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BUSN 3200-001 Trade Project: KN95 Mask

This document summarizes the details of importing KN95 masks from a supplier in China to sell in Canada. It outlines the product details, supplier credentials, costs associated with licensing, purchasing, importing and selling the masks. These costs include the medical device license, product costs, shipping, import fees, inspection costs, and expected profit margins from wholesale and retail sales. It also discusses risks and mitigation strategies, required regulatory approvals, sales terms, inventory management and industry references. The total landed cost of importing 100,000 masks is estimated to be CAD 60,830.43 which allows for wholesale and retail profit margins.

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Tanveer Kochhar
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102 views16 pages

BUSN 3200-001 Trade Project: KN95 Mask

This document summarizes the details of importing KN95 masks from a supplier in China to sell in Canada. It outlines the product details, supplier credentials, costs associated with licensing, purchasing, importing and selling the masks. These costs include the medical device license, product costs, shipping, import fees, inspection costs, and expected profit margins from wholesale and retail sales. It also discusses risks and mitigation strategies, required regulatory approvals, sales terms, inventory management and industry references. The total landed cost of importing 100,000 masks is estimated to be CAD 60,830.43 which allows for wholesale and retail profit margins.

Uploaded by

Tanveer Kochhar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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BUSN 3200-001

Trade project
KN95 Mask
Product details

● Anti haze KN95 masks from Anhui Tongcheng YaGe Health Materials Co. Ltd.

● The N95 has a filtration efficiency of 95%.

● Used for medical and commercial purposes.

● Comes with an adjustable headband

● Reduces exposure to airborne particles.

● Anti haze

● KN95 is considered equivalent to N95 produced by 3M


Supplier Details

● Anhui Tongcheng YaGe Health Materials Co. Ltd., located in Anhui in East China.

● Listed on Alibaba

● Good credibility

● 3/5 rating in two years time


Financial Aspects

License Cost
● Medical Device Establishment License
● Cost for the license is $4590
● License needs to be renewed every year.

Product Cost
● Order quantity = 100,000 pieces
● Cost per unit = USD 0.40
● Total cost of product = USD 40,000
Shipping Cost
● Delivery by sea is cheaper as compared by air.
● Delivery method provided by Alibaba is “Express Sellers Shipping Method”.
● Takes up to 30-60 working days.
● Shipping Cost = USD 1,400
● Total cost of product with shipping = USD 41,400

Import fee and other taxes 


● To import goods to British Columbia, a duty charge of 6.5% and a GST of 5% will be incurred.
● Duty Charge = USD 2600
● GST Charge = USD 2000
Inspection Cost
● Product quality check
● Alibaba provides a quality check option for USD 218.

Total and per unit cost


● Total expenditure to land in Canada is USD 46000
● cost of the product = CAD 60,825.43 + CAD 5 for transaction fee = CAD 60,830.43

Transaction fee and Payment method


● Payment can be done through Alibaba’s secure portal
Selling Price
Assuming 50% wholesale and 50% retail margin the selling price of the mask will be
Wholesale selling price = CAD 1.20 per piece or discounted price of CAD 5.75 for pack of five
Retail selling price = CAD 2.40 per piece or discounted price of CAD 11.50 for pack of five
Risk Mitigation
Currency Risk

● Fluctuation of currency rates


● Alibaba mitigates the risk by using third party contracts
● Bills of exchange

Country Risk

● It is combination of political and economic risk.


● Economic risk factors include GDP and fiscal deficits
● Political risk may include civil disobedience, social conflicts, strikes.
● Incoterms
Commercial risk
● Commercial risk refers to potential losses arising from trading partners.

● Difficult to gather information for private company

● Commercial risk can be prevented by engaging in third party contracts, using letters of credit etc.

● Other ways to avoid risk is to not sell on credit and establish contingency allowance on non-
payment accounts.
Required Industry/ Government Regulatory
Approvals
● N95 mask is a part of Personal Protective Equipment

● Facemasks of all types are classified as class 1 medical devices by Health Canada.

● A Medical Device Establishment License (MDEL) is required to import and distribute the product.

● All the importers have to follow the Good manufacturing practices as defined in the Food and
Drugs Act.
Sales Terms and Conditions for Retailer and Wholesaler

For retailer:
● Quality check the products imported before selling in the market.
● Negotiate the payment terms and conditions with the wholesaler.
● Determine if the manufacturer/wholesaler has the laboratory report that is ISO/IEC 17025
accredited and verified by NIOSH.
● If the wholesaler has the following test approved, then the masks can be legally sold in Canada.
For Wholesaler:
● Run a background check for the retailer.
● How big is the retail firm, market share etc.
● Negotiate the payment terms.
● Investigate or gather details about the performance of the company.
● Check their credit history and their paying back capacity.
 
Payment terms with the buyer
● The best suitable payment method for Canadian retailers will be 2% 10 Net 30.

● if payment is made within 10 days, a discount of 2% will be offered on the invoice price.

● the retailer will be expected to pay the full amount within 30 days.

● Due to the pandemic most of the credit companies have changed their policies.

Industry Default rates


● For wholesalers it will have a low or potentially zero, default rate on invoices.

● The period can vary up to 90 to 270 days.

● For the retailers the risk is high upto 90% since it totally depends on the sale of goods purchased.
Inventory Turnover Ratio
● Inventory turnover ratio is a method of measuring the number of times the inventory has been sold
or consumed in a given period.
Turnover Ratio = Cost of goods sold/beginning inventory + Ending inventory/2

Beginning inventory = 100,000 Ending Inventory = 5000

Cost of goods sold = 216,000 ($2.40 per piece) from the annual income statement

Average inventory = Beginning inventory + Ending inventory/2

= 100,000 + 10000/2

= 55,000

Inventory Turnover rate = Cost of goods sold/average inventory

= 216,000/55000

= 3.9
Perishable Inventory
● products that a firm sells that tend to lose their value over time.

● the pandemic has hit the world hard, N95 masks are now considered as essentials.

● The product does not come with a specific expiry date either

Return and Disposal


● Return of the product is only applicable if the product is damaged.

● The retailer can return the product or may not accept the delivery if the product does not qualify
the safety standards or the product is defective.
Refrences
● Anderson, S. A., & Gomez, C. G. (2020, April 1). Canadian government shopping for high-demand N95
masks on the international market. CBC.
https://www.cbc.ca/news/investigates/canada-searching-masks-international-1.5517276
● Bronca, T. B. (2020, April 8). COVID-19: A Canadian timeline | Canadian Healthcare Network. Canadian
Healthcare Network. https://www.canadianhealthcarenetwork.ca/covid-19-a-canadian-timeline
● AliBaba. (n.d.). Inspection Solutions - Alibaba.com. Retrieved October 25, 2020, from
https://inspection.alibaba.com/?spm=a2700.wholesale.0.0.5e5d4427vZr8np
● Strategies for Optimizing the Supply of N95 Respirators: COVID-19. (n.d.). Retrieved October 25, 2020,
from https://www.cdc.gov/coronavirus/2019-ncov/hcp/respirators-strategy/index.html
Importing Masks and Sanitizers into Canada. (2020, October 11). Retrieved October 25,
● 2020, from https://www.orbitbrokers.ca/importing-masks-and-sanitizers/

● Medical Device Respirator recalls - Recalls and safety alerts. (2020, October 27). Government of Canada.
https://healthycanadians.gc.ca/recall-alert-rappel-avis/hc-sc/2020/73137a-eng.php
● Health Canada. (2020, April 16). Fees for Examination of an Application for an Establishment Licence:
Medical Devices - Canada.ca. Government of Canada. https://www.canada.ca/en/health-
canada/services/drugs-health-products/funding-fees/fees-respect-human-drugs-medical-devices/medical-
device-establishment-licence-funding-fees-drugs-health-products.html
Thank you

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