Tools of The Trade
I love using metaphors to aid my memory. It also livens up any discussion. In my view, importing is a skill just like carpentry, sculpting or even mechanical repair. All of these skills require the use of tools. Using this metaphor, it’s easier to appreciate how ridiculous it would look for a carpenter, sculptor or mechanic to think they can come to work without the necessary tools.
In importing, your documents are your tools. Although this may sound obvious, you will be amazed at how many times I see importers make the same mistakes regularly. Don’t be surprised when I say that some do not even know what they’re missing. Much of this can be blamed on the expectation that dealing with a supplier overseas, has little difference to working with a local one.
Here is a list of what I believe are the critical documents you need to help you get through your importing transaction without damaging your bank account.
Sample Making Agreement
This agreement must contain a detailed description of the product, quantity of samples to be made and the cost of producing the samples. It should also include the responsibilities of both parties involved.
Supplier Self-Assessment
Remember a time in school when your teacher asked you to check your own work? This may sound contrary to human nature, but getting your supplier to check their own output can work wonders.
Non-disclosure Agreement
This is not a time you would appreciate someone copying something you worked hard to develop. This agreement tells your supplier you are serious about protecting your intellectual property.
Purchase Order Agreement
Once you like the sample, the next step is to get down to the business of getting your products made and shipped. The best way to start the process of manufacturing is through this agreement. It should specify that you get the right product delivered to the correct location, at a time of your liking and at an agreed price.
Manufacturing Agreement
This agreement should cover a noncompete clause, leasing agreements if any, licensing agreements and intellectual property protection.
Exclusive Distribution Agreement
This may look like something that should be understood by both parties. However as I had said, as much as you can help it, put it in writing.
Finally – you must remember your counterpart in China will probably need an accurate translation of all these documents.
In my next articles, I will discuss each of these agreements in greater detail. Until then!