Legal Analysis And Risk Prevention Of The International Factoring Transaction

With the increased competition of international trade, the acceleratedprocess of global economic integration and the formation of buyer’s market,the price, raw material cost and other factors are becoming no differencein the worldwide。Therefore, the sellers should make efforts in other areasto get competitive advantages. This is the reason of the prevalence ofinternational factoring in the last ten years in the field of thesettlement of international trade, particularly in those developedcountries, like Europe and the United States. While in China,international factoring does not play its due role in the settlement oftrade. China is an international trading power, and takes the front placein the world ranking of total amount, especially in some provinces in thesoutheast of China. There are many export oriented enterprises in thoseprovinces, facing large risk of accounts receivable. While in this case，there is still not a perfect system of international factoring. The reasonis that the understanding of legal basis of international factoring isnot enough clear and the analysis of the deep legal issues is not definitein the process of international factoring transactions, leading to afailure on the issue of legal risk prevention. The paper focuses on these issues, exploring the legal issues and riskprevention of the transaction, putting forward author’s proposals for thefuture legislation improvement on the basis of the analysis of the legalnature of international factoring transaction.The paper is divided into four parts. The first chapter is an overviewof the international factoring including the definition and historicalevolution, which is the basis of making a better understanding of themeaning and development of international factoring. And the overview ofthe factoring and international factoring will contribute to a betterunderstanding of the theory that the nature of international factoringis the assignment of accounts receivable. Furthermore, the chapter alsodescribes the characteristics of international factoring, compared withother methods of settlement, in order to make better use in practice.The second chapter analyses the legal foundation of internationalfactoring. And the writer gives the conclusion that the nature ofinternational factoring is the assignment of account receivable,contrasting to several important and confusing theories, which is thebasis of the next two parts of the paper. Meanwhile, this part alsoincludes the introduction of the conflict of rights and the riskprevention during the international factoring transactions.The third chapter is the focus of the paper, which discusses the riskof the assignment of account receivable for preventing the potential risksin the transaction. This section is built on the previous section aboutthe legal basis of international factoring, and is the foundation of thenext section about the proposals for improving China’s internationallegal system.The last part is about the development status of internationalfactoring in China and some proposals for improving China’s relevantsystem of international factoring. The proposals are based on the analysis of risk mentioned above, which are the essence of the paper, only hopingto help the development of international factoring in China.