Role Play

 Situation 1

Jenica is a sales manager in Anhui OSA Pet Products Co., Ltd. and she is negotiating about the terms of payment with her client Kent, who is from New Zealand. Jenica plans to ask Kent to pay by L/C, but Kent asks for easier ones such as D/A, D/P or T/T. At last, they agree to pay by L/C at 30 days' sight.

Situation 2

City Electronics is doing business with their customer J&C Co. Ltd. They have confirmed the order quantity and now is discussing the payment terms. The sales manager Dorothy Wang hoped J&C to pay them by Western Union, and J&C agreed to do that. Please work with your partner to present their discussion based on your own creation.

Situation 3

Jason is from Walmart and he would like to buy tissue from Zyko. Cathy is one of the salesman from Zyko. This time Jason is quite satisfied with 3 kinds of tissues offered by Cathy. And he planned to order 1×40ft HQ (high quality) container tissue for shipment. But the contract is still pending due to the payment terms which Cathy insisted on L/C according to her company policy. Suppose you are Cathy and try to work with your partner (Jason) to reach the agreement on payment terms.

Situation 4

Sandy (buyer of Toys from Tyle Toy Ltd) has signed a purchase contract with Judy (seller from Ally Children Products Ltd) based on the payment by D/P. However, this is the first time for Judy to do business with Sandy (Russian). Her manager reminded her that Russia custom is disordered. Buyers can clear the cargoes without any official document. Sandy was requested to change the payment terms by Judy. Please work as Judy and Sandy to discuss about the matter and find a trustable reason (instead of saying the disordered custom clearance in Russia) to convince Sandy.

Situation 5

 Minoya HA Ltd is a famous domestic HA (home appliances, 家电) manufacturer. Sam is the salesman for Japan market. Now he is attending the HK CE Show (香港电子展). He got a potential customer Mr. Tai who was quite interested in two types of vacuum cleaner (吸尘器). Mr. Tai said that he may have a 20,000 PCs inquiry respectively. They have reached an agreement on specifications, color as well as design, etc. However, Japanese customer is very strict with everything. And he insisted on using L/C as the payment term based on their general policy. While Minoya company requested to use T/T since the order quantity is not so big and L/C need to pay high handling charge (手续费). Please work with your team members to arrange the whole procedure of promoting your products at a trade show.  (welcome visitors→introduce company and product→negotiate product details→discussing payment-sign contract)

Situation 6

One company sent you to an American factory managed by John for an order of 300 vacuum cleaners. You try in various ways to make John accepts D/P or D/A payment. John insists on L/C payment since he is not so sure of your credit position. You agree to L/C payment and therefore you both agree to sign the contract.

Situation 7

 Your customer, a businessman from America, is negotiating with you about some business. Everything has been settled except the problem of payment. He insists on D/P terms. As his order is big enough, you finally agree to 50% by L/C and the rest by D/P at sight.

Situation 8 （综合实训）

Role-play activity:  Student A acts as the seller and Student B acts as the buyer. Student A sells electric products on behalf of a Chinese international trading corporation. Now a Thailand business person (Student B) makes an inquiry for Student A's products on CFR Bangkok basis, for which Student A quote as follows:

Electric fan: US$10 each

Electric shaver: US$3 each

Motor bicycle: US$60 each

Rice cooker: US$30 each

Radio: US$5 each

The negotiation goes like this: First the buyer makes an inquiry, then the seller makes an offer, and then comes the buyer's counter-offer… Each tries to persuade the other. Finally you two agree on all the prices. For the payment, the seller insists on irrevocable L/C against sight draft and the buyer tries to persuade the seller to accept A/P. At last, both agree that if the seller can reduce the price by 2%, the buyer accept L/C 60 days.

Situation 9

A certain buyer has bought from your company 100 sets of color TV and he intends to open the covering L/C in your favor. But before doing so, he'd like to know something in detail, such as the shipping documents, transshipment, shipping time, destination, validity, L/C, etc. As a salesman in your company, you are answering his questions.

Situation 10

Jack, a manager from Brazil International Trade Corporation, comes to your company for an order of 500 sets of chinaware. Jack tries in various ways to make you accept D/P or D/A payment. But you insist on L/C payment since you are not so sure of their credit position. Finally, Jack agrees to L/C payment and therefore you both agree to sign the contract.

Situation 11

You are consulting your manager what you can do if the buyer wants L/C 90 days. And you tell him the benefits of L/C 90 days for your company. After a few minutes’ thought, he suggests you to ask the buyer to commit 50% fee if he insists on payment by L/C 90 days.

Situation 12

The seller and the buyer are talking about the payment. The buyer insists on L/C while the seller wants cash due to the computer virus. Then the buyer says if the seller can reduce the price, they can consider the cash payment.

Situation 13

Ms. Wang, manager of Dong Fang Machines Corporation, is interviewing her assistant, Mr. Li. Ms. Wang is asking Mr. Li some detail questions on how to open the L/C. It seems that Mr. Li's answer satisfies his boss.

Task 1

Pair work. Make a conversation for about 3 minutes with your partner according to the given information.

Tips for you (A)

Situation: The buyer and the seller are talking about payment terms. The tips are for you to prepare a conversation.

●  You are Cao Zhen,   a salesperson of Fast-green Bicycle Co., Ltd., Tianjin, China  

●  You will

•   hope to get payment by documentary L/C at sight

•   think T/T delivery is unacceptable

•   insist on your bottom line

Tips for you (B):

●  You are Jonathon Cooper,   purchase manager of Tesco, UK

●  You will

•   try to persuade the seller to accept your paying by T/T on delivery

•   think documentary L/C is also acceptable

Reference sample:

A: Good afternoon, Mr. Cooper. Since we have settled everything in this transaction, now let's come to the point of payment.

B: Sure, Mr. Cao. So could you tell me what mode of payment you usually accept?

A: When it comes to the payment, L/C at sight is normal for our exports to Europe.

B: Is it possible to find alternative payment terms for this order?

A: As you know, L/C is most favored by exporters when safety is taken into account.

B: It is true. But considering the good business relationship between us, we suggest that T/T on delivery be taken this time. 

A: I'm afraid that T/T on delivery is rather risky for sellers. 

B: Opening an L/C will tie up a certain sum of money in the bank, you know, and an additional cost will be collected by the bank.

A: I'm sorry but if you insist on that and refuse to make any concession, there will be not much point in further discussion.

B: Well, so let's make it in L/C this time. But I hope you will consider other modes of payment next time.

A: That is OK. Thanks for your understanding.

Task 2

Background 

The buyer and the seller are discussing the change of payment terms.

Task Description

Discuss in groups the following questions:

What are the commonly-used terms of payment in international trade?

What are the advantages and disadvantages of payment by L/C?

Nowadays T/T is increasingly more adapted in foreign trade. Try to make some analyses of it.

Task Requirements

The conversation should last at least 3 minutes. The following items should be included:

1. the difference between payment by L/C and by T/T; 

2.  the advantages of D/P at sight.

Reference sample:

A: Hello, Ms. Tang, this is Steve from Unique Export & Import Company.

B: Hi, Mr. Steve, good to hear from you! Is there anything I can do for you?

A: Yes, Ms. Tang, the purpose of my calling today is to inquire about the possibility of changing the terms of payment. How about changing it from documentary L/C into T/T in advance?

B: Mr. Steve, I'm afraid it is fairly inconvenient for us to do so. As you know, documentary L/C is a safe and reliable payment mode for both parties. 

A: You know, T/T is also a commonly-used payment term currently, and it is efficient and time-saving. However, opening an L/C will take a long time for its applying procedures, as well as the time-consuming sections like bank negotiation, L/C examination and amendment.

B: Given that it is our first transaction and the total amount is quite large, frankly speaking, I think it's worth the time and efforts as for our long-term cooperation.

A: Definitely. But our biggest concern is that opening an L/C will bind up a big sum of money into the issuing bank, and it will greatly influence our cash flow in this season. Ms. Tang, how about meeting each other in half way, if T/T is not available, is it possible for us to pay in documentary collection? Say, D/P at sight?

B: To be frank, documentary collection is rather risky for us sellers. In collection, all the safety is placed on the business credibility of you buyers, while in L/C payment the banks will take the paying credit. We prefer to adopt a payment term of higher safety.

A: Ms. Tang, we assure you of the reliability of our credit status. You see, D/P at sight is seen as sound and practical in international trade payment.

B: Mr. Steve, I know what you mean. For this matter, I have to consult our sales manager before giving you the reply. Is that OK?

A: That will be fine. I am looking forward to your reply. 

Task 3

Task Description

Mr. Jin  (A), sales manager of Sunny Transformers Co., Ltd., Taizhou, Zhejiang, is negotiating with Mr. Cox (B) from Alex & Taylor Company of the USA, on the subject of terms of payment.

Topic: Cash on Delivery 

Hints:   

A: Express thanks for B's placing an order

B: Ask about the terms of payment

A: Introduce the company's common practice in terms of payment

B: Inquire about the possibility of adopting cash on delivery

A: Tell B it will be totally unacceptable

B: Give reasons for adopting cash on delivery

A: Insist the on L/C and express the concerns for safety and stability

B: Ask for alternatives 

A: Give alternatives

B: Make a concession and then offer a proposal

A: Accept or reject the proposal 

Reference sample:

A: Mr. Cox, thank you for placing an order for our transformers.

B: That is our pleasure. We hope to establish a long-term friendship with your company. A: We do hope so.

B: There is still one thing we need to talk about, that is the term of payment. What modes of payment do you usually accept, Mr. Jin?

A: The term of payment we usually adopt is confirmed and irrevocable L/C.

B: L/C is most favored by exporters as I know. By the way, do you accept cash on delivery?

A: I'm afraid it is totally unacceptable.

B: You know, Mr. Jin, by adopting cash on delivery, we will have a more flexible strategy on our capital. And we will guarantee our business credit as well.

A: For the sake of safety and stability, I think we insist on paying by L/C.

B: How about D/P or D/A? It is a highly reliable payment mode as you know.

A: We will consider your proposal if you make the payment in D/P at sight.

B: If that is the case, let's make it in D/P.

A: That is fine.

Task 4

Task Description

Milson Solar Corporation is a Chinese company manufacturing solar water  heaters. Mr. Cai (A), export sales manager of Milson Solar, is talking with Mrs. Miles(B), a regular  buyer in Europe. Their focus is on choosing a payment term that is mutually beneficiary  for both parties.

Topic: Make Concession

Hints:

A: Express thanks for B's trust and ask about the terms of payment

B: Thinks that D/P will be most favorable 

A: Ask why and express L/C is the normal practice

B: Make an explanation

A: Insist on payment in L/C

B: Explain the complexity and inconvenience brought by applying L/C

A: Show understanding and concerns about the safety of payment

B: Guarantee the safety as reassurance for A

A: Make concession and accept B's proposal

B: Show thanks

Reference sample:

A: Good afternoon, Mrs. Miles. The purpose of my calling is to talk with you on which terms of payment we shall adopt this time.

B: Well, Mr. Cai, from my point of view, D/P will be mutually beneficiary for both parties.

A: But I'm afraid that our regular practice is L/C.

B: Exactly, Mr. Cai. Well, as you see, L/C is a kind of mode more suitable for relatively large orders, but the present order is totally a different case, isn't it? I'm wondering if it is possible for you to do us a special favor and exceptionally entertain payment by D/P. So far as I know, you did sometimes agree to such mode of payment, didn't you?

A: I can't be of any help in this respect. Letter of credit is the only term of payment we can accept when we deal with new clients. You know, safety is our first priority.

B: You know, to open an L/C will add to the cost of our imports. Is it possible to find alternative payment terms for this order?

A: Well, considering you are our big client, D/P will be acceptable if your commercial credit can be guaranteed.

B: No problem, Mr. Cai. I will have it arranged, please feel assured.

A: OK, if we can complete this order smoothly and established mutual confidence, 

we may consider doing business on more favorable payment terms in future.

B: Thank you very much.