, etc.

Break Bulk Cargo

This is the traditional mode of ocean transport, involving packaged and non-packaged goods (including machinery) being lifted individually by way of cranes and lowered into the vessel’s holds.

It is also called “conventional cargo.” It includes general cargo, machinery, lumber, bundled steel, newsprint, vehicles (as long as they are lifted on and off).

The security of the cargo is dependent on adequate packaging and protection, careful loading and unloading operations and adequate securing, blocking and bracing in the ships’ hold.

Containerized Cargo

This involves the loading of packaged goods, non-packaged goods and machinery into standard-size ocean containers.

The criterion is that the cargo must fit the confines of the container frame (space-wise as well as within the container’s weight carrying limit).

It is to note that some bulk commodities are shipped in containers (certain agricultural products, chemicals, lumber, etc.)
Some large “out-of-gauge” cargo can be shipped on specialized containers (open tops or flat racks) instead of break bulk. In these cases, the packaging of the cargo is as important as if it was shipped on a break bulk service, since the container affords little or no protection and is used merely for the convenience of cargo handling.

Roll-on/Roll-off Cargo

It is abbreviated as RO-RO, this method is for being mobility, as the cargo is either driven under their own power or towed onto the ship.

Automobiles, trucks, tractors, buses and heavy machinery are shipped this way.

Out-of-gauge cargo is also often shipped on RO-RO ships. It must first be loaded and secured on a special trailer with wheels, and then the trailer is pulled on board.

Over-dimensional Cargo

Oversize, out-of-gauge or over-dimensional cargo that does not fit in a standard ocean container must be shipped break bulk, roll-on/roll-off or on a specialized container (open-top, flat-rack or platform).

Shipping oversize cargo in specialized ocean containers is expensive because the containers themselves are more expensive than regular containers and are in limited supply.

Although cargo exceeding standard container sizes can generally be accommodated on container ships, any over-width, over-height and/or over-length cargo will create “dead space” or empty space on board, and carriers will charge for that.

For example, a flat-rack container loaded with a piece exceeding the standard width on both sides will occupy the space of three containers. If the piece is both over-width and over-height, its container will occupy the space of six containers and carriers will tend to charge accordingly for the “dead space.” The same principle applies for over-length too.

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Types of Products