5 Tips for Dealing with Overseas Suppliers

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Finding it hard to source for products that you can’t get in Singapore? That’s what many of our new buyers face when dealing with suppliers during the procurement stages. 

Improved your buying experience with overseas suppliers with these 5 tips that will help you on your way to easier and fuss-free international transactions 

Tip 1: Time to Sherlock Holmes Your Selected Supplier

Cross-border trade can be scary when you're dealing with huge expenses on products from someone who is practically unknown and whether they can deliver on their promise. In today’s age of scams and falsehoods, it’s more important than ever to know that the other party across the line is a trusted and reputed source. 

This is why knowing your supplier is of the utmost importance and we always recommend buyers dealing with new suppliers to research, investigate, question and review the other party before proceeding with any deal.

Depending on how sure you would like to be, there are a variety of methods you can do to ensure due diligence is done when selecting your supplier. These methods include: 

  • Only selecting suppliers with verified business registration credentials
  • Making a trip down in-person to visit their factory/premises
  • Getting recommendations from trusted business partners and competitors
  • Reading up on their business policies

For suppliers selected from a reputable e-marketplace website eg Alibaba: 

  • Only select suppliers who have been verified by the website
    As a broad overview, these suppliers have two different types of verification status, "Gold Suppliers" and "Verified Suppliers." You can find out more about their differences here.  
  • Read up on their buyer protection policy 
  • Check out other customer reviews, especially the lower-rated reviews to be aware of any potential problems to address upfront in the procurement stage. 

 

Tip 2: Maintain a Clear Division of Responsibilities 

The cross-border delivery process has many stages to it involving many different stakeholders. That makes it critical to clarify and document the many different responsibilities between you and your supplier. A clear understanding between both parties is necessary to keep track of who is responsible for handling and paying for which portion of the process. 

One way to kickoff such negotiations is to discuss Incoterms, also known as 条款 in Mandarin Chinese with regards to your purchase orders.

It is good practice to clearly Incoterms on relevant trade documents and/or keep documented records of what has been negotiated to protect the interest of both parties.

Tip 3: Check if Your Supplier is Looking to Claim Export Tax Rebates

If you are sourcing from China, this is important to take note of! Chinese manufacturers have the ability to significantly undercut prices offered by foreign competitors over a wide range of products, and this is made possible by the country's strong export subsidies and export tax rebates system.

In light of this, it is common for your supplier in China to request for export documentation to be created by the appointed freight forwarder, in order to claim such export tax rebates. 

The cost of creating and filing for such export documentation is dependent on your shipment volume and charged on a "per supplier per shipment" basis, which can add up to a significant additional cost at times. The creation and filing costs are either billed to the supplier, the customer or both, depending on what is negotiated and the incoterms selected.

Tip 4: Request for Essential Trade Documents From Your Supplier

The two key documents you should be concerned with as a buyer are:

  • Commercial Invoice
    This is a legal document between the supplier and the customer that clearly describes the sold goods and the amount payable by the customer. This document is used in customs declarations and determining customs duties when a person or corporation exports/imports an item across international borders.

  • Packing List
    This is a trade document that offers details about the cargo to the exporter, freight forwarder, and consignee. Information includes how the cargo is packed, the dimensions and weight of each package, and the markings and numbers on the outside of the boxes, etc.

These documents are critical for you/your appointed freight forwarder to help you check and tally the cargo from your supplier upon receipt, as well as for any declarations required to the air/sea carrier and custom authorities in the shipping process. 

Do remember to request for these essential documents from your supplier early on and provide them to your freight forwarder when you place a shipment booking.

Tip 5:  Find a Trusted Freight Forwarder

Having recommended these best practices above, we know that managing international transactions and overseas shipments can still be confusing for many individuals. You should strongly consider engaging a trusted local freight-forwarding partner to assist with your shipping needs to help avoid mishaps or pitfalls.

Our team is always happy to assist businesses and individuals that may need assistance when it comes to such high-stake topics. Feel free to arrange a no-obligations consultation with our team to help you get started with arranging your shipment.

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