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Step1: The China importer places an order with the Step 6: the US exporter ships the goods to the
US exporter and asks the American if he would be China importer on a common carrier. An
willing to ship under a letter of credit. official of the carrier gives the exporter a bill of
lading.
Step 2: The US exporter agrees to ship under a
letter of credit and specifies relevant information Step 7: the US exporter presents a 90 day-time draft
such as price and delivery terms. (bill of exchange) drawn on the State
Bank of China, in accordance with its letter of credit
Step 3: the China importer applies to (e.g.) State and the bill of lading to the bank of New
bank of China for a letter of credit to be issued in York. The US exporter endorses the bill of lading so
favor of the US exporter from the merchandise the title of goods is transferred to the Bank
importer wishes to buy. of New York.
Step 4: the state bank of China issues a letter of Step 8: the bank of New York sends the draft and
credit in the China importers favor and sends it to the bill of lading to the State Bank of China.
the US exporters bank, the bank of New York. The State Bank of China accepts the draft, taking
possession of the documents and promising
to pay the now accepted draft in 90 days.
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Step 9: State Bank of China returns the accepted Step 12: State Bank of China notifies the China
draft to the bank of New York. importer of the arrival of the documents. He
agrees to pay the State Bank of China in 90 days.
Step 10: the bank of New York tells the US exporter State Bank of China releases the documents
that it has received the accepted bank draft, which so the importer can take possessions of the
is payable in 90 days. shipment.
Step 11: the exporter sells the draft to the bank of Step 13: in 90 days, the State Bank of China receives
New York at a discount from its face value and the importers payment, so it has funds
receives the discounted cash value of the daft in to pay the maturing draft.
return.
Step 14: in 90 days the holder of the matured
acceptance ie, bank of New York presents it to
the State Bank of China fro payment. The State
Bank of China pays.
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Export procedure
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Export Documentation
Documents related to goods
Proforma Invoice
Used as a formal quotation for Export Commercial Invoice
Sale Most important export document
Should mirror how shipment will Instrument of payment and/or release
occur of foreign exchange
Is used by Buyer to open L/C or to Negotiable as part of L/C transaction
obtain financing Has legal standing as demand for
Is required by many countries to obtain payment
Import License or Foreign Exchange Must mirror Proforma, L/C, purchase
authorization order, or other formal instruction
May have to be in other language
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Export Documentation
Export Documentation
Export Documentation
DOCUMENTS RELATED TO SHIPMENT
Export Documentation
DOCUMENTS RELATED TO PAYMENT
Letter of Credit Bill of Exchange
Export Documentation
There are five important parties to a Bill of Exchange:
The Drawer: The drawer is the person who has issued the bill. In an export transaction, exporter draws
the bill as money is owed to him.
The Drawee: The drawee is the person on whom the bill is drawn. Exporter draws the bill on the
importer who is the drawee. Drawee is the debtor who owes money to the exporter (creditor).
The Payee: The payee is the person to whom the money is payable. The bill can be drawn by the
exporter payable to the drawer (himself) or his banker.
The Endorser: The endorser is the person who has placed his signature on the back of the bill
signifying that he has obtained the title for the bill on his own account or on account of the original payee.
The Endorsee: The endorsee is the person to whom the bill is endorsed. The endorsee can obtain the
payment from the drawer.
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Export Documentation
DOCUMENTS RELATING TO INSPECTION
Certificate of Inspection
It is a certificate issued by the Export Inspection Agency certifying that the consignment
has been inspected under the Export (Quality Control and Inspection) Act, 1963 and found
that the requirements relating to quality control and inspection have been complied with,
as applicable, and the goods are export worthy.
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Import Documentation
The following initial documents are required to import into China:
1) NTN
National Tax Number Certificate, which is issued by the Income Tax Department on filing of
application form accompanied with one attested copy of NIC.
2) Bank Account
Current Bank Account is required for import proceedings and documents.
3) Sales Tax Registration
Sales Tax Registration is required to import into China. For registration, Form ST-1is required to
send to the local sales tax registration office via post with acknowledgment due (courier is
preferable).
4) Chamber Membership
Membership certificate of Chamber of Commerce and Industries or any relevant trade
association of Pakistan.
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Import Documentation
Importer must show Right to make entry Typical documents required
Transport Document Customs Entry/Entry
Commercial Invoice Summary (CHB)
Packing list
Immediate Delivery
Importer must give Power of Attorney to
Application (CHB)
CHB
Commercial Invoice (Shipper) must
All importers must be bonded
be in English
Transport Document (Shipper)
Packing List (Shipper)
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Import Documentation