14.2.1　Opening the L/C开立信用证

As the importer,you must open the L/C if so required by the contract.A deadline for opening the L/C is normally stipulated in the contract,which is generally a date that allows the exporter enough time for shipment,such as 30 days before the time of shipment.As the deadline is set forth in the contract,this should be complied with.

Applying to a bank for an L/C normally requires a copy of your business license,the contract and other necessary attachments,such as the import license,a certificate for import quota,approval documents from certain government departments,etc.

You need to fill out an application form for a letter of credit,which requires such information as business name and address of the beneficiary and contract number,expiry date and place of the credit,latest time of shipment,nature of the credit,description of goods,documents required,amount and type of the credit,special terms and conditions and other terms and conditions,etc.Finally,sign and stamp the letter of undertaking,declaring that you have “completed all formalities before import,and are hereby irrevocably bound by the credit to be opened by the issuing bank in accordance with the application form”.The credit shall be issued and forwarded to theexporter after being examined by the bank.Should the exporter ask to extend the time of shipment or expiry date of the credit,change the port of destination or other terms of the credit,you need to apply to the issuing bank for an amendment if you agree to the changes proposed by the exporter.

Finally,transfer the foreign exchange or foreign exchange quota to the issuing bank.And in line with international trade conventions,make a deposit and pay a fee for the bank’s service.The amount of deposit varies depending on your credit standing and the financial strength of the bank,such as 50%～70% of the total amount of the credit.