When proving a potential customer with a price list should this be in GBP or the currency the customer is based?

Question posted by Liz Morana, on behalf of Mumba Designs in SK9

Hello,
I run a small UK based maternity lingerie company where I design the products, but they're manufactured in China and shipped to the UK. I store all of my goods in the UK.

I currently have interest for my products from an online retailer in Hong Kong. They have asked me to provide them with my warehouse location and price list.

Can someone please advise, me on both.
- Is it a negative for export if my warehouse is based in the UK?
- Should I be providing my price list in GBP or in HK Dollars

Many thanks

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I have recently worked for companies that have their main warehouse in the UK, and on some items being made in China we would set up a triangular invoicing system.
This would mean shipping the goods from China direct to your customer in whatever country .. Australia, South Africa, Brazil etc without them coming to your UK warehouse. This saved about 15% on freight and duty and we passed that onto the customer.
So we still made the same margin.
We invoiced to them from the UK in US dollars (though goods went direct with packing list only) and as a universal currency we then used this price list for other customers who saw an advantage or were closer to china.
You need to set up an agreement on quality control with your manufacturer, because at the moment you are getting the goods into your own warehouse in UK, where you can check.
The other issue you have to face I.P. Protection and Trademark protection. Once the HK company knows where to buy they could be tempted to bypass you after the first order and just negotiate directly with the Chinese manufacturer.
Feel free to get in touch with me direct if you wish
Gilio

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Liz Morana, on behalf of Mumba Designs in SK9.

Thanks for your help Gilio

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Olivier BRUSLE, on behalf of ACTIOM in SW1V.

The best supply chain management practices are:
1. Quote in the customer currencies (to facilitate the decision-making) and manage the exchange rates by yourself (with daily updates).
2. Commit to lead times rather than explain where goods are coming from: that's what real customers are concerned with.
3. Secure your manufacturing & distribution exclusivity with IP protection (it is your design, right?).
4. Actively manage quality through quality audits by third parties
5. Set up a distribution model which minimises total cost and customer lead time. If the manufacturing is in China, then you can even get the goods into a Free-Zone whereby you will only incurr duties when goods are shipped to customers. You will significantly improve your cash flows and reduce your working capital.

If you wish more information, feel free to contact me.

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Liz Morana, on behalf of Mumba Designs in SK9.

Thank you Oliver

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Hello Liz,
When you issue your price list take care that you have thought through all the costs that you need to build in.

Remember that different countries of destination need different things such as labelling content, packaging, marketing material, etc. etc. There are lots of hidden costs.

I have prepared a short free seminar on costs and costing for Open to Export (see Bootcamp listings) which could help you avoid costly omissions.

Regards,
Susan
www.morley-consulting.co.uk
enquiries@morley-consulting.co.uk

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David Rosenberg, on behalf of ParityFX Plc in HA7.

Hi Liz

My name is David Rosenberg and I own a FX business called ParityFX Plc. Having been in the FX market for over 20 years I am able to provide you with good honest advice.

The question you asked: - Should I be providing my price list in GBP or in HK Dollars - the simple answer is provide it in GBP!!

The reason I say this is quite simple. You have costing in place based in GBP. If you start quoting in another currency you are at the mercy of the GBP/HKD FX rate. While the USD/HKD rate is mostly pegged, the one you will have to worry about is the GBP/USD. I guess the last thing you want is to worry about what the rate is and if it is against you to what extent. This will ultimately cut into your profits if the rate goes against you. Thus quoting in GBP simplifies it.

Having said that (sorry to complicate things), if you asked me what the forecast is for GBP/HKD in the coming months I would say GBP is going to weaken vs the HKD, in other words if you were paid in HKD, you would get MORE GBP and thus your revenues would be higher than if you quoted in GBP originally. If you did this, you have 2 options (1) open a HKD account with your bank so that your client can pay you in HKD or (2) get your client to pay the HKD into a company like ParityFX and we do the GBP/HKD exchange on your behalf, depositing the GBP proceeds directly into your GBP account.

Sounds pretty complicated doesn't it. You are not alone. Many companies don't have USD, HKD etc accounts and thus find themselves at the mercy of their banks FX rates and charges. ParityFX does not charge fees, commissions or transfer charges. It is free!!

My advice to all my customers who are in the same boat as you is if you can quote and charge in GBP, do it. Your business is about growing Mumba Designs, not about trying to manage your FX needs.

I am available anytime should you wish to discuss this in more detail.

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