A quick primer on evaluating a compliant-import agent from China
Reading time: 10 minutes
Evaluating an agent is one of the important parts of a client's groundwork, especially when it comes to importing cargo from abroad. For medium and large businesses it's fairly simple - the agent company can be checked on resources like RusProfile and similar databases, so what follows is aimed at small and mid-sized businesses moving from a cargo scheme to compliant, white-channel import.
Distinguishing signs, and how to tell you're dealing with an unreliable broker for compliant import from China:
Pricing quoted as $/kg
We understand that the most familiar option for most people who used to ship via cargo is a $/kg rate. Because of that, cargo brokers resort to "tricks" and count on making a quick sale of the delivery. In reality, the list of costs under compliant import can't be summed into a single figure that you then divide by weight to get a familiar shipping rate.
A simple example is duty and customs VAT, the size of which depends on the value of the goods and has no correlation with the weight of the cargo at all.
A correct pricing proposal for a delivery is, at minimum, a separate cost for the goods themselves, the overall delivery costs (with the option to break out individual cost line items), and the cost of items such as domestic VAT / foreign trade commissions.
A significant gap between agents' commercial offers
Lately quite a few agents have appeared offering to deliver goods "turnkey," who invoice the client through an LLC, but through certain financial schemes the purchasing and delivery of the goods still happen via cargo.
As a rule, the commercial offers from such brokers are far cheaper and more attractive than offers from competent companies.
The risks?
When the tax authority starts an audit of such a broker (and it's only a matter of time), both the agent and the client's legal entities fall under scrutiny and its consequences. In the end you'll still have to pay the shortfall in tax contributions plus the financial cost of penalties, which always show up at the "worst possible" moment.
Offering savings through dubious, risky schemes
One fairly common situation is when brokers offer to lower - or lower without notifying the client - the cost of delivery by undervaluing the invoice value of the cargo. This is a high-stakes gamble with customs valuation that isn't worth the risk.
A defining feature of this scheme is a combined payment structure for the delivery - part of the payment goes through a bank account, part is taken through unofficial channels.
Right now the customs service is working especially hard to clear the import sector of agents who undervalue invoices. For example, customs is now issuing demands for additional customs payments before releasing the customs declaration, based on its own analysis of the goods' value.
The topic of agent quality and evaluation in import could easily fill several more posts - there's a lot to say about it, without a pause for breath. In this post we'll stick to general, useful information, and later on we'll go into the background of MATE and our clients.
Choose reliable partners and agents you can negotiate with and find compromises on pricing with. But not the other way around, chasing super-attractive terms while sacrificing reliability and safety 🤝
❗️We are always open to new long-term partnerships and proposals. For consultations and proposals, our managers are here - Ada and Rail