Business Opportunities as African Buying Agents

Welcome, Guest. Please login or register.
July 29, 2010, 06:31:39 AM

News:

www.flickr.com

The African Diaspora (TAD) Forums

Business, Investments and Finance

Business and Investment Opportunities (Moderator: Forums Administration)

Business Opportunities as African Buying Agents

0 Members and 0 Guests are viewing this topic.

« previous next »

Pages: [1]

Poll

Question:

How would you rate an African buying agency as a viable business opportunity, based on the article below?
[Please login to vote.]

5- Very High

4- High

3- Medium

2- Low

1- Very low

Author

Topic: Business Opportunities as African Buying Agents (Read 314 times)

Maru Baines
Global Moderator
Pioneer Member

Offline

Posts: 11

Business Opportunities as African Buying Agents
« on: March 16, 2006, 05:27:01 PM »

Given the significant differences in culture and business practices between Africa and the rest of the world as well as the increasing negative image Africa has, a business opportunity as a buying in the African Diaspora could seem to be a lucrative adventure. Such an agent would work very closely with local African staff or businesses with well grounded local connections and who understand the customs and regulations of the particular African country in order to successfully source desired products those African countries.

The cultural difference and the poor image of Africa as a viable source of high quality and products and products (other than poorly crafted curios) make it difficult, and often impossible, for foreign buyers to conduct business effectively in Africa without the presence of a reliable and knowledgeable buying agent, or similar type of middleman, because of the following reason:

Business is done on a more personal basis relying heavily on personal relationships and trust as the local business laws may not offer as much protection as one could expect. A buying agent provides continuity with the local vendors, which is often critical in the development of the vendor relationship, and may not exist between the buyer and the vendor. A buying agent also makes efforts to get to know the buyer and the company represented by the buyer.
Because the buyer typically does not understand the local language and/or customs, it is quite difficult to gauge the strength of a vendor’s statement or position. A buying agent's judgment is essential in assessing a vendor's position and negotiating acceptable arrangements with qualified vendors.
The perception of quality and functionality can be confusing for foreign buyers. Where such minute details as the correct shade of colour are considered important in determining the quality of a product, the African vendor may consider product functionality to be more important in determining the quality of the product. Buying agents, with knowledge of the foreign buyer’s needs and cultures, can resolve these types of problems.
In the African markets, the buyer is responsible for communicating the exact requirements to the vendor, e.g., price, quantity, product specifications, and packaging. The vendor rarely says "no," which means it is necessary to assess the vendor's capacity to deliver the required product and to negotiate the appropriate price. Buying agents are accustomed to this style of doing business, and their skill in these types of vendor negotiations is particularly helpful to buyers who have less exposure to this method of doing business.

The essence of the buying agent function is to assist the buyer in making the best possible purchase contract. These agents are asked to negotiate some or all aspects of the relationship between the buyer and the vendor. Buying agents are the "eyes and ears" of the foreign buyers and have the day-to-day responsibility of protecting the buyer’s interests. Such day-to-day responsibilities may include:

Identifying potential vendors and conducting initial negotiations with them;
Handling ongoing dealings with vendors regarding various issues, such as delivery, production, and quality that may arise during the relationship;
Resetting prices, terms, and so on for subsequent time periods (usually on an annual basis); and
Re-sourcing products, where appropriate.

The steps described below are the elements of a full sourcing/re-sourcing action. Typically, a buying agent for vendors that have no established relationship with the buyer performs all the steps. Over time, through this process, the buying agent and the buyer create a list of established vendors from whom the buyer orders goods. In the case of established vendors, the buying agent gathers the pertinent information (e.g., capacity, delivery, and quality) and carries out preliminary negotiations with the vendor on a more informal basis throughout the year.
The elements of a full sourcing/resourcing action are:

Buyer instructs buying agent to initiate a search for a product vendor.
Where no established relationship exists, the buying agent develops a list of potential vendors and their characteristics.
Buying agent contacts product vendors and evaluates the quality, capacity, reliability, and financial stability of the vendor and conducts preliminary negotiations regarding potential prices, quantity, and certain other conditions.
Where no established relationship exists, the buying agent reduces the list of vendors to a "short list" based on the buyer's requirements and the information.
Buying agent reports the results to the buyer.
Buying agent conducts preliminary negotiations with the "short list" vendors or established vendors and arranges factory meetings for the buyer.
Buying agent helps facilitate the negotiation process during the buyer's on-site meeting.
Buying agent obtains product samples and arranges for the quality tests required by the buyer.
Buying agent aids in the final negotiations with vendors regarding price and such details as packaging and shipping dates.
Buyer issues a purchase order in the name of the retailer, which is presented to the vendor by the buying agent. The agent may present the purchase order issued in the name of the retailer or may issue its own separate purchase order. In addition, the buying agent arranges the means of payment to the vendor, usually a letter of credit (LC).
Buying agent finalizes production schedule and delivery date with the vendor and assists in logistical arrangements such as shipping. The agent also tracks the order, ensuring that it reaches the retailer at the agreed time.
Buying agent authorizes payment to the vendor.
Buying agent negotiates resolution of after-sale claims between the buyer and the vendor.
Buying agent conducts or assists in negotiations needed to reset prices, delivery dates, and terms in subsequent years.

Overall, one could easily make a good living as an African buying agent and at the same time assist the hard working African businessepeople sell their products abroad. As a buying agent, one oculd easily make between 1% to 10% of the purchase price and sometimes more. The key to this type of business opportunity is being able to develop long lasting relationships.


	Logged

Pages: [1]

« previous next »

Jump to:

Page created in 0.251 seconds with 23 queries.