Planning to engage in re-export trade business, inquiring whether re-export trade requires bank access and the specific access conditions and processes. The best answer points out that re-export trade usually requires bank access because banks undertake responsibilities such as risk assessment. Access requires enterprises to submit documents such as business licenses, and banks will review and assess the enterprise's creditworthiness, repayment ability, etc. The enterprise must have a good credit record and a clear business model. Requirements vary among different banks, and it is advisable to discuss in detail with the intended bank.
Do banks really prohibit re-export trade?
Resolved
I recently plan to engage in re-export trade, but I heard from peers that banks no longer allow it. Is this true? Why is this happening? If banks don't allow it, how can I proceed with re-export trade? I hope someone knowledgeable can explain it in detail, as this is crucial for my upcoming business planning. Thank you all!
Trade Expert Insights Answers
Banks do not entirely prohibit re-export trade. In recent years, due to the higher trade financing risks associated with re-export trade, some banks have tightened their review of re-export trade businesses. Some banks may restrict re-export trade for specific customers or in particular business scenarios due to risk control.
Re-export trade involves goods transiting through a third location, with relatively complex capital and goods flows, making it susceptible to exploitation by criminals for arbitrage, foreign exchange speculation, and other illegal activities.
To engage in re-export trade, you must first communicate fully with banks, providing genuine and detailed trade background information such as contracts, invoices, and logistics documents, to prove the authenticity and compliance of the business. At the same time, choose reputable and well-regulated trade partners to mitigate risks. You can also consult professional trade agencies, like Zhongmaoda, who can provide expert guidance and solutions to help you successfully conduct re-export trade business.
Banks might prohibit it due to perceived high risks. For example, re-export trade involves complex cargo transportation, and if logistics documents are fake, banks fear liability. You can prepare more materials proving the authenticity of the trade for the bank, and you might be able to proceed.
Not all banks prohibit it; some banks still support high-quality clients. You need to assess your company's qualifications. If your qualifications are good, your business is genuine, and you communicate well with the bank, you might get approval.
There have been numerous cases of illegal foreign exchange arbitrage in re-export trade in the past, which is why banks are cautious. If you want to do it, you need to clearly outline your business processes, ensuring the bank understands that the risks are controllable, only then might they allow you to proceed.
Banks restrict re-export trade due to regulatory requirements on one hand, and their own risk control on the other. You can try partnering with experienced trade companies and leverage their relationship with banks, which might help advance your business.
It might be that the bank you approached has a tight policy. Try inquiring with several banks. Different banks have varying levels of acceptance for re-export trade; comparing them might reveal a bank willing to work with you.
To engage in re-export trade, besides communicating with banks, you also need to standardize operational procedures. For example, clear cargo transportation routes and complete documentation will reassure banks and make them more comfortable.
Banks are currently scrutinizing re-export trade strictly. You can start by improving contract terms to clearly reflect the true nature of the trade, reduce bank concerns, and strive to conduct business.
If banks prohibit it due to risk, you could consider involving a third-party guarantee institution to increase the bank's confidence in the business, and then you might be able to conduct re-export trade.