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Eight major risks in export trade

  • Author:Alvin
  • Source:HKSG-GRUP
  • Release Date:2018-08-02
Eight major risks in export trade

Export trade business is to obtain foreign exchange through commodity exports, and foreign exchange earning from commodity exports is the most important source of foreign exchange earnings in China. The situation of the international foreign trade market is becoming more and more complicated, and the risks faced by exporting enterprises are rising. We have compiled the common eight major risks to remind foreign trade enterprises to raise their risk vigilance.

1. The order suddenly increased dramatically

When the size of the buyer is average, the amount of orders issued to you suddenly increases, and these orders are not transferred from other suppliers. It is necessary to pay attention to whether the buyer has sufficient downstream sales ability. If the buyer is too optimistic about downstream sales, the risk of blind procurement may eventually be transferred to the supplier.

2. Trading with multiple suppliers at the same time

If the same type of products are scattered among a number of enterprises, the buyer may really care about the supply capacity of the export enterprise, but instead obtain more suppliers to sell them, so as to achieve the purpose of financing the upstream funds. . Once the buyer's capital chain is difficult, it will be transmitted to upstream companies, and the impact is often wide.

3. Downstream is a single emerging market

Don't be too happy when the buyer tells you how much market share he has in a certain market, you need to worry about the sustainability of this market advantage. When a single market is a high-risk emerging market, it needs to be treated as a major negative information. The downstream market will have a strong impact on the buyer's operations. There are a large number of middlemen in the UAE and Hong Kong, China. Due to the difference in the terminal market, the risk of buyers in the UAE is much higher than that of buyers in Hong Kong.

4. High debt management

When the buyer asks for the release, the reason for explaining to you is that it has a higher liability and hopes to get your support. At this time, you need to pay attention to the impact of high debt on the payment of the payment. When the operating income cannot cover the financing cost, or the financing institution tightens the policy, the buyer's capital status will be seriously affected, which will result in arrears to the upstream suppliers. You need to find ways to understand the details of high debt, including actual debt levels, financing to banks or financing to other institutions, financing maturity and continuity of financing policies.

5. The credit period is extended continuously

Credit sales, which embody the characteristics of modern international trade, are being widely used and have become an important means for Chinese companies to improve their competitiveness. Out of inertia to habitual things, there is often a lack of vigilance against the buyer's demand for an extended credit period. When the buyer's required credit period deviates from the industry practice and far exceeds its downstream sales repayment period, it is necessary to beware of whether the buyer intends to use it for other purposes.

6, business deviation from the main business

When you learn that the buyer is investing in a large-scale non-main business, what you need to do is not to sigh the buyer's strength, but to care whether the investment will affect its main business, and thus affect the payment for your payment. According to experience, few buyers will make up for trade losses through investment income, and more often sacrifice trade to make up for investment losses.

7. Engage in offshore procurement

With the development of international trade, more and more buyers use legal means to protect their rights and interests in order to alleviate the consequences of business failure. More typical is that a well-known buyer establishes a procurement company in a third country (region) for offshore procurement. Due to the independence of the legal person status of the procurement company, it is difficult to trace the payment responsibility to the parent company with its strength.

In recent years, in the statistics of China's customs, the business exported to the Virgin Islands, the Marshall Islands and other places is very small, but the buyers of export contracts account for a considerable proportion of the situation in these areas. It is more common for buyers to establish purchasing companies in countries such as Singapore, the United Arab Emirates and Hong Kong.

8. Buyer's imports from highly regulated countries

In international trade, whether or not the goods can be safely received depends not only on the buyer's own credit and strength, but also on the country (region) in which the buyer is located. In some countries with high control over trade and foreign exchange, such as Iran and Venezuela, there are some strong buyers who have a strong willingness to pay for goods. However, due to the influence of national policy control, there may not be enough foreign exchange to be exchanged, or the payment cannot be made smoothly.