Stop making random choices! Which is the "true destiny" of foreign trade, export by purchase or export on agency basis?

In the ever-changing foreign trade market, enterprises face numerous choices, among which the two models of export by purchase and export on agency basis have attracted much attention. They are like different characters on the foreign trade stage, each with its unique "way of performance". Today, let's delve into the mysteries of export by purchase and export on agency basis together.

Export by purchase, simply put, means that a foreign trade company directly purchases the ownership of goods from a manufacturing enterprise and then exports the goods to foreign markets in its own name. It's as if the foreign trade company becomes the "new owner" of the goods and has absolute say in the export and sales of the goods.

From the perspective of the manufacturing enterprise, export by purchase has many advantages. The enterprise can quickly recover funds. After selling the goods to the foreign trade company in one go, it doesn't need to worry about subsequent export matters and can focus on production. For example, a clothing manufacturing enterprise quickly obtained funds for expanding production scale by selling its products through export by purchase to Zhongshitong Foreign Trade Company. However, export by purchase also has risks. If the foreign trade company has poor sales in the international market, the manufacturing enterprise generally doesn't need to bear direct losses, but it may affect subsequent cooperation with the foreign trade company. Moreover, if the purchase price is unreasonable, the manufacturing enterprise may miss out on higher profits.

For foreign trade companies, export by purchase means a larger profit margin. Once the goods are successfully sold in the international market, the profit after deducting costs belongs to the company itself. But at the same time, the foreign trade company has to bear market risks alone, including international market price fluctuations and trade barriers.

Export on agency basis means that a manufacturing enterprise entrusts a foreign trade company to handle its export business, and the ownership of the goods still belongs to the manufacturing enterprise. The foreign trade company is like the "foreign trade assistant" of the manufacturing enterprise, completing a series of export processes according to the requirements of the manufacturing enterprise.

When a manufacturing enterprise chooses export on agency basis, it can leverage the professional resources and channels of the foreign trade company to reduce the cost and difficulty of exploring the international market on its own. For example, some small and medium-sized enterprises lack foreign trade experience. By entrusting Zhongshitong to handle export on an agency basis, they can use its rich customer resources and professional foreign trade operation team to smoothly promote their products to the international market. However, the manufacturing enterprise needs to pay a certain agency fee to the foreign trade company.

For foreign trade companies engaged in export on agency basis, the risks are relatively small, and the main income comes from the agency fee. But in this mode, the profit of the foreign trade company is relatively limited, and it needs to invest energy in maintaining the cooperative relationship with the manufacturing enterprise. At the same time, it has to operate strictly in accordance with the requirements of the manufacturing enterprise, and its autonomy is relatively weak.

When choosing between export by purchase and export on agency basis, enterprises need to consider various factors. If a manufacturing enterprise has strong financial strength, a strong ability to withstand market risks, and hopes to directly obtain higher profits, export by purchase may be a good choice. But if the enterprise has tight funds and lacks foreign trade experience, export on agency basis may be more suitable.

From the market perspective, when the international market demand is stable and the price fluctuation is small, export by purchase allows enterprises to obtain more profits; while when the market uncertainty is high, export on agency basis can help enterprises reduce risks.

In conclusion, both export by purchase and export on agency basis have their advantages and disadvantages. Enterprises should make cautious decisions based on their actual situations to move forward steadily in the complex foreign trade market. It is hoped that enterprises can find the most suitable foreign trade model for themselves and show their strength in the international market.