Is Your Business Missing the Boat to China?

China is a difficult market to acquire exact data as the government often keeps vital information to itself or only release partial data, but the world knows that the China market has the largest and fastest growing middle market that are showing tremendous purchasing power.   Assuming the online Chinese ecommerce  market is a satisfactory reflection of their purchasing power and growth, one can use this as a barometer to evaluate the size and growth rates.  As of June 2012, there is an estimated 193 million online shoppers purchasing approximately USD $200 billion in products and services and this is expected to double in transaction size to over USD $400 billion by 2015.  

As I described in my book, "Dancing with the Dragon", China is a market that US business and US government have to come together strategically because we still have a golden opportunity to take advantage of this, but the window will not be open too long.  The US's future growth has already been shown to be in foreign sales of goods and services, and with China as our #1 an #2 partner for trade and business, we need to think long term.  The S&P 500 companies have derive more than 50% of their current revenues from abroad for many years now and the writing could not be clearer for the US.  The US has a lot of leverage still with its economic and military dominance globally to align our two countries as there is too much to loose for both sides if it does not happen.    

Even if the US government cannot get its act together (which is completely possible as they cannot make meaningful decision these days on any level), your company can still explore these markets with the many available tools and simple strategies.  

I will describe these tools and strategies in my next series on "How to Open Your Market in China".  

Until next month.

Tips on Using Letters of Credit

International letters of credit play an integral part in facilitating foreign trade while providing a secure and reliable means of payment. In simple terms, a letter of credit is a financial guarantee of payment separate from the sales or other contracts on which it is based. It is a way of reducing the payment risks associated with the movement of goods across borders.

When PMF Bancorp provides trade financing, letters of credit come with the territory. With the letters of credit, we also make sure your clients are reliable and creditworthy. Naturally, letters of credit and credit checks go hand-in-hand. The goal is to provide the financing you need to complete the deal and help your business.

The need for a letter of credit is a consideration in the course of negotiations between the buyer and seller. When the seller has doubts about the credit-worthiness of the buyer and wishes to ensure prompt payment, a letter of credit allows the deal to happen. If the seller is shipping to a foreign country, a letter of credit issued by a financing institution can ensure the safety of the goods and the completion of the exchange.

Letters of credit open doors to international trade by providing a secure mechanism for payment. Financing opportunities, such as pre-shipment finance secured by a letter of credit and/or discounting of accepted drafts drawn under letters of credit, are often available. The expertise of a company like PMF Bancorp with extensive international expertise and experience in financing global trade makes this type of transaction simple for the typical business owner.

If you are moving forward with an international trade deal, PMF Bancorp has many years of experience in issuing letters of credit for businesses to securely finance their trade needs. By obtaining international letters of credit and doing a background check on your trade partner, PMF helps to ensure both the deal and the accounts receivable financing needs as well. With an international letter of credit, what appeared at first to be a risky venture can turn out to be a profitable expansion for your company.