Forfeiting Means Of Financing The Use Of Research In China

As international trade transactions become numerous, international settlement is developing very fast. Meanwhile international trade financing, which comes into being based on international settlement, are taking place great changes. More and more new trade financing methods are occurring. Forfaiting is one of these unconventional methods. It facilitates export-import corporations for medium and long-term trade financing.Forfaiting represents a modern technique for financing export-import, which allows the exporter who had sold goods on credit, to get refinancing by selling his debts in the form of documents with a maturity of over 90 days, to financial institutions specializing in this type of operations. Forfaiting comes from the French "a forfeit" which means giving up certain rights. No other form of financing undertakes all the risks threatening the exporter until the time of collecting debts: credit risk, interest rate risk, currency risk, country risk etc. It became popular in west European countries after 1965. Statistics show that the proportion of average annual world forfaiting volume in the world trade turnover is 2%.This paper gives a full and particular account of forfaiting, specially on how China use it in promoting the international trade. In chapter one, it introduces the definition and procedure of forfaiting, and its main features in details. And forfaiting is compared with other trade financing methods to show its advantages. Chapter two introduces the beginning of forfaiting and the reasons why it started to be popular. This chapter also summarizes the essential features of the ways in which developing countries (e.g. USA and Japanese) utilize forfaiting. Chapter three is about the necessity of utilizing forfaiting in China. In this chapter, the benefits taken from forfaiting are analyzed from the two angles of commercial banks and export-import corporations after stating the present situation of forfaiting in China. Chapter four put forward the problems in utilizing forfaiting in China, mainly on legislation, risk controlling of banks and the problems lying in the export-import corporation itself. According to the problems raised in chapter four, chapter five proposes some Countermeasures and some reference suggestions.As a retort to the changes occurred in international trade during the last few decades (the unprecedented increase of the role of the international loan in carrying on international commercial transactions) and as proof of the adaptability of financing techniques to the new requirements, alternative financing sources surfaced: using certain methods of payment/credit in order to obtain funds in advance, before the payment term decided upon with the importer, such as forfeiting. Importers and exporters are more interested in finding flexible financing methods which would allow them to obtain funds without having to draw up more documents and to bring guarantees, like when they decide to file for a bank loan. That is why the international commercial practice has created a series of methods and ways to obtain financing. Forfaiting is the special method to sustain the extension of receiving foreign exchange earnings in trade. And it will be sure to play more and more important role in the development of China's export-import business.