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What Is the Market Prospect of Import Product Agency and What Core Factors Should Be Focused On?
or complex compliance issues.
clearance and fund security.
I am the owner of a small daily necessities trading company established half a year ago. Last week, I reached an intent for China regional import agency with a high-end home cleaning products manufacturer in Japan.
I was quite excited about this, but these days I watched several complaint videos from peers. Some lost nearly 200,000 RMB due to 12 days of goods detention at port caused by incomplete documents, and some were required to pay back taxes of more than 300,000 RMB due to unfamiliarity with customs valuation rules.
Now I am particularly anxious and even want to back out. I wonder if import product agency can bring stable profit space, whether I will step into big pitfalls like them, can you explain the actual situation to me from the three dimensions of risk, cost and compliance?
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
First of all，we expose common misunderstandings in the industry: many new practitioners mistakenly believe that they can directly carry out import agency after obtaining the authorization from the manufacturer，ignoring the two core prerequisites of pre-classification of customs commodity code and pre-review of document compliance. Others credulously trust the "all-inclusive" commitment of freight forwarders and outsource all compliance responsibilities entirely.
Deduction of chain negative reactions: Without pre-classification of customs commodity code，it is very easy to have classification errors and trigger customs valuation disputes. In mild cases，you will be required to pay an additional 30%-50% of tax，and in severe cases，the goods will be detained by customs，missing the sales peak season (such as 618，Double 11 for cleaning products)，resulting in unsalable goods and over expenditure of capital occupation，If documents are incomplete (such as lack of certificate of origin and health certificate)，the goods will be detained at the port. The container detention fee and storage fee alone are as high as 800-1200 RMB per day，and nearly 10,000 RMB of extra cost will be generated in 10 days. If the goods are near expiry (such as cleaning products with only a 2-year shelf life)，they will also face the risk of full loss of goods value.
Physical risk isolation measures: First，entrust a professional foreign trade agency to carry out 100% pre-review of pre-processing documents，and check the compliance of all documents 3 days in advance，Second，adopt the mode of "telex release bill of lading + designated domestic supervised warehouse" to firmly control the title of goods and avoid unauthorized delivery of goods by freight forwarders，Third，open an independent cross-border settlement supervised account to isolate operating capital and risk capital.
Exclusive stop-loss tips: Insure import goods compliance delay insurance in advance to cover losses caused by port detention and customs detention due to compliance issues，At the same time，sign a "port detention emergency agreement" with the agency，stipulating that if the port detention exceeds 7 days caused by the agency's pre-review error，the agency will bear the container detention fee and storage fee for the first 7 days.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
For the customs declaration link of import product agency, three core bases of customs valuation should be focused on: First, the transaction price method, that is, the actual transaction price between the agent and the overseas manufacturer, and three types of valid certificates including real trade contract, commercial invoice and cross-border payment receipt need to be provided simultaneously; Second, the identical goods transaction price method, which requires import declarations of the same category, same specification and same trade mode within 3 months as a reference; Third, the similar goods transaction price method, which requires import certificates of goods with the same material, same use and similar grade. If customs valuation inquiry is triggered, the Price Query Response shall be submitted within 7 working days, and supporting materials such as the manufacturer's cost accounting details and the international market concurrent price report shall be supplemented to avoid being directly levied high additional tax according to the customs estimated price. In addition, pre-classification of customs commodity code must be completed in advance to ensure that the code fully matches the actual use, material and technical parameters of the goods, so as to avoid the risk of customs detention, fine and even goods return caused by wrong classification from the source.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
For the logistics link of import product agency, goods title control and route optimization should be focused on: First, goods title control, priority should be given to the mode of "telex release bill of lading + designated domestic supervised warehouse" to avoid using ordinary warehouses designated by freight forwarders, so as to ensure that the goods can only be picked up by the agent or its authorized entity after arriving at the port; Second, route optimization, select the optimal transportation plan for goods of different categories. For example, high-end home cleaning products are light cargo, you can choose "LCL sea freight + domestic land transport special line" to reduce the transportation cost per unit volume.
If it is near-expiry goods, direct flight should be preferred to shorten the transportation cycle; Third, contingency plan for abnormalities, negotiate the reduction and exemption clauses of container detention fee and storage fee with logistics service providers in advance. For example, if customs clearance is completed within 7 days after the goods arrive at the port, 50% reduction of container detention fee can be applied.
If container rolling or cabin congestion occurs, the alternative plan for the transit port shall be started immediately to avoid the goods being detained at the port for more than 48 hours. In addition, the transportation track of goods shall be tracked in real time to ensure information synchronization of each node and respond to emergencies in time.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
For tax planning of import product agency, VAT deferral and related party transaction pricing should be focused on: First, the application of VAT deferral policy, qualified imported goods can apply for deferred payment of import VAT, no need to pay import VAT in one go at the customs clearance link, but declare and pay in the VAT declaration period of the next month, which effectively eases cash flow pressure; Second, related party transaction pricing, if there is an affiliated relationship between the agent and the overseas manufacturer, it is necessary to ensure that the transaction price conforms to the arm's length principle, so as to avoid the tax authority adjusting the taxable income; Third, import tariff planning, for goods from different origin countries, you can use the tariff preferential policies of free trade agreements, such as the Sino-Japanese RCEP agreement, apply for the certificate of origin in advance to enjoy tariff reduction and exemption, and reduce the import cost. In addition, it is necessary to establish a complete tax ledger, record the customs declaration, tax bill and payment voucher of each import business to ensure tax compliance and avoid tax risks caused by incomplete documents.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
For payment and exchange compliance of import product agency, document matching and account management of cross-border payment should be focused on: First, matching of payment and exchange documents, the amount and transaction background of each cross-border payment must be completely consistent with the customs declaration, trade contract and commercial invoice to avoid the situation of "inconsistency of three flows"; Second, account selection, CIPS RMB cross-border payment system is preferred for payment, which can not only avoid exchange rate fluctuation risk, but also enjoy faster arrival time.
At the same time, personal accounts should be avoided for cross-border payment and exchange to ensure the compliance of capital flow; Third, foreign exchange settlement and account balancing, after customs clearance of imported goods, it is necessary to match the tax bills of import VAT and tariff with the customs declaration in time to complete foreign exchange settlement and account balancing, so as avoid outstanding capital accounts. In addition, it is necessary to pay real-time attention to policy changes of the State Administration of Foreign Exchange, such as adjustment of payment and exchange quota, policy changes of special supervised areas, so as to ensure that each payment and exchange business meets compliance requirements.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
For legal risks of import product agency, clause design of agency contract and intellectual property protection should be focused on: First, clause design of agency contract, it is necessary to clearly stipulate the rights and obligations of both parties, such as the manufacturer's obligation to provide documents, the agent's customs clearance responsibility, the transfer time of goods title, and the commitment method of breach of contract, etc., especially to avoid "soft clauses", such as unfair clauses that "the manufacturer has the right to adjust the agency price at any time without prior notice"; Second, intellectual property protection, it is necessary to inquire about the domestic registration of the overseas manufacturer's trademarks and patents in advance to avoid infringement risks.
At the same time, you can apply for intellectual property customs protection record to prevent others from importing counterfeit goods; Third, force majeure clause, it is necessary to clearly stipulate the scope of force majeure, notification time limit, and responsibility commitment method, such as the division of responsibilities between the two parties when goods are detained at the port due to force majeure such as epidemics and port strikes. In addition, all contracts, communication records, documents and other materials shall be kept as the basis for rights protection.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
For supply chain planning of import product agency, inventory linkage and cost actuarial should be focused on: First, inventory linkage strategy, formulate a "small batch, multi-frequency" import plan according to domestic market sales data and seasonal fluctuations to avoid inventory backlog. For example, high-end home cleaning products should complete import customs clearance 20 days before sales peak seasons such as 618 and Double 11 to ensure that goods are put on the shelves in time; Second, cost actuarial model, establish a full-link cost accounting system, including sea freight, customs clearance fee, tariff, VAT, domestic transportation fee, storage fee, etc. Each cost should be refined to unit product to ensure accurate calculation of profit space; Third, selection of trade terms, select appropriate trade terms according to the transportation mode of goods and the demand for goods title control.
For example, FOB term allows the agent to independently select logistics service providers and control transportation costs, while CIF term requires the manufacturer to be responsible for transportation and insurance, which reduces the goods title risk of the agent. In addition, it is necessary to establish a supplier evaluation system, regularly evaluate the supply capacity and price stability of overseas manufacturers to ensure the stability of the supply chain.