Recently updated on April 19th, 2023 at 05:47 pm
If you are considering importing sculptures from China, there are many things you must keep in mind when you want to get an accurate quote from the sculpture manufacturer.
In the B2B trade of the sculpture industry, the influence of quantity on the final quotation of sculpture is limited. Under normal circumstances, in the sculpture industry, the purchase of sculptures with a size below 50cm will have a certain impact on the final quotation of the sculptures. However, in the quotations of medium and large sizes above 50cm, the quantity has little effect on the price.
Generally speaking, for the sculpture industry, the factors that have a more significant impact on the final quotation are the design, material, size, and transportation of the sculpture.
In the production of sculptures, the price of sculptures that require making a clay mold before the sculpture is made will be higher, and the price of sculptures that do not require a model will be lower. Sculptures with simple details and few details will cost less, while more intricate and beautiful sculptures will be more expensive. Marble, bronze, and stainless steel are relatively more costly, while resin and aluminum sculptures are less expensive. These are some things you need to know before buying a sculpture.
Many people will say that the price of a sculpture that is in stock or in stock will be lower than the price of a custom sculpture. This also makes sense. This is because stock sculptures do not require additional model fees, so they are relatively more expensive than custom and newly made sculptures. Also, the sculptures in stock are generally on sale, so the price will be lower. In the sculpture industry, the difference between stock and new products is not big, the quality and details are all kept up. If you encounter inventory and spot when purchasing sculptures, their size, design, material and color are all what you want, then spot will definitely have more advantages than new products.
After the above aspects are determined, when determining the final quotation, you need to understand some standard Incoterms in international trade, so that you can easily know whether the prices and conditions given by suppliers are reasonable in the process of work, and also make the entire trade process clear.
Why is Choosing an Incoterm So Important?
Incoterms are short for International Terms of Business, and it is important to understand that they are legitimate business terms used to determine who (i.e. buyer or seller) is responsible for what during shipping. If you choose or agree to the wrong Incoterms in your contract during negotiations with international buyers, you could face financial loss.
Incoterms were created as a common code of conduct and contracts and are regulated by the International Chamber of Commerce for international trade. Every Incoterm does one of two main things. The first is to determine when responsibility and title to the goods pass from the seller to the buyer. This is important if goods are lost or damaged in transit. The second is to determine who is responsible for or pays for the transportation, import and export process, insurance, loading and unloading of the goods.
Although in international trade, there are dozens of trade terms. The International Chamber of Commerce (ICC) publishes a book every few years to regulate all terms of trade. But in most trades, you don’t have to memorize them all, as many terms are only useful for high-volume transactions. In fact, the most commonly used trade terms are FOB, CIF, EXW, DDU/DDP. I’ll give a brief description here.
FOB
FOB is an Incoterm meaning Freight on Board or Free on Board. It represents a transfer of responsibility from the supplier to the buyer of the shipped goods. The seller is responsible for the costs involved in transporting the product to the ship’s rail. And the buyer pays the shipping and shipping costs until arrival at the port.
FOB dictates who is responsible for most specific expenses. The seller is responsible for bringing the product to the FOB shipping point. After the goods arrive at the seller’s shipping terminal, the buyer is responsible. It is clear who is responsible for paying insurance and other related costs if damage occurs during shipping.
In FOB, if the FCL is damaged in transit on board, it becomes the buyer’s responsibility, not the seller’s.
What Are the Responsibilities of Fob Buyers and Sellers?
In FOB incoterm, the two parties involved are divided into responsibilities. The seller of the goods bears the FOB price until the ship’s rail is serviced. The buyer takes responsibility after specifying the port and bears the cost of shipping the goods from one country to the other.
The Following is a Basic Outline of Buyer and Seller Responsibilities in FOB Seller’s Responsibilities:
Packaging: It is the seller’s responsibility to pack the goods safely in international transactions. They are also responsible for conducting pre-shipment inspections.
Loading Fee: The seller pays the loading fee at its warehouse.
Delivery to port: After the buyer purchases the goods, the supplier pays the shipping cost to the port of shipment.
Export License, Taxes and Customs: The seller bears the cost of these documents prior to delivery.
Loading on a sailboat: The seller also pays for packing the goods on board, although their customers pay for shipping.
Buyer’s Responsibilities:
Buyer pays shipping from FOB destination, also known as shipping charges.
Domestic Shipping: The seller is no longer responsible for domestic shipping in the buyer’s country.
Import customs clearance: the seller is responsible for the export, and the buyer bears the modern domestic freight.
Insurance Costs: Buyers are responsible for their cargo once they are on board. Anything that happens from the FOB origin is the buyer’s responsibility.
Payment: The buyer pays for the value of the product in the container shipment.
Advantages and Disadvantages of FOB Advantage:
Seller processes local export documents at FOB origin.
It is often difficult to obtain export documents in an unfamiliar country. In FOB terms, the seller does this for you. You only need to consider the documents required for the final destination of the shipping vessel or your country. You can control the shipping cost after the ship rail. From FOB origin, you can choose your FOB shipping. Freight and control after FOB port are outside the seller’s business scope. So, as a buyer, you can choose what you want.
Disadvantages:
Product cost is high. In FOB, sellers can sell their products at a higher unit price. In each unit, the seller includes the cost of processing the documents and the final shipping cost. Higher local shipping costs. Most of the time, in international trade, buyers do not visit the FOB origin in person. So, as a buyer, you won’t be able to tell if the seller is charging you more for local shipping.
CIF
CIF means cost, insurance and freight. It is part of an international shipping agreement for inland waterway transport. In a CIF contract, the seller is responsible for paying the freight, shipping insurance policy, and other additional costs that come with it. Unlike some Incoterms published by the International Chamber of Commerce, in CIF risk and cost responsibilities are transferred at different shipping points.
When to Use CIF Incoterms?
Buyers should use CIF when shipping bulk, oversized, or even small packages via inland waterways. The CIF agreement is one of the international trade terms and one of the most convenient shipping terms for inexperienced buyers. The buyer does not have many responsibilities in the CIF. The seller is responsible for export licenses, customs clearance, and minimum insurance. Sellers can accept CIF incoterms when they don’t mind paying for shipping and insurance but don’t want them to take the risk of shipping.
Disadvantage:
Here are the downsides of choosing cost, insurance, and shipping. CIF is not the most cost-effective shipping term. Since the seller bears most of the costs, they can also choose to charge the buyer more. Some sellers lie and claim to use shipping and shipping freight forwarders that charge more than they do. The seller tricks the buyer into paying more for the goods.
CIF only applies to ocean and inland water transportation. This is a disadvantage because you cannot use your knowledge of CIF in other shipping methods in the future.
The buyer has little control. In CIF, the seller gets more control than the buyer.
The seller only pays the minimum insurance amount. In the event of damage, your insurance may only cover a portion of all the costs you have paid.
The buyer takes the risk early. The seller pays for the final destination. However, the risk of the goods passes to the buyer from the moment the vessel leaves the port.
CIF Incoterms Risk
For sellers: Risk of additional shipping charges. In CIF inland waterway transportation, the seller is responsible for paying for the shipping and freight. Therefore, when the market cost suddenly increases during the shipping process, the seller bears an additional financial burden.
For the buyer: risk of external damage or deterioration of the goods. Under the CIF shipping terms, the buyer is responsible for the risks associated with the shipment of the goods from the port of shipment to the port of destination. Therefore, the buyer is solely responsible for any damage to the goods during transportation. Therefore, buyers must be willing to take the risk and choose CIF.
EXW
Ex Works (EXW) is a phrase used in international trade. It means that the buyer handles the shipping costs when the seller provides the product at the specified location. You will often see it in shipping agreements. When working under EXW terms, buyers can enjoy the advantage of full control over the shipping process. Also, buyers are in a better position to buy cheaper products. But when we talk about the cost of customs clearance and export licenses, things may not be for the buyer.
When to Use EXW?
Most organizations will use the EXW arrangement when the seller is unable to export. Even buyers want to add goods and export them under a single name. Another reason to choose EXW is if they send Air Express. The courier picks up the item from the seller’s location. They cover all shipping costs and export documents.
Pros and cons of EXW
EXW is a great advantage for sellers. Their only responsibility is to take on a minimum of duties and expenses. The EXW agreement may also bring benefits to buyers. The buyer is responsible for shipping and responsibility. That’s why they have complete control over the shipping process. Plus, they can ensure that the product arrives safely. Shipping methods are advantageous after local shipping. Buyers can better predict fees and avoid paying higher shipping costs.
Customs clearance is one of the most notable drawbacks of EXW. EXW rules require simple documentation for export approval. Buyer is responsible for additional costs and delays. The buyer also bears the cost of export customs inspection if required. If the seller does not have an export license, the EXW condition is generally chosen. The customer will be responsible for paying the fee. Buyers have to find the right freight forwarder. Seek someone who can provide door-to-door service and customs clearance. Buyers should evaluate shipping costs and the pros and cons of various Incoterms. Especially when determining shipping arrangements to calculate explicit and implicit costs.
What is DDP Incoterm?
DDP means that the seller agrees to charge the buyer at the full federal duty rate for the goods or services. DDP rules are entirely the responsibility of the seller. The seller delivers the goods or services to the buyer, who can pay the duties. DDP is an agreement between the supplier and the buyer. It is easier and less risky for buyers to source goods. If the supplier agrees to charge you the federal rate. They are willing to comply with the Shipping Customs Procedures Policy related to this.
When to use DDP Incoterms?
According to Incoterm 2020, DDP incoterm is the greatest obligation to the seller. Shipping terms that can be used for any mode of transport: air, sea, etc. The seller handles the costs and risks involved in shipping the goods, including paying duties or taxes. The buyer must receive the goods within a reasonable time after arriving at the designated location. Arrival means that the goods have arrived at the designated place.
What are the responsibilities of buyers and sellers to DDP incoterms?
Responsibility for payment of any import duties, VAT and other charges related to the goods rests with the buyer. Buyer may use DDP incoterm if supplier agrees to charge at federal rate. However, the buyer must keep detailed transaction records to demonstrate that the goods were purchased and imported at the national exchange rate
FOB vs CIF vs EXW:
Suitable for choosing FOB:
When the buyer’s budget is tight. Buyers have long experience in this industry. They want to know the status of the goods. Then FOB is the best option. Why choose FOB? FOB is the most commonly used term. From the buyer’s perspective, any shipping arrangement that they have control over is desirable. Compared to CIF, the FOB agreement gives them better control over the contract of carriage and the total cost of the goods. Sellers also feel “weightless” because they don’t have to worry about the goods being loaded onto the ship. Once these leave their warehouse, the seller can mark the export trade as “complete”. This is hassle-free shipping for sellers.
Suitable for choosing CIF:
If you are new to this industry, I recommend you to try CIF. Why choose CIF? Looking at the buyer’s point of view, CIF is the better choice in situations where a “done for you” approach is required. Of course, choosing a CIF trade agreement also requires a bit of budget flexibility. Obtaining information on the status of shipments can be challenging as shipping is beyond the customer’s control. With CIF, it’s more seamless for buyers. CIFs may generate higher profits if the seller knows how to make the most of this period. Most sellers prefer this term for this reason.
Suitable for choosing EXW:
Select EXW Engineering Terms if: Suppliers do not export. In this case, you have no choice but to ship it yourself. You are used to the import business and know how to contact the shipping company and apply for insurance for your shipment. You know how to handle shipping documents. You are willing to do the extra work to gain better control of your cargo. You want to buy wholesale products at cheaper prices.
