How In-Country Buying Can Derail Projects
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Project type: Global Rollout
Destinations: Brazil, China, India, and Mexico
Issue: Changes in compliance regulations
It is surprising to find out that the method of centralized IT procurement is often considered to be too complex (especially when considering the customs clearance requirements), too expensive (surely it is cheaper to purchase in the foreign country for that office), or too lengthy (it should be a lot quicker just to purchase in-country for that office).
However, a centralized procurement approach is beneficial to all parties involved. The buyer does not have to deal with various vendors or international purchase orders. The reseller is able to maintain the complete deal and extend out of saturated markets—a massive win-win. We recently worked with a reseller whose project had a number of these complexities. The client initially tried an in-country procurement only to be found in a sticky situation.
Project Complexities for International Deployment
A reseller reached out to TecEx looking to access an international opportunity that required the deployment of bespoke configured networking gear from their headquarters in the USA to a single end-user with separate physical presences in Brazil, China, India, and Mexico.
Furthermore, added complexities influenced the project, namely:
- Cost: The end-user was leveraging a financing party to secure funding for the project. This meant that there was no room for amendments or deviations in the costings.
- Lead time: The financing opportunity was only available for a certain time period, which included Proof of Delivery; failing that, the financing would lapse.
- Legal: No party involved in the transaction had the legal ability to act as the importer in any of the destination countries.
With all these concerns in play, the client assumed that the project was better suited to an in-country procurement model. However, this was highly unsuccessful.
When In-Country Procurement Goes Wrong
Sometimes, it does work out to make use of in-country resellers and distributors. However, it was unsuccessful in this case due to three main concerns.
- The distributors in each country were unable to offer the bulk order discounting available to the client when sourcing directly from the OEM in the United States. This made the project unaffordable for the end-user.
- Our client had concerns regarding quality assurance, as they could not see the gear physically and their team of in-house engineers would need to be flown out to configure gear within each destination country.
- The financing party had a non-negotiable requirement that ownership of the goods remained with them in the USA. This was impossible to achieve using local distribution partners.
Compliance Concerns
An additional complexity came into play in this situation. While the client and end-user were negotiating, the OEM of the equipment suggested that the end-user buy directly from the distributor within India. India’s customs compliance requirements are highly complex and have recently undergone a series of changes. This meant that all the equipment the distributor had imported a year ago was now non-compliant and would need to be exported and reimported into the country before the end-user could even consider buying the products.
Using an IOR ensures that their clients would never be in this situation.
TecEx stepped in, offering a full DDP solution meeting all the projects requirements.
Central Procurement Solutions
TecEx’s Delivered Duty Paid shipping solution ensured that all the pain points in the project could be successfully mitigated. The client and end-user were able to make use of a centralized procurement model – buying the technology in the US and importing the goods to each of the four global offices.
- Cost sensitivity: TecEx provided upfront and accurate project quotes for each leg of the deployment into each country, inclusive of international freight, comprehensive liability cover, customs clearance, payment of duties and taxes, and final delivery.
- Quality assurance: Our client was able to prepare, configure, and test the gear in the comfort of its own warehouse before handing the goods over to TecEx to manage the logistics phase.
- Lead Time Sensitivity: TecEx’s accurate and dynamic lead time calculator ensured that lead times were accurate and the goods were delivered without concern.
- Ownership of the goods was able to remain within the USA, allowing for a simple local sale for our client.
TecEx, leveraging its international footprint, acted as the Importer of Record in each destination country, ensuring that the end-user and our client were entirely protected from any legal, audit, or financial risk associated with importation.
Procuring the tech hardware in-country often feels like the safest and easiest way to outfit local offices – however, this often comes with a lot of other risks and financial constraints. Over our years of experience, we have seen how a centralized purchase is by far the best option for most of our clients. End-users are more protected, resellers retain their deals, and soft efficiencies fall away.
Looking for a
similar solution?
Contact TecEx to help with shopfitting, design, and architectural projects in foreign markets. Our global presence, project management, import compliance, and logistics network allow us to offer a comprehensive end-to-end solution for clients throughout the supply chain.
Looking for a
similar solution?
Contact TecEx to help with shopfitting, design, and architectural projects in foreign markets. Our global presence, project management, import compliance, and logistics network allow us to offer a comprehensive end-to-end solution for clients throughout the supply chain.