Replying to [Amazonianfish]:Your observations are very accurate. This practise needs to be augmented.Besides we have no surety of performance after money has exchanged hands.How do we redeem our money if no goods are despatched?
Sixer

Replying to [ZhuoErTe Manufacturing]:Trust at its best is ok for a seller who has been working with you over a period of time.Waste of time?No way.
As seller, my guarantee of genuine buyer is an offer by him to open Irrevocable L/C of prime international bank payable at sight,fully paid on production of bill of lading.
Sixer

Hi,

When we wanted to start doing business with chinese companies, we were confronted with this same problem.

Eventually, I realised that the number one reason is that chinese companies are averse to paying bank charges (confirming/ negotiation etc) associated with letter of credit transactions and would rather do a transaction via TT where there is only the intermediary bank charges which is usually very small.

The second reason is ignorance. I believe that a lot of chinese companies do not trust their abililty to be able to meet extactly the terms as contained in L/C's. They are afraid of the risk of not being paid after they have shipped goods owing to discrepancies either in their interpretation of the terms of the L/C or wrong preparation of docs.

Replying to [sixer]:
I think that they do not want to be involved in more documentations. Chinese people are more interested in selling goods, when quoting they do not consider the expenses ratio, when opening an L/C they provide documents to the banks, and if one of the term does not matches the bank, then they have to face penalties.

Replying to [sixer]:they feel safe in tts as well as able to puchase raw materials in good price with this cash flow so as to mentain their profite under given export price.

Replying to [sixer]: In my opinion, China prefers TT for two main reasons, TT is the simplest of all the payment terms as less technicality is involved, sales contract can be varied without the usual amendments associated with LCs. Most sellers, not only the Chinese would therefore prefer TT because of this simplicity.

However, and for the Chinese in particular, the Language barrier is a major problem, an average Chinese runs away from anything that would require rigorous interpretations and understandings associated with the terms and conditions inherent in a Letter of Credit. To the Chinese, its all about making money, not Queens English, its all about buying and Selling, not Marketing and Marketing Techniques.

To the chinese, anything standing in the way of money making should be done away with! Its like "You have your Money", and "I have my goods", simply TAKE MY GOODS AND BRING YOUR MONEY, WHY ALL THE JARGONS!!

But do you blame them, if it is working for them? The Europeans are speaking the grammars and losing the market, the chinese does not communicate, goes for the simplest of all the payment terms and he is gaining the Market.

Replying to [sixer]: Is itFear Of Unknown and they don't want to take risk.

Replying to [sixer]:
We are willing to prefer L/C, we won't accept T/T until we know eath other very well.

Replying to [sixer]:
re payment byT/T,as I know,some chinese small enterprise does not have experienced salesman.their boss only prefer T/T payment.bcos they are new and not familiar with the L/C payment.I hv a friend,he is doing business with Indian customers.He only accepts D/P payment for his export business.

Replying to [sixer]: China refer on T/T it is because, they want an urgent supply of the product and te most is that, the T/T is much easier and cost is not expensive, not like L/C that very much expensive for opening on it. Also china prefer T/T, cause it is the simpliest and fastiest payment for negotiation and no huzzle on your mind is it?