Interested in China-Vietnam re-export trade and asking about specific sectors. The best answer states that this trade sector is rich and diverse. From a product type perspective, it includes light industrial goods such as textiles, electronic products, agricultural products, machinery and parts, chemical products, and more. These sectors form the main components of China-Vietnam re-export trade, meeting the demands of both countries and surrounding markets.
What are the payment methods for re-export trade, and which one is the most suitable?
Resolved
I'm planning to start re-export trade business recently, but I'm not very familiar with the payment methods. I'd like to know how payments are generally made and received in re-export trade. What are the common methods, what are their respective characteristics, and which method is more suitable for someone new to re-export trade? I hope to get a detailed answer, thank you!
Trade Expert Insights Answers
David ChenYears of service：10Customer Rating：5.0
Trade Compliance AdvisorStart a Chat
The common payment methods for re-export trade mainly include the following:
First is telegraphic transfer (T/T), which is divided into advance T/T and after T/T. With advance T/T, the importer transfers the funds to the exporter through a bank before shipment, and the exporter ships the goods after receiving payment. This method is most advantageous for the exporter, with low risk. After T/T involves payment after shipment, which carries higher risk for the exporter.
Second is letter of credit (L/C), where the bank acts as a third party. As long as the exporter submits compliant documents according to the L/C terms, the bank will make the payment. It is relatively fair and provides some security for both buyers and sellers, but it is complex to operate and involves higher costs.
Third is collection, divided into documents against payment (D/P) and documents against acceptance (D/A). D/P means the importer can only receive the documents and take delivery of goods after payment; D/A means the importer can receive the documents after accepting the bill of exchange, which carries higher risk for the exporter. For those new to re-export trade, securing advance T/T as the payment method is the most secure, with controllable risk; if the counterparty has good credit, L/C is also a good option.
Daniel KimYears of service：4Customer Rating：5.0
Commodity Inspection and Quarantine ConsultantStart a Chat
In addition to the above methods, third-party payment platforms like International Alipay can also be considered. This method is relatively simple to operate, with transparent transaction processes, and it protects the rights of both buyers and sellers to a certain extent. However, there may be transaction limits, and handling fees vary across different platforms, making it suitable for re-export trade with smaller amounts.
Olivia LiuYears of service：6Customer Rating：5.0
Foreign Exchange Risk ManagerStart a Chat
In re-export trade, with D/P under collection, the importer pays to redeem the documents, which allows the exporter to retain some ownership of the goods, and the risk is lower compared to D/A. However, if the importer refuses payment, handling the goods can be troublesome, so careful selection based on the partner's creditworthiness is necessary.
Michael ZhangYears of service：10Customer Rating：5.0
Customs Clearance SpecialistStart a Chat
Although using a letter of credit is complex to operate, it is binding on both parties. The issuing bank assumes primary payment responsibility and will pay as long as the documents are compliant. Disadvantages include high bank fees and the risk of refusal of payment due to non-compliant documents, so accurate document preparation must be ensured.
Thomas LiYears of service：7Customer Rating：5.0
Import Licensing AdvisorStart a Chat
Under the advance T/T method of telegraphic transfer, the exporter receives payment before shipping, ensuring stable cash flow and low risk. However, for the importer, paying in advance carries risk. Therefore, if this method is to be used, it requires a good working relationship with the importer or the provision of certain guarantees.
Richard WuYears of service：8Customer Rating：5.0
Global Trade Operations ExpertStart a Chat
International factoring is also an option, where the exporter assigns receivables to a factor, who then becomes responsible for collection. This allows for early access to financing and can mitigate the importer's credit risk, making it suitable for companies with high working capital requirements.
Emma ZhaoYears of service：3Customer Rating：5.0
Export Documentation SpecialistStart a Chat
For larger amounts and long-term, trusted partners, the after T/T method can simplify procedures and enhance the cooperative relationship. However, the exporter must have a thorough understanding of the importer's creditworthiness and financial situation to avoid payment risks.
Anthony LuoYears of service：10Customer Rating：5.0
Trade Compliance ExpertStart a Chat
With the D/A method under collection, the importer can take possession of documents upon acceptance, which means less financial pressure for the importer and is easily accepted. However, the exporter faces the risk of the importer not paying at maturity, so it is not recommended to adopt it lightly unless there is a high degree of trust.
Linda GuoYears of service：3Customer Rating：5.0
Trade Dispute MediatorStart a Chat
When using third-party payment platforms, attention must be paid to their scope of application and regulatory policies. Regulations for third-party payments vary across different countries and regions, so it is crucial to ensure transaction compliance to avoid financial losses due to policy issues.