There are various methods by which merchants and manufacturers obtain orders from overseas buyers are as follows,
(1)Through the postal service by letters and printed matters through Emails via internet specially addressed to foreign buyers whose names have been obtained from directories or other sources of information.
(2)Through the Manufacturer’s own agents who reside in the country whence the orders are obtained.
(3)Through travelers sent abroad periodically by foreign firms who personally canvass overseas buyers for orders.
(4)Exhibitions held in foreign trade centres usually result in orders for British exhibitions. Similarly, a very large volume of business is transacted by British manufacturers with foreign buyers who visit trade exhibitions held in this country,such as the British Industries Fair.
(5)From time to time specifications of goods required are advertised by Dominions, foreign government , municipalities and large coperations in foreign journals, and tenders are invited from British manufacturers for the supply of such goods. In such cases the order is usually allotted to the firm that tenders at lowest price.
(6)Sometimes delegations representing the whole of a British industry will tour foreign countries or overseas Dominions and a large influx of orders to the industry will result.
Assistance Avaliable to firms wishing to obtain Orders- The concern is soley with export trade and a brief reference will be made to the organizations helping to promote this type of trade. Government aid is centred primarily in the commercial relations and export deparment of the trade board. It is a primary function of the department to provide reliable information about overseas market such as might not be obtained through normal business mediums.The information obtained is disseminated through the press by means of circulars, also via internet and in answer to specific queries. Sometimes export missions are dispatched to make special studies of some overseas markets but other wise the department is mainly dependent on its own representatives abroad, the commercial diplomatic service, the consular service and the trade commissioners .The type of information provided to exporters are of –
(a)Importers abroad
(b)Suitable agents
(c)Contracts open for tender
(d)Method of marketing and distribution.
(e)Shipping and transport services
(f)Demands abroad for particular goods and the nature of foreign competition
Another department of board of trade which affords considerable assistance to exporters is the export credits guarantee department. The disturbed economic conditions on the conclusion of the first world (ww1) made it very difficult to conduct foreign trade profitable and in order to help the British manufacturers to over come these difficulties , particularly the difficulty of conceding the extended credit demanded by foreign buyers and yet avoiding the making of bad debts , the board of trade was empowered by the overseas trade Acts 1920-1935 to give guarantees in connection with exportation of British goods. These powers were dispensed by the export credits guarantee Department , from offices in London , Manchester , Bradford , Birmingham and Glasgow, acting in conjunction with a statutory Advisory committee. Under the scheme as originally operated , actual financial advances were made to exporters in respect of credit sales. But since 1927, the scheme has been worked somewhat on the basis of insurance. Every exporter , on payment of a small premium , can be assured that the greater part of the value of his bills of exchange, drawn upon approved customers will be forthcoming when set. Before the second world war(ww2) the largest users of this facility were the textile exporters . Since 1945 , however the total value of credits granted has increased very greatly and many other industries figure prominently on the list of participants . Under an Act of 1945 , the department was authorized to guarantee credits up to a total of 200 hundred million pounds sterling and this subsequently increased. Policies are available to cover sales of both capital and consumer goods. The departments liability is limited to 85% of the contract price in the event of the buyer failing to pay within one year of the date agreed upon. In the case of transfer risks , however , the liability is increased to 90%. This relates to cases where the buyer pays , but where the vendor is unable to obtain the money as a result of importation of exchange restrictions in the importing country. Guarantees are only granted on the advice of an advisory committee which the department has to consult. The department is run as a business and is intended to be self supporting and sustaining.
Looking forward , the voluntarily organizations which also help to enhance trade export are chambers of commerce and the federation of British Industries, in Nigeria, it is the Bank of industry in conjunction with the ministry of trade and investments. , It must also be mentioned of the British Export Trade Research Organization, although it is now defunct. In 1945 certain large industrial companies formed B.E.T.R.O. for the purpose of carry out co-operative export market research and publicity for all firms which became members. It was a non- profit making company operating under board of trade licence.Its revenue consisted of membership subscription and payments for specific items of research and its operations during the first few years of its existence were covered by a board of trade guarantee intended to cover any financial loss that might be incurred. Its failure must be attributed to a combination of lack of support and high head overhead costs. While , particularly since 1945 , much help has been available to the exporter in one way or the other , it is important to remember that the actual procurement of orders depends primarily on the initiative and perseverance of the individual firms.It is quite literally , upon their success that the future of the country depends , Britain has many necessary imports and to pay for these she must export.
Consignment Business-It is not necessary that merchants should in all cases await firm orders before transacting overseas business. Where it is known that there is a constant demand for particular goods in a particular overseas market , a manufacturer of such goods , if he/she has a trustworthy agent in a foreign centre is justified in anticipating the demand and sending out the goods on consignment. Goods sent on consignment remain the property of the consignor till such time as they are sold. They cannot therefore be invoiced as a definite sale would be invoiced. The document used in such transactions is the Pro forma invoice. This specifies the quantities and descriptions of the goods and the prices and values. The prices stated may either be (a) the actual prices at which the goods are to be sold or (b) the ordinary wholesale export price, the agent being let to obtain the best price he/she can for the good . The last stated course is followed. When the agent has sold the goods , he sends to his principals a document known as an ACCOUNT SALES. This shows the proceeds of sale , the agent’s expenses , his commission and finally the net amount due to the principals in respect of the consignment. Further more the commission ordinarily is charged by the agent, he may also be allowed an extra commission , termed a DEL CREDERE commission . Such a commission is allowed when the agents guarantees the solvency of his customer. Ordinarily , the agent is not responsible should any of the buyers of the consigned goods default in payment. In cases where a DEL CREDERE commission is allowed , he becomes responsible and must bear the loss through insolvency himself.
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