Research On Trust Mechanism Of Foreign Merchants’ Credit Transaction

The transformation from "Feather for sugar" to "world supermarkets",from the first generation of "Niansanli Market" to the fifth generation of "China Yiwu International Trade Mart",Yiwu has attracted a large number of foreign businesses due to the rise and development of its small commodity market.Yiwu market has shown its potential in the foreign trade market through five generations of rotation.Since the establishment of China Yiwu International Trade Mart,there have been credit transactions in the Yiwu foreign trade market.Credit transactions have also become one of the mainstream trading methods in the foreign trade market.It has a history of more than ten years and is still adopted by most merchants.However,the particularity of the Yiwu foreign trade market is that before foreign merchants enter the Yiwu foreign trade market,Yiwu merchants are completely unfamiliar with them.This is different from the original "acquaintance relationship" that only occurs on credit transactions.As a way of economic transactions,it is necessary to establish a trust relationship to ensure the smooth progress of the transaction,otherwise it is prone to risks such as foreign business defaulting on payment indefinitely or even running away with the goods.The paper uses semi-structured interviews to collect data and information,selects merchants in China Yiwu International Trade Mart who have long-term foreign trade transactions with foreign merchants and have credit transaction experience,and intermediary personnel with extensive foreign trade experience.Conduct interviews from these two different perspectives of market participants.And in the paper,four Yiwu merchants with long-term foreign trade cooperation and credit transaction experience are selected as analysis cases to present the details of the transaction process.In the foreign trade transactions in Yiwu market,the establishment of a trust relationship between Yiwu merchants and foreign businessmen is the basis for the possibility of credit transactions.The establishment of this trust relationship can be explained by the embeddedness theory and the process can be divided into two stages.In the first stage,the market is "preliminarily embedded" in society.At this time,the trust relationship between the parties is based on the transfer of "third-party" trust and historical culture through the intermediary organization,and coupled with the pursuit of interests.This initial trust is a cognitive trust.At this stage,market embeddedness in society is still a kind of "shallow embeddedness",which can be explained by the indirect relational embeddedness and cultural embeddedness in embeddedness theory.The society restricts economic activities,but its restraining effect is limited,not enough to encourage Yiwu merchants to provide credit transactions under uncertainty and risk.For credit transactions to occur and exist stably,market needs to be embedded in society deeply.In Yiwu foreign trade transactions,this deep embeddedness is possible through direct relationship embeddedness and institutional embeddedness.With the increase in the number of transactions and the extension of the cooperation years,Yiwu merchants and foreign merchants will have social interactions more than economic behaviors.Interpersonal interactions bring the possibility of the development of "acquaintance relations" between the two parties in the transaction,and "acquaintance trust" under "acquaintance relations" develops unidirectionally and responds quickly in the social circle,and its binding force is stronger.In addition,the Yiwu government cooperates with the market to pave the "general trust" in the market with the system,embed the market in the society with the system,and maintain the market order extensively and compulsorily as the basis for the stable operation of the market.In the second stage,the continuous trust between Yiwu merchants and foreign businessmen is manifested in the development of mutual trust and emotional trust.Under the continuous trust and the deep market embedded in the society,Yiwu merchants have the conditions and basis to conduct credit transactions with foreign businessmen.