• Quotations

Quotations should always include the trade terms, currency, price number and unit. Both sellers and buyers should understand the trade terminology very well, especially those terms which are commonly used, such as FOB, CIF, C&F, etc. The choice of currency has become extremely important since exchange rates between RMB and other currencies are frequently fluctuating. So it is essential for the buyers to be familiar with the RMB's exchange rate with their local currency and to be prepared for the potential risk caused by the RMB's fluctuation. For some special products, the buyer should clarify what unit the quotation should be based on. For example, with casting products, buyers should make it clear whether the price should be per piece or per kg.

• Payment Terms

Buyers usually consider the enquiry stage to be too early to discuss payment. This is indeed true most of the time, but buyers operating within financial systems with specific requirements should be given favorable terms. For example, some countries have strict foreign currency systems that require buyers to transfer a certain minimum amount before the goods can be shipped, and sometimes buyers are subject to a long process of applying for bank clearance or approval from a currency management bureau. Under such circumstances, the buyer may prefer lower prepayment or other payment terms which require no T/T before shipment, which creates extra banking costs for both sellers and buyers. Those working in procurement should be aware of these limitations and if necessary, let the potential suppliers know.

• Delivery Time

When enquiring about delivery time, the buyer should pay attention to the following:

1. If a sample is required, how long will it take for the sample to be ready?
2. How long will it take to manufacture different quantities of products?
3. When will delivery time commence, the contract signing date or the prepayment arrival date?
4. Will delivery time include the shipment booking time? (After they are ready, goods can sometimes only be shipped several weeks later due to difficulties in booking the shipment, especially bulk shipments, or shipments to certain countries).
   

In my next posting, I will cover more items.