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Hsbc Trade Tutorial Through Copy Paste Method

Hsbc Trade Tutorial Through Copy Paste Method

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Published by MEGHANALOKSHA

Trade tutorial -

Introduction To International Trade :
As natural resources are unevenly distributed in different countries, a country cannot produce everything it needs. Some countries are good at producing dairy products; some are specialized in iron and steel industries.
As a result, a country will buy what it needs from countries that are good at producing them and in return will sell its products to countries who require them. The products will be moved from one country to another by means of aircraft, railways, trucks, ships or a combination of two or more modes of transport.
This buying and selling of goods is international trade and is participated in by different parties.

The Parties Involved
• The Buyer, who places orders and imports goods (meaning to bring into the country).
• The Seller, who manufactures and exports goods (meaning to ship out of the country) and issues invoices.
• The Manufacturer, if the seller does not make his own goods.
• The Shipping Company, (or Airline Company) who transport the goods overseas and issue Bills of Lading (or Air Waybills) as receipt of goods.
• The Insurance Company which insures the goods against risk. An insurance policy or certificate is issued to this effect.
• Governments and Embassies who give permission to import or export specific types of goods by issuing Import and Export Licenses, and Consular Invoices respectively.
• The Customs and Excise, who levy import duty and issue Custom’s Invoices.
• Various professional bodies, who issue Inspection Certificates certifying that the goods have been inspected and meet certain quality standards.
• Lawyers, who draw up contracts of sale.
• Agents, who represent either the buyer or seller overseas.
• Shipping Registries, who ensure that the carrying ship is seaworthy.
• Chambers of Commerce, who issue Certificates of Origin.
Banks, who participate in most trade transactions to some extent, from full finance to the processing of simple remittances. Sometimes, alternative names are used instead of the ones we have listed.

Payment Methods
There are four main ways for importers to make payment to exporters in international trade:
• Advance payment
• Open account trading
• Documentary credits
• Documentary collections
Advance Payment
The buyer agrees a price for goods from an overseas exporter and sends his payment with the firm order i.e. before the goods are shipped:
The importer must be confident of:
• the reliability of the exporter
• the stability of the exporter’s country
The risk is borne by the importer.
In return the importer may be allowed a discount which is a deduction from the price of goods in consideration of its being paid in advance.
This method would be used when:
• an importer is unable or unwilling to open a documentary credit
• an importer has a good cash position and can negotiate a cash discount
• an individual is buying from a mail order company
Importers can arrange to make advance payment through a bank.

Open Account Trading
This is basically payment in arrears, the opposite of advance payment and usually covers a regular flow of shipments. The importer usually agrees with the exporter to pay at the end of each month or, say, one month after each shipment. There is usually a long-standing or regular business relationship between the two parties:



The exporter must be confident of:
• the reliability of the importer
• the stability of the importer’s country
The risk is borne by the exporter.
Governments sometimes support their exporters to protect them against these risks.

Documentary Credit
As mentioned in the previous two methods, there are problems of trust and risk for both the buyer and the seller. In fact, trade will be difficult between companies who do not know each other well.
Banks act as a trustworthy third party or intermediary between the buyer and the seller. The reasons are:
A bank is acceptable to both t

Trade tutorial -

Introduction To International Trade :
As natural resources are unevenly distributed in different countries, a country cannot produce everything it needs. Some countries are good at producing dairy products; some are specialized in iron and steel industries.
As a result, a country will buy what it needs from countries that are good at producing them and in return will sell its products to countries who require them. The products will be moved from one country to another by means of aircraft, railways, trucks, ships or a combination of two or more modes of transport.
This buying and selling of goods is international trade and is participated in by different parties.

The Parties Involved
• The Buyer, who places orders and imports goods (meaning to bring into the country).
• The Seller, who manufactures and exports goods (meaning to ship out of the country) and issues invoices.
• The Manufacturer, if the seller does not make his own goods.
• The Shipping Company, (or Airline Company) who transport the goods overseas and issue Bills of Lading (or Air Waybills) as receipt of goods.
• The Insurance Company which insures the goods against risk. An insurance policy or certificate is issued to this effect.
• Governments and Embassies who give permission to import or export specific types of goods by issuing Import and Export Licenses, and Consular Invoices respectively.
• The Customs and Excise, who levy import duty and issue Custom’s Invoices.
• Various professional bodies, who issue Inspection Certificates certifying that the goods have been inspected and meet certain quality standards.
• Lawyers, who draw up contracts of sale.
• Agents, who represent either the buyer or seller overseas.
• Shipping Registries, who ensure that the carrying ship is seaworthy.
• Chambers of Commerce, who issue Certificates of Origin.
Banks, who participate in most trade transactions to some extent, from full finance to the processing of simple remittances. Sometimes, alternative names are used instead of the ones we have listed.

Payment Methods
There are four main ways for importers to make payment to exporters in international trade:
• Advance payment
• Open account trading
• Documentary credits
• Documentary collections
Advance Payment
The buyer agrees a price for goods from an overseas exporter and sends his payment with the firm order i.e. before the goods are shipped:
The importer must be confident of:
• the reliability of the exporter
• the stability of the exporter’s country
The risk is borne by the importer.
In return the importer may be allowed a discount which is a deduction from the price of goods in consideration of its being paid in advance.
This method would be used when:
• an importer is unable or unwilling to open a documentary credit
• an importer has a good cash position and can negotiate a cash discount
• an individual is buying from a mail order company
Importers can arrange to make advance payment through a bank.

Open Account Trading
This is basically payment in arrears, the opposite of advance payment and usually covers a regular flow of shipments. The importer usually agrees with the exporter to pay at the end of each month or, say, one month after each shipment. There is usually a long-standing or regular business relationship between the two parties:



The exporter must be confident of:
• the reliability of the importer
• the stability of the importer’s country
The risk is borne by the exporter.
Governments sometimes support their exporters to protect them against these risks.

Documentary Credit
As mentioned in the previous two methods, there are problems of trust and risk for both the buyer and the seller. In fact, trade will be difficult between companies who do not know each other well.
Banks act as a trustworthy third party or intermediary between the buyer and the seller. The reasons are:
A bank is acceptable to both t

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Published by: MEGHANALOKSHA on Sep 09, 2009
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07/24/2013

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Courtesy: rai.nemiraj@yahoo.com
Trade tutorial -
Introduction To International Trade :
As natural resources are unevenly distributed in different countries, acountry cannot produce everything it needs. Some countries are good atproducing dairy products; some are specialized in iron and steel industries.As a result, a country will buy what it needs from countries that are good atproducing them and in return will sell its products to countries who requirethem. The products will be moved from one country to another by means ofaircraft, railways, trucks, ships or a combination of two or more modes oftransport
.
This buying and selling of goods is international trade and is participated inby different parties.
The Parties Involved
The Buyer, who places orders and imports goods (meaning to bringinto the country).
The Seller, who manufactures and exports goods (meaning to ship outof the country) and issues invoices.
The Manufacturer, if the seller does not make his own goods.
The Shipping Company, (or Airline Company) who transport thegoods overseas and issue Bills of Lading (or Air Waybills) as receipt ofgoods.
The Insurance Company which insures the goods against risk. Aninsurance policy or certificate is issued to this effect.
Governments and Embassies who give permission to import or exportspecific types of goods by issuing Import and Export Licenses, andConsular Invoices respectively.
The Customs and Excise, who levy import duty and issue Custom’sInvoices.
Various professional bodies, who issue Inspection Certificatescertifying that the goods have been inspected and meet certain qualitystandards.
Lawyers, who draw up contracts of sale.
Agents, who represent either the buyer or seller overseas.
Shipping Registries, who ensure that the carrying ship is seaworthy.
Chambers of Commerce, who issue Certificates of Origin.Banks, who participate in most trade transactions to some extent, from fullfinance to the processing of simple remittances. Sometimes, alternative namesare used instead of the ones we have listed.
 
There are four main ways for importers to make payment to exporters ininternational trade:
Advance payment
Open account trading
Documentary credits
Documentary collections
 
Advance Payment
The buyer agrees a price for goods from an overseas exporter and sends hispayment with the firm order i.e.
before the goods are shipped
:The importer must be confident of:
the reliability of the exporter
the stability of the exporter’s countryThe risk is borne by the importer.In return the importer
may
be allowed a discount which is a deduction fromthe price of goods in consideration of its being paid in advance.This method would be used when:
an importer is unable or unwilling to open a documentary credit
an importer has a good cash position and can negotiate a cash discount
an individual is buying from a mail order companyImporters can arrange to make advance payment through a bank.
Open Account Trading 
This is basically payment in arrears, the opposite of advance payment andusually covers a regular flow of shipments. The importer usually agreeswith the exporter to pay at the end of each month or, say, one month aftereach shipment. There is usually a long-standing or regular businessrelationship between the two parties:The exporter must be confident of:
the reliability of the importer
the stability of the importer’s countryThe risk is borne by the exporter.Governments sometimes support their exporters to protect them against
 
Payment Methods
 
these risks.
Documentary Credit
As mentioned in the previous two methods, there are problems of trust andrisk for both the buyer and the seller. In fact, trade will be difficult betweencompanies who do not know each other well.Banks act as a trustworthy third party or intermediary between the buyerand the seller. The reasons are:A bank is acceptable to both the buyer and the seller. By issuing adocumentary credit, the buyer’s bank guarantees payment to the seller if hepresents the correct documents. The buyer has to pay for the documents, butnot until his bank receives them.
A bank is a financial institution and therefore has the necessaryexpertise in handling international trade transactions.
A bank is able to supply trade and credit information, which is veryimportant to both buyer and seller.
A bank is ready to provide finance to help the buyer and the sellerfulfil their commercial obligations.Documentary credits are covered in detail later.
Documentary Collections
In the case of a collection, no documentary credit is issued and the bank is notinvolved in any undertaking to pay the seller. The bank acts as an agent. The collection cycle starts when the seller, having shipped the goods andobtained the necessary documents, presents the documents together with hisinstructions to his bank (remitting bank). The bank will send these to itsbranch/correspondent bank (collecting bank) in the buyer’s country forpayment. The risk to the importer is little more than in documentary credits: he caninspect the documents before paying for them. The risk to the exporter is much greater because he does not have a bank’sguarantee as in the case of a documentary credit;
but
he may have controlover the goods through the collecting bank. Collections are coveredin detailin another session.
Government
In some developed countries, government or quasi-governmentorganizations are established to help exporters in their export business e.g.Export Credits Guarantee Department (ECGD) in Britain and Export CreditInsurance Corporation (ECIC) in Singapore and Hong Kong.

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