Understanding Price in International Trade: Principles, Methods, Currency Choice, Commission, and Discount

1.  Chapter5: Price of I&E goods • Summary: Through the studying of this chapter , student can grasp the price of the imported and exported goods correctly, selecting the favorable pricing currency for use , using relevant commission and discount properly, and ordering the price clause in the contract. Section 1：Price Section 2 ：Method of deciding the price Section 3 ：Choosing the currency Section 4 ：Application of commission and discount Section 5：Price clause 国际贸易实务讲义

2. Section 1: Price 一、Principle of price 二、Fluctuation of price in International Market 三、Factors effected the price 四、strength the cost-counting • The meaning of export total cost（ export total cost =purchasing cost+fixed charge-drawback duties） • Net incoming of foreign exchange(according to FOB） • Net incoming of RMB 国际贸易实务讲义

3. （一）Profit and loss rate of the export commodities Notation： Purchasing price=goods price+tax = goods price （1+tr） Drawback duties= goods price  dr =[purchasing price /（1+tr）] dr 国际贸易实务讲义

4. （二） Cost of foreign exchange generated of the export commodities 国际贸易实务讲义

5. （三）Earn foreign exchange through export (the rate of increase of foreign currency) 1、About import raw materials , no matter using which kind of price term, it should be converted into CIF price. 2、About export products , no matter using which kind of price term ,it should be converted into FOB price. 3、If it is the raw materials country products, cost of foreign exchange can according to FOB price of raw materials to calculate 五、Conversion between the price terms CFR=FOB+freight CIF=FOB+freight+I CIF=CFR+I CIF=CFR/(1-1.1R) 国际贸易实务讲义

6. Section 2 Method of fixing a price 一、Regular price 二、Unregular price 三、Price Adjustment Clause Application of Price Adjustment Clause： 国际贸易实务讲义

7. Section 3: Choice of the currency • Choice of the currency 1、Hard money is better when exporting, and soft money is better when importing. 2、If the money isn’t good enough, we should adjust the quotas according to the fluctuation of money. 3、If the money isn’t good enough, we should add related clauses to avoid risks. 国际贸易实务讲义

8. Section4 Application of Commission and Discount 一、Commission （一）The meaning of Commission （二）Method of accounting the commission （三）Accounting the commission • Under most situations,calculate the commission based on the price term. • Net price=price including commission（1-commission rate） price including commission =net price/（1-commission rate） 国际贸易实务讲义

9. (四）Payment of commission • Commission is the payment to the intermediate trader after the buyer give the payment of goods to the seller. 国际贸易实务讲义

10. 二、Discount （一）The meaning of Discount （二）Method of accounting discount （三）Accounting the discount • Discount amount=price including discountdiscount rate • Discount is deducted from the payment in advance. 国际贸易实务讲义

11. Section5: Price Clause 一、Content of price clause • Uint price are composed by 4 parts： 二、Notice when stipulate the price clause 国际贸易实务讲义

12. Summary • Through the studying of this chapter, we can carry on the cost accounting of the export commodities and export and offer checking and calculating correctly , using the commission and discount clause flexibly in the trade practice. • Key：cost accounting, commission, discount • Difficult points：choosing the price 国际贸易实务讲义

13. Excercises 1、Key conception： Profit and loss rate of the export commodities, Cost of foreign exchange generated of the export commodities , the rate of increase of foreign currency 2、How to use commission and discount？ 3、What’s the content of price clause? 国际贸易实务讲义