Case Study of Risk Prevention of T/T on delivery for Chinese Exporters

Case Study of Risk Prevention of T/T on delivery for Chinese Exporters

International trade settlement is the foreign exchange collection and payment business between importers and exporters of two different countries or regions due to the trade of goods through banks or other financial institutions, in order to settle the creditor-debt relationship between two parties. Along with the rapid advancement of economic globalization, coupled with the rapid development of information technology, trade relations among countries or regions have become increasingly close. More enterprises are engaged in import and export trade. The scope of international trade settlement is also expanding. The payment method based on commercial credit— telegraphic transfer (T/T) is one of the main methods of international settlement. Due to its advantages such as fast speed, simple procedure and low cost, it is more and more widely used in business. However, due to the nature and characteristics of telegraphic transfer, exporters have certain risks in using this settlement method, especially T/T on delivery. It is important for foreign trade enterprises to study how to avoid risks. Through the analysis of a case between Chinese Company A and Pakistani importers, this paper summarizes the risk prevention measures employed by exporters when they use T/T on delivery.