International business basics training The International Department of the Industrial and Commercial Bank of China Shaoxing Branch June 2009
Table of Contents Some risks, export enterprises need to guard against Second, several of the international business billing methods Third,international trade finance products Fourth, foreign exchange wealth management business
Background Since the second half of last year, the financial turmoil triggered by the U.S. subprime mortgage crisis intensified, causing a ferocious, very strong impact, spread to a wide range of international financial crisis. This wave of the financial crisis has affected the real economy of our country, but also a direct impact on the Foreign Trade of Shaoxing, especially export enterprises are facing significantly increased risk.
Background Ministry of Commerce issued a notice through its official website requires, first export enterprises in China is highly concerned about the changes in the international banking market. ● At present, a large number of small and medium-sized banks in the United States is bankrupt. ● serious bank losses, said Nomura Securities in a recent global banking report, the United States and the European Union countries in 2009, many financial derivatives maturity is also a breach of contract occurred when a large area. ● According to the forecast of the international agencies such as Moody's, rising Banking crisis situation in Europe and America, the integration of banking mergers and acquisitions worldwide will enter a new climax. The financial crisis has intensified since last summer, the fate of many banks in Europe and the United States are different, staged a major reshuffle. Lehman Brothers crashing down, Fortis, RBS and other troubled, Morgan Stanley, UBS, Citigroup strength has been greatly weakened.
Risk Analysis Exchange earnings of the export enterprises need to guard against some risks The risk of financing costs Political risk Exchange rate risk The risk of foreign banks The risk of foreign buyers
What is the international settlement? For International Settlements (International Settlement): refers to the parties in two different countries (because commodities trading, service providers, transfer of funds, international lending) monetary payment business between the two countries through the bank.
Three traditional settlement Letter of Credit (Letter of Credit) three traditional billing methods Collection (Collection) Remittances (Remittance)
Letter of Credit (Letter of Credit) 1, define According to the "Uniform Customs and Practice for Documentary Credits (ICC Uniform Customs and Practice for Documentary Credits.)" Credit means any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation. Credit means any arrangement, however named or described, that is irrevocable and thereby constitutes the issuing bank to honor a complying determine commitment. Popular understanding: The letter of credit is a bank payment conditional commitment, the bank (the issuing bank) according to the requirements and instructions of the buyer (applicant), opened to the seller (beneficiary), within a certain period of time, with the provisions of the bill paying written commitment to a certain amount.
Letter of Credit (Letter of Credit) 2, nature The letter of credit is conditional payment undertaking of the issuing bank The letter of credit is the independence of the documents, banking processing independence Letters of credit business trading documents
3, the letter of credit parties 1, the applicant: apply to the issuing bank to open letters of credit Issuing line: accept the applicant's commissioned to open a letter of credit bank, which bears the liability for payment of the terms and conditions stated in the credit guarantee. 3, notice the line: accept commissioned by the issuing bank, credit can not be transferred to the exporter's bank only to prove the authenticity of the letter of credit, does not accept other obligations 4, beneficiaries: the right to use the letter of credit is specified in the letter of credit 5, the negotiating bank: the documents handed beneficiaries or money order handling the negotiation bank 6, the paying bank: usually specified by the issuing bank or the bank 7, confirming bank guarantee: the issuing bank or the beneficiary should be open to filling in the credit commitments The bank cashing responsibility, and the issuing bank is in the same position. 8 reimbursing bank: can the issuing bank, can also be specified on the negotiating bank or on behalf of Pay to reimburse the agent
Letter of Credit (Letter of Credit) 4, the role of the letter of credit And solve both the import and export trade contradictions of mistrust Of importers in terms of credit terms to control exporters shipping conditions, on the other hand the coin to open a credit line granted by the issuing bank to the issuing, financing role Exporters receive better credit bank to open a letter of credit, there is a receivable guarantee. Can Syria do packaged loans, export bills. And ensure timely receipt of exporters safe and timely receipt Importer Security importers and exporters are easy to get financing from banks
Letter of credit business processes 1 signed contract. Importers. Exporters. 5 shipments. 4 Letter Use Certificate Through Know 6 Cross Single Discuss Pay 7 Pay Paragraph 10 Put Single 9 Pay Paragraph 2 Shen Please Open Certificate 3 out of letters of credit. The issuing bank. Advising bank / negotiating bank. 8 to send a single cable exchange. 11 payment.
The performance of the credit risk (1) credit risk of the issuing bank. So strict in some countries, the establishment of the bank, unlike China, and the need to have a registered capital restrictions, foreign bank ownership is mostly private in nature. Importers will joint the same small banks or non-existent bank fraud is entirely possible. ? ② letter of credit the hard Terms risks. Many rigid provisions in the prescribed format of the letter of credit, which constitute the basic elements of the letter of credit, such as beneficiaries, the validity of shipment, to pay a single period, the negotiating bank, any of the terms of subtle changes can give export to bring trouble. ? (3) the credit risk of soft terms. In the credit business, the importer or the issuing bank may take advantage of the letter of credit only the focus document this feature to set the "trap Terms called the soft terms of the letter of credit. ? ④ documents risk. The letter of credit is a document trading, the implementation of the principle of payment vouchers.
Collection (Collection) 1 concept: Collection payee or creditor of the relevant documents to the local bank, and entrusted to the bank by the foreign agency to pay a single payer or debtor receivables business. 2, features: a documentary collection and letters of credit as a payment guarantee is a commercial credit. - The lack of a third party (the bank) to assume the payment obligations of the commitment. - Obligations of the examination of the documents of the bank, the bank is under no obligation for the payment of - The procedures are relatively simple, the cost is higher than the remittance, but lower than the letter of credit - Unfavorable for exporters, and favor importers
Clean collection (Clean Collections) A documentary collection (Documentary Collections) - D / P (Documents against Payment, payment orders) - D / A (Documents against Acceptance, Against Acceptance) Export collection Import Collection Collection (Collection)
Collection business processes 1 signed a contract. Exporters. Importers. 2 shipments. 3 Cross Single 8 Pay Paragraph 5 Pay Paragraph 6 Put Single 7 payment. Remitting bank. Collecting bank. 4 to send a single.
The performance of the risk for collection The ① importers credit risk and the collecting bank to bank risk. In the case of a bad market, importers will be looking for an excuse to reject the goods to pay the purchase price; There may collude with the collecting bank, or forged bills of lading to the collecting bank to cheat. ? ② importing country's political risk. Importers may be because of the importing country's war riots, strikes, failed to obtain an export license, the importing country's foreign exchange management, and other causes can not pay on time. These are the importers exporters need to consider where the country's political risk. ? (3) financial risk. Once importers refused payment Shouhui failed, even in the case of master of property rights exporters have to bear alone the financial loss. Such as: loss of resale prices of the goods; destination port warehousing, extract and insurance and other cargo storage time is too long, may also spoilage; really can not resell, also had to bear the round-trip shipping.
Remittances (Remittance) 1 concept: is the remitter (payer) initiative through a bank or Other ways this money to the payee of a method of settlement. 2, features: - Less risk of bank funds - The procedure is simple, inexpensive - Importers and exporters is not easy to get a bank trading under the financing
Remittances (Remittance) 3, two forms of remittances Ticket exchange (Remittance by Bank's Demand Draft, D / D) Electronic Funds Transfer (Telegraphic Transfer, T / T) - T / T after T / T
Remittances (Remittance) The point in time of the wire transfer of remittances distinguish ①. Advance payment Fully Prepaid Part of the prepaid (and letters of credit, letters of guarantee, such as is used in combination) ②. Cash on delivery Exporters to expand business opportunities, to the importer to provide the most favorable terms of payment Importers do not take up its own funds
Remittance risk performance 1 credit (O / A OpenAccount): exporters send the goods to the importer did not get the payment or commitment, it will be the the cargo transport documents to the importer, importer to extract a settlement of the goods. This after delivery to the importers larger credit, long time clearing the way financing. In this case, exporters ability to get the payment, completely dependent on the credibility of the importer, Once the exporters breach of contract, there will be the money the two air cargo situation. Importers did not pay any money in the case of goods, and the goods can be dealt with in accordance with their own wishes. ? ② COD: exporters ahead of the goods shipped, importers receive the goods and then remit paid to exporters. COD specific and can be divided into the consignment and sale given two payment point in time, there are subtle differences between the two, but unilateral financing channels are exporters to importers, and exporters also need to bear importers refused pay risk. In the practice of international trade, and more with the sale scheduled, buyers and sellers to sign a contract immediately after receipt of the goods in the importer of the full purchase price paid to exporters in the form of a wire transfer. ? ③ payment in advance: the importer first payment Concurrent exporters, exporters received payment before shipment to the importer, the more common way for a down payment.
The difference between the three Security 高 低 Letter of credit Collection Collection 高 低 Cost
Guarantees • Bank guarantee letter (banker's letter of a guarantee from), abbreviated as L / G), also known as bank guarantee, bank guarantees, or referred to as a letter of guarantee, it refers to the application client banks should open a written certificate to the beneficiary, to ensureapplicant to perform the contract in accordance with the regulations, otherwise be liable to pay by bank debt. Properly fulfill its contractual obligations to the beneficiary banks according to the request of the applicant, the applicant's guarantee in writing to prove. • Bank conditional bear some financial responsibility for the contract file, when the applicant fails to fulfill the obligations of its commitment, the bank bears the responsibility for compensation for economic losses to the beneficiaries. • Supplemental commercial credit with bank credit, pay widely used in trade, project contracting, rental payments, capital borrowing. A wide range of applications than the letter of credit, and variety.
The combined use of various methods of settlement In the business of international trade, the settlement of the payment transaction, you can use only one method of payment (usually the case), may also be required, such as different trading commodities, different trading object, different trading practices, two or morethe combination of the method of settlement, or conducive to facilitate transactions, or conducive to the safe and timely receipt, or conducive to properly handle the payment. The common use of different settlement forms: letters of credit and remittance binding letters of credit and collection, remittance, bank guarantee or letter of credit.
The combined use of various methods of settlement a letter of credit and remittance combined This refers to the sum of the purchase price of the transaction, part of the letter of credit to pay the balance by way of remittance settlement. The combination of the form of this settlement is commonly used in the allow its delivery quantity to a certain maneuver magnitude of certain primary products trading. In this regard, by mutual agreement, the credit states that pay the invoice amount against shipping documents before shipment prepaid amount of certain balance to be goods to the destination (domestic) or by the actual number of re-examination by way of remittance. Using this combination in the form, you must first set the Ming is what the letter of credit, and what kind of remittance as well as the proportion of the amount of payment by letter of credit.
The combined use of various methods of settlement b, letters of credit and collection This refers to the sum of the purchase price of the transaction, part of the letter of credit to pay the balance by the end of the collection methods. This combination in the form of specific practices are usually: letters of credit require the beneficiary (exporter) opened two drafts, are part of the purchase price under the credit with light ticket payment, and the balance will be shipping documents attached to the collection money order under the spot or forward against payment collection. This approach, the exporter exchange earnings safer, reduce mat gold importer, easy to be accepted by the parties. But credit must prescribe the types of letters of credit and payment amounts and types of collection methods, must also be prescribed "paid in full invoice amount before surrendering the terms.
The combined use of various methods of settlement C, remittance and bank guarantees or letters of credit combined The remittance bank guarantees or letters of credit in the form of commonly used equipment, large machinery and means of transport (aircraft, ships, etc.), payment of the balance sheet. Such products, the transaction amount, and the production cycle, often require the buyer to prepay a portion of the purchase price or deposit remittance manner, most of the rest of the purchase price by the buyer required letter of credit or open-plus guarantees installments or late period of payment.
Settled in accordance with international classification Under the credit Exports: packaged loans, export bill purchase / discounting, forfaiting; Imports: import bill, offshore and pay;
Exports: export bills / discounting, export of dual-factoring; Collection under Imports: import bill;
Exports: export invoice financing the export of dual-factoring; Remittance under Imports: import T / T financing and T / T paid;
International trade finance products In accordance with the import, export classification
International trade finance products Packaged loans Export bills negotiated / discounted Forfeiting Products Export invoice financing Import bill, overseas payment
International trade finance products 1, the loan package
International trade finance products 1, the product concept Packaged loans under letters of credit, trade financing, exporters mortgage to the Bank for letters of credit received from abroad to obtain a Pre-shipment financing of the working capital required by the production or purchase of export goods.
International trade finance products 2, the product advantages ·Avoid exchange rate risk · Help exporters to solve export commodities due to the organization under the credit purchase, preparation, production and shipment of the funding gap, expand their business scale, to ease the pressure of the working capital.
International trade finance products 3,Scope and handle timing • Stage of financing needed in the production of stocking handle timing; • Stocking stage after signing a contract to receive the importer open letters of credit;
International trade finance products 2, export bills negotiated / discounted
International trade finance products 1, the product concept Export bill refers to my line-recourse financing under the letter of credit or collection export documents (including the spot documents and forward not acceptance / commitment payment vouchers). Exports discounted my recourse of business under open the issuing bank acceptances forward documents for the financing of export letters of credit (including standby letters of credit).
International trade finance products 2, the product advantages • Convenient financing • Flexible scheduling of funds • Effective exchange rate risk management
3 Scope and handling of export bills negotiated / discounted timing • Needed exchange earnings to accelerate cash flow; • Credit and debt structure needs to be changed in some way in order to avoid exchange rate risk; • Handle timing • Documentary bills: the goods are shipped, require the production of documents under a letter of credit and submit my bank for; or after shipment, has a full set of the documents submitted to the Bank for collection; • Discounted: the documents have been issuing line valid acceptances;
International trade finance products 3 Forfaiting
International trade finance products 1, the product concept Forfeiting means the package buyers. (My line) without recourse to buy forward letters of credit under the trade acceptances receivable financing business.
International trade finance products 2, the enterprise benefits Finality financing facility Improve cash flow Save administrative costs Early tax refund To circumvent various types of risk Increased opportunities for trade Transfer pricing
International trade finance products 3,Scope and handle timing • Need to somehow reduce export risks • Credit rating or guaranteed by my line of credit does not meet business requirements • Needed to write-off to handle the export tax rebate • Liquidity position, modified financial statements need to be improved in some way • Apply for the timing: long-term letters of credit under the notes receivable or accounts receivable issuing bank valid acceptances
International trade finance products 4 ,Export invoice financing
International trade finance products 1, the product concept The remittance settlement in the way of international trade, export invoice financing receivables for goods with a commercial invoice issued by the exporter, the first source of repayment, the business of trade finance to exporters.