The Fatal Traps of Export Agency: the Pitfalls Stepped on by 90% of Foreign Trade People

"Mr. Zhang has been very headache recently - a foreign customer who has cooperated for two years suddenly refuses to pay the payment for goods. The goods worth 2 million yuan are stranded at the port, generating high warehousing fees every day." Such a scene is not uncommon in the export agency industry. With the complication of the global trade environment, the risk of export agency has become a challenge that foreign trade people must face directly. This article will dissect the three core risks and provide implementable coping strategies.

Ms. Li exported mechanical equipment through a middleman in a certain country last year. The other party refused to pay the final payment on the grounds of "inconsistent quality" after receiving the goods. After investigation, it was found that this middleman had multiple default records before. Buyer Credit Investigation is the first step to prevent credit risk:

• Entrust professional institutions to verify the registration information and financial reports of overseas enterprises
• Require the buyer to provide a bank guarantee or a letter of credit
• Bind shipments in batches with installment payment terms

The blockage of the Suez Canal last year led to the delay of a batch of urgent orders agented by Zhongshitong, resulting in a liquidated damages of 360,000 US dollars. To deal with logistics sudden risks, a combination of punches is needed:

• Purchase full-course freight insurance (Cargo Insurance)
• Explicitly state the force majeure clause in the contract
• Establish a contingency plan for an alternative transportation route

A certain agency company was fined three times the value of the goods by the importing country for mistakenly declaring controlled equipment as ordinary goods. The compliance requirements vary greatly in different markets:

• Establish a dynamic database of HS codes for exported products
• Regularly update the technical trade measures (TBT) of the target country
• Adopt customs service of AEO-certified enterprises

Smart foreign traders will not wait until the risk occurs to take remedial measures. It is recommended to conduct risk audits every quarter: Check the credit records of all partners, review the transportation terms, and verify the compliance of documents. As an old foreign trader with 20 years of experience said: "Profit is calculated, and safety is managed."

What export agency problems have you encountered recently? You are welcome to share your coping experiences in the comment section. Forward this article to three colleagues, and you can obtain the electronic version of the international trade risk case manual.