One of
the major challenge of exporters in most parts of the word is getting buyers
for their products. The fact that export business involves trade across borders
makes it very difficult to get across to the various intending buyers around
the world due to the distance, language barrier, cultural differences and many
more factors.
Getting
purchasers and signing an export contract (agreement, purchase order, sales
& purchase contract) mark the commencement of an international trade
transaction. Invariably, an export contract can be defined as a document that
needs to be signed by both importer and exporter before a legally binding
international trade can take place between them. The questions that anyone
looking to get purchasers and sign an export contract with them need to answer
in the business should include the following: What the content of a typical
contract are? Where can one get the links to buyers? When should an exporter go
ahead to sign the export contract? Who are the people that can link exporters
to buyers? Why does the exporter need to sign an export contract? Which
contract terms are most preferred? How can one secure an export contract from
buyers abroad?
The first
question states that, what are the content of a typical contract are? The content
of an export contract should include but not limited to the following: Buyer &
Seller’s Name, Buyer &
Seller’s Contact
details, Buyer & Seller’s
Account Details, Description of goods, Quality Specification, Quantity,
Packaging, Latest date of shipment, Pricing, Incoterms 2010, Origin, Port of
loading and port of discharge, Payment terms and Payment methods, Shipping
Documents
Dispute
resolution, Inspection, Insurance,
Force Majeure,
Termination,
Special Conditions, Governing law, Juridictions and Signature of Buyer & Seller.
The
second question is where can one get the links to buyers?. This is a very
important question because it exporter to know the options that are available
to him. These include online trade platforms (alibaba.com, tradekey.com, tradeboss.com, tradeindia.com etc), going on trade mission to the
country of the buyers abroad, advertising on the media platforms in the buyer's
country, visiting the Nigerian Export Promotion Council (NEPC), visiting
bilateral chambers of commerce like Nigerian British Chamber of Commerce,
Nigerian German Business Council, Nigerian Netherlands Chamber of Commerce etc
The next
and very critical question is, when should an exporter go ahead to sign the
export contract? It is extremely important that an exporter should not rush to
sign an export contract until he has been able to answer the following questions.
Where do I intend to get the items to be exported? Does the source have enough
quantity of the items to meet the volume demanded in the contract within the
specified period? Can I transport the required quantity to the port and still
be able to ship them abroad within the shipment period? How much do I need to
raise in order to fund the export project? Do I have all the funds for the
project? Do I need to source for equity or debt to fund the deficit? Can I get
the funds for the project and still be able to ship within the stipulated
shipment period? As soon as you sign the contract, the time starts ticking and
so it is wise for you to ensure that the questions about source of goods,
funding and logistics are answered before the contract is signed.
The
fourth question is, who are the people that can link exporters to buyers? Some
of the people that an exporter should look out for in their search for links to
buyers abroad include: Trade brokers, friends and relatives abroad and existing
exporters. The trade brokers are professionals who specialize in connecting
buyer's to sellers around the world at a fee. A number of these brokers are
commissioned by buyers to help them search for products to buy. They are also
engaged by sellers to help them market their products and search for credible
buyer's around the world. A number of these brokers are fund in London
(covering Europe), New York (covering North and South America), Dubai (covering
Africa & Middle East) and Shanghai (Asia). Another very credible channel of
getting buyer is working with friends and relatives abroad. This is a less
costly and reliable channel because it involves a known person. The details of
how this works will be discuss in one of the subsequent editions of export
matters. The last one with least probability is getting buyer's through current
exporters. Except for exporter who have a large heart, willing to see other
people grow and knowing fully well that the market is large enough for
everyone, most exporters do not like to reveal their buyer to intending
exporters.
The fifth
question to be answered is, why does an exporter needs to sign an export
contract? Why can't he just get a proforma invoice and base on this ship the
goods? It is very important that things do go wrong in international trade and
the only way to seek a redress and get a judgment in your favour if the other
party have erred is through a contract that both of you have signed. If there
is no binding agreement showing the roles and responsibilities of the parties then
it will be difficult to hold the erring party to account when things go wrong.
The
second to the last question is, which contract terms are most preferred? This
means the terms of delivery which is also called the Incoterms. These are
international commercial terms that defines the where the risks and costs of
the exporter ends and where that of the importer starts. It is wiser for the
exporter to choose the terms that is first reasonable and also enables the
exporters to incur minimal cost with his risk ending on or before the port of
loading. Reasonable in the sense that it does not requires the importer to come
and pickup the goods at your warehouse in Nigeria (Ex-Works-EXW) or a shipping
line terminal (Free Carrier-FCA) when a lot of your competitors are willing to
deliver to the port. Largely in Nigeria, many deliver to the port using Free on
Board (FOB) Cost and Freight (CFR). However, if you have a higher power in the
negotiation, then you can go for EXW or FCA.
The last
in the series of questions to be answered as an exporter seeks for purchasers
is how can one secure an export contract from buyers abroad? Having been able
to get a link to a buyer, how them do you eventually secure the contract? You
need to demonstrate credibility (your consistency of result in export business
or other businesses that you have done), cohort (the experience of the team
working with you), competence (to deliver the right quality and quantity),
character (that you will abide by what will be signed in the agreement) and
cash (that the cash to do he business is available or will be made available as
at when needed). These are traits that you must have and also find a way to
communicate in all your conversation with the intending buyers.
Finally,
I will like to state that if the challenge of getting purchasers are going to
be surmounted by an exporter, then the seven questions posed in this edition of
export matters have to be adequately answered.
For questions on this thought, you can reach me via email to bayemibo@3timpex.com
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