The following quiz is intended as a fun exercise to test your knowledge on international trade. However, real life situations are more complex and should be discussed with a TD International Trade Services specialist.
Your Profile:
- You are CanImport Inc., a Canadian wholesale food importer.
- Until recently, you specialized in a few perishable products. Unfortunately, profit margins have been poor.
- At your last senior management meeting, the decision was made to diversify into canned and dried foods.
- This diversification means that you will have to begin importing from areas of the world where you have had little experience.
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Scenario I
Peach Exporters Co. - an eager, new supplier of canned peaches - hears through the grapevine that CanImport is interested in diversifying its purchases. One taste of the delicious peaches, and CanImport is impressed. Peach Exporters Co. suggests that CanImport make a 25% downpayment to cover pre-shipment costs and issue a Letter of Credit for the remaining 75%.
Which option below could cause CanImport to lose the 25% downpayment?
Scenario II
CanImport is approached by past trading partner Papaya Export Inc. located in Chilandra, a developing country with a strong political and economic environment. Coincidentally, Papaya Export Inc. has recently expanded from exporting fresh papayas to also exporting dried papaya slices. Based on the previous mutually profitable relationship between the two companies, CanImport agrees to ten monthly shipments of dried papaya slices. Now, the companies must decide on what method of payment to use for the transactions.
Unfortunately, trading on Open Account is against Papaya Export company policy. Under these circumstances, which of the following is the best payment method?
Scenario III
CanImport just landed a great deal on the purchase of a large shipment of prunes from Prune Exporters Inc. However, you have never dealt with this company and, therefore, cannot be sure that the quality of the prunes will be superior, Grade A.
Which of the following strategies would provide the most assurance of receiving Grade A prunes?
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