Product Sourcing for Global Markets

Traders normally continue to search for new products for existing and new customers. The new product usually commands a higher profit margin. At times, the buyer may request the trader to look for a specific item or to contact a particular manufacturer, which could be supplying the buyer's competitor and other traders.

The government external trade department normally maintains extensive trade publications from which the trader may source products from the vendors. The publications typically include various trade directories (i.e., export directory, manufacturers' index, buyers' guide, business yellow pages) and export-oriented magazines, gazettes and newsletters. Export associations and libraries may also maintain such publications. The publications can be obtained from the respective publishers usually through a paid subscription.

Reliability of the Suppliers

It is important to know whether the vendor can supply a consistent product quality on time, before issuing a purchase order. Any order that deviates from the contracted specifications and quality will result in the non-delivery within the contracted time for shipment.

A delay in the vendor's delivery can cause a lost profit and may spoil the exporter's reputation. Such a delay may mean the reschedule of export shipment, if not the buyer's cancellation of the order. The shipping schedule to certain countries is available only every 2 or more weeks. As such, rescheduling of shipment may mean waiting for another 2 or more weeks.

A delayed delivery may also mean issuing another letter of credit (L/C), that is if L/C has expired, or amending the L/C. In both cases, it means additional bank charges and loss of time to both importer and trader. The importer may request the trader or the vendor, depending on the sales agreement, to reimburse the contingent charges.

Another drawback in a delayed delivery is the cancellation of the order. This may happen in the case of seasonal products (e.g. raincoats and winter wears) and fashion and promotional sales, where a product loses its usefulness or its intended purpose after a period of time.

Product Information

In order to discuss business with a buyer, the export-trader must have adequate information about the product. The vendor's catalogue usually contains the item number, product specifications, and packing information. Information such as the price, payment terms, delivery time, and production capacity are essential in an export business discussion.

Production Capacity

The production capacity is very important when doing business with large foreign importers such as chain stores. It could be a waste of time and money to offer your products to large importers if your production capacity is low.

Advance Payment and Deposit

Before the 1970's, many manufacturers relied on the traders for exporting. The export business then was far less competitive and the occurrence of the bouncing cheque/check---NSF cheque/check (no sufficient fund or cheque/check with insufficient fund in the bank account)---was less frequent. At that time, many manufacturers did not require an advance payment or deposit from the trader, even for a new account. The trader usually paid the manufacturer in one or two weeks after the negotiation of the letter of credit. In the mid-1970's, many manufacturers started exporting directly. During the oil crisis in late 1970's, the occurrence of the 'bouncing cheque/check' was rampant. The terms of payment have changed since then. The manufacturer demanding an advance full payment or a deposit from the trader is not uncommon now, especially for a new account.

In certain countries, the export-trader has to finance the manufacturer---by advancing funds to the manufacturer---to procure the necessary materials in making the export goods. The financing turning into a 'bad deal' is not uncommon.

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