The risks of foreign trade always exist, but for foreign trade sellers, business still needs to be done. Foreign trade sellers must keep their eyes open before using letters of credit to trade. The following are 7 aspects to help foreign traders clear mines, which are applicable to countries and regions with higher letter of credit risks.
1. The other party makes “weird” requests during cooperation
When foreign trade people talk about cooperation, they often hear the other party say: “The company has insufficient capital reserves, and I hope the importer can first Payment” or “Can you quote a lower price to help avoid some taxes?”
We must resolutely put an end to illegal and unreasonable requirements in such transactions. Once a partner encounters this situation, he must be vigilant.
2. Old customers play tricks
Many old customers will stab foreign traders when they relax their vigilance, so every time they cooperate, a contract must be signed in strict accordance with formal procedures and requirements. The other party issues a sight letter of credit, and the order is issued after shipment, leaving no opportunity for unscrupulous merchants to take advantage of.
3. Collusion between the issuing bank and the customer
When applying for a letter of credit, the most important thing to check is whether the issuing bank is in compliance with the standards. You can avoid asking for a letter of credit and give priority to a strong bank.
4. Discrepancy scam
The issuing bank cannot relax after the review, and must also pay attention to the review of the letter of credit. Once discovered, the certificate must be changed before delivery. Even if the customer proposes to accept the delivery of documents with discrepancies, the certificate must be changed before delivery. Get these details right in advance and you’ll be foolproof.
5. Counterfeit quality and demand price reduction
For goods stipulated in the letter of credit, delivery in batches should be avoided as much as possible. After the customer first picks up the goods, the next batch will be delayed due to quality problems. Redeem the goods and require the exporter to lower the price.
6. Chargeback, refusal to pay, total loss
When signing a contract, try to obtain a certain proportion of advance payment, so as to cause corresponding “breach costs” to the other party and avoid any discrepancies. The other party refused to pay.
7. Not paying or not picking up the goods to threaten price cuts
Even if the foreign trade sellers do everything perfectly, some unscrupulous businessmen will still threaten to not pay or not pick up the goods under the pretext of quality issues. , forcing sellers to lower their prices. In this regard, we must argue vigorously, seize advantageous evidence in the trade process, and file lawsuits in a timely manner.
Foreign trade sellers must pay more attention to the above seven points, because risks exist in the entire process of trade, and prior risk control alone is not enough to deal with all hidden dangers in trade.