We will tell you what the company’s international trade is and select the outsource team for the international trade department.
What is GSCM and why do I need it?
GSCM is a supply chain management of the company. It is based on two main concepts – import (when we import goods, components, and materials from another country) and export (when we export them).
Legal entities have the right to engage in foreign trade since 1991, but they are subject to strict government control. It includes regular interaction with the tax and customs authorities, obtaining licenses and various certificates, and dealing with the law. But we must not forget about the risks: sanctions, currency rate changes and damage to goods during transportation can hit the business if the foreign trade department is not sufficiently qualified.
However, with a well-organized work, you can get much more – access to the international market, purchase of materials and components at lower prices, new trade connections, and nice profits.
How to start a foreign economic activity for an enterprise?
One can try to organize foreign trade independently, but consider the time, complexity, and costs associated with this.
First, we open a currency account. This is done quickly, but its maintenance – registration of contracts, issue of certificates, and compliance with currency control standards – often requires the involvement of certain specialists and full immersion in the legislation.
So, to organize a foreign trade department, the following specialists are required:
Accountant – its functions are tracking transactions, monitoring taxes and duties, preparing reports, and many specific tasks. But an average accountant is not suitable – here, a deep experience, knowledge of documentation and nuances are essential. For example, the experience in working with cargo customs declarations.
Customs declarant is a customs control specialist. Usually, a dedicated specialist is hired for each direction: for equipment, for components, etc. The delivery time of goods and filling out the necessary documents largely depend on this person. An incapable specialist can ruin the entire delivery – only one item requires up to 50 files where all the data and markings must match.
In addition, customs re-check all documents within 3 years after the issue of the permit, and if any violations are found, sanctions may be applied to the foreign trade participant.
Foreign trade managers – they are responsible for searching for foreign contractors, conducting negotiations, and logistics. Of course, one manager can be hired to perform these duties, but the customs clearance of some items can be quite time-consuming (for example, when importing a set of spare parts, each individual part must be registered), and with large volumes of import, it will be quite difficult for one person to cope.
For this reason, there are individual managers for the below directions:
Business development manager is a person who searches for contractors, visits exhibitions and factories, conducts negotiations, and maintains business correspondence. The expenditures for such specialist are rather high. Only one efficient trip to the exhibition costs about 150 thousand rubles.
The search process itself is also not easy. Very often, foreign contractors do not respond to requests immediately or do not respond at all, and if the process is poorly-organized, only few responses are received out of 10 requests. A good search specialist can effectively build the search process and achieve good results. In addition, such a specialist in negotiations should understand the cultural characteristics of other peoples.
Logistics manager is a specialist in the goods transportation. But, for example, even foreign currency payments are attributed to logistics. This usually takes 4-5 days, but we have agents who help reduce this term to one day. This is done to minimize the time of storing the goods in the warehouses.
Lawyer in the field of customs and international law is a specialist who protects the company from customs difficulties. To put it simply: the company always seeks to find products at more competitive prices. Some companies avoid paying all the necessary fees, underestimate the cost, etc., and the government fights against such violators and checks every delivery. Therefore, a lawyer of a respectable foreign trade participant must prove the real cost and absence of violations, ensure that all necessary checks are passed, and confidently conduct the case in court if problems arise.
Then, the lawyer should be aware of the rules of international law, know the legislation of the country of the company’s trading partner, and prepare documentation for foreign contractors. For example, there may be a lot of disputes with Chinese suppliers. Legal proceedings with them are very complicated, so it is good if there is a specialist who has the experience or necessary knowledge.
Certification specialist is the person whose duty is the preparation of the necessary documents to confirm the compliance of the goods with the technical regulations of the Customs Union (TR CU), national standards of the Russian Federation and, if necessary, the CSR (Certificate of state registration). If the documents confirming compliance with the TR CU standards are not provided with the goods, the delivery may be arrested, fined, or even seized. The point is that the requirement for certification of certain goods is not always expressly specified in the law, so the specialist must “always keep a finger on the pulse” and have the skills to process a lot of information.
How to choose a foreign trade outsourcing company?
There are a lot of criteria for choosing a company for foreign trade outsourcing or for delegating your import/export deliveries because each cross-border transaction is unique in its own way. We will consider the main criteria.
First, the company must have an experience that it can confirm. For example, we often invite new clients to contact those with whom we have been collaborating for a long time. Thus, we confirm not only the experience and availability of real cases, but also the level of interaction between the company and customers.
Secondly, the company must have the above-listed specialists with high qualifications and a set of cases. This way, all risks will be minimized, and you will worry less about each delivery.
In addition, the company must provide an inspection lot of samples to let you test whether the product is suitable for your production. In addition, a reliable company will definitely build a purchasing system for your individual specifics, taking into account seasonality, details, and “purchasing portfolio”, that is, the degree of importance of the product in production and criteria to suppliers based on quality, price, and reliability. The company also independently conducts negotiations in a foreign language, deals with the specification, and fixes the exchange rate for the duration of the transaction (hedging).
Reputation in the countries where the company operates. For example, in Italy, there are black lists of unreliable companies that no supplier will work with. And the Chinese even have a concept called “guanxi”. This means the company’s connections, its reputation in the business community, credibility, and observance of liabilities. If a company has “guanxi”, it is able to build long-term business relationships, which means that it has many connections in China.
Find more information about the organization of the supply chain management department here. ©