External Trade Doc Flow Chart - Download as Excel - Excel

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					     Overview


      Buyer (Importer)                                 Letter of Enquiry



      Seller (Exporter)                                       Quotation

                                                                                                                  Refer to "Local Trade
                                                                                                                  Documents" for details
      Buyer (Importer)                                  Purchase Order




                                       Acknowledgement of Order (or signing of Sale and
      Seller (Exporter)                            Purchase Agreement)

                                                                           Upon signing of contract, both parties will
                                                                           prepare their respective import and export
                                                                           documents.




       Buyer                                                                                                                           Seller




          Apply for
       Letter of credit
             or
use other methods of payment


   Issuing bank approves                                                                                                    Ready to produce goods upon
       letter of credit                                                                                                      receipt of Letter of Credit



                                                                                                                            Apply for export licence
                                                                                                                                  Consular Invoice and
                                                                                                                              Certificate of Origin; issue
                                                                                                                             Bill of Exchange and Invoice
                                                                                                                           according to the terms stipulated
                                                                                                                                 in the Letter of Credit



                                                                                                                                      Despatch
    Import Licence and                                                                                                       Shipping Advice/Advice Note
  storage space available

                                                                                                                                   Despatch goods
                                                                                                                                   (Shipping Order)
                                                                                                                                                                 According to Hong Kong
                                                                                                                                                                 Ordinance, an exporter must
                                                                                                                                                                 submit an Export Declaration
                                                                                                                              Obtain Receipt
                                                                                                                                  Mate              from         within 14 days of despatch
                                                                                                                          shipping company, with which to        of goods.
                                                                                                                         Bill of Lading upon departure of ship


Make payment according to
  the terms stipulated in                                                                                                  Send all documents concerned to
    the Letter of Credit                                                                                                    the negotiating bank to collect
                                                                                                                                       payment




  Redemption of bills and                                                                                                Send all documents concerned to
   documents concerned                                                                                                   the buyer


                               According to Hong Kong
    Customs Clearance,         Ordinance, an importer must
   take delivery of goods      submit an Import Declaration
                               within 14 days of arrival of
                               goods.
Overview of External Trade
External Trade involves more documentation flow due to:
(1) Both the importer and the exporter have to declare to their respective government authorities details of the goods for ta
(2) Most external trade involves credit and financing from banks or other intermediaries, which make documentation requi
(3) Further more, external trade involves trade relations between parties separated by long distance. Matters arising from s




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rnment authorities details of the goods for tariff and statistics purposes.
mediaries, which make documentation requirement even more complex.
 ted by long distance. Matters arising from shipping and insurance are bound to be more complicated.
Certificate of Origin:
As the name suggests, a Certificate of Origin certifies the place in which the goods is produced
and the major production process involved. In Hong Kong, this document is issued by the
Trade and Industry Department and other trade associations# authorized by the government to

#
 The five organizations authorized by the government are the Hong Kong General Chamber of
Commerce, the Indian Chamber of Commerce, The Federation of Hong Kong Industries, the Chinese
Manufacturers' Association of Hong Kong and the Chinese General Chamber of Commerce.




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n which the goods is produced
document is issued by the
horized by the government to

Kong General Chamber of
ong Kong Industries, the Chinese
Chamber of Commerce.
Consular Invoice:
A Consular Invoice is an official invoice issued by the consular of the importing country
located in the exporting country to enable the importing country to verify tariff and to report
data for statistical purpose.

Contents of a Consular Invoice contain names of the exporter and the importer, description
of goods and in particular, value of the goods.




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Export Licence
Goods in certain categories required an Export Licence for permission to be sent out from a country. In Hong
Kong, goods such as textile goods, drugs and shoe products can be exported subject to certain regulations. Some
products even require quota certificates to support the application of an Export Licence.

An Export Licence records information relating to the importer and the exporter such as names and addresses, brie
description of goods, the port of loading and the F.O.B. price.



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ission to be sent out from a country. In Hong
 be exported subject to certain regulations. Some
n of an Export Licence.

nd the exporter such as names and addresses, brief
Shipping Order
The main difference between external trade and local trade is the longer distance required for
transportation. Because not every importer has the capability to collect goods directly from the
exporter, shipping companies play an important role in external trade. A Shipping Order is a
request form given by an exporter to a shipping company asking for goods to be shipped. Shipping
companies will have preprinted forms available for exporters to fill in the particulars.

A shipping order generally contains information such as names of the importer and exporter, the port of
loading, measurement of goods shipped, gross weight and number of packages.



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 ce required for
 directly from the
ping Order is a
be shipped. Shipping
iculars.

r and exporter, the port of
s.
Mate receipt / Dock receipt:
A Mate Receipt/Dock Receipt is a provisional receipt issued by a shipping company to an
exporter. When goods is handed over to the shipping company for delivery, the exporter will
receive a Mate Receipt/Dock Receipt to acknowledge receipt of the goods. As soon as the
vessel has departed, the shipping company will issue an official receipt (Bill of Lading) to the
exporter in exchange for the Mate Receipt/Dock Receipt.

Information contained in a Mate Receipt/Dock Receipt is similar to that in the Shipping Order.
Sometimes, a Mate Receipt/Dock Receipt is a page in, which forms part of, the Shipping Order.




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Bill of lading:
A Bill of Lading symbolizes the ownership of goods. When the goods has arrived to the
destination, the bearer of the Bill of Lading can claim possession of the goods.

Information contained in the Bill of Lading is similar to that of the Mate Receipt, which includes
information about the importer and the exporter, the voyage number, the port of loading and the
port of destination, description of goods and other details.




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has arrived to the
 goods.

e Receipt, which includes
e port of loading and the
Export Declaration:
An Export Declaration mainly contains information such as the name of the vessel, date of departure,
Export Licence number, Country of Origin, description of goods, unit price, quantity, and F.O.B. price.
The exporter has to sign on the Declaration to certify that all information given is true and correct. It must
be declared within 14 days after the export of goods.




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ssel, date of departure,
antity, and F.O.B. price.
 is true and correct. It must
Shipping Advice / Advice note
When an exporter is ready to despatch the goods, he will issue a Shipping Advice/Shipping
Note to the importer. A Shipping Advice/Shipping Note contains details of the goods to be
shipped, which will enable the importer to verify the details of goods to be imported, and to
start applying for importation documents such as Import Licence, and prepare for storage
space etc.




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Import Licence:
Certain goods such as textile goods, tobacco, liquor, petroleum products, prop guns, drugs, rice
and frozen meat require an Import Licence for reasons of health, security and customs.

An Import Licence contains information such as information about the importer, business
registration number, the date of arrival, mode of transport, the port of loading, exporting country,
descripton of goods, country of origin and the C.I.F. price. The importer is required to sign on
the Declaration to certify that all information given is true and correct.




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op guns, drugs, rice
d customs.

orter, business
 g, exporting country,
required to sign on
Import Declaration:
An Import Declaration mainly contains information such as the name of the vessel, date of
departure, Import Licence number, Country of Origin, description of goods, unit price,
quantity, and C.I.F. price. The exporter has to sign on the Declaration to certify that all
information given is true and correct. It must be declared within 14 days after the import of
goods.




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Letter of Credit:
A Letter of Credit is a document issued by a bank to an exporter on behalf of an importer.
The Letter of Credit stipulates that the exporter will be able to collect the sum of money stated
in the Letter of Credit if he fulfils the terms and conditions contained therein by a certain date.
Such terms and conditions include obligations stated in the sale and purchase agreement.




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Other Methods of Payment:
Apart from using a Letter of Credit for payment of goods, exporters have other options. The
common ones are Bank Draft and Bill of Exchange.

Bank Draft:
A Bank Draft is a cheque issue by a bank requested by an exporter. Usually, foreign currency
is involved. The importer may ask for the bank draft to be sent to the exporter by mail or by
telegraphic transfer.

Bill of Exchange:

A Bill of Exchange is issued by the exporter who is the drawer of the Bill of Exchange, to the
importer who is the drawee, requesting the importer to accept unconditional payment of the
amount of goods by a certain date. Only after the importer has signed such an undertaking
will the exporter despatch the goods.




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Customs Clearance
As soon as goods arrived at the port of destination, the importer has to go through
customs clearance in order to take delivery of the goods.
Customs Clearance means submission of the required importation documents such
as Import Licence and Import Declaration to the authority.




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