spoken english for international business lesson 5 payment foreign languages college

Spoken English for Spoken English for International BusinessInternational Business

Lesson 5 PaymentLesson 5 Payment

Foreign Languages CollegeForeign Languages College

Learning PointLearning Point In this lesson, we will learn how In this lesson, we will learn how

to negotiate payment terms to negotiate payment terms effectively and make international effectively and make international payment correctly in complex payment correctly in complex business environments. business environments.


Background KnowledgeBackground Knowledge Every commercial transaction specifies the priEvery commercial transaction specifies the price of the merchandise and how and when it will bce of the merchandise and how and when it will be paid for. Pricing merchandise in an internationae paid for. Pricing merchandise in an international transaction is more complicated than in a purell transaction is more complicated than in a purely domestic setting because more than one curreny domestic setting because more than one currency is involved. Determining the precise method thcy is involved. Determining the precise method that will be used to make payment is also more diffiat will be used to make payment is also more difficult because traditional methods like cheques ancult because traditional methods like cheques and drafts pose legal technical problems in processid drafts pose legal technical problems in processing, clearing and enforcement. ng, clearing and enforcement.


What’s more, both the exporter and the impWhat’s more, both the exporter and the importer face risks in an export transaction because torter face risks in an export transaction because there is always the possibility that the other party here is always the possibility that the other party may not fulfill the contract.may not fulfill the contract. Considering the characteristics of payment anConsidering the characteristics of payment and the risks in international transactions, different d the risks in international transactions, different methods of payment have been developed. Thesmethods of payment have been developed. These methods are: 1. bank transfer, 2. cheques, 3. pre methods are: 1. bank transfer, 2. cheques, 3. promissory note, 4. documentary draft, 5. letter of comissory note, 4. documentary draft, 5. letter of credit, 6. cash in advance, 7. open accountredit, 6. cash in advance, 7. open account



Case StudyCase Study

Documentary collectionDocumentary collection F: I wonder if we can make payment for this order by F: I wonder if we can make payment for this order by

documentary collection?documentary collection? C: I am sorry, you can't. Generally, we only accept C: I am sorry, you can't. Generally, we only accept

payment by ir revocable letter of credit payable payment by ir revocable letter of credit payable against shipping documents.against shipping documents.

F: You know our order this time is very large. To open F: You know our order this time is very large. To open an L/C for such a large amount at a bank is costly. Can an L/C for such a large amount at a bank is costly. Can you be a bit more flexible and bend the rules a little?you be a bit more flexible and bend the rules a little?

C: I really can't help you. Presently, the situation on C: I really can't help you. Presently, the situation on the international money market is unstable. To be on the international money market is unstable. To be on the safe side, we insist on the payment by L/C. the safe side, we insist on the payment by L/C.

…… …… ………… …… ……


When will you send us the L/C? When will you send us the L/C? C: Could you send us the L/C 20 days in advance? That is, 20 C: Could you send us the L/C 20 days in advance? That is, 20

days before shipment is made?days before shipment is made? F: Sure. No problem. But when do you plan to ship the goods?F: Sure. No problem. But when do you plan to ship the goods? C: According to our manufacturer, the goods will be ready in C: According to our manufacturer, the goods will be ready in

Octo ber. So we'd really appreciate it if the L/C could reach us by Octo ber. So we'd really appreciate it if the L/C could reach us by September the first. Furthermore, we need a transferable L/C.September the first. Furthermore, we need a transferable L/C.

F: What about the term of validity? What's your company's stipu F: What about the term of validity? What's your company's stipu lation on that?lation on that?

C: That we can go according to conventions. Let's say the L/C C: That we can go according to conventions. Let's say the L/C expires 15 days after the loading is completed in China, okay?expires 15 days after the loading is completed in China, okay?

F: Okay, sounds good to me. Any other requirement?F: Okay, sounds good to me. Any other requirement? C: Just one more thing. Please add a brief statement that the C: Just one more thing. Please add a brief statement that the

seller has the right to add or deduct a total of 5 % worth of seller has the right to add or deduct a total of 5 % worth of goods.goods.

F: Fine. We'll open the L/C according to your requirement within F: Fine. We'll open the L/C according to your requirement within the designated time. the designated time.



Class ActivityClass Activity

Compose dialogues on the following situations.Compose dialogues on the following situations. 1.1. You represent China National Arts & Crafts ImYou represent China National Arts & Crafts Imp & Exp Corp., Fujian Branch (p & Exp Corp., Fujian Branch ( 工艺美术品总公司福工艺美术品总公司福建分公司建分公司 ). You sell paper umbrellas. Now a busine). You sell paper umbrellas. Now a businessman from Japan likes your umbrellas id has ordessman from Japan likes your umbrellas id has ordered a total of $ 15 000 worth of your products. Now red a total of $ 15 000 worth of your products. Now the two of you are talking about ways of making ththe two of you are talking about ways of making the payment: sight L/C, usance L/C, confirmed L/C; ae payment: sight L/C, usance L/C, confirmed L/C; and finally both of you agree it should be paid by irrnd finally both of you agree it should be paid by irrevocable L/C payable against ship ping documents. evocable L/C payable against ship ping documents.


2. You're another member on this largest ever p2. You're another member on this largest ever purchase delegation to the U.S. You represent China urchase delegation to the U.S. You represent China Metallurgical Imp & Exp Cor poration (Metallurgical Imp & Exp Cor poration ( 中国冶金进出中国冶金进出口总公司口总公司 ). Your purpose on this trip's to import a c). Your purpose on this trip's to import a complete set of computer controlled technology thomplete set of computer controlled technology that can increase your present iron casting (at can increase your present iron casting ( 铸铁铸铁 ) pr) production capacity by 30% . The total amount of the oduction capacity by 30% . The total amount of the deal that you have in mind is somewhere between deal that you have in mind is somewhere between $ 45 000 to $ 50 000. Now you're negoti ating the de$ 45 000 to $ 50 000. Now you're negoti ating the deal with your American counterparts, and you start al with your American counterparts, and you start with the price inquiry and terms of payment. with the price inquiry and terms of payment.



ExercisesExercises

I. Answer the following question.I. Answer the following question. How many payment methods do you knoHow many payment methods do you know in international business transactions?w in international business transactions? II. Interpret the following sentences.II. Interpret the following sentences. 11 ．根据惯例，信用证应在装船前．根据惯例，信用证应在装船前 1515 到到 2020天由买方开出。天由买方开出。 22 ．我现在无权对你的要求做出答复，我得．我现在无权对你的要求做出答复，我得和我们公司总部联系一下。和我们公司总部联系一下。


33 ．如果是老客户，我们可以按照承兑．如果是老客户，我们可以按照承兑交单来做；但对新客户，我们都按信用交单来做；但对新客户，我们都按信用证的方式来做。证的方式来做。 44 ．在分期付款和延期付款上，我们对．在分期付款和延期付款上，我们对客户加收的利率是一样的。客户加收的利率是一样的。 55 ．最主要的是，我们需要你方议付行．最主要的是，我们需要你方议付行开出的保兑信用证。开出的保兑信用证。



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spoken english for international business lesson 5 payment foreign languages college

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