6 Major Export Business Risks | You Must Know

In recent years, the import and export business risk has been increasing, which not only results in interest loss, but also increases the risk coefficient with the passage of time, which brings serious impact on the sustainable development of foreign trade enterprises. Therefore, the issue of export business risk is becoming more and more a topic of concern.

Export business risk

Shipment specifications and dates do not conform to contract provisions

The exporter fails to deliver the goods according to the contract or letter of credit.

  1. Misuse of production plant, resulting in late delivery;
  2. Substituting products with similar specifications for those stipulated in the contract;
  3. Low transaction price, substituting the second best for the best.

Poor quality of documents

Although the provisions of the letter of credit mode of settlement, and on time and quality shipments, but after the shipment, the negotiating bank documents do not do single consistent, consistent with the documents, so that the letter of credit to promote the role of due protection.

At this time, even if the buyer agrees to pay, but in vain to pay the expensive international communication costs and inconsistency deduction, and the collection of foreign exchange time is greatly delayed, especially for the amount of smaller contracts, seven deductions down to the loss will occur.

A full understanding of the information necessary for exporting is essential to minimize the export business risk:

Shipping Documents For Export | Compelte Guide


Export business risk

export business risk


Trap provisions of the letter of credit

Some letters of credit stipulate that the customer inspection certificate is one of the main documents for negotiation.

The buyer will seize the seller’s eagerness to ship, deliberately picky, but at the same time put forward a variety of payment possibilities to induce enterprises to ship. Once the release of goods to the buyer, the buyer is very likely to intentionally goods inspection does not match, delay payment, and even money, goods empty.

The letter of credit provides for transportation documents issued within 7 working days after the expiration of foreign and so on. These provisions of the negotiating bank and the beneficiary can not guarantee to do, must be carefully examined. Once the terms of the trap, should promptly notify the amendment, do not want to save a moment, to the future buried risk hidden danger.

If you don’t want to just read these text interpretations, you can click on the video below to help you understand more quickly about export business risk:

export business risk


No complete set of business management system

Export work involves all aspects, and both outside, prone to problems.

If the enterprise does not have a complete business management approach, once the lawsuit, it will result in a reasonable situation, especially for those who only focus on telephone contact with the enterprise.

Secondly, due to the expansion of the enterprise’s clientele every year, in order to enterprises in the trade in a targeted manner, it is inevitable to establish a business profile of each customer, including creditworthiness, trade volume, etc., year by year to screen and reduce business risks.


Export business risk

export business risk


Operation contrary to the agency system

In terms of export business, the real practice of the agency system is that the agent does not advance funds to the client, the profit and loss is borne by the client, and the agent only collects a certain amount of agency fees.

But now the actual business operation, not so. The reason for this is that their own customers are fewer, the ability to collect foreign exchange is poor, but also to strive to complete the target; the second is that they want to make more profit, and they think that the agency fee is less.

Use D/P, D/A forward payment method or consignment method

The deferred payment method is a forward commercial payment method, such as the exporter accepts this method is equivalent to the importer financing preferences.

Although the issuer voluntarily pay the interest on the extension, on the surface of the exporter only need to advance, release, in essence, the customer waits for the arrival of the goods to the port to check the number of arrivals. If the market changes in poor sales, the importer can apply for bank refusal to pay.

Some companies release goods to foreign business classmates, friends. Thought it was a relationship with the customer, there is no problem of not being able to receive remittances. Once the market sales are not good, or customer problems, not only the money can not be recovered, the goods may not be recovered.

Export business risk prevention links and basic practices

Strengthen the management of the contract of sale

In the unit (enterprise) to strengthen the internal management of the contract of sale or other economic contracts, can help the unit (enterprise) in accordance with the contract of scientific arrangements for the relevant work, timely resolution of the contract and the implementation of the problems that exist in the contract, to prevent the use of the contract by the wrongdoers to carry out fraud.


Cash On Delivery

export business risk


Anti-fraud before the signing of the contract of sale

This period of anti-fraud review is the main body of the signing of the contract of sale and purchase review.

The signing of the contract of sale of anti-fraud

This stage of the main task of anti-fraud is the form of the contract, the main terms of the contract, the contract of the signature and seal, the contract of the guarantee and the review of the relevant procedures.

Scroll to Top
Xiongda always care about your products, and will provide full services in the freight progress.