Advices of experts of the Uzbek-Chinese Trading House regarding contracting, logistics and insurance of goods from China
Uzbek-Chinese Trading House - the market leader in the supply of equipment, raw materials and special machinery to Uzbekistan - celebrates its 10th anniversary this year. In honor of the anniversary, a cycle of interviews with experts of the UKTD is organized, dedicated to a particular stage of procurement of equipment, in which the experts share their experience and give practical advices regarding the business. Another material of the series is dedicated to the preparation of contracts, the subtleties of logistics and cargo insurance.
In the previous article, we told about how to choose the right manufacturer in the Chinese equipment market. But the choice of a reliable manufacturer is only the first stage in a complex chain of your project launch. It generates a lot of related issues: how to execute correctly an international contract, how to deliver the equipment quicker and what to do to reduce the risks of transportation. Muzaffar Kasymov, the Deputy Head of the Uzbek-Chinese Trading House, tells us.
International contracts and production of equipment
— What is the importance of an international contract with the manufacturer? What are the problems in working with the Chinese market?
— According to statistics, more than 90% of our clients receive loans to start new businesses. The most important document in providing the loan for purchase of equipment is the contract with the plant manufacturer. And the degree of elaboration of such a contract directly affects the time of provision of the loan and the success of the project as a whole.
Preparation of an international contract is a complex and multi-step process. And in the case of the Chinese market, full of peculiarities, this task is doubly complicated. It requires multiple visits to China to sign the documents and involvement of the whole staff of specialists: translators, consultants, lawyers, economists and technicians. Typically, novice businessmen do not possess such a staff of employees, so, the preparation and signing of a contract with the manufacturer may take several months or even years.
There is a solution, of course: it is often faster, more reliable and cheaper to apply to a local supplier company, which will undertake the preparation of a contract and will assist in the collection of documents for the loan.
— The manufacturer has received the payment and informs about the readiness of the equipment for shipment. What should be taken into account at this stage?
— Warehouses of the manufacturer are usually limited in size, so they are interested in the quick delivery of the order implemented. However, you should not hurry. Careful inspection of the equipment at the site is the key to further proper functioning and rapid customs clearance. The equipment produced must fully comply with the technical specifications, and all deficiencies of the manufacturer identified must be eliminated before signing the Act of transfer-and-acceptance.
You can also entrust an independent company to carry out the inspection: you will save time and money on a trip to China, while a professional inspector checks the equipment and gives a detailed report.
The inspection of equipment for compliance with technical specifications in the manufacturer factory in China.
Logistics and transportation
— How to choose a reliable transport agent?
— Careless transport easily turns the expensive equipment into a pile of scrap metal. Therefore, the choice of transport agent that rapidly delivers the equipment without any damage is a task requiring a special attention. The problem of selection is compounded by the fact that there are thousands of competing carriers in China.
In this case, it is better to choose one of the largest players in the market. These companies highly appreciate their reputation and provide the best services. Study company websites, system of tariffs, as well as the conditions under which they carry out the transport. Contact their manager, clarify guarantees and speed of delivery. The leading transportation agents have in their staff the logistics specialists able to speed up the passage of goods in the event of congestion at the customs or other hubs.
— What are the factors affecting the speed and cost of delivery? Why some agents provide their services much cheaper?
— Today, the most optimal way of delivery in terms of price and speed is by rail. On average, a standard container route fr om China to Uzbekistan takes 15-18 days. However, many agents propose to increase the time of delivery up to one month, offering discounts of up to 20% of the cargo. This is the way how the Chinese railroad employees stimulate loading of internal transport routes. A significant reduction, of course, looks tempting, but also entails a high risk of longer delay of delivery.
Make sure that the discount on delivery is not related to savings on packaging materials. Package price is not comparable with the cost of equipment, and only the properly prepared cargo will stand for a transport for thousands of kilometers.
Some transport companies offer lower prices, but keep silence regarding the unaccounted costs. In this case, there is a major risk that you will be required to pay a separate fee for related services (loading and unloading) and internal customs clearance.
Often, only a long-time experience in the China market allows choosing a reliable transport partners to ensure prompt delivery of goods at reasonable prices.
— What is consolidation and how to use it to reduce the price of transportation?
— Sometimes, the cargo is much smaller in size than the standard railway container. In such cases, many transport agents offer consolidation services to carrying small cargoes of different senders in a single container. This reduces the delivery costs proportionally.
Transport of railway containers with consolidated cargos.
Issues of insurance and comprehensive delivery services
— How to reduce the risks of transportation?
— Transportation of the complex and expensive equipment over long distances expectedly entails the risk of damage. A reliable solution of this issue is the insurance of cargo for all the route by an international insurance company. But even in this case, there are some nuances. It is important to note that according to the terms and conditions of international trade, the insurance company is liable only up to transfer of the goods to the customs warehouse of destination point. In the case of receipt of equipment in an improper condition, it will require a lot of documents from the insurance company and the customs office to determine whether the damage was made before arrival to the destination and whether this is an insurance event. Experienced suppliers know how to deal with these issues in the shortest possible time and how to prevent them.
— How to facilitate as a whole and how to accelerate the process of delivery and customs clearance of equipment?
— Practice shows that the main reason for the long-time process of purchase and transport the equipment from China is a complex document flow and the peculiarities of the market, exacerbated by the language barrier. Inexperienced businessmen do not have the necessary experience and the staff of necessary specialists, which significantly delay the coordination of contracts and obtaining of necessary permits.
The solution is to apply to an experienced supplier who will provide all services on execution and transport of goods on “turnkey” basis. In this case, under a supplier we mean an import-export company with offices in Uzbekistan and China.
Only such a provider will provide all services in a “single window” mode:
· Preparation and coordination of an international contract, taking into account the subtleties of the legislations of Uzbekistan and China.
· Preparation of a package of documents for financial and credit institution.
· Control of production of equipment and its thorough inspection during the acceptance at the factory.
· Selection of a reliable transport agent, which guarantees the delivery of goods within the agreed period.
· Logistics monitoring and tracking of location of the goods with provision of the reports.
· Coordination of all issues with an international insurance agent and purchase of insurance for the cargo.
· Preparation of a package of documents for customs clearance in Uzbekistan.
— In this case - wh ere to find such a provider?
— Examine the market of relevant services and the companies providing them. For example, UKTD provides to the entrepreneurs the whole range of services from equipment selection to its final commissioning in the customer's premises.
Years of experience in the markets of China and Uzbekistan allowed forming a system of quick delivery of any goods. Thanks to the work with proven partners, the Company always supplies the goods safely and within the agreed time frame.
Managers of UKTD are ready to give any advice on the following phone numbers:
(+99890) 175-0-175, 915-0-915.
You can also contact us via the website or by e-mail:info@uzchinatrade.com.
