Export/Import procedure according to the Non-L/C method - Trade settlement : Divide in L/C method and Non-L/C method Non-L/C

method : Divided in collection method (D/P, D/A) and remittance method. - Although the L/C method provides payment guarantee to an exporter by a opening bank, the transaction has number of shortcomings to pay high service fee to ban ks by the sales involved parties and that the transaction amount is the lowest, - In the stand point of a exporter, Non-L/C could be profitable transaction as l ong as a importer's creditability is definite. - Since the Uniform Rules for Collection of the Commercial paper to regulate a c ollection method, there is a special trait to this method as a draft transaction , sending documents through banks and collecting payment. - Remitting method : Since there is no international regulation to regulate this method, the contract terms can be determined freely as long as the contents are not violating the said countries' a forced legislation. Export/Import procedure according to the remittance method [1] Definition - The common traits of remittance method is that it is not necessary for a bank to intervene to exchange transaction exist and since it is not limited to paying a debtor by a creditor's request, bill of change preparation is not needed in g eneral. - A transaction method to export under a condition to receive remittance directl y. [2] Remittance method (1) D/D(demand draft; check remittence ) - A method of a remitter sending a check received from a bank under his/her reas onability. - There is a risk that the mail might get loss while delivering so the method is not prefer to use for a trade payment method. - According to the exchange transaction contract, if a issuing bank is issuing m oney order over a fixed amount, the issuing bank is bound to notify a money orde r drawing advice to a paying bank, and the paying bank may confirm the authentic ity of the drawing advice and the money order if a payment presentation is reque sted by a payee. <1> Procedure 1. Remittance inquiry (Remittance deposit) 2. Issue money order 3. Forward debit authorization and money order issuing notification - If a paying bank is the depositary correspondent bank of the remittance bank, it is regarded as a debit authorization of money order issuing certificate to se ttle fund and if the remittance amount is small sum, money order issuing notific ation can be omitted according to the correspondent contract of the paying bank. 4. 5. 6. 7. Send money order Present money order Pay remittance Credit advice and debit advice

- On the basis of remittance bank's debit order, the bank's current withholding account is debit processed and stand by in the paying banks account, the paying bank sends a debit advice to the remittance bank and stand by advise to the payi ng bank to notify the completion of the transaction. (2) M/T(mail transfer)

- A method when a remitter entrust to a bank, the bank sends a payment order to a bank where the recipient is located under the bank's responsibility. - It is usually used for non-urgent remittance or for the small sum remittance. <1> Procedure 1. 2. 3. 4. 5. Remittance inquiry (Remittance deposit) Debit order and payment order (T/T or mail) Remittance arrived notification Payment Stand-by advice and debit advice

- If a paying bank is depositary correspondent bank, the method instructs to pay in the order of paying bank from remittance bank directly debiting without sele cting a separate settling bank. (3) T/T(telegraphic transfer) - This method is same as mail remittance but different from M/T method with the instruction method which is telegraphic method. - Although this method has a shortcoming for excess expense due to the telegraph ic transferring fee but it is used with a urgent remittance and for the large am ount remittance. <1> Advantages with T/T transaction 1. Pay only remittance service fee and telegraphic cable service fee. 2. T/T method is fixed amount system regardless of transaction amount and it is possible deposit as a foreign currency and can avoid exchange risk. 3. It can choose the export earning before or after shipping and it is effective to move up the payment period to installment receipt. 4. No security is needed when importing. <2> Things to be cautious for T/T transaction 1. Since the method has no bank involvedness and deals with only the importer's creditability, there is a risk with payment unpaid so before sending a B/L after shipping, there must be a procedure to confirm deposit of payment. 2. In order to receive the export earning at the right time, the payment deposit and payment order (P/O) have to be confirmed at the same time. 3. There could be a cancellation with payment therefore, a schedule notice and t he actual deposit have to be confirmed in advance. <3> Procedure 1. 2. 3. 4. 5. Remit inquiry (remittance deposit) debit advice and payment order (T/T or mail) Advise remittance arrival Payment Advice stand-by and debit

- If a paying bank is depositary correspondent bank, the method instructs to pay in the order of paying bank from remittance bank directly debiting without sele cting a separate settling bank. <4> Examples of T/T remittance 1. If paying bank is depositary correspondent bank - LT CHAMANBANK NEWYORK MAY 10 1996 ADVISE AND PAY USDLS ONE HUNDRED LESS YOUR CHARGES TO KIM JONG SIK 3200 5TH AVE NEWYORK ORDER H

ONGKILDONG SEOUL OUR REF CH101TT 1234 KOIN BANK 2. If paying bank is non-depositary correspondent bank - To the order of paying bank LT FUJI BANK TOKYO MAY 10 1996 ADVISE AND PAY USDLS ONE HUNDRED LESS YOUR CHARGES TO KOREA TRADING CO 5-1 NISHI SHIMBASHI 2CHOME MINATO KU TOKYO ORDER KOREA TRADING CO SEOUL COVER CABLED THRU CHAMANBANK NEWYORK OUR REF CH101TT 1235 KOIN BANK - To the order of settling bank LT CHAMANBANK NEWYORK MAY 10 1996 PLS DEBIT OUR ACCOUNT USDLS ONE HUNDRED AND CREDIT TO FUJIBANK TOKYO IN REIMBURSING OF OUR REF CH101TT 1235 KOIN BANK (4) Depends on payment period <1> CWO (Remit in advance or remittance method) - A trading method which a importer remits the total payment for goods to a impo rter in advance using T/T or with cash after a sales contract is concluded, the exporter ships the contract goods after procuring the contract goods. - ex post facto management and transaction credit limit for this method is deter mined by laws of regulations separately. - Procedure 1. Concluding contract 2. Receive exporter's downpayment 3. Export license request (Export license application, contract, a certificate o f foreign currency purchase) 4. Procuring raw materials (Purchasing approval form, Open import L/C (Not allow to open domestic L/C) 5. Procuring funds 6. Transportation and concluding insurance contract (Transportation documents, i nsurance documents) 7. Export clearance 8. Sending shipping documents (Transportation documents, insurance documents, co mmercial invoice, packing list etc; bill of change is not necessary to send) 9. Export execution declaration <2> Later remittance - A transaction to receive the total export earning through a foreign exchange b ank within ~ date from the delivery day or at the same time of goods delivering period which is a preferable method to be used when opening L/C or settling fore ign currency is difficult in a certain region. 1. COD(cash on delivery) - A method for a representative of a exporter in the import location to present the goods to a importer which were shipped by the main office to exchange the ac tual goods with cash after inspecting goods. - This method is utilized for the precious metals which are expensive items and that are difficult to get hold of the quality of the goods before an actual insp ection of the goods. 2. CAD(cash against document)

- A payment method which a representative of a importer in the export location c onfirms shipping documents and actual goods that are shipped to the main office and a exporter sends the shipping documents to a importer to pay the payment by reimbursing with the documents. - D/P is an alias of Europe styles when a bank intervenes for sending documents or payment collection this method is difficult to differentiate with D/P but sin ce a bill of change is not required, it can be divided. - Procedure a. Concluding a contract b. Appling for export license (Export license application, contract) c. Procuring raw materials (Local L/C, purchasing approval form, opening import L/C) d. Procuring funds (Required funds can be procured by trading loan) e. Goods inspection (a representative of importer inspect the goods directly) f. Conclude transportation and insurance contract (transportation documents, ins urance documents) g. Requesting shipping documents take over (May request to the representative wh o took charge of goods inspection for 1st time) h. Export clearance i. Send shipping documents (If representative of a importer refuse to take over the documents, documents such as transportation documents, insurance documents, commercial invoice, packing list can be directly sent to a importer) j. Accepting shipping documents and payment k. Accept exporter's remittance l. Declare export performance 3 BWT (bonded warehouse transaction) - Unlike COD, CAD which a transaction party is determined in advance before ship ping, this method is a selling method to carry in the goods of a exporter to the transaction party's bonded warehouse and the representative of the exporter exe rcise local sales with a sample by taking out the goods from the bonded warehous e as needed after clearance. 4 CTS(central terminal station) - A method which a exporter establish a local sales cooperation as a foreign loc al CTS and a exporter ship goods to the local sales cooperation then the local s ales cooperation exercise sales and send the sales earning to the exporter which is used by many consignment sales exports. [3] Thing sto be cautious for remittance method transaction (1) For export earning, the remittance must be received by a foreign exchange ba nk. (2) If there is no representative in the place of importing, a exporter prepares a consignee as the correspondent bank in the place of importing when preparing the transportation documents and assign a notify party as a importer to prevent importer receiving goods from a the carrier without payment settle.