Overall process of import trade

International trade business has a long cycle, high risks, many links, and involves a wide range of departments. For a person who is preparing to engage in international trade business, only by fully understanding the main processes of each link can he be confident and calmly deal with and handle specific situations.

The performance of import and export contracts involves multiple institutions such as import and export companies, transportation companies, insurance companies, banks, customs, and the State Administration of Foreign Exchange (hereinafter referred to as the Foreign Exchange Administration). The relevant parties are responsible for their respective duties and work closely together. This section takes the transaction between a Chinese importer (Importer) and a European exporter (Exporter) as an example, using the Letter of Credit (L/C) payment method, based on the Cost Insurance and Freight (CIF) trade term and the sea transportation method, to explain the overall process of general import trade.

The two parties to the import and export trade establish a business relationship, express their willingness to trade, and investigate the credit status of the other party.

① The two parties to the import and export trade establish a business relationship, express their willingness to trade, and investigate the credit status of the other party.

② If the goods recommended by the exporter are suitable for the domestic market demand of the importer, the importer will make inquiries and the exporter will make quotations, and the two parties will bargain on the main transaction conditions.

③ The importer and the exporter reach a consensus, accept and confirm the transaction conditions, sign an import purchase contract, and agree to trade under the CIF trade terms, settle by L/C, and transport by sea.

④ According to the supervision conditions of imported goods, the importer applies for relevant import licenses from the competent authorities, such as: applying for the People’s Republic of China Entry Animal and Plant Quarantine License (apply to the Customs) and the People’s Republic of China Automatic Import License (apply to the Bureau of Commerce).

⑤ The importer applies to the issuing bank for the opening of L/C at the agreed time in the contract terms.

⑥ After issuing the L/C, the issuing bank sends it to the notifying bank at the place of export.

⑦ After receiving the L/C, the notifying bank reviews and confirms that it is correct and transfers it to the beneficiary (European exporter).

⑧ After the exporter (beneficiary) reviews the L/C according to the contract terms and places an order with its domestic supplier.

⑨ The exporter shall handle the chartering and booking procedures with the shipping company by himself or through the freight forwarding company.

⑩ The exporter shall handle the export goods insurance procedures with the insurance company and obtain the insurance documents.

?After the exporter has prepared the goods, he shall personally or entrust the freight forwarding company to transport the goods to the designated place at the port of shipment for storage.

?The export goods shall be inspected and quarantined, and the customs shall issue the inspection certificate after passing the inspection.

?The exporter shall apply for export declaration to the customs by himself or entrust the customs broker.

?After the customs of the exporting country inspects and releases the goods, it shall stamp the release stamp on the bill of lading.

?The European exporter or freight forwarding company shall ship the export goods with the bill of lading stamped with the customs release stamp.

?After the goods are loaded, the exporter or freight forwarding company shall pay the freight with the mate’s receipt, and the shipping company shall issue the ocean bill of lading (Bill of Loading, B/L).

?After the goods are loaded, the exporter issues a shipping notice to the importer so that the buyer can prepare to receive the goods.

?After the exporter prepares all kinds of documents according to the provisions of the L/C, he/she will go through the bill payment procedures with the negotiating bank.

?After the negotiating bank examines the documents and finds that they are consistent with the terms of the L/C, it will advance the bill payment to the exporter.

?After the negotiating bank negotiates the payment, it will send the documents to the paying bank or the issuing bank for payment.

?The issuing bank or the paying bank issues a document arrival notice to the issuer (Chinese importer).

?After the Chinese importer examines the documents and finds them correct, he/she will pay for the documents.

?After the goods arrive at the port of destination, the shipping company issues an arrival notice to the importer.

?The importer submits the ocean freight BL to the shipping company for bill exchange.

?The shipping company issues a delivery order (D/O).

?The importer himself or entrusts a customs broker to declare the imported goods to the customs at the port of import and pay the import taxes and fees.

?For some goods or sampled goods, the customs at the importation place conducts inspections, and issues inspection and quarantine certificates if the inspections are qualified.

?The customs at the importation place releases the goods.

?The importer picks up the goods.

?The importer sells the goods in the domestic market.

?The importer reports the domestic sales of the goods to the relevant import goods supervision department (only for the domestic sales of some imported goods, such as food and meat).