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What is underwriting?
Underwriting, also known as exclusive distribution, refers to a trade method in which a supplier grants the right to operate a certain commodity or a certain type of commodity to a foreign underwriter in a certain region and within a certain period through an underwriting agreement. In other words, the underwriter enjoys the exclusive franchise right to the designated goods within the time limit and territory stipulated in the agreement.

The exclusive sales agreement itself is not a sales contract. It stipulates the rights and obligations of both parties and the general trading conditions. Its main contents are as follows:

1, the basic relationship between the two parties. Make it clear that the relationship between exporters and underwriters is a buying and selling relationship. Underwriters should buy out the goods with their own funds and sell them at their own expense.

2. Goods, regions and time limit for exclusive sale. The agreement shall stipulate the type or model of the insured goods and the geographical scope of the underwriter's right to operate, which shall be decided by both parties according to the exporter's marketing intention, the underwriter's sales ability and the promised sales quantity. The underwriting period is the validity period of the underwriting agreement, which is generally one to two years, but also indefinite, with only the suspension clause or renewal clause.

3. Franchise. Franchising includes exclusive right and exclusive right. The former means that the exporter promises not to sell the goods to other customers in the underwriting area within the validity period of the agreement. The latter means that the underwriter promises to buy goods only from the agreed exporters, and shall not buy similar goods or competitive substitute goods from third parties. Among them, the exclusive right is an indispensable part of the exclusive distribution agreement and the main condition that distinguishes it from the exclusive distribution agreement.

4. The minimum quantity or amount of the insured goods, that is, the minimum amount that the insurer must insure from the exporter within the time limit stipulated in the agreement. Some underwriting agreements do not stipulate this.

5. The price and general trading conditions of the insured goods. The price of the insured goods can be agreed at one time or according to the market situation when concluding a sales contract. General trade terms refer to the terms applicable to each transaction during the agreement period, such as payment terms, inspection claims, insurance, force majeure, etc., which can be agreed in the underwriting agreement to simplify the contents of future sales contracts.

Principles of underwriting:

(1) Dealers with high loyalty and strong promotion ability must be selected. For high-end products, we must focus on choosing dealers who can cooperate with the company's promotion and brand planning programs and have a good terminal image. For low-priced products, you can choose dealers with smooth and extensive wholesale network, strong distribution ability and market impact ability;

(2) The types of products insured must be determined by observing and analyzing the historical sales records of dealers-which dealers are particularly suitable for promoting products of which types, grades and market segments must have detailed data analysis. At the same time, we also consider capital, region and product characteristics;

(3) Underwriting products generally have higher profits, which can give dealers great sales enthusiasm, so manufacturers can give dealers certain sales pressure according to this psychology-that is, promise to sell in stages to ensure their sales and profits.

Market function

1, the role of the country in promoting economic development. Promote the horizontal financing of funds and the horizontal connection of economy, and improve the overall efficiency of resource allocation.

2. Establish and improve the management mechanism of self-restraint and self-development of joint-stock enterprises.

3. Open up investment channels for investors, expand the scope of investment choices, adapt to investors' diversified investment motives, trading motives and interests, and generally provide investors with the possibility of obtaining higher returns.