The Study On Problems Of Selecting Trade Terms Of Export Companies In China

When a contract is established during international trade, the first thing is choosing trade terms. Trading activity in the long term confirms that CIF has more ability than FOB in protecting exporters'benefit, however because of the limit of condition, our exporting companies almost apply FOB, and always suffer from taking delivery of goods without bills. In order to prevent these companies from risk, we must consider to choose CIF or FOB in exporting trade again. As profit units, exporting companies intend to make decisions for more profit, the cost is a significant factor of influencing profit, without an exception of choosing trade terms. So selection between CIF and FOB is necessary in premise of guaranteeing the benefit of exporting trader.On this subject, many scholars have done amount of researches, and believe that our exporting companies should choose CIF, but they just analyze the risk of these firms and avoidance of the risk in the perspective of right and commitment not the conditions of themselves. Basically this paper analyze the cost of applying CIF,FOB of our exporting firms from the point of cost by applying play model.At first, this paper compares the differences between CIF and FOB under different trade practices, the differences of seller's obligation under CIF and FOB by applying the method of comparing,summarizing empirical analysis. On the basis, this paper explains the meaning of utilizing CIF in export contract. And in the basis of especially analyzing cost of using CIF and FOB, this paper get the reason that exporting firms don't select CIF. To solve the problem, the author puts forward some advices to reduce the cost to guide the exporting company in China to choose CIF.