About Foreign Trade Terms

Nowadays, the most of companies from different countries have joined in international trade action (namely Foreign trade). However, related foreign trade business there are a lot of expertise and tricks we may apply during business negotiation to realize successful deal with foreigner buyers. As often, the most of businessman and merchants do not consider about utilization of foreign trade terms and only focus on lowering price of products for their oversea customers. So the most of time negotiation of business will be kind of deadlock. So how to break the deadlock of negotiation is very important for every representative of foreign trade no matter you work in import and export companies or in factories. Hereby, according to main foreign trade terms FOB, CRF and CIF, let us know how change the impasse to good opportunity.

Basic terms to know

FOB, Free on Board which means there is duty pass from sellers to buyers when the sellers deliver the goods to specified port of shipment and goods on the board of vessel. Meanwhile, as sellers, they do not need to pay for related fees such as freight fee, fee of chartering space and so on.

 

CFR, Cost and Freight which means the sellers have to pay freight fee for this batch of goods which the buyers purchase and others are as same as FOB term. Well, this is quite same expecting freight fee by the sellers.

 

CIF, Cost, Insurance and Freight which means the sellers are in charge of paying about Freight fee, Insurance fee for this batch of goods. Meanwhile, the risk of cargo loss is bear by the buyers after the cargo on the board of vessel.

How to use these terms for negotiation

These three of terms are very simple and popular for the foreign trade enterprises in every countries because of its easy process and low risk. As often the factory always advertise own by its quality of products, good service after sale, advanced technology for producing, and large scale of workshops and factories and so on. However, they forget to apply these foreign trade terms skillfully. Because even of your products are good and service are professional, as oversea buyers they seldom know about your situation as not domestic factories. Sometimes they will cancel the order for only a little bit profit and benefits; or they will ignore your these advantages of factories as pity freight fee adding into their cost.

 

According to my opinion and experience, I suggest that sometimes you may offer oversea buyers extra a bit benefits such as FOB term changing to CFR term, meanwhile you keep the quotation as same as you send as initial one. It means you try to attract the buyers by freight fee or an insurance fee. This is really good job after you try often.

Foreign trade knowledge here.

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