KNOWLEDGE|
(1) |
Characteristics of export business Export business is vulnerable to changes in the international environment, which is complex and unstable. Foreign trade involves a wide range of areas as well as many intermediate links. Generally, foreign trade easily faces risks like exchange rate, credit and bad debts. Which are much higher than domestic trade. In addition to the both parties of transaction, export business also involves coorperations with shipping company, insurance company, banks, commodity inspection & quarantine authorities and customs. |
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(2) |
Characteristics of clients Overseas clients are from various countries, and some of them are not well-known enterprises of large scale, so it is difficult to evaluate the comprehensive situation of the clients. |
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(3) |
Characteristics of accounting The recognition standard of sales revenue for export business is different from domestic sales, the supporting documents are also different in terms of bookkeeping time, sales amount and sales recognition for various transaction methods. Furthermore, the exchange gains and losses arises from exchange rate fluctuation will have a certain impact on the total profit of export enterprises as well. |
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(4) |
Characteristics of taxation Export tax rebate is an international common practice. It aims to encourage the export of domestic products to enter the international market with price free of tax, and enhance the competitiveness of products. The export tax rebate methods and rates in China are made with accordance to the nature of exporting enterprises and goods. |
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(1) |
Telegraphic transfer There are 2 kinds of telegraphic transfer. One is before TT, it refers to when the buyer shall make full payment before the seller deliver the goods. The seller would undertake no risk under this payment method; The other is post TT, the buyer pays deposit in advance and the balance shall be settled after the goods delivered. |
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(2) |
Bill for collection It refers to when the exporter draws a bill of exchange on the importer and entrusts the exporter’s bank to collect payment through its branch or agent bank abroad, including DP and DA. |
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(3) |
Letter of credit It refers to written documents issued by a bank to the exporter upon the request of the importer, guranteering the obligation to make payment for the goods under the L/C. Under this method, the bank authorizes the exporter to draw on the bank or its nominated banks for the stipulated amount and collect payment at the designated place with shipping documents. |
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Term |
Place of delivery |
Time of risk transfer |
Export declaration responsibility/ Payer of expense |
Import declaration responsibility/ Payer of expense |
Applicable mode of transport |
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FOB |
Port of shipment |
After shipment |
Seller |
Buyer |
Water transport |
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CIF |
Port of shipment |
After shipment |
Seller |
Buyer |
Water transport |
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EXW |
Place of origin |
After buyer disposes the goods |
Buyer |
Buyer |
Any transport method |
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DDP |
Country of importer |
After buyer receives the goods at the designated place |
Seller |
Seller |
Any transport method |
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LDP |
Warehous designated by the seller |
After buyer receives the goods at the designated place. Mainly used for textile export and buyer has greater responsibility. |
Seller |
Seller |
Any transport method |
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Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage. |
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