Transfer Pricing: Government v Buying offices and their Parent companies

My new book Birnbaum’s Global Guide to Agents and Buying Offices is due out in the next two weeks.  The subject is described in the title. The following is taken from the back cover:

20 years ago, every middleman —every agent and every buying office —provided the same basic services.  Today the list of required services has expanded geometrically and skill-set needed to provide those services have expanded exponentially.  The days when the middleman needed only merchandisers and QC are long gone. 

Today, the difference between a first class and a mediocre middleman is the difference between success and bankruptcy.

 

Are you an agent or a buying office?

This book will tell you whether you are in front, on the cutting edge or at the back, about to fall off.

 

Are you a brand importer or retailer?

This book will tell you what is on the cutting edge, and what you may be missing.

 

Every customer asks the same basic question: What is a fair commission?

 

The answer depends on three factors:

Who are you?

What do you need?

How good is your middleman?

The short answer is:

In some cases 5% is too high. More...

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Operating a Successful Small and Medium Size Factory in a World of Giants

On 11 November, I posted a note on birnbaumgarment.com for readers to suggest topics of special interest.

Here is the first request

Dear David
Glad to hear your proposal; always a bit afraid to ask, knowing your tight schedule….
Here is something I will like your to see your point of view: You frequently talked about the big suppliers to macro international factories with capacities in many countries and one buying office for all, like Hong Kong. What do you think of the rest of us (suppliers) small suppliers should do? Do you think we will be swallowed just like Walmart has done with all the small retailers in the US; or do you think we will have hope working with smaller customers that could not reach the minimum of this macro factories?
All the best ! Love the blog
Jaime

Operating a Successful Small and Medium Size Factory in a World of Giants

An average small and medium size factory cannot work with a large customer:

1.    The large customer cannot afford to work with the small supplier because the customer’s overhead costs would be too great.  The factory that ships 100,000 units annually requires the same follow-up as the factory that ships 1,000,000 units annually, with the result that the cost per unit working with the small factory is 10 times greater than working with the large More...

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Posted in Customer Strategies, Factory Strategies, Garment Factories, Garment Prices, Garment Sourcing | 5 Comments

Looking for Input

Dear Reader:

I have been writing this blog for the past three years. According to the usage statistics data, as well as comments from friends and colleagues, birnbaumgarment.com has attracted a surprising large following, for which I am very grateful.

However, to date the conversation has been mostly one-way.

I write.    About 6000+ people read.

A blog should be a two-way .

I would like to suggest the following. If you are a student or a professional, I want your input

If you have a question, let me know.  I will answer.

I you have a topic about which you want information or even an opinion, let me know.  I will try to write an article.

Help me with you input.

DAVID BIRNBAUM More...

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The Decline and Rise of the Buying Office

Twenty years ago major garment importers and retailers began to move away from independent agents to set up their wholly owned buying offices.

In those early days, every customer required their middle man (agent or buying office) to perform the same work.  Every middleman carried out the same work.  For the most part the quality of work differed little from one middleman to another.

Everyone carried out the same 5-basic tasks

a      To select the supplier factories;

b      To allocate orders to those factories;

c      To act as a Nexus between the customer and the factory.  To ensure that the factory received and understood the customer’s instructions and to communicate the factory problems and requests back to the customer;

d      To ensure the factories follow all specifications;

i.         In-process inspection

ii.         Final inspection

e      To alert the customer on a timely basis of existing or impending problems.

If the customer’s annual imports at FOB was in excess of $10 million, the wholly owned buying office made commercial sense. Middleman commissions ranged from 5-10% depending on customer size and other relevant factors. This allowed a total commission of between $500,000 to $1,000,000 — sufficient to pay for a decent size office, and then some.  The large customer, which twenty years ago was defined as importing $100+ million at FOB More...

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Posted in Garment Sourcing, Innovation, U.S. Government | Leave a comment