Textile Attention! Ministry Of Commerce Issued Major Risk Warning For Bangladesh Letter Of Credit

People's Republic of Bangladesh has been an important exporter of China's textile machinery. The DTG2019, the sole agent of China Textile Machinery Association, has successfully concluded recently.

In January 20, 2019, the Ministry of Commerce issued a safety risk warning on the official website: since last year, The Farmers Bank Limited of Bangladesh Bank has caused huge losses to Chinese enterprises due to frequent default of letters of credit.

The economic and Commercial Counsellor's office of the Chinese Embassy in Bangladesh officially blacklisted the bank.

According to the relevant provisions of foreign exchange management in Bangladesh, except for special circumstances, the external payment of import and export must adopt the form of bank letter of credit.

Because the reputation of the Commercial Bank of Bangladesh is generally poor, many issuing banks operate irregularly, and in the business of Bangladesh exported by Chinese companies, they often encounter delays in payment when there is no discrepancy of the L / C at sight, or when the customer fails to pay the bill, the customer claims the quality of the exporter after he takes delivery of the goods or sees the goods and is forced to reduce the price of the exporter, resulting in economic losses.

This happens mainly in the export of fruits and vegetables (ginger, Apple), chemical raw materials and textile raw materials.

If there is discrepancy in the document, the prevailing market price will drop, and some customers will refuse to pay the bill, or take the opportunity to make a high claim to the exporter, forcing the exporter to reduce the price and thereby suffer great economic losses.

It is very difficult for the goods to be processed after the bank returns.

The return and pfer of goods must be approved by the original customer. The procedures are cumbersome, and the customers will not adopt a cooperative attitude. Therefore, there is very little return to traffic. Even if they are returned, the losses will be very serious.

According to Bengal customs regulations, goods are stuck in port for more than 3 months (fruits, vegetables and vegetables for 45 days), and goods will be auctioned by the customs, and the auction proceeds will be turned over to the state treasury.

The list of importers in Bangladesh with more complaints from Chinese companies is:

1. M/S FRIENDS FASHION

2. SDS INTERNATIONAL LTD.

3. AMICO APPARELS LTD.

4. ALPHA FASHION PVT LTD.

5. RAHIMA GARMENTS LTD.

6. MIKA APPARELS LTD.

7. SHIFA APPARELS (PVT) LTD.

8. M/S. MAYC 'S GARMENTS LTD.

9. M/S HARVEST RICH LIMITED

10. GRAND APPARELS LTD.

11. M/S MRINMOY FASHION AND TRADE INT 'L LTD.

12. M/S REU FASHION LTD.

The list of Bangladesh exporters complained by Chinese companies is:

1. KYSUN SULIAO INDUSTRIES LTD.

China's domestic enterprises, people and letters complain about KYSUN SULIAO INDUSTRIES LTD. of Bangladesh using fraudulent documents to defraud money.

After investigation, Meng company and Chinese enterprises signed a supply contract based on sight letter of credit, and extracted money from the bank by forging documents. When Chinese enterprises recover money, they delay or refuse to refund with foreign exchange control and other reasons, causing huge economic losses to Chinese enterprises.

The company's behavior is suspected of fraud, which reminds the domestic importing enterprises to avoid the risk and avoid being deceived.

2. S.S. Enterprise

China's domestic enterprises complain about Bangladesh's S.S. Enterprise, 33/A Becharamdewri Road, Dhaka (company representative: Taslim Akter) with orders from high-quality samples, actual shipments as gravel sand, and circumvention of Bangladesh's law on international trade must be settled by letter of credit, requiring remittance settlement.

The company's behavior is suspected of fraud, which reminds domestic enterprises to be vigilant and must use letter of credit to settle accounts and avoid being deceived.

Bangladesh's better credit banks are:

1. Primer Bank Ltd

2. Prime Bank Limited

3. One Bank Limited

4. Export Import Bank of Bangladesh Limited (EXIM BANK)

Bangladesh's poor credit banks are:

1. Islami Bank Bangladesh Limited

2. Social Investment Bank Limited

3. Mutual Trust Bank Ltd.

4. National Bank Limited

5. Sonali Bank

6. Janata Bank

7. Basic Bank

8. Mercantile Bank Ltd.

9. Uttara Bank Ltd.

10. The Farmers Bank Limited

In recent years, the economic and Commercial Counsellor's office of the Chinese Embassy in Bangladesh has received complaints from domestic enterprises that the number of Bangladesh enterprises and banks has increased significantly. In order to prevent the economic losses caused by the above situation, it is suggested that the following points should be noted in the trade between Bangladesh and China.

1, carefully choose partners, in the process of cooperation, resolutely reject any illegal and unreasonable demands made by Meng Fang, such as: Meng importers ask for lower prices to help them evade taxes and tax evasion.

2, strengthen awareness of wind control, strictly regulate their own trade practices, each contract is strictly in accordance with the formal procedures signed, requiring Bangladesh to open a letter of credit at sight, after delivery, even if the other side is the object of cooperation for many years, according to the above procedures, in order to prevent an opportunity for illegal traders.

3, when Meng Fang opens the card, he must first understand the credibility of the issuing bank, choose a bank with good credit and strong strength, and try not to accept letters of credit issued by banks and branches with poor credit.

4, do a good job in the letter of credit verification, to ensure that there is no soft clause.

If a soft clause is found, it is necessary to change the certificate before delivery, especially the delivery date, so that it can meet the stipulations of the letter of credit. Even if the customer proposes to accept the discrepancy documents, it can not accept it.

5, the goods under the L / C should be arranged for one time delivery, so as to avoid partial delivery, so as to avoid delay in the redemption of the next shipment on the grounds that the quality of the goods is delayed after the first single pickup, which requires the exporter to reduce the price.

6, when signing a contract, if possible, try to ask the customer to have a certain proportion of the advance payment. When the customer pays the advance payment, even if there is discrepancy in the document, it is relatively easy to solve, and will not cause the adverse situation that the customer withdraws the bill and refuses to pay.

7, set up a sense of law, report problems and prosecute promptly after problems arise, and actively take legal measures to safeguard their own interests.

8, once there is a dispute, we must fight against it and resolutely safeguard our interests.

Some monk importers, on the pretext of not having the quality of the goods or the discrepancies between the specifications and the requirements, propose to reduce the price and compensate for the goods without any payment or pick-up.

In the event of the above situation, we can not blindly agree to its request, avoid the aggravated increase of Meng enterprises, and thus lead to greater losses and eventually lose everything.

9, for larger export contracts, it is recommended to export export credit insurance.

Source: Ministry of Commerce and China Textile Machinery Association