What Is an Underwriting Fee?

Underwriting (bought deal, underwriting), also known as exclusive distribution, refers to a type of goods or a certain type of goods in a certain region and a certain period of time by the supplier to the individual underwriters by the underwriting agreement alone forms of commerce. That is to say, the underwriter enjoys the exclusive franchise for the specified products within the time limit and region specified in the agreement. ^[1]

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Underwriting (bought deal, underwriting), also known as exclusive distribution, refers to a type of goods or a certain type of goods in a certain region and a certain period of time by the supplier to the individual underwriters by the underwriting agreement alone forms of commerce. That is to say, the underwriter enjoys the exclusive franchise for the specified products within the time limit and region specified in the agreement. ^[1]

(1) Must choose a dealer with high loyalty and strong promotion ability. High-end products must focus on selecting dealers with a good terminal image that can cooperate with the company's promotion and brand planning schemes. Low-priced products can choose dealers with smooth and extensive wholesale networks, strong dealership and market impact;

(2) The determination of the types of underwriting products must be determined based on observation and analysis of the historical sales records of the distributors-which distributors are particularly suitable for promoting which types, grades, and market segments of products must have a detailed data analysis, At the same time, funding, region, product characteristics, etc. are also considered;

(3) Underwriting products generally have higher profits and can give dealers a lot of sales motivation, so manufacturers can give dealers a certain amount of sales pressure based on this mind-that is, committing sales in stages to ensure the manufacturers' own sales and profits.

Underwriting considerations

For exporters, the main purpose of the underwriting method is to use the funds and sales capabilities of the underwriters to establish a stable market in a specific region. For the underwriters, because they have obtained the monopoly rights, they are in a favorable position in the sales of designated commodities, avoiding the situation of price reductions and profit reductions caused by long competition. Therefore, it has high operating enthusiasm and can make more investment in advertising promotion and after-sales service.

Because underwriting is an underwriter who buys out the goods and then sells it on its own, the underwriter needs a certain amount of capital investment and assumes sales risks. If the underwriter has insufficient funds or lacks sales capacity, it may form "underwriting but not sales." Therefore, for exporters, choosing an appropriate underwriter is the key to successfully adopting an underwriting approach.

Underwriting Market Role

1. Effects on the country's economic development. Promote the horizontal integration of funds and the horizontal connection of the economy, and improve the overall efficiency of resource allocation.

2. Establish and improve self-restraint and self-development management mechanisms for joint-stock enterprises.

3. Exploring investment channels for investors, expanding the scope of investment choices, adapting to the investor's diverse investment motivations, trading motivations, and benefits, and generally providing investors with the possibility of obtaining higher returns. ^[2]