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Step 12: Negotiating and quoting in exports

You are here:Step 12: Negotiating and quoting in exports > Quoting for exports



Quoting for exports



Export quotations may take various forms: a verbal offer made personally or by telephone, or a written offer made by fax, letter (sent by post) or an e-mail offer. It may also be in the form of a pro-forma invoice which is essentially an outline of what the commercial invoice would contain - showing all the details of the order and shipment which would be in accordance with the specifications of the buyer as negotiated with him/her. Quotations issued on pre-printed letterhead stationery is also quite common. Export quotations should describe the goods, the quantity involved, any standards prescribed to, the unit price, the total value of the order, the delivery and payment terms, the validity of the offer, and any discounts allowed. You need to provide all of the information the importer needs to make a decision to accept your offer; the last thing you want is the importer asking you to add or delete information - this backwards and forwards just slows down the purchasing process.

Bear in mind that the export quotation in business law is deemed to be an offer. Once accepted by the buyer, a legally binding export contract comes into being. Should the foreign buyer respond to your offer with a counter-offer (e.g. agreeing to buy only, with different payment terms), then an export contract is formed only if you accept the counter-offer. It is important, therefore, to ensure that you have covered all bases and addressed any issues of concern to you (such as your ability to meet the requirments of the importer in terms of quantity, quality, delivery schedule, price, etc. Once you have submitted the order and the buyer accepts it, we have said that this is a legal contract and you will be obliged to meet your obligations in terms of the contract. You need to get your facts right before committing yourself to an order.

The SCP-approach to quoting

The most usual form of export price quotation today is CIF, and at named foreign port of discharge. This means that the exporter is responsible for paying all costs until the goods arrive at the foreign port. The price is usually quoted in US dollars. The foreign importer can then calculate his landed cost for the product by adding to the CIF price quoted, the import duty, local taxes and local transportation costs.

To make the product more attractive to foreign buyer, exporters sometimes quote F.O.B. price and a named foreign port or city. Thus, for example, a Japanese firm may quote FOB Hamburg price to its European customers. Actually, these prices are identical with C.I.F. prices because all the cost of shipping the goods are paid by the exporter. The importer only needs to add on the duty, taxes and transportation costs from Hamburg to his warehouse in Frankfurt, to calculate his final cost.

On the other hand, the exporter may quote F.O.B. Cape Twon or F.O.B. Johannesburg International Airprot (JIA), what this means is that the cost of transporting the goods up to the point where the goods are loaded onto the Ship or Airplane and any other service charges are paid by the exporter. The cost and all other charges for shipping from Cape Town or Johannesburg International Airport to the importer warehouse will be paid by the importer.

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Step 12: more information

Step12: Negotiating and quoting in exports
      .The art of negotiating in export markets
      .Doing business abroad

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More information on Step 12
Learning to export...
The export process in 21 easy steps
Step 1: Considering exporting
Step 2:Current business viability
Step 3:Export readiness
Step 4:Broad mission statement and initial budget
Step 5:Confirming management's commitment to exports
Step 6: Undertaking an initial SWOT analysis of the firm
Step 7:Selecting and researching potential countries abroad
Step 8: Preparing and implementing your export plan
Step 9: Obtaining financing for your exports
Step 10: Managing your export risk
Step 11: Promoting the firm and its products abroad
Step 12: Negotiating and quoting in exports
Step 13: Revising your export costings and price
Step 14: Obtaining the export order
Step 15: Producing the goods
Step 16: Handling the export logistics
Step 17: Export documentation
Step 18: Providing follow-up support
Step 19: Getting paid
Step 20: Reviewing and improving the export process
Step 21: Export Management
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