国际市场风险管理termscountertrade.ppt

The Risk Triangle Terms of Payment Types of Payment Cash in Advance Not widely used except for first time transactions Letter of Credit Promise to pay Irrevocable, confirmed, revolving Drafts Similar to personal check Must obtain shipping documents prior to delivery Documentary collection Bank acts as collection agent Draft may be sold at discounted rate for immediate cash Negotiating Terms of Payment Considerations The amount of payment and the need for protection. Terms offered by competitors. Practices in the industry. Capacity for financing international transactions. Relative strength of the parties involved. Managing Foreign Exchange Risk Forward rate exchange market “the exchange of currencies on a future date at an agreed upon exchange rate” Spot rate transaction “the exchange of currencies for immediate delivery” Possible price manipulation responses to currency movements Make no change in the dollar price (pass-through). Decrease the export price (absorption). Pass-through only a portion of the increase. Exporter Strategies Under Varying Currency Conditions WEAK POSITION Stress price benefits Expand product line Shift sourcing to domestic market Cash-for-goods trade Full costing Speed repatriation Minimize expenditure in local currency STRONG POSITION Non-price competition Improve productivity/ cost reduction Sourcing overseas Prioritize exports Countertrade with weak currency countries Marginal-cost pricing Slow collections Buy needed services abroad Sources of Export Financing Commercial banks first rate credit risks only enhanced services overseas reach Forfeiting and Factoring uses bills of exchange or promissory notes to pay at time of shipment may use discounts to purchase receivables Official Trade Financing loans or guarantees Price Negotiations Be aware that price is only one part of a comprehensive package. Avoid early price concessions. Carefully consider concessions that reduce price or profitability. discounts, payment terms, product feature