Finance Foreign Trade
-
Upload
anitha-purushothaman -
Category
Documents
-
view
239 -
download
0
Transcript of Finance Foreign Trade
-
8/20/2019 Finance Foreign Trade
1/31
1
Multinational Financial Management
Alan Shapiro
7 th Edition J.Wiley & SonsPower Points by Joseph F. Greco, Ph.D.
California State University, Fullerton
-
8/20/2019 Finance Foreign Trade
2/31
2
FINNCING F!"#IGN $"D#
CHAPTER 18
-
8/20/2019 Finance Foreign Trade
3/31
3
CHAPE! "#E!#$EW%
I. P%N$ $#"&S
II. D!CUN$S
III.FINNCING $#C'NI(U#S
I). G!)#"NN$ S!U"C#S !F#*P!"$ FINNCING ND
C"#DI$ INSU"NC#
). C!UN$#"$"D#
-
8/20/2019 Finance Foreign Trade
4/31
4
$. PAME' E!MS I. P%N$ $#"&S
. Five Principal &eans+. Cash in a-vance
. /etter of Cre-it
0. Drafts1. Consi2n3ent
4. !pen ccount
-
8/20/2019 Finance Foreign Trade
5/31
5
PAME' E!MS 5. Cash in -vance
. &ini3al ris6 to e7porter. Use- where there is
a. Political unrest
b. Goo-s 3a-e to or-erc. New unfa3iliar
custo3er
-
8/20/2019 Finance Foreign Trade
6/31
6
PAME' E!MS C. /etter of Cre-it 8/9C:. letter a--resse- to seller
a. written an- si2ne- bybuyer;s ban6b. pro3isin2 to honor seller;s-rafts.
c. 5an6 substitutes its ownco33it3ent-. Seller 3ust confor3 to ter3s
-
8/20/2019 Finance Foreign Trade
7/317
PAME' E!MS . -vanta2es of an /9C to#7porter
a. eli3inates cre-it ris6
b. re-uces -efault ris6
c. pay3ent certainty-. prepay3ent ris6 protection
e.
-
8/20/2019 Finance Foreign Trade
8/318
PAME' E!MS 0. -vanta2es of /9C to I3porter
a. ship3ent assure-b. -ocu3ents inspecte-
c. 3ay allow better sales ter3s
-. relatively low=cost
-
8/20/2019 Finance Foreign Trade
9/319
PAME' E!MS 1. $ypes of /9Cs
a. -ocu3entaryb. non=-ocu3entary
c. revocable
-. irrevocablee. con
-
8/20/2019 Finance Foreign Trade
10/3110
PAME' E!MS D. D"F$S
. De
-
8/20/2019 Finance Foreign Trade
11/31
11
PAME' E!MS . $hree Functions of Drafts
a. clear evi-ence of
-
8/20/2019 Finance Foreign Trade
12/31
12
PAME' E!MS 0. $ypes of Drafts
a. si2htb. ti3e
c. clean 8no -ocu3ents
nee-e-:-. -ocu3entary
-
8/20/2019 Finance Foreign Trade
13/31
13
PAME' E!MS #. C!NSIGNN$
. #7porter > the consi2nor
. I3porter > the consi2nee
0. Consi2nee atte3pts to sell
2oo-s to a thir- party? 6eeps so3epro
-
8/20/2019 Finance Foreign Trade
14/31
14
PAME' E!MS F. !P#N CC!UN$
. Creates a cre-it sale
. $o i3porter;s a-vanta2e
0. &ore popular lately because
a. 3aAor sur2e in 2lobal tra-e
b. cre-it infor3ation i3prove-
c. 3ore 2lobal fa3iliarity withe7portin2.
-
8/20/2019 Finance Foreign Trade
15/31
15
PAME' E!MS 1. 5ene
-
8/20/2019 Finance Foreign Trade
16/31
16
$$. ("C)ME'S II. D!CUN$S US#D IN IN$;/ $"D#
. Four 3ost use- -ocu3ents
. 5ill of /a-in2 83ost i3portant:
. Co33ercial Invoice0. Insurance Certi
-
8/20/2019 Finance Foreign Trade
17/31
17
("C)ME'S 5. 5ill of /a-in2
$hree functions+. cts as a contract to carry the2oo-s.
. cts as a shipper;s receipt0. #stablishes ownership over
2oo-s if ne2otiable type.
-
8/20/2019 Finance Foreign Trade
18/31
18
("C)ME'S . $ype of 5ills
a. Strai2htb. !r-er
c. !n=boar-
-. "eceive-=for=ship3ente. Clean
f. Foul
-
8/20/2019 Finance Foreign Trade
19/31
19
("C)ME'S C. C!&"CI/ IN)!IC#
Purpose+
. /ists full -etails of 2oo-s shippe-
. Na3es of i3porter9e7porter 2iven
0. I-enti
-
8/20/2019 Finance Foreign Trade
20/31
20
("C)ME'S D. INSU"NC#
. $wo Cate2ories+
a. &arine+ transport by sea
b. ir+ transport by air
. Insurance Certi
-
8/20/2019 Finance Foreign Trade
21/31
21
("C)ME'S #. C!NSU/" IN)!IC#
/ocal consulate in host countryissues+ a visa for the e7porter;s invoice
reuires fee to be pai- to consulate
-
8/20/2019 Finance Foreign Trade
22/31
22
$$$. F$'A'C$'* ECH'$+)ES III. FINNCING $#C'NI(U#S
. Four $ypes+
. 5an6ers; cceptances
a. Creation+ -rafts accepte-
b. $er3s+ Payable at 3aturity to
hol-er
-
8/20/2019 Finance Foreign Trade
23/31
23
F$'A'C$'* ECH'$+)ES . Discountin2
a. Converts e7porters; -rafts to cash
3inus interest to 3aturity an-co33issions.
b. /ow cost
-
8/20/2019 Finance Foreign Trade
24/31
24
F$'A'C$'* ECH'$+)ES 0. Factorin2
=
-
8/20/2019 Finance Foreign Trade
25/31
25
F$'A'C$'* ECH'$+)ES 1. Forfaitin2
a. De
-
8/20/2019 Finance Foreign Trade
26/31
26
$#. *"#E!'ME' S")!CES "F
E,P"! F$'A'C$'*
I). G!)#"NN$ S!U"C#S !F
#*P!"$ FINNCING NDC"#DI$ INSU"NC#
. #7port=I3port 5an6 of the U.S.=6nown as #7=I3 5an6
=
-
8/20/2019 Finance Foreign Trade
27/31
27
*"#E!'ME' S")!CES "F E,P"! F$'A'C$'*
. #7=I3 5an6 Pro2ra3s+
a. Direct loans to e7portersb. Inter3e-iate loans toe7porters
c. /oan 2uarantees-. Preli3inary co33it3ents
e. Political an- co33ercial
insurance
-
8/20/2019 Finance Foreign Trade
28/31
28
*"#E!'ME' S")!CES "FE,P"! F$'A'C$'*5. Private #7port Fun-in2 Corporation
8P#FC!:
. Finances lar2e sales fro3 private
sources
. &ay purchase loans of U.S. i3porters
0. #7I3 5an6 provi-es loan 2uarantees.
-
8/20/2019 Finance Foreign Trade
29/31
29
*"#E!'ME' S")!CES "F E,P"! F$'A'C$'*
C. Forei2n Cre-it Insurance ssociation
8FCI:. !ers co33ercial an- political
ris6 insurance
. Ehen insure-, e7porter oftenable to obtain
-
8/20/2019 Finance Foreign Trade
30/31
30
#. C")'E!!A(E
).C!UN$#"$"D#. $hree Speci
-
8/20/2019 Finance Foreign Trade
31/31
31
C")'E!!A(E 5. Ehen to Use Countertra-e
. Eith soft=currencyH-evelopin2
countries
. Ehen forei2n contractor3ust
perfor3.