Focus 1: Document trading
The so-called documentary transaction is to use a set of documents to represent the goods. The transaction is based on this set of documents, whoever gets the set of documents, who is the owner of the goods. In this way, the goods are kept as far as possible, and the documents are arbitrarily bought and sold, and the holder of the documents decides when and how to process the goods. This set of documents usually includes several core files:
1. Bill of lading (ie Billoffloading, abbreviated as B/L)
2, invoice (Invoice)
Unlike the concept of an ordinary invoice, an “invoice†in a foreign trade refers to a signed document that is produced by itself and lists the name, quantity and price of the goods.
3, packing list (PackingList)
A signed document of the volume and weight of the shipment.
4. Other documents describing the condition of the goods, such as the certificate of proof of the quality of the goods, the certificate of origin of the place of origin.
In the full set of documents, the bill of lading is more important because it is the proof of ownership of the goods---is a proof of property with internationally recognized legal effect. Invoices and packing lists can be self-made. Other inspection certificates, certificate of origin, etc., according to the characteristics of the goods and the requirements of the buyer, are issued by the corresponding state agencies such as the Import and Export Commodity Inspection and Quarantine Bureau, or organizations recognized by both parties, such as private inspection companies and freight companies.
In a sense, foreign trade operators are not buying piles of items, but a stack of pieces of paper. Therefore, a foreign trade salesman completes a transaction, and has never seen the appearance of the goods from beginning to end, it is not surprising - he only needs to carefully handle the stack of paper. It is not difficult to imagine, because trade is mostly based on documents rather than physical transactions, so even if the goods themselves are perfect, and the documents are flawed - such as data errors, lack of a relevant supporting documents, etc. - It is likely to cause the transaction to fail. Conversely, even if the goods have problems and the documents are complete, they can still be traded smoothly in the initial stage. Of course, this brings with it some risks, such as falsifying documents for fraud. However, fraud itself is a criminal act in all countries of the world, and it has its own corresponding measures.
In short, the role of documents in foreign trade is decisive. The concept of “foreign trade is actually buying and selling a set of documents†is necessary to understand many special and professional operations in international trade.
The market is fiercely competitive. In many cases, price has become the only factor in whether or not to trade. We often see foreign traders export goods at prices lower than domestic sales costs. Are they crazy? Do not. Even if it is "selling" at a price lower than the purchase price, foreign trade still has profits. This is the second key secret of foreign trade: the tax rebate system.
Foreign trade key two: tax refund system
Tax rebate is an important concept in foreign trade and a major source of profit in foreign trade business. In order to facilitate management, the state assumes that all products are domestically circulated and consumed, so VAT is generally levied, and the tax rate ranges from 6% to 17% of the selling price. Under normal circumstances, the price before domestic purchase or export is the tax-included price, that is, the price that has already paid the value-added tax. If the product is used for export, this part of the tax should not be levied, and the already collected can be returned to the exporter in part or in full according to the procedure.
If you buy a batch of color TV sets from domestic factories, the price is 1170 yuan including tax price, of which 1,000 yuan is the net price, and 170 yuan is the paid value-added tax. According to national regulations, the export tax rebate rate for color TV products is 17%. That is to say, after the export of color TVs, the tax bureau will refund 170 yuan to exporters. In this way, even if the exporter exports at a flat price of 1,170 yuan, he can still get a tax refund of 170 yuan as profit income. Under this circumstance, if the exporter takes a part of the 170 yuan to compensate for the price reduction due to competition considerations, even if it is sold at a price lower than the purchase price of 1,170 yuan, there is still profit.
Foreign trade transactions usually have a relatively high value, and the corresponding tax refunds are also considerable. Of course, the state is also very strict with tax refund management and is closely integrated with foreign exchange management. Before exporting, you need to obtain the Export Tax Refund Verification Form from the State Administration of Foreign Exchange, and declare the total amount of exports. The verification form also requires customs seal to confirm that the goods have indeed been exported. After receiving the payment from the foreign buyer, with the bank receipt, together with the verification form to the foreign exchange administration for verification, and then with the value-added tax invoice to the tax bureau to handle the tax refund, receive the tax refund.
Therefore, the source of foreign trade profits is partly derived from the export tax rebate in the national export tax rebate system. This is one of the more significant characteristics of foreign trade, and is also closely related to the daily operations of most foreign trade salesmen.
Focus 3: Letter of Credit Transaction
In international trade, buyers and sellers are far apart, and the payment schedule for the delivery of goods in different backgrounds and the payment period of goods are very long. Therefore, commercial credit has become a big problem.
As an exporter, I am worried that after the bulk goods are ready, what should the buyer do? If the goods are shipped abroad, what should the customers do? Or what if you don't give money? Naturally, buyers are expected to be able to pay for the goods first, and then have the guarantee and then deliver the goods. As an importer, what should I do if I am worried that the exporter cannot deliver on time? What should I do if the quality and quantity of the goods are not qualified? Naturally, the seller is expected to deliver the goods first, and the verification is correct and then the money is given.
This contradiction can of course be negotiated and resolved through the buyer's payment of part of the advance payment or deposit. However, after all, it is not the best policy. First, the buyer's capital is relatively large. Second, there is really a dispute. The two sides lose both right or wrong. fair. Thus, a unique way of operation for foreign trade has been created: a letter of credit. The issuance of letters of credit is based on the characteristics of foreign trade “document transactionsâ€.
The so-called letter of credit, in general terms, is the buyer and seller to agree on the terms of the transaction, such as the name, quantity, quality standards, price, delivery time and so on. The buyer then finds a bank (usually the buyer's bank, or a certain guarantee) as a “middleman†and submits these terms of the transaction to the bank, which then issues a document as a basis for trading between the buyer and the seller. The responsibility of the bank as an intermediary is to supervise the transaction. The seller stocks the goods according to the documents, and then delivers the full set of documents representing the goods to the bank. After the bank has verified the documents, the payment will be paid directly. With banks as intermediaries, buyers and sellers no longer deal directly with money and goods, but deal with banks separately. If the seller does not deliver the goods in time and according to the quality, they will not get the money; if the buyer does not pay, they will not get the goods. On the contrary, there are banks to guarantee, as long as the seller pays the goods, they will certainly get the money. This way, it 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.
A letter of credit has four basic relationships:
1. Importer: Responsible for applying for the opening of a letter of credit to his bank, called a letter of credit applicant.
2. The bank of the importer is responsible for opening the letter of credit and reviewing the documents and allocating the payment, which is called the letter of credit issuing bank.
3. The exporter is responsible for the shipment according to the letter of credit, and the payment is guaranteed by the letter of credit, which is called the beneficiary of the letter of credit.
4. The bank of the exporter is responsible for receiving the letter of credit for the exporter, handing over the documents and contacting the issuing bank, called the advising bank.
In addition, the bank that is responsible for the appropriation is called the letter of credit reimbursing bank, which is generally the issuing bank; it can also be advanced by another bank and charge a small amount of fees, called the letter of credit negotiation bank, which is generally the notice bank. Letters of credit are more important and more common tools in foreign trade. The International Chamber of Commerce has established a unified standard "UCP500" for the regulation of the use of letters of credit, that is, the "International Uniform Provisions for Documentary Credits" as the basis for use and arbitration.
Through the understanding of the three key points of foreign trade: document trading, tax refund system and letter of credit settlement, we basically grasp the essence of foreign trade. Now we can finally understand a standard export operation case process clearly:
Looking for a customer----signing a contract----customer to open a letter of credit----Stocking according to the letter of credit----the goods are handled for commodity inspection, after the customs declaration, the goods are transported to the company and the bill of lading is obtained---based on the letter of credit Complete set of documents----documents are delivered to foreign banks, and foreign banks will pay the funds to the domestic banks after checking them correctly----based on the receipt of the domestic bank's receipt certificate to the foreign exchange administration for verification----to the tax bureau for tax refund- ---End.
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