International Trading Company – Different Roles They Play

With increasing trade liberalization and reduced tariff barriers globally, international trading has gained remarkable prominence recently. Export-import is a common business practice today, especially for companies that aim at global growth, diversification and international market penetration. However, complex procedures and unforeseen risks involved in this process often turn off businesses from engaging in profitable trading transactions. This is where an international trading company comes into the picture – bridging the gap between the buyer and the sellers, streamlining operations, mitigating risks and protecting interests of both the parties to trade.

What is a Trading Company?

In its strict sense, a trading house is one that purchases products from one country and resells them to another country, with a profit margin in between. However, many foreign trading brokers also present themselves as trading companies though they do not buy or sell commodities directly. They only act as an intermediary between the importer and exporter by facilitating the trading process and earns a lucrative commission on the goods sold.

Typically, the functions of an efficient trading company like Suisse Commodity are:

Identifying reliable suppliers with the capacity of high volume transactions

Negotiating on terms of sale and pricing

Procuring goods in bulk (import)

Inspection and certification

Product insurance

Discovering prospective buyers and influencing them with a competitive deal

Ensuring buyer’s creditworthiness

Agreeing upon trading terms, pricing and product delivery

Managing logistics, transportation and customs clearance

Distribution through the supply chain

International trade financing

Roles of a Trading Company

On the basis of the business contract, a trading house can function in the following ways:

1. Exclusive Distributor: In a true sense, the primary role of a trading company is that of an exclusive distributor who acts on a simple import-export basis. They will buy (import) a certain commodity from a country at a specific price and resell (export) it in another country at a mark-up price to earn a profit. In this case, the producer or manufacturer of the commodity may not have any control over the export price determined by the trading company. The entire process of import and export is managed by the latter itself and ensuring lucrative outcomes to both the producer and the consumer.
2. Buyer’s Agent: Many international trading houses also play the role of a buying agent for importers who want to purchase certain goods from a particular country or territory. Herein, their key responsibilities include discovering competitive suppliers or exporters from the desired country; negotiating terms of payment, pricing and delivery; and managing logistics, shipping and trading documentation.
3. Seller’s Agent: Trading companies may also enter into a contract to serve as sales agents for domestic suppliers or exporters. In this case, the former identifies the high-potential market for the said product and helps build a strong presence that drives import orders for the producer or manufacturer. They can also act as a negotiator to determine the most profitable price margin for the exporter. To protect the seller’s interest, the trading house will ensure the creditworthiness of the buyer to reduce the risks of non-payment. Some companies, such as SUISSE COMMODITY, also provides insurance of goods to cover the losses that may arise during transit. It may also be responsible for logistics, transportation and other documentation required for international trading.
4. Intermediary: They are also foreign trade brokers but do not act on behalf of the exporter or the importer – their role is that of an intermediary. They serve to bridge the gap between the parties to the trade, offering value-added services like facilitating negotiations, handling shipping and product delivery, documentation, managing payments, etc. They charge a particular percentage as their commission for export-import operations.

Conclusion

The role of an international trading company is important for both the exporter and the importer. However, based on different ways these trading houses operate, you have to pick wisely by determining your core needs. Evaluate the four integral roles these companies play in foreign trading and decide which one fits into your business objectives or trading goals perfectly. Be clear of their functions and how they can help your business flourish. A consultation with their expert team is important to know their structure and decide upon the trading terms.

SUISSE COMMODITY is located in Sharjah, 70 km from Jebel Ali Port, Dubai. Its core objects are import and export on the commodity market, including primary materials / primary products, food and non-food.