How exactly should the profit of entrepot trade be calculated? Come and help me figure it out!
Solved#Entrepot trade#
I have just entered the field of entrepot trade and I'm not very familiar with this aspect. I would like to ask everyone, how is the profit of entrepot trade calculated? Is it the same as the profit calculation method of general trade? For example, I purchase a batch of goods from Country A at a price of 1 million yuan, and after a series of operations, resell them to Country B for 1.5 million yuan. The intermediate costs such as transportation and warehousing are 200,000 yuan. Is my profit simply calculated as 1.5 - 1 - 0.2 = 0.3 million yuan? It doesn't seem that simple. I hope friends who know the ropes can explain it in detail.
Professional consultant answers
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
The calculation of entrepot trade profit has a similar basic principle to what you understand, but there are more details to consider. First of all, your calculation idea is correct. Profit = reselling revenue - purchase cost - intermediate costs. In your example, the preliminary calculation of 1.5 - 1 - 0.2 = 0.3 million yuan is correct. However, intermediate costs need to be comprehensively accounted for. In addition to transportation and warehousing, there may also be customs declaration fees, inspection and quarantine fees, agency fees, etc. In addition, exchange rate fluctuations also need to be considered. If different currencies are used for purchasing and reselling, changes in the exchange rate will affect the actual profit. Taxes cannot be ignored either. Import tariffs, value-added taxes, export tax rebate policies, etc. will all have an impact on profits. If 100,000 yuan of import duty needs to be paid, the profit will become 0.3 - 0.1 = 0.2 million yuan. Therefore, when calculating the profit of entrepot trade, it is necessary to comprehensively sort out various revenues, expenditures and influencing factors.
Sarah ZhangYears of service：8Customer Rating：5.0
Document expertConsult
In addition to what was just said, don't forget the insurance cost. Goods generally need to be insured during transportation, and this is also a cost. For your business, if the insurance premium costs 50,000 yuan, the profit will be reduced by another 50,000 yuan.
William YangYears of service：5Customer Rating：5.0
International logistics consultantConsult
In entrepot trade, the cost of capital occupation also needs to be calculated. From the time of purchase to resale, the funds are occupied. If there is a financing cost for the 1 million yuan of purchase funds, for example, 30,000 yuan of interest is generated, this part also needs to be deducted from the profit.
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
Sometimes, there may also be costs due to quality issues. In case there are quality defects in the goods after they arrive in Country B, compensation or handling costs may need to be paid, which will affect the final profit.
Joseph ZhouYears of service：10Customer Rating：5.0
Senior foreign trade managerConsult
Market fluctuations also have an impact. If the market price suddenly drops after the purchase, the goods that could originally be sold for 1.5 million yuan may only be sold for 1.3 million yuan, and the profit will be greatly reduced.
Emily LiuYears of service：10Customer Rating：5.0
Settlement and payment expertConsult
Document processing in entrepot trade may also generate costs, such as the production and certification costs of various documents. Although the amount may not be large, it still needs to be included in the cost.
Amanda YangYears of service：3Customer Rating：5.0
Cost control consultantConsult
If there are costs related to intellectual property, such as brand authorization, this is also a cost expenditure and cannot be omitted when calculating the profit.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
If you have special agreements with customers in Country A and Country B, such as sales reward or penalty clauses, this will also have an impact on the profit and needs to be carefully accounted for.
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
Don't forget to consider the labor cost. The salaries and commissions of employees handling entrepot trade business are also part of the cost.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
Some entrepot trades may also involve special warehousing requirements, such as cold chain warehousing, which will significantly increase the warehousing cost and needs to be calculated when calculating the profit.