Introduction
The L/C is a payment undertaking by Bank of China to the foreign importer. Bank of China will fulfill its payment obligation when the terms stipulated in the L/C are complied with.
Features
1. Improvement of your bargaining position in a negotiation - opening L/C provides the exporter with a conditional payment commitment on top of the commercial credit, giving you better credit by which you may win favorable price terms for your goods;
2. Warranty of your cargo - commercial credit is enhanced by bank credit through the product. The trade itself will be warranted by the bank, and the ownership of the cargo, shipping date and quality of cargos are well controlled under the documents and terms;
3. Reduction of fund occupation - for the importer who uses the L/C with credit limits, the fund occupation will be minimized during the period between the L/C issuance and payment.
Target Customers
1. Importer and exporter wish to promote the level of trade credit by making appointment on each other's business activities;
2. The imported commodity is within a seller's market and the exporter insists on settlement with L/Cs;
3. Both importer and exporter want to select trade finance out of the lack of liquidity.
Application Qualifications
1. The applicant shall be approved and registered in accordance with the law, and hold a business license that has passed the annual inspection or other valid certificates which fully prove its legal operation and scope of business;
2. The applicant shall have the qualification to engage in import and export trade.
Process
1. The importer submits the application for issuance of L/C, and Bank of China will issue the L/C based on margin or credit line taken up after examination and approval;
2. The exporters prepares and ships the goods in accordance with the relevant L/C clauses after having been advised of the L/C;
3. The exporter presents the documents required by the L/C and the presenting bank mails the documents to Bank of China to request payment or acceptance;
4. Upon receipt of the documents, Bank of China will make payment or acceptance to the exporters after examination and approval;
5. Bank of China makes the payment when the acceptance is due.
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