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

Question

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

Answer

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

Answer

Thanks for your help Gilio

Answer

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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