The Third Step Of Foreign Trade: Three Key Secrets Of Foreign Trade

And ordinary domestic

Imagine a real foreign trade operation, Mr. Wang, a foreign trade salesman of a Ningbo factory, doing business with Johnson, a British merchant in London.

We can easily imagine the difficulties we will encounter.

1. generally, buyers and sellers do not meet each other.

By telephone, fax,

Through websites, e-mail, QQ or MSN instant messaging software, digital photos, cameras and other channels, we can easily exchange, display products, bargaining, just like everyone sitting at a conference table.

2. the trading cycle is very long.

A shipment of goods from Ningbo to London is usually the most cost-effective way, which is shipped in containers from ocean ports to port of London from Ningbo port.

At present, it takes about 25 days for sea going alone, plus the time for stocking, unloading and inland pportation, usually more than a month.

Therefore, it is often the goods that buyers can receive after one month or even longer.

Accordingly, the seller's time to recover the payment will take roughly the same time.

In fact, for some seasonal products or targeted holiday products, they usually negotiate in advance for months or even a year, making long-term contracts.

3. high paction costs.

Even by sea, the cost is still high.

The shipping cost of a container cargo (about 30 cubic meters or 20 tons) is about 10 thousand yuan from Ningbo to London.

Prices are higher in remote, remote or smaller ports.

In addition, some fees for import and export procedures are still needed for settlement of bank charges, which are often fixed and not much related to paction volume.

Such a way is obviously uneconomical for small pactions.

In order to share the cost equally, the volume of paction is large.

This is also a feature of international trade - large volume.

International trade goods are mostly wholesale, often using "container" as the unit of paction volume.

4. there are many intermediate links.

Goods from Ningbo to London will go through many links in the middle.

For example, many commodities must be compulsive inspection before export, and be operated by the state import and export commodity inspection and Quarantine Bureau; they must declare to the customs and sellers that manage import and export; they must be pported by ocean shipping companies; they must collect money from banks; they should pay taxes to the tax authorities; similarly, our country also controls foreign exchange in particular, and it is assigned to the State Administration of foreign exchange for unified management through the declaration of foreign exchange revenues and expenditures.

Since the two sides do not meet each other in foreign trade, the cycle of delivery and collection is long, the road is far away, the amount is large and the middle links are many. The natural risk will be relatively large, and the loss will be great if there is a problem.

For this reason, for several hundred years, the international trade industry has correspondingly formulated trade practices and agreements, including international quality standards for goods, price calculation, responsibilities and powers of buyers and sellers, and so on, with a view to ensuring trade order to the maximum extent.

At the same time, the banking industry, international freight industry, insurance industry and so on also have very mature and perfect coordinated operation.

However, there is still an important problem: the pportation and storage of large quantities of goods are expensive.

There are many links involved in the delivery from factories to customers. Shippers can not supervise custody from beginning to end.

Especially in international trade, most of them are hand in hand and batch sale. If they are physical pfer, they will not only greatly increase the cost of pportation and warehouses, but also increase the loss of goods during loading and unloading.

The best way is to simplify the process of physical pshipment, so that goods can only pass through the four parts of the factory, the loading port, the unloading terminal and the warehouse.

As a result, the most important and crucial point of foreign trade is the evolution of optimization and efficiency.

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One of the key secrets of foreign trade: document paction

The so-called documentary paction means using a set of documents to represent the goods.

The paction is based on this set of documents. Whoever gets the set of documents is the owner of the goods.

As a result, the goods are not moved as much as possible, and the documents are pferred arbitrarily, and the holders of the documents decide when and how to deal with the goods.

This set of documents usually includes several core documents:

1. bill of lading (i. e. Bill of loading, abbreviated as B/L)

2. invoice (Invoice).

Unlike the concept of ordinary invoices, the "invoice" in foreign trade refers to a signed document which lists the name, quantity and price of the goods.

3. packing list (Packing List).

I have made a signed document showing the volume, weight and packing of the goods.

4. other documents indicating the condition of the goods, such as the certificate of inspection of the quality of the goods, the certificate of origin of the place of origin, etc.

The bill of lading is the most important document in the whole set of documents, because it is the proof of ownership of the goods. It is a proof of property with internationally recognized legal effect.

Invoice and packing list can be repaired by oneself.

Other inspection certificates, certificate of origin, etc. are issued according to the characteristics of the goods and the requirements of the Buyers by the corresponding national institutions such as the import and export commodity inspection and Quarantine Bureau, or the authorized organizations such as folk inspection companies and freight forwarder.

In a sense, foreign trade operators do not buy piles of articles, but stack sheets of paper.

Therefore, it is not surprising that a foreign trade salesman completes a paction and has never seen the appearance of the goods from beginning to end.

It is not hard to imagine that trade is mostly based on documents rather than physical pactions. Therefore, even if the goods themselves are perfect, and the documents are flawed, such as data errors, lack of a relevant supporting document, etc., it is likely that the paction will fail.

Conversely, even if the goods are defective and the documents are complete, they can still be successfully traded at an early stage.

Of course, this brings some risks, such as forging documents to cheat.

But fraud itself is a crime in every country in the world, and it has its own corresponding measures.

In short, the role of documents in foreign trade is decisive.

Establishing the concept of "foreign trade is actually buying and selling a set of documents" is very necessary for understanding many special and professional operations in international trade.

Fierce competition in the market, many times, the price has become the only factor in the paction.

We often see foreign traders export goods at a price lower than the cost of domestic sales.

Are they crazy? No.

Even if the price is lower than the purchase price, the foreign trade will still be profitable.

This is the second key secret of foreign trade: tax refund system.

Two key secrets of foreign trade: tax rebate system

Tax rebate is an important concept in foreign trade. It is also the main source of profits in foreign trade.

In order to facilitate management, the state assumes that all products are domestic circulation and consumption. Therefore, the value added tax is generally levied. The tax rate is as high as 6% to 17% of the selling price.

Under normal circumstances, the price before domestic purchase or export is tax inclusive, that is, the value added tax has been paid.

If the product is used for export, this part of the tax should not be levied, and what has been collected can be refunded to the exporter in part or wholly according to the procedure.

If you buy a batch of color TV sets from domestic factories, the price is 1170 yuan including tax, of which 1000 yuan is net price, and 170 yuan is paid VAT.

According to the regulations of the state, the export tax rebate rate of color TV products is 17%, that is to say, after the export of color TV, the Inland Revenue Department will withdraw 170 yuan to the exporter.

In this way, even if the exporter exports at a flat price of 1170 yuan, he can still get a tax refund of 170 yuan as a profit income.

In this case, if the exporters take part in the price from 170 yuan for competitive consideration, even if they sell at a price lower than the price of 1170 yuan, they will still have profits.

Foreign trade pactions usually have relatively high value, and the corresponding tax rebate is also considerable.

Of course, the State Administration of tax refund is also very strict, and closely linked with foreign exchange management.

Before export, it is necessary to receive the export tax refund verification form from the Department of foreign exchange administration and declare the total export amount.

The cancellation documents need to be sealed by the customs to confirm that the goods have been exported.

After receiving the payment from foreign buyers, the bank's receipts, together with the verification form, will be written off to the foreign exchange administration, and then the tax refund will be collected by the value-added tax invoice until the tax bureau issues the tax refund.

Therefore, the source of foreign trade profit comes from the export tax rebate system in the national export tax rebate system, which is one of the most significant characteristics of foreign trade, and is closely related to the daily operation of most foreign trade operators.

Three key secrets of foreign trade: letter of credit paction

In international trade, buyers and sellers are far away from each other, and the background is different.

Therefore, business credit has become a big problem.

As exporters, worried about getting ready for the bulk cargo, how did the buyer change the goods? The goods were pported abroad all the way, and what customers did not want to do? Or if they did not want to pay the money, how could they do so?

As an importer, how can the exporter be unable to deliver the goods on time? What about the quality and quantity of the goods? I hope the seller will deliver the goods first and check the money correctly.

This contradiction, of course, can be negotiated through buyers' payment in advance or by way of deposit, but after all, it is not the best policy to get a bigger bonus for buyers, but there is really a dispute between them.

So there is a unique way of operation: letter of credit.

The emergence of a letter of credit is based on the characteristics of foreign trade "document paction".

The so-called letter of credit, popularly speaking, is agreed on the terms and conditions of paction, such as name, quantity, quality standard, price, delivery time, etc.

Then the buyer looks for a bank (usually the buyer's account bank, or a certain guarantee) as the "middleman" and submits these terms to the bank. The bank issues a document as the basis for the paction between the seller and the buyer.

The responsibility of banks as intermediaries is to supervise pactions.

The seller delivers the goods according to the documents, and delivers the complete documents representing the goods to the bank.

After the bank has checked the document, it will pay the money directly.

With banks as intermediaries, buyers and sellers no longer conduct direct money trading, but deal with banks separately.

If the seller fails to deliver the goods promptly and according to the quality, he will not get the money. If the buyer does not pay, he will not be able to get the goods.

On the contrary, there is a bank guarantee, so long as the seller delivers the goods, they will be able to get the money.

This way does not occupy the buyer's funds, but also gives the seller a good credit guarantee.

This document, which is used to prove the commercial credit of both parties, is called a letter of credit.

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Generally speaking, there are four parties to a letter of credit:

1. the importer is responsible for opening a letter of credit to his bank, which is called a letter of credit applicant.

2. the importer's Bank is responsible for opening a letter of credit and checking the documents and appropriating payment, which is called the letter of credit issuing bank.

3. the exporter, who is responsible for the payment of L / C under the letter of credit, is called the beneficiary of the letter of credit.

4. the exporter's Bank is responsible for collecting letters of credit, forwarding documents and contacting the issuing bank for exporters, which is called notice bank.

In addition, the bank responsible for the final allocation is called the reimbursement bank of letters of credit, usually the issuing bank. It can also be advanced by other banks and charged a small fee, which is called the negotiating bank of letters of credit, generally known as the advising bank.

Letter of credit is the most important and common tool in foreign trade.

In order to standardize the use of letters of credit, the International Chamber of Commerce has formulated a uniform standard "UCP500", that is, the uniform provisions of international documentary credits, as the basis for the use and arbitration.

With regard to the actual operation of the letter of credit, we will give an example to explain in the fifth section of this book, the master's letter: the letter of credit strategy.

Through understanding the three key secrets of foreign trade: document trading, tax rebate system and letter of credit settlement, we basically master the essence of foreign trade.

Now we can finally understand a standard export operation case clearly.

To find a customer --- to sign a contract -- to open a letter of credit, that is, to open a letter of credit by the client, to prepare the goods according to the letter of credit, that is, to deliver the goods after the commodity inspection, to deliver the goods to the shipping company, and to obtain the bill of lading, that is, to prepare a complete set of documents according to the letter of credit, that is, the documents to be delivered to the foreign banks, and the foreign banks to check the money to the domestic banks after the audit is correct.

With the basic knowledge of foreign trade, the next step is to create two necessary tools for foreign trade: computer and English.