A company involved in re-export trade business inquired whether foreign exchange can be purchased for payment, along with the necessary conditions, policy regulations, and precautions. The best answer indicated that foreign exchange can be purchased for payments in re-export trade, provided the enterprise ensures a genuine and compliant trade background, retains relevant documentation, and banks will review based on established principles. Additionally, companies must comply with SAFE policies, such as reporting information to the foreign exchange administration under specific circumstances.
Is Foreign Exchange Payment Always Required for Re-export Trade? Find Out Now!
Resolved
Our company recently plans to conduct re-export trade business and is not very clear about the foreign exchange payment process involved. We would like to ask if re-export trade requires foreign exchange payment? If so, under what circumstances is foreign exchange payment required? Are there any special situations where foreign exchange payment is not necessary? We hope knowledgeable friends can explain in detail, so that we have a clear understanding when conducting business and can avoid unnecessary risks and troubles.
Trade Expert Insights Answers
Whether re-export trade requires foreign exchange payment depends on the specific business situation. Generally, if re-export trade involves the transfer of goods ownership, i.e., purchasing goods from a supplier and then selling them to the end customer, foreign exchange payment is usually required. For example, if a supplier in country A sells goods to your company, and your company then resells them to a customer in country B, your company will need to make a foreign exchange payment to the supplier in country A.
However, in some special circumstances, foreign exchange payment may not be required. For example, if goods are stored in a third-party supervised warehouse, and your company merely acts as a trade intermediary facilitating the transaction, with ownership of the goods transferring directly from the supplier to the end customer, and your company only charges a service fee, then foreign exchange payment may not occur. Alternatively, if both trading parties agree to settle transactions using non-monetary methods such as barter, foreign exchange payment is also not required. When engaging in re-export trade, enterprises must understand relevant foreign exchange control regulations and operate according to requirements to avoid compliance risks.
If the re-export trade is a pure agency model, where the agent only charges an agency fee and the payment for goods is made directly by the actual buyer to the seller, then the agent does not need to make a foreign exchange payment.
If the re-export trade adopts a credit sale method, where goods are delivered to the downstream customer first, and the downstream customer pays later after a period, then during this phase, if the upstream supplier does not require advance payment, foreign exchange payment may also be temporarily unnecessary.
When the goods involved in re-export trade are of a donation nature, transferred from the donor to the recipient, there is generally no foreign exchange payment activity in such cases.
If the re-export trade contract stipulates payment for goods in kind, for example, using other goods to offset the payment for this re-export trade, then foreign exchange payment is also not required.
In some re-export trades, if goods only have a brief stopover at a transit port, and their ownership has not substantially transferred, merely for reasons such as transportation convenience, foreign exchange payment may also not be involved.
If both trading parties are within the same foreign exchange control zone and agree to complete settlement through internal transfers or similar methods, conventional foreign exchange payment operations may also not be necessary.
When re-export trade involves transactions between affiliated enterprises, and both parties agree to handle it through internal allocations or similar forms, foreign exchange payment may not be required.
If re-export trade involves service-type re-export, such as technical service re-export, and the fee settlement method is not monetary payment, then foreign exchange payment may not occur.