Matters Needing Attention for New Foreign Traders: Foreign Traders should Learn to Identify These 3 Common Traps
Common Traps in Foreign Trade How to Identify Common Traps in Foreign Trade For many small and medium-sized enterprises, they want to get a “slice of the pie” in international trade and are often afraid of being cheated. In international trade, what are the traps that you may fall into, and how can your enterprise see through and avoid these traps at the same time … this is a problem.
Today I will share with you three common traps in the process of foreign trade.
Three Common Traps in Foreign Trade Trap ①: Foreign buyers demand credit Many enterprises are hot-headed at the sight of foreign businessmen demanding goods and fail to notice the hidden risks of payment methods. For example, some buyers allow enterprises to sell goods on credit. If they can sell the goods, they will give money. If they cannot sell the goods, they will keep a backlog and transfer the risks to the enterprises.
L/C letter of credit is the best method of payment, and letters of credit issued by reputable banks are required, because letters of credit can be issued to banks in South America, Central America and other countries, even 3 yuan and 10 yuan. The next payment methods are D/P (D/P) and D/A (D/A). Even if the customers are closely related, they should try not to use credit.
Trap 2: The buyer conceals the fact of applying for bankruptcy protection Some buyers have applied for bankruptcy protection, but the enterprise has shipped the goods and cannot recover the payment. Only after investigation can it be found that the buyers have no ability to repay. However, since the buyer has filed for bankruptcy protection, the enterprise cannot sue such a buyer at all.
To investigate the buyer’s credit status, one can investigate and evaluate the buyer’s rating through lawyers or credit rating agencies.
Trap 3: Buyer to Change Letter of Credit Terms after Signing Contract Some buyers may modify the terms of the letter of credit after the contract is signed, such as modifying the quantity, difference and quality of the goods, or changing the quality requirements of the products. After delivery, the enterprise may not be able to comply with the terms of the letter of credit and therefore cannot recover the money.
Enterprises must be careful with all contracts and amendments to the terms of letters of credit. They can seek professional legal advice.
Original Artical，Author：China Trade Agent，if repost，please give references ：https://offers-bg.com/identify-these-3-common-traps/