王帅 国际贸易专业英语_国际贸易专业英语

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There are three kinds of payment methods.Each payment method may have its advantages and disadvantages.Do you think that payment by a letter of credit always the first choice in international trade? Why?

In international trade settlement, the payment of international money usually uses a non-cash settlement according to the amount of cash.It often uses financial instruments instead of cash as a means of circulation and means of payment for settlement.There are three payment methods in international trade: remittance, collection and letters of credit.As a written document, letter of credit opened by banks and banks are committed to make a payment.As the bank's financial strength, they usually have a higher credibility.In the letter of credit payment, as long as the beneficiary to fulfill its obligations under the letter of credit or meet the conditions, the iuing bank guarantees payment and bear the responsibility of the first payment.Thus, in the form of letter of credit, it is the bank that provides credit.It has four functions for exporters.(1)Provide a security guarantee for exporters to receive payments;

(2)Enable exporters to obtain the foreign exchange protection;

(3)Increase the stability of the export trade;

(4)Provides a convenient financing for exporters.It has three functions for importers.(1)It is helpful for the imports to receive the goods under the contract on time;

(2)To provide a certain amount of transaction security;

(3)Provides a convenient financing for importers.In addition, for the banks, the iuing bank only bear the responsibility to ensure payment, it provides only bank credit, not money.Moreover, the iuing banks also require the applicant to provide the iuing guarantees and to pay the deposit in order

to spread risk.By letter of credit busine, the iuing bank expands its busine volume and increases its economic benefits without taking much risk in the case.In the form of letter of credit, bank provides credit;it has many benefits for imports, exports and the iuing banks.So the letter of credit has been widely used in international trade, especially in China, international trade are basically using this payment method

However, there are also some drawbacks for the letter of credit.For example:

(1)Documentation requirements are relatively high, as documents and letters of credit do not match, prone to non-payment of the settlement;

(2)Cost is relatively high, affecting exporters’ profits;

(3)Special national letters of credit risk.For example, letters of credit in Bangladesh, they were very irregular in the operation, which takes many risks in international trade settlement.(4)Bank risk.Ultimately, banks are also enterprise;they have their own credits too.Especially in the foreign, the bank entry threshold is very low, relatively large differences in bank credit, and some small banks’ reputation is not very good.In summary, Letter of credit payment in international trade, is it always the first choice? I think it is not comprehensive.In some cases, use remittance and collection is better.Remittance: refers to the payer initiative remitted to the payee by banks or other means of payment.It includes Mail Transfer(M/T), Telegraphic Transfer(T/T)and Remittance by Banker’s Demand draft(D/D).For remittance, its advantages are: simplicity and low cost.Mode in the remittance whether the seller can recover the money on agreed time depends entirely on the buyer's credit situation.Because of this payment is a commercial credit with a high risk, it is usually applied to a small payment, deposit money, transport fees and commiions, etc.If used properly, the transaction will benefit both sides.In international payments another common way to settle payments is by collection whereby the exporter first ships cargoes to get neceary documents and entrusts banks as intermediaries to collect the money for the goods.For the

advantages and disadvantages of collection: collection way is more favorable to the buyer, it has a low cost, low risk, and financial burden.It even gets the seller's financial intermediation.However, it has been more detrimental to the seller, even Documents against Payment(D/P)methods, because the goods have been iued, if the other party refused to pay money for the sake of the price is low, property in poor condition or other reasons, the seller will suffer a lo and round-trip transportation costs of goods for resale the lo.For Documents against Payment after sight(D/P after sight)and Documents against Acceptance, the sellers to bear the financial burden while the latter risk more.Based on the comparison above, I think China’s enterprises should take a comprehensive plan.The creditworthine of buyers and sellers, the position of buyers and sellers and other risk factors should all be taken into account in international trade when they choose the mode of payment.Only in this way can we lead to a succeful deal.国际贸易专业英语

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国际经济与贸易国贸08—1班王帅汪海凤2011 年 12月10日