International - Trade - Procedures

International Trade Procedures

1. Classification of International Trade

There are various forms of international trade and they can be classified into various categories according to a number of different criteria.

1.1. From the direction of cargo flow, international trade can be classified into export trade, import trade and transit trade(过境贸易)。

Export trade means to transport the goods which are produced and processed in domestic market to international market for sale. On the other hand import trade is made in the reverse direction; it refers to the transaction to transport the goods from foreign countries to domestic markets for sale or use.

If the goods are transported from the producing country to the consuming country via a third country‘s border, this is known as transit trade. Transit trade can be further divided into direct transit trade and indirect transit trade. Direct transit trade means the goods are not placed in the bonded warehouse (保税仓库)of the third country, but further transported toward outside along the domestic transportation line under supervision of the customs of the third country.

In contrast, indirect transit trade refers to the fact that goods are first placed in the bonded warehouse of the third country and then transported further to the importing country.

1.2. According to the form of the goods, international trade can be classified into visible goods trade and invisible goods trade. Visible goods trade, also known as tangible goods trade, refers to the exchange of physically tangible goods such as cars, wines shoes between countries. It is distinguished from invisible goods trade which involves the export and import of intangible items such as services and technology.

1.3. Here I want to introduce to you entrepot trade（转口贸易）.It refers to the transaction which involves importing goods from overseas for further processing or assembling and the re-exporting

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the goods abroad.

Export and Import Procedures

Generally speaking, from the beginning to the end of a transaction, the whole operation undergoes four stages, namely the preparation of a transaction, the negotiation of a contract, the performance of the contract and finally the settlement of disputes(if any). 1. Preparation of a Transaction

Suppose you want to start your business by selling color TV sets to the world market. You may wonder which market is profitable to enter into and who is a potential partner in that particular market. Even if you have already found the right market and the potential partner, you will have to evaluate the target market and make credit enquires of the potential partner. So there are a lot of steps to take before you can start to do business.

Selecting the right market

To select the right market, one needs to do some market research. It includes the cultural background and economic situation, infrastructure, political climate, current import and export statistics, information on trade barriers and restriction before deciding to enter the target market.

Finding the potential partners

After finding the right market, the next step is to find the potential partners. There are various channels through which one can make contacts with the potential foreign partners: trade fairs, direct sales, direct mail, wholesalers, distributors, etc personal contacts.

Studying creditability of the partners

In order to ensure your rights and benefits, you need to know the following information about your potential partners:

1. credit reference from local bank or correspondent bank 2. business range and annual sales volume 3. sales literature and pricelist 4. major customers 5. business culture

Applying for export license

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When the right customer is determined, you have to make sure whether the products you intend to sell are within some certain export controls. If so you have to deal with them before the negotiation of trade terms and conditions of the transaction.

2. Negotiation of a Sales Contract

After the market research has been conducted, the trader may initiate to negotiate on relevant terms and conditions for the formation of a contract for the export or import business.

Business negotiation may consist of four steps: enquiry, offer, counter-offer and acceptance. An enquiry asks for the possibility of selling a certain commodity in the importing country or buying a certain commodity from the exporting country. An offer can be an answer to the enquiry or can be initiated by either seller or buyer without enquiry being made first. An offer has the binding force upon the offerer within the validity and can be refused by the offeree, in this case, the refusal is called the counter-offer and serves as the offer of a new round. If the offer or counter-offer is accepted by the offeree, an agreement is reached between the seller and the buyer and a contract is concluded at the same time when an acceptance becomes effective.

3. Performance of the Contract

After preparation and signing of the contract, the orders shall be processed.

Procedure

As contracts for export in China are mostly concluded on L/C , we shall use this type to illustrate the export procedure.

? Examining L/C ? Getting goods ready ? Applying for mandatory inspection (the exporter present

commercial invoice, the copy of sales contract, letter of credit, and inspection report supplied by the manufacturer. ? Booking shipping space ? Clearing goods for export ? Getting the goods loaded ? Obtaining insurance, if any ? Presenting documents for bank negotiation

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Homework: translate the sentences marked red

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