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Chapter 1

Chapter 1. Key Issues in International Payment. Section one Broad Issues Affecting Payment Method. Task1 Discuss the following questions with your neighbor. And share answers with all classmates. 1: What process of payment will happen in international transaction?

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Chapter 1

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  1. Chapter 1 Key Issues in International Payment

  2. Section one Broad Issues Affecting Payment Method Task1 Discuss the following questions with your neighbor. And share answers with all classmates. • 1: What process of payment will happen in international transaction? • 2: If you are a buyer/seller, what are your target for an international payment?

  3. 3: As a businessman, do you need to afford any risks for your business? If there are some, what are they? • 4: Try to compare, are there any differences between international payment and home payment?

  4. Task 2: read the following cases and give your comments or suggestions.

  5. Case 1 CFR &goods quality • A French company imported a batch of wheat on CFR basis. The contract provided that the landing quality of the goods should be taken as final. However, when the goods arrived at the destination, the import quarantine bureau detained the goods as they found that the goods contained a great deal of bacteria forbidden to enter the country. Unfortunately, the goods were consumed by a fire while in detainment. A dispute broke out between the buyer and the seller. • Consider: Who should bear the damages? What are the risks?

  6. Section twoBasic parties of international payment • Task 3: • Discuss with your neighbor. How many parties would be included in the international payment?

  7. In the conventional international payment • By non-cash payment: the buyer and the seller, pay by goods • By cash payment: the buyer and the seller, pay by gold, silver, copper coins, paper currency( e.g.：RMB, USD) etc.

  8. By notes: the buyer, the seller and the old-style Chinese private bank (banking house 钱庄）

  9. In the modern international payment • By E-commerce: • The Buyer, the Seller, Banks and warrantor (like alipay支付宝）

  10. Task 4 Discuss with your partner and draw the procedures of the following payment methods: • By notes • By E-commerce

  11. Section threethe risks of international payment • Task5 : • Discuss what the risks are in different payment methods according to the procedures you’ve just drawn. List them out and give your reasons.

  12. Task 6 • Compare the information (page 1-5) with the risks you’ve listed. Draw a new list of the risks in international payment and do explanation of each one.

  13. risks in international payment 1.Who bears the credit risk(信用风险）? 2. Who finances the transaction? Go to case 2.

  14. 3.In what currency will payment be made? Task 7 Supposed USD is the currency for payment. The total amount of the trade is $100. • USD VS RMB • When the contract was signed, $1=￥7.2 , $100= ￥720. • Situation 1: when $1= ￥ 6.5, what would happen? • Situation 2.: when $1= ￥8.5 , what would happen? And: • Which situation is more profitable to the seller, buyer and other parties?

  15. 4. What are the political and legal risks? Political Risks: • Political instability the unimaginable change of trade policy, restrictions on foreign transfers, restrictions on the importation or exportation of certain goods

  16. Changes in monetary policy e.g devaluation of the local currency • Riots or civil unrest loss or damage to merchandise potentially

  17. Task8: Discussion： • If the buyer agrees to handle insurance coverage, should the seller have “insurable interest” in the goods? • (hint: Could the seller assure that the buyer will pay for the goods certainly?)

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