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Index > Knowledge > How can foreign traders Due to the fact that foreign traders engage in cross-border transactions, th
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2024/03/04
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How can foreign traders Due to the fact that foreign traders engage in cross-border transactions, th
Due to the fact that foreign traders engage in cross-border transactions, they often face significant risks. These risks can range from transaction failures and financial losses to market development failures, with all initial efforts being in vain. Therefore, for foreign traders, it is very important to do a good job in risk management. So what risks may foreign traders encounter in cross-border transactions?

1. Risk of freight increase

International freight prices fluctuate greatly because they are often influenced by various factors, such as previous epidemics and local conflicts, which can lead to problems on some routes and affect the overall freight prices.
 
 
 Foreign traders need to have a clearer plan for the transportation of goods to avoid having freight times uniformly fixed within a certain time period, as once problems arise, it can easily lead to a significant increase in freight costs. If the value of the goods is high, foreign traders can also reduce the overall shipping cost through overseas warehouses.

2. Supplier risk

For foreign trade companies or foreign trade SOHO, suppliers are also a risk. After obtaining the order, if there is no timely supply of goods, it will not only lead to the order not being completed smoothly, affecting reputation, but also may face the situation of breach of contract compensation.
To reduce supplier risk, foreign traders need to maintain good relationships with multiple reliable suppliers. If foreign traders have a large shipment volume, they can also divide the orders into different suppliers, which will reduce the risk much.

3. Customer risk

It is common and common for customers to face operational difficulties and maliciously refuse to pay the final payment. However, due to the fact that most customers are unwilling to accept payment before delivery, in order to obtain orders, foreign trade often chooses to accept payment before delivery or deposit first. Therefore, in order to reduce risks, foreign traders must conduct customer background checks.

You can directly search for the customer's name through tracking data, and you can see the detailed information of the customer, including their transaction records, partners, etc. For example, the purchaser we searched for named "TO THE ORDER OF THE SHIPPER", we will find that its transaction frequency is very frequent, and it has generated hundreds of transactions with each purchaser, indicating that it is still relatively reliable.
 
 
（Source：ueedata）
 
If you find a purchaser with low transaction volume but a large number of cooperating suppliers, and each supplier only has one transaction, then you need to be more cautious.

4. Import and export country risks

The risks of import and export countries are usually reflected in tariff adjustments, exchange rate adjustments, policy adjustments, and political risks, especially in recent years when the global situation is unstable and political risks are constantly expanding.
These risks are quite fatal for foreign traders. On the one hand, they may come suddenly, and on the other hand, they cannot be solved solely by the foreign traders themselves.

To deal with this risk, the only thing foreign traders can do is to lay out a multilingual market. This way, even if one market encounters problems, foreign traders can break through the predicament by shifting their business focus.

If you want to learn more about strategies to deal with foreign trade risks, you can send us a private message~
 
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