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

Journal of China Institute of Technology Vol.37-2007.12 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

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

Journal of China Institute of Technology Vol.37-2007.12 187

188

Journal of China Institute of Technology Vol.37-2007.12 Merchanting Trade Buyer Master L/C Original L/C Back-to-Back L/C Secondary L/C Exporter Importer 189

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

Journal of China Institute of Technology Vol.37-2007.12 OBU CFR CIF CI CIF 叁 191

Transferable Credit Transferable Credit UCP600 Letter of Transfer 192

Journal of China Institute of Technology Vol.37-2007.12 193

194 Back-to-Back Credit Master Credit Secondary Credit

Journal of China Institute of Technology Vol.37-2007.12 UCP 600 39 195

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

Journal of China Institute of Technology Vol.37-2007.12 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

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

Journal of China Institute of Technology Vol.37-2007.12 Transhipment Prohibited D/AD/P L/C Secondary L/C Master L/C Secondary L/C 199

Re-invoicing L/C OBU OBU OBU UCP600eUCP http://www.horwath.com.tw http://www.jing-hua.coml http://www.bycpa.com.hk 200