AboutNicola Zheng Expertise All issues from sourcing, import, customs clearance, binding ruling, consumer safety testing, freight forwarding, terms of payment, US-based distribution (to retailer or e-commerce based).
Experience I work for an consumper product importer/distributor that imports from China, India, and Pakistan. I deal in both front end (dealing with retailers) and back end (dealing with overseas factories and agents).
Question Hi there
I would be a novice to shipping etc,I would like to do buisness with a company, They have given me a FOB price from what i'v seen so far this means that the supplier in China gets the product to the nearest port.i have never done buisness with this company "or indeed any overseas company before" could you please give me some advise on things such as payment methods(cards etc),payment terms(ownership),invoice,vat is vat even an issue?. some terms to be expecting to come accross..could or should i get this company to source the shiping company on terms that i pay?
I would greatly appreciate your advise on this topic!!
yours sinceerly
Seamus
Answer Hi Seamus,
Sorry for the delay in replying, I just returned from vacation.
Ok, if this is a new company that you are doing business with, my number one caution is to NOT give any deposit up front.
For payment methods, generally wire transfer is preferred. However, if this is a brand new partnership, they might ask you for an LC (letter of credit). This could be beneficial to you as well, if any of the terms stipulated on the LC is not performed or performed on time, you have the option to refuse the documents in order for the bank to release your payment.
In terms of ownership, if you can arrange for international transportation, FOB should be acceptable (you need to stipulate the FOB port). However, a lot of factories try to quote based on an FOB port that is the closest or most convenient for the factory, but you might not necessarily get the best rate out of that port. So, if you use this term, you should investigate the rates from all viable ports prior to settling with the factory. Ex factory means you take ownership from the factory and would have to arrange for contaner pickup from the factory.
As for invoice, you need to make sure that it conforms to the requirements by both clearing China and US customs, generally requires the date, b`uyer name & address, seller name and address, item description (specific is better, down to the sku level), unit price in USD, qty, sub total per sku, grand total, any declarative statement required/applicable to the specific items you are importing.
VAT should not be an issue for import into the US as you should be quoted based on a first cost basis (VAT is part of the manufacturer's cost), included in their quote to you. However, there might be exceptions to this based on specific products, so you might want to check further.
You should definitely ask this company to quote you with freight & insurance included as sometimes they might have a better rate than what you can negotiate on an individual basis.
