exporting country, "Taiwan meets the list, the mainland produces goods" is the typical representative of the triangular trade. In order to ensure the

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1 Journal of China Institute of Technology Vol The Operation of Letter of Credit and Offshore Company under Triangular Trade Lisa Liang Lecturer Department of International Business, China Institute of Technology Triangular Trade Back-to-Back L/C Transferable L/C Offshore Company Abstracts The triangle trade is that the middlemen use their experience in international trade, the technology as well as the commercial relations, to gain the price difference by buying commodities from exporting countries, and selling commodities to importing countries, the cargo in fact is directly transported to the importing country by the 185

2 exporting country, "Taiwan meets the list, the mainland produces goods" is the typical representative of the triangular trade. In order to ensure the payment and collection of goods, and security of commercial confidentiality under the triangular trade, the payment term mostly is made by transferable letter of credit or back-to-back letter of credit. The transferable credit is that middlemen transfer L/C to exporter, exporter negotiates credit after shipment, and the commission is transfered to middlemen s account. As to the operation on back-to-back credit, there are two credits, master L/C and secondary L/C, middlemen and exporter negotiates their L/C seperately. Nowadays, more and more trading companies use offshore company established in Tax Heaven country to operate the triangular trade. In this way, it can not only avoid tax, but also to create image as international brand in order to get maketing benefit. The main purpose of this paper is to discuss the operation and attention points of triangular trade, the operations of transferable L/C and back-to-back L/C under triangular trade and how to avoid the risks, and also the role of offshore company in triangular trade. 186

3 Journal of China Institute of Technology Vol

4 188

5 Journal of China Institute of Technology Vol Merchanting Trade Buyer Master L/C Original L/C Back-to-Back L/C Secondary L/C Exporter Importer 189

6 190 Transit Trade L/CD/PD/A O/A OBU

7 Journal of China Institute of Technology Vol OBU CFR CIF CI CIF 叁 191

8 Transferable Credit Transferable Credit UCP600 Letter of Transfer 192

9 Journal of China Institute of Technology Vol

10 194 Back-to-Back Credit Master Credit Secondary Credit

11 Journal of China Institute of Technology Vol UCP

12 B/L Form A Inspection Certificate UCP600 L/C L/C Chinese Port Offshore Company Tax Haven Paper Company Offshore Banking Unit, OBU USD USD 196

13 Journal of China Institute of Technology Vol OBU c/o OBU OBU USD50,000 USD10,000 OBU 2 USD50,000 OBU USD60,000 OBU OBU Master L/C L/C OBU USD50,000 USD60,000 OBU OBU USD50,000 USD10,000 OBU 197

14 198 CIF B/L Shipper Consignee Shipper Consignee OBU USD60,000 OBU USD50,000

15 Journal of China Institute of Technology Vol Transhipment Prohibited D/AD/P L/C Secondary L/C Master L/C Secondary L/C 199

16 Re-invoicing L/C OBU OBU OBU UCP600eUCP

foreign trade controlling organization before order confirmation. Moreover contract cancelling after verification must be handled within the validity

foreign trade controlling organization before order confirmation. Moreover contract cancelling after verification must be handled within the validity Journal of China Institute of Technology Vol.38-2008.6 The Practice of Customs Supervising and Managing Pattern of Bonded Processing Goods in China Lisa Liang Lecturer Department of International Business,