International Trade Forms

1. International Trade Forms Week 15

2. Background information • The adoption of open foreign trade policy has widened the horizon for international economic and technical exchange. • In recent years, the FTCs (Foreign Trade Corporations) have moved forward in the direction of using different forms of flexible trade to create better conditions and more opportunities for the development of international trade. Along with big increase of normal trade, the total volume of flexible trade has multiplied remarkably.

3. Background information • We are not only import and export normal commodities like computers, fruits etc. But also import and export technologies, services etc. • The relationship between business partners from different countries could be variety, and the way of co-operation could be variety.

4. Trade forms we are going to talk about: • Processing trade (加工贸易), • Joint Venture (合资公司）, • Leasing Trade （国际租赁）, • Compensation Trade （补偿贸易）, • Barter Trade （易货）, • Consignment Trade （寄售）, • Agency （中介） These are not include all the forms !

5. Processing Trade • Definition: Processing trade is a company through different ways to import resources, raw materials, or components, the use its own technology and labor to produce, and then export the product to other countries, to earn the profit.

6. There are mainly two different arrangements 1. Overseas manufacturers provide the essential raw materials and design samples while the processing work is carried out in factories and workshops in China in accordance with the design, format, quality and quantity specifically required by the overseas manufacturers. After processing, the finished products are sent back to the overseas partners; therefore the Chinese FTCs will receive the processing fee in return. (来料加工) 例子：服装行业，外贸原单

7. 2. Sometimes, processing partakes of assembling supplied parts, e.g. assembling components into mechanical, electrical and electronic products, to say a but few; in such cases we may call this arrangement assembling trade which has a similar meaning to processing trade. The only difference lies in the fact that overseas manufacturers provide not only samples, models, essential components and parts, but also equipment and essential production lines. After assembling completed, the Chinese FTCs receive processing fee, which enables the factories which undertake the processing job to pay back the cost of supplied equipment (from overseas) by installments.

8. Objective: For the companies from developed countries: Save the cost (Labor, resources) For the companies from developing countries: Earn the processing fees, and learn new technology.

9. Sample Letter

10. Dear Sirs, Re: Processing Trade on Stereo Sets After several months’ negotiation, we have at long last （eventually, finally） succeeded in reaching an agreement the proposed contract for assembling supplied components. Now we wish to summarize those essential points of our proposition as follows. 1. Shanghai Electronics Factory (alias SEF) shall assemble 50 000 Stereo Sets within a period of five years with the components, auxiliary materials(辅料) and necessary equipment and tools supplied by Adlar Electronics Inc., Hong Kong (alias AE). 2. AE shall provide SEF with all components, auxiliary materials, necessary equipment and tools, as well as technical data and blue prints as specified in Appendix I, and SEF shall assemble these components into finished products (stereo sets) and ship them to AE in Hong Kong or any other port as instructed by AE. All the shipping expenses for the finished products shall be for the account of AE.

11. 3. Both SEF and AE agree that the fees of assembly for each set is HK$10 000 not including insurance premium. 4. The components and auxiliary materials supplied by AE are to be shipped from Japan to Shanghai and the finished products are to be carried by railway from Shanghai to Hong Kong or shipped to the western ports of USA as based on the shipping instructions’ given by AE one month in advance. Shipment of the finished products is to be effected once or twice a month, which is to be arranged on a quarterly basis. 5. Payment for the processing fee and shipping expenses is to be made by sight L/C to be opened by AE or its affiliate（分公司） in the USA not later than 30 days before the shipping schedule.

12. 6. Insurance for the components and auxiliary materials, etc. during their storage in Shanghai and the finished products during transit from Shanghai to destination are to be taken care of by SEF on behalf of AE. 7. Packing: 1 set to a cardboard box. 50 sets to a wooden ease suitable for export， packing charges are for AE’s account, on cost basis. 8. Compensation for loss arising from default(…..所引起的). Should（here means “if”） AE fail to supply the components and auxiliary materials or SEF fail to deliver Stereo Sets in time as contracted, as a result of which loss is incurred, the responsible party shall compensate the party affected for the entire loss thus sustained.

13. 9. After signing the contract, AE shall send at its own expense 15 technicians and 3-5 administrative staff members to SEFs factory render（means give assistance） technical assistance during assembly and inspect the finished products before delivery. 10. The allowance for damage to components and auxiliary materials during the process of assembly is 2.5%. If any damage or defect is found in the components and auxiliary material supplied by AE, SEF shall advise AE immediately to that effect, so as to enable AE to rush replacements in time. Please give the above your best consideration and if you fall in with us on these essential points, let us have your tele-reply, so that we can get the contract ready for your signature when you come to Shanghai. Awaiting with keen interest your early reply. Yours faithfully

14. Useful Expressions • processing trade加工贸易 • stereo sets立体声收音机 • at long last最后，最终 • assembling supplied components提供配件 • Alias 别名，又名，假名 • auxiliary materials辅料 • Appendix 附录 • for the account of AE费用由AE 方承担 • insurance premium保险费用 • in advance预先，事先

15. Useful Expressions • affiliate n.隶属的机构，分公司 • arising from default 所引起的违约 • incur v. 遭受，蒙受，导致 • the responsible party 责任方

16. Exercises • Translate the following sentences 1. 我们的工程包括建一个水果加工厂和一个食品加工厂。 2. 来料加工和来件装配对扩大我国的对外贸易有着重大作用。 3. 加工和装配业务是我国对外贸易的一个组成部分。 4. Through a series of discussions, we have reached substantial agreement on the processing and assembling business. 5. Party B has agreed to process and assemble for Party A 30 000 video recorders within a period of two years. 6. Party A has agreed to provide Party B with materials, components, necessary equipment and tools as well as the relevant technical data and blue prints needed for the processing and assembling.

17. Answer to Complaint, Claim and Settlement • Translate the following terms and expressions: • 提出索赔 2.索赔短重 3.拒赔 4.品质不良 • 合同违约 6.仲裁条款 7. arbitration award 8. settle a claim • . Translate the following sentences: 1.We hope that you will not take this case as breach of the contract and refrain from making any claims against us as the loss can be negotiable.

18. 2. We have investigated the case carefully, but found no error on our part. We packed the goods according to the contract. They were in good condition as shown by the certificated of packing inspection. The clean B/L further proved that. We suggest you file a claim with the insurance company. We shall try our best to assist you in your claim. 3. We take all our customers’ comments seriously. We shall arrange for a replacement consignment to be sent to you immediately and would be grateful if you could return the faulty products to us. We shall reimburse freight charges. 4.请尽快告知我方是否可以在7月底交货，如果不能，我们将取消订单，因为我们无法再等下去了 5.完好无损的包装证明货物是在装运前损坏的。 6. 对你们遭受的不便我们深表歉意，保证尽心高效地办理你们今后的订单。