This is a brief tutorial for first-time importers

First, you have to know the basic terminology

When you get a price from an overseas supplier it’s quoted either as FOB or CIF.

FOB means Free On Board the supplier’s port of shipment. This means that you have to arrange for freight from that port to you. Caution: you have to make sure that it’s not FOB factory, which means that you have to pay for shipment from the factory to the shipping port.

If you get an FOB shipment port price that means you have to arrange for shipment to the destination, which means your city, or have the supplier arrange that for you. Since most overseas shipments arrive at Los Angeles, San Francisco, New York or other Pacific or Atlantic port, you may end up paying for inland transportation to your city.

CIF means cost, insurance, freight to destination city and is the most preferred pricing for buyers since the price you pay to suppliers covers not only the goods but freight and insurance as well. C&F is a variation of such pricing minus insurance. CIF pricing eliminates most unknowns between the supplier and you.

Does this guarantee that you’ll receive the goods you ordered exactly to your specifications? Not necessarily.

Payment

Most  suppliers will not ship the goods to you until they get paid in advance or guaranteed payment by a bank. This is called a Letter of Credit.

If trust is established between the buyer and seller a TT, or telegraphic bank transfer is the easiest and cheapest form of payment for an overseas transaction. Exporters will not accept a credit card or ship COD (cash on delivery) unless you’re buying a small amount at retail price. Manufacturers and exporters are not set up to accept credit cards or ship COD as in domestic shipments. So, how do you satisfy both buyer and seller that payment is guaranteed when the goods are shipped? By a Letter of Credit issued by a recognized bank.

The first thing you have to know about L/C’s is that it’s a “documentary” guarantee. Payment is made in accordance with the terms specified by the buyer, that payment will only be made by their bank when shipping documents are received and presented. Does that mean that you’ll get exactly what you ordered? Not necessarily. Maybe the goods shipped have some kind of flaw. Maybe it’s close to your specs but a slightly different color or quality. Letter of Credit is not a guarantee of quality.

The second thing to know is that Letters of Credit can be somewhat expensive, and raise the price of the goods you are buying. Bank charges have increased substantially within the past few decades.

So, how do you guarantee that you’ll get exactly what you ordered?

The first solution is common sense, except that it doesn’t really make any sense for you to go overseas and inspect and ship your purchases yourself.

The alternative is to retain a Quality Control (QC) service. This can also be an expensive proposition. Imagine, if you’re ordering 1000 porcelain cups they have to check each one to make sure there’s no flaw.

If you’ve paid for a shipment from overseas and you did not get exactly what you ordered, there is very little recourse for a remedy.

Over 3 decades ago Taiwan Trade Service started as a QC operation in response to a demand for solutions to importers’ issues. Our sourcing and custom manufacturing services include low-cost prototyping and quality control at each stage of the production and shipping processes to ensure that you are getting exactly what you ordered from Taiwan. We stand behind what we ship.

What’s a customs broker? One of your best friends

Once your shipment has arrived in your city you have to pay any duties and taxes, if applicable, and clear it through U.S. customs so you can take delivery. Customs clearance is a complex process, so we recommend that you retain a customs broker. It’s a very competitive business, so it can be a real bargain to hire one. Make sure, however that they know all regulations pertaining to the country you import from. In this case, hopefully, Taiwan…