Selling with a Letter of Credit is a safe control mechanism that helps the overseas seller ensure he gets his money before the products arrive to the Chinese client.
However, for the local client, issuing a Letter of Credit (L/C) is a major hassle and a cash flow problem, as local banks require cash guaranty for the entire period the L/C is effective. As a result, most local companies prefer buying with local currency from local stock. If your competition sells locally, being a foreign supplier insisting on L/C terms will place you at a disadvantage.
4th party logistics companies such as PTL Group serve as a “collection agent” in such transactions, allowing you to sell at RMB while conducting effective risk management by collecting payments before the product leaves our warehouse. This way, the full local market price system become transparent and VAT rebates are available too. This transparency is critical for effective management of distribution channels, as well as brand stabilization.
Contact us for more details.
PTL Group team