DIALOGUE

A Zimbabwean Coal Mining Import and Export Corporation intends to import coal cutters from China.To save foreign exchange,compensation trade is considered preferable by the foreign side.Negotiations are conducted between Mr.Xu(X) who represents the Chinese side and Mr.Peter Scholtissek(S) who represents the Zimbabwean Coal Mining Corporation.

S:Glad to meet you,Mr.Xu.The purpose of inviting you to come here is to discuss the purchase of some long wall coal cutters.

X:Good.Our coal cutters are very advanced in technology,aren’t they?

S:Yes,they are a bit better than the coal cutters we just purchased from other countries.But your price is skyrocketing,and much higher than those from other countries.

X:Well,when you buy something,you shouldn’t consider the price only,but also its efficiency.

S:Yes,we are satisfied with the efficiency of your cutters.But being short of foreign exchange,we must plan our purchases according to our means.Therefore it’s difficult for us to buy the coal cutters of your production this year.Furthermore,those of other brands are not so bad after all.

X:If so,can we consider the possibility of undertaking compensation trade?

S:Why not? We’d be happy to negotiate with you for such a deal.Which do you prefer,buy-back or counter purchase?

X:I guess buy-back is easier.Since we do often import a lot of coal from abroad,you can pay for the coal cutters with the coal produced by them.

S:That sounds promising.Do you wish to have total compensation trade or a partial one?

X:It depends very much upon your payment capability.In other words,the more you can produce in a given period of time,the sooner you will be able to pay for the cutters.

S:I understand the whole process.As for us,it’s better to do total compensation trade.

X:It’s quite alright to me.Total compensation trade maybe good for both of us.For instance,you’ll buy from us four coal cutters at the unit price of 1 million US dollars.All of them will be paid for with the coal produced by the machines.

S:We would like to know how long you expect us to complete the payment.

X:Of course,the sooner the better.

S:If we do some calculation on the basis of the cutters’ production capacity and the current price of coal,it will take about two years to complete the payment.How do you like it ?

X:May I say that your estimation does not seem to be 100% correct? Compensation trade is,in a way,a kind of loan you need to pay the interest on the loan every year.

S:But you also need to take the price of coal into consideration.The price of coal in international commodity market keeps rising.Don’t you think that is enough to offset the interest of the loan?

X:You are right,we can discuss a detailed payment estimation plan when we draft our contract.It’s only fair and square to consider both loan interest as well as coal price changes.

S:I think so.That’s settled.We’ll work out a specific payment schedule from the commencement of coal production.May I remind you of your definite responsibilities for technical assistance,the performance of the machines and finally a smooth and successful start-up.

X:Certainly we’ll fulfill our obligations.Meanwhile,it’s our hope that you’ll meet our requirements on the varieties,quantity and quality specifications and the time of shipment for all the coal you deliver to us.

S:We’ll certainly act in accordance with the contract terms.

X:Good.Would you please get the draft contract ready as soon as possible?

S:Yes,we will.