Buying from an overseas supplier

SITUATION

Nicole Vernay also sells her clothes in the United States. Karen Shersteen is a fashion buyer for Skopje's, a big department store in Los Angeles. She wants to order the new clothes from Nicole's spring collection, but because Fashionpark has the exclusive rights to manufacture Nicole Vernay designs, Karen must order from Korea. We look at how the supplier organises the goods to be shipped from the factory to California and how they are paid for by the customer.

CHARACTERS

LANGUAGE

Placing an order

18.1 Listen and read

Karen Shersteen is in Paris, where she has just been watching the showing of Nicole Vernay's spring collection. What is Karen worried about? Why is Nicole not worried?

18.2 Speaking practice: congratulations

Listen to this conversation. Then listen again and speak the part of the man.

18.3 Find the word: documentary credits - 1

Read the text below on documentary credits. Write a word from the box to fill each of the gaps.

Selling your goods overseas is never as simple as selling them at home. But the exporter has plenty of professional help to call on. The business of transporting the goods is usually entrusted to a firm of freight a , They will arrange for the goods to be b by sea or by air and for all freight c to be paid. They handle all the necessary documentation and arrange for the shipment to be d against all risks.
Banks also offer many services which make life easier and more secure for exporters and importers. Among these are e credits, which facilitate payment. Suppose your overseas customer says that he wishes to f an order with you. You calculate the total g of the goods, add on the insurance h (fixed by the insurance company) and freight i (fixed by the freight forwarder), and send him a j invoice. He instructs his bank to open a k in your favour for the amount of the invoice and to inform your bank, who in turn will advise you of the details. The l of m (L/C for short) is normally n : that is, the customer cannot recall or cancel it.

18.4 Listen and read

Karen Shersteen contacts Park on the telephone. Listen to what they say. Do you think Fashionpark is an efficient business? Why?

18.5 Document study

When Karen faxed her order to Fashionpark, she sent the covering letter below. What do Fashionpark have to do? They acknowledged Karen's letter. What does Karen have to do?

Arranging credit

18.6 Document study

These two documents are part of the arrangements between Skopje's and Fashionpark. For each document: who sends it, and to whom? What action will be taken by the company that receives it?

18.7 Document study

The freight forwarder writes to Skopje's to say that the goods have been shipped. Read the letter carefully, and check the details against the bill of lading in 18.8. Are the details correct?

18.8 Document study

You work as a clerk in the buying department of Skopje's. A customs official rings, asking for particulars of the bill of lading. Read the official's part of the conversation, and write down the clerk's replies using the details from the bill of lading (click to view) and the letter in 18.7. Then listen to the conversation and check what you wrote.

18.9 Find the word: documentary credits - 2

Read the text below on documentary credits. Write a word from the box to fill each of the gaps.

Your customer has opened an irrevocable credit on his account and in your favour. You can now go ahead and a the goods. You must not delay too long; the credit is only valid until its b date. As soon as the goods are on board ship, the bill of c is signed and sent to your freight forwarder. You can now send it to your bank with the other documents which will enable d to be made. The first is the e , showing the total cost 'c.i.f.' - cost of goods, plus f , plus g . This must be accompanied by the insurance h , and often by a certificate of i , to show where the goods, and the raw materials in them, originated. This often has to be authenticated by your local j of commerce. If the goods are going by sea, you must also enclose the k set of clean l of lading.

Collecting the money

18.10 Document study

Fashionpark start the process of collecting their money from Skopje's letter of credit. First, Skopje's must 'accept', or sign, a bill of exchange. The text of this standard covering letter is stored on a word processor and the secretary only needs to key in a few words and figures. Which ones?

18.11 Document study: a bill of exchange

Bills of exchange originated nearly 300 years ago, and their wording is still rather old-fashioned. Read the example below. Are the details correct?

18.12 Listen and read

Park, Nicole and Karen meet, months later, in Paris. Listen to what they say. Why does Karen complain about delivery times? What solution does Park have?

18.13 Listen and read

Park, Nicole and Karen continue their discussion. Listen to what they say. Are Park and Nicole enthusiastic about Karen's proposed 'vertical integration'?

18.14 Reading for key words

Find the words or phrases in 18.12 and in 18.13 that tell you the following:

18.15 Find the word: documentary credits - 3

Read the text below on documentary credits. Write a word from the box to fill each of the gaps.

Once the shipment is safely on its way, the a documents are sent to your customer's bank, while your own bank notifies you that everything has been done in accordance with your instructions. The documents will only be b to the customer 'c payment'. The customer, however, doesn't want to hand over the money yet, because it will be several days or weeks before the goods are delivered to his d . You, the supplier, therefore send him a bill of e and ask him to accept it by f it.
Some bills are payable as soon as the bank sees them - these are called g bills. Most are payable at 30, 60 or 90 days; this gives the customer time to receive and use or re-sell the goods before the money is transferred from his letter of h . But an accepted bill is a guarantee of payment, and it is therefore i ; it can be bought and sold. In fact, it is almost as good as j , except for the delay in payment. As the supplier, you will probably sell it to a bank, which will k it - that is, deduct interest from the total amount.