Who is the trading partner in entrepot trade? Come and help me figure it out!
Solved#Entrepot trade#
Recently, our company has been involved in entrepot trade business. We purchase goods from country A and then resell them to country B. The goods do not pass through our country and are directly shipped from country A to country B. But I'm a bit confused about the determination of the trade relationship. I don't know if this is considered trading with country A, country B, or if there is another way to put it? I hope someone who knows the ropes can help me analyze in detail who the entrepot trade is actually with and what the basis for judgment is.
Professional consultant answers
Emily LiuYears of service：10Customer Rating：5.0
Settlement and payment expertConsult
In the entrepot trade scenario you described, from a commercial substance perspective, there is a trade relationship with both country A and country B.
On the one hand, you purchase goods from country A and sign a purchase contract with the supplier in country A. This involves a series of trade activities such as goods pricing, transportation arrangements (although the goods are directly shipped to country B, the purchase link involves negotiations on transportation terms, etc.), and payment of the purchase price. So, it forms an import trade relationship with country A.
On the other hand, you resell the goods to country B and sign a sales contract with the customer in country B. This involves trade activities such as goods delivery (even though the goods are directly shipped from country A to country B, the sales contract stipulates delivery obligations, etc.) and collection of payment. This forms an export trade relationship. The main basis for judgment is the trade contracts. The purchase contract signed with country A determines the purchase trade relationship, and the sales contract signed with country B determines the sales trade relationship.
Joseph ZhouYears of service：10Customer Rating：5.0
Senior foreign trade managerConsult
Entrepot trade is considered to have trade with both country A and country B. Because there is a transaction with country A in the purchase link and a transaction with country B in the sales link, and both transaction behaviors meet the definition of trade.
Robert ChenYears of service：6Customer Rating：5.0
Customer service consultantConsult
It should be considered as trade with both country A and country B. In entrepot trade, the relationship with country A is a buying one, and the relationship with country B is a selling one. The whole process involves business dealings with both countries.
Sarah ZhangYears of service：8Customer Rating：5.0
Document expertConsult
From the perspective of the capital flow, paying the purchase price to country A and receiving the payment from country B also shows that there is a trade relationship with both country A and country B.
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
Entrepot trade involves two transactions, one for purchasing from country A and the other for selling to country B, so it is considered as trading with both countries.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
From the contract perspective, signing contracts with country A and country B respectively naturally means there is a trade relationship with both countries.
William YangYears of service：5Customer Rating：5.0
International logistics consultantConsult
Under the entrepot trade model, it is an import for country A and an export for country B. It is definitely considered as trading with both countries.
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
The purchase from country A and the sale to country B are two different but related trade behaviors, so there is trade with both countries.
Amanda YangYears of service：3Customer Rating：5.0
Cost control consultantConsult
It is considered as trade with both country A and country B. Although the goods do not pass through the home country, the trading relationship is established through contracts, etc.
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
From the trade process, it involves buying from country A and selling to country B, which indicates that there is a trade relationship with both countries.