Chapter Four Content of Negotiation (I)
Anyone engaged in foreign trade knows that negotiation is a very important component in international business activities. As far as international investment, import and export of products, machinery and equipment are concerned, negotiation on international business and economy is a consultative process between governments, trade organizations, multinational enterprises or private firms. In short, it is a process between the buyers and the sellers, so negotiation is one of the important steps taken toward completing import and export trade agreements.
4.1 Inquiry and Reply
In international business activities, making inquiry is the initial stage of business negotiation between the buyers and sellers, the purpose of which is to seek a supply of products, service or relative information.
Usually, the buyers make inquiries without any engagement to get information about the goods to be ordered. The sellers, however, can also make inquiries to get information about the goods to sold, without any engagement, too.
The information wanted by the buyers or the sellers usually includes the following elements:
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The supply of commodities;
The price;
The catalogue;
The packaging;
The delivery date;
Terms of payment and other terms concerned.
Inquiry can be made orally or in written form.
If the written form is adopted, the person who makes inquiries should remember to consider carefully to which the inquiries are to be sent and how many supplies or purchases are to be approached in one and the same region. Failure to take into consideration the relevant situation would lead to adverse effect on future transactions.
When writing enquiry letters to your counterpart, there is on need to choose words and phrases carefully to draw the readers’ attention. A request for a price list or catalogue can be made in a single sentence. A request for a quotation of price and other trade terms may need a little longer description, which should be clear and exact. But remember there is no need for long, over-polite phrases and
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still less humbleness.
If it is the first transaction between the parties concerned, the first enquiry letter should begin by telling the receiver how his name and address is known. Then, some generally information about your own business, such as the kind of goods handled, quantities needed or to be sold, usual terms of trade and any information likely to enable the suppliers or the buyers to decide what they can do for you, should be given.
Having received the enquiry letter, the receiver should study it with caution and reply the enquiry letter as soon as possible, telling them whether you could sell or buy.
If in oral form, especially when the business relations have been established between the buyers and sellers, the inquiries and replies will be very easy and simple. What should be paid attention to is that both of them may have a friendly and cordial discussion according to what has been mentioned.
4.2 Offer and Counter-offer
In many types of business, it has always been the practice for the supplier to make an offer directly to his regular customers and to others who may be interested in his goods, without waiting for an enquiry. But when the supplier has received an enquiry from the buyer and decide to sell the goods, he should make an offer to him.
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It should be pointed out that offer is different from quotation. Quotation is just an indication of price without contractual obligation, and it is subject to change without previous notice. We have learned that a proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offerer to be bound in case of acceptance. So offer is a definite commitment on the part of the supplier.
In business activities, when making an offer, orally or in written form, the following elements are usually included:
The name, price, quality and quantity of the goods;
The date of delivery and/or time of shipment;
The terms of payment;
The validity of the offer;
Other terms concerned, such as packing, discount, insurance, etc.
When a supplier promises to sell the goods at a stated price within a stated period of time, the offer made by him is called a firm offer. In making a firm offer, mention should be made of the time of shipment and the date of delivery, the mode of payment desired and the period for which the offer is valid. In addition, an exact description of the goods should be given. If possible, pattern or sample
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should be shown or sent.
It should be noted that a firm offer, although not legally binding, is capable of acceptance, and once it has been acceptable it cannot be withdrawn and the offerer should perform the obligations stipulated in it.
It is known that a reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer. So, a counter-offer means a partial rejection of the original offer, and it also means a counter proposal put forward by the buyers or the offeree.
In practical business negotiations, the buyers may not agree on the price, packing, shipment or payment, etc. He may state his own terms instead. Such alterations indicate that business has to be negotiated on a renewed basis. Such being the case, the original offerer or the seller now becomes the offeree and is entitled to accept of refuse. In the latter case, he may make another counter-offer of his own. This process can go on for many a round until the transaction is concluded or called off.
Sometimes, the sentence “Accept your offer subject to the following alterations……” may be used in answering an offer. Although the word “accept” is used, in fact, the offer is still rejected, because the offeree does not agree to the whole offer.
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In making a counter-offer, the party concerned should express regret at inability to accept, explain reasons for non-acceptance and suggest that there may be other opportunities to do business together in the future.
4.3 Price and Placing orders
It is known to all of us that price, which should be carefully considered, is one of the most important factors in the international business activities.
Price is the money of other considerations exchanged for the ownership or use of a product or service. The products’ price includes fixed cost, variable cost and expected profit. The fixed cost and variable cost of export products, however, means the total figure of production cost, selling cost, delivery cost, taxes and tariffs and some other unknown costs.
In any transactions, the buyer wants to buy cheap and the seller wants to sell dear. In order to get the expected target, the buyer or the seller should know the pricing strategies and other factors which can influence the price.
As to the pricing strategies, there are three basic techniques of pricing export products, which can be indicated as follows:
Cost-plus pricing;
Marginal cost pricing;
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Break even pricing;
Besides what have been mentioned above, the international and external factors which can affect pricing should be noted.
International factors include:
Marketing objectives;
Marketing mix strategies;
Costs;
External factors include:
The market and demand;
Competitors’ prices and offers;
In international business negotiation, because haggling is a common occurrence, the buyer or the seller should not ignore the following items, which can also affect pricing:
Fluctuations of the currency used in the transaction;
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Terms of payment;
Date of delivery;
Packaging, etc;
Everyone knows that negotiating price is a skill needing nerves of calm. Once given the factors affecting prices, the buyer or the seller is now ready to select a workable price. In any case, the price will have to be somewhere between one that is too low to produce a profit and one that is too high to result in any demand.
In business discussion, even when the buyer has an advantage over the seller, because of overproduction, etc., and is accordingly able to dictate terms, such as lowering the price, quickening delivery date and so on, he should consider everything on the “you” attitude and give the reasonable price. Of course, when the seller has an advantage over the buyer, the same attitude should be adopted.
Having finished negotiation price between the buyer and the seller, the former may place an order to the latter for goods needed on the price agreed upon between them. Once the order has been accepted by the seller, a purchase contract should be singed. After that, both parties are legally bound to carry out their agreement.
When the binding agreement comes into force, the buyer’s obligations are:
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to accept the goods supplied, provided that they comply with the terms of order;
to pay for them according to the terms agreed upon;
to check the goods as soon as possible (failure to give prompt notice of faults to the seller will be taken as acceptance of the goods);
When the binding agreement comes into force, the seller’s obligations are:
to deliver the goods exactly of the kind ordered, and at the agreed time;
to guarantee that the goods to be supplied are free from faults, of which the buyer could not be aware at the time of purchase.
According to commercial law, if faulty goods are delivered, the buyer can demand either a reduction in price, or replacement of the goods, or cancellation of the order. He may also be able to claim damages.
Chapter Five Content of Negotiation (Ⅱ)
5.1 Packaging 包装
It is known that packing is another important element which should be pay attention to by the buyers and the seller when negotiating any transactions,
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because neither of them like to have the goods shipped or received in a damaged condition. It is appropriate packing that could prevent or minimize the damage of the goods and could promote the sales. Therefore, in modern days, more and more people have come to realize the importance of packing.
When discussing packing, the seller should keep the following in mind:
﹙1﹚ The buyers are under certain conditions entitled to reject the goods if they are not packed in accordance with his instruction or with the provisions agreed upon.
﹙2﹚ Packing should be designed to suit shipment requirements. In case of anomalies in packing, the master of the ship has authority to refuse to sign a clean B/L. Likewise, the buyer is empowered to refuse the acceptance of a B/L which refers to goods marked and branded not in strict conformity with the contract.
﹙3﹚ Packing should tally with the regulations in the country of destination, because some countries levy very heavy import duties on particular kinds of packing material.
Besides what have been mentioned above, the seller should show solicitude for the appearance and packaging of packing.
The features of the packing should be:
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Beautiful and durable;
Easy to handle;
Well suited for long distance shipment;
Proof against damage;
Waterproof /shake-proof;
Standardized.
The appearance and packaging of packing should be:
Modern and attractive;
Small and exquisite;
Suitable for window display;
Facilitate marketing;
In practical business activities, as far as the benefit of the buyer and the seller concerned, both of them should be familiar with the following items.
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⒈ Packing Parameters
The main parameters that affect packing include the following:
1) Value of the Goods
Packing depends on the value of the goods, that is, high value consignment usually needs more expensive than low value merchandise. Therefore, packing for valuable goods must be done professional to avoid any damage caused by transactions.
2) Nature of the Goods
Generally speaking, packing depends upon the nature of a products as well as the mode of transportation. For instance, cargo shipped in bulk requires little or no packing at all; small products are usually packed in standard-sized wooden or cardboard boxes; machinery or some heavy goods may need to be shipped in crates; commodities like sugar and coffee are usually packed in bags; and fragile goods should be done professionally.
3) Rulers and Regulations
This has particular relevance to dangerous cargo whose very nature calls for adequate and safe packing in line with strict regulations applicable both to sea and air transportation. Besides, in some countries, straw, wood and some other
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material are unacceptable forms of packing owing to the risk of insects being imported.
4) Temperature Variation
Temperature variation is another important factor which should be considered when packing, because some kinds of cargo that will have to undergo the temperature variation will face the danger of deterioration.
5) Cost of packaging
With the overseas markets becoming ever more competitive, the exporter is compelled to explore new methods of packing. The basic principle of packaging is to make packaging as light and compact as possible so as to keep freight cost down.
⒉ Marking of Goods
When packing is finished according to the packing instructions from the buyers, marking should be done on the export packages, which mainly include:
The consignees’ own distinctive marks, which should include the name of the port of destination;
Any official marks required by authorities concerned, because some
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countries require the name of the country, there the goods are produced, the weight and dimensions, to be marked on every package.
Special directions or warning which should be stenciled on the package foe the benefit of the owner and the carrier.
5.2 Delivery of Goods
When discussion the delivery of the goods, the negotiator should be familiar with the following contents:
Modes of the transportation;
Time of shipment;
Place of shipment and place of destination;
Partial shipment and transference;
Shipping advice;
Shipping documents.
1. Modes of Transportation
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Although there are many modes of transportation in international trade, ocean transportation is still the most important mode at present.
When the buyer and the seller negotiate the ocean transportation, the following items should be paid attention to: regular shipping liner transportation and charter transportation.
(1) Regular shipping transportation: it involves the standard for calculating
premium, the liner’s freight tariff, the basic rate, the surcharge, the time of premium payment and the special discount for freight.
(2) Charter transportation: it can be divided into voyage charter, time
charter and empty ship charter. Charter transportation cover charter party, rent or freight and the good shipped.
2. Time of Shipment
When talking about the time of shipment, we should distinguish “shipment” from “delivery”. Under FOB, CFR, CPT and CIP, the time of shipment corresponds to the time of delivery, bur under DES, DEQ, DDU and DDP, the two are quite different, because FOB, CFR, CIF and so on belong to the constructive delivery, and DES, DEQ and so on belong to the actual delivery.
When negotiating the time of shipment, the party concerned should know something about the stipulations of shipment time.
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(1)
“Time shipment” means that an actual time of shipment should be
given, such as “Shipment during April and May”
(2) “Shipment in the near future” refers to “prompt shipment”,
“immediate shipment”, and “shipment as soon as possible”. Because these terms have different explanations in different countries and lines, the negotiators should refrain from using them so as to avoid misunderstanding.
(3) “shipment without fixed time” means that the seller will ship the
goods with a certain time only after the payment of the L/C. under this stipulation, the following phrases are usually used:
Shipment within 30 days after receipt of L/C;
Shipment within 15days after receipt of remittance;
Shipment by first available vessel;
Shipment within 20 days after receipt of L/C, which must reach the seller not later than 30th April.
Besides what have been mentioned above, the parties concerned should pay much attention to the canceling date, the demurrage and the dispatch rate, which are also very important in negotiating shipping contract.
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3. Place of Shipment and Place of Destination
Under CIF and CFR terms, the port of shipment and the port of destination should be stipulated in the contract. Under CPT and CIP terms, however, the place of destination and the place of the departure should be stipulated in the contract.
But under FAS and FOB terms, the port of shipment should be stipulated in the contract, and FCA term, the place of departure should be stipulated in the contract. Although the terms mentioned above only refer to the port of shipment and the place of the departure, it is better to stipulate the port of destination or the place of destination in the contract respectively.
4. Partial Shipment and Transportation
Besides the time of shipment, the place of shipment, the place of destination, and the mode of transportation in the delivery clause of the contract, there are partial shipment and transshipment in it.
(1) Partial shipment usually has the following three forms:
Not specify lots and quantity---the phrase “partial shipments to be allowed” can be used;
Specify lots but not specify quantity---the phrase “shipment during May, Jun and July in three installments” can be used;
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Specify lots and quantity---the phrase “shipment during May and June in two equal lots” can be used.
(2) Transshipment should be clearly specified in the contract if it is necessary,
such as “transshipment to be allowed”, “transshipment at Hong Kong to be allowed”, etc.
(3) When partial shipment and transshipment are needed, they should be
written down in the contract, such as “shipment on of before May 31st from Shanghai to Wellington, allowing partial shipment and transshipment”
5. Shipping Advice
After making shipment, the seller is required to advise the buyer its effectuation (usually within 24 hours) no matter the transportation is concluded on FOB, CFR or CIF basis, so that the buyer can take necessary measures to take the goods and take out insurance. The required shipping advice usually includes:
(1) the contract number and the L/C number;
(2) the name of the commodity;
(3) the quantity loaded;
(4) the invoice value;
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(5)
the name of the vessel;
(6) the port of loading and the port of destination;
(7) the date of B/L;
(8) the date of departure;
(9) The expected time of arrival at the port of destination.
6. Shipping Document
Shipping document is a kind of main certificate, by which the seller proves that he has completed his obligation of delivering goods, and on the other hand, the buyer pays for the shipment. If the shipping documents do not strictly conform with the terms of the L/C, the bank will reject them and refuse to pay, so great care is required on the part of export in preparing the shipping documents.
The shipment documents required in shipment usually include:
(1) bill of landing (B/L);
(2) commercial invoice;
(3) insurance policy or insurance certificate;
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(4)
inspection certificate or survey report;
(5) weight memo (note) and packing list;
When discussing shipping documents, the person concerned should know something about the B/L, especially the Ocean B/L.
The bill of landing is a document given by a shipping company, representing both a receipt for the goods shipped and a contract for shipment between the shipping company and the shipper. It is also a document of entitlement to the goods, giving the holder or the assignee the right to possess the goods.
The ocean B/L usually includes:
shipped B/L or on board B/L;
clean B/L, unclean B/L;
straight B/L;
order B/L;
direct B/L;
transshipment B/L;
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through B/L;
Freight prepaid B/L, etc.
In a word, when shipping goods by ocean freight, the negotiators must take into account the following:
(1) Arranging the port of shipment and the port of destination. Commonly, the seller chooses the port of shipment whereas the buyer decides the port of destination on the basis of mutual agreement.
(2) Settling the time of shipment. To avoid future disputes in international trade, the time of shipment must be settled clearly between the buyer and the seller. When settling the time of shipment, the exporters should take every possibility into consideration, such as the supply of goods, international transportation, and external market quotations. The time of shipment should be made suitable to both the seller and the buyer.
5.3 Insurance
When negotiation the marine cargo insurance, the parties concerned should be first familiar with the following content:
Perils Insured Against;
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Marine Transportation Loss;
Types of Insurance.
1. Perils Insured Against
Each shipment in transit may run into various types of dangers. Generally speaking, the risks covered by insurance can be basically divided into two types---“perils of the sea” and “extraneous risks”.
The perils of the sea include not only natural calamities such as storms, floods, earthquakes, lighting, etc. but also fortuitous accidents like fire, collision, explosion, stranding and sinking of the carrying vessels, and so on.
The extraneous perils are usually caused by external factors, which can be divided into two---the ordinary and the special. The ordinary perils include the theft, pillage, leakage, shortage, rusting, contamination, and so on. But the special perils refer to war, strikes, import duty, rejection and failure to deliver, and so on.
2. Marine Transportation Loss
Generally speaking, losses on the high seas fall into two categories: total loss and partial loss.
⑴ Total losses: Actual total loss & constructive total loss;
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⑵ Partial losses: Generally average & particular average;
3. Types of Insurance
The principle perils which the basic marine policy of the PICC insurance against under its Ocean Marine Cargo Clause are:
⑴ free from particular average (F.P.A.);
⑵ with particular average (W.P.A.);
⑶ all risks.
These three perils are usually called “basic risks”, which are granted according to institute cargo clauses.
Besides the “basic risks” mentioned above, there is another type of risk---additional risk, which can be divided into two---general risks and special additional risks.
Generally speaking, general additional risks include:
theft, pillage and non-delivery( T.P.N.D.);
Fresh water and/or rain damage;
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Shortage;
Intermixture and contamination;
Leakage;
Clash and breakage;
Taint of odor;
Sweat and heating;
Hook damage;
Breakage of packing;
Special additional risks, however, include:
war risk;
Strikes;
On deck;
Import duty;
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Rejection;
Failure to deliver;
Survey at jetty risk;
Fire risk extension clause.
出师表
两汉：诸葛亮
先帝创业未半而中道崩殂，今天下三分，益州疲弊，此诚危急存亡之秋也。然侍卫之臣不懈于内，忠志之士忘身于外者，盖追先帝之殊遇，欲报之于陛下也。诚宜开张圣听，以光先帝遗德，恢弘志士之气，不宜妄自菲薄，引喻失义，以塞忠谏之路也。
宫中府中，俱为一体；陟罚臧否，不宜异同。若有作奸犯科及为忠善者，宜付有司论其刑赏，以昭陛下平明之理；不宜偏私，使内外异法也。
侍中、侍郎郭攸之、费祎、董允等，此皆良实，志虑忠纯，是以先帝简拔以遗陛下：愚以为宫中之事，事无大小，悉以咨之，然后施行，必能裨补阙漏，有所广益。
将军向宠，性行淑均，晓畅军事，试用于昔日，先帝称之曰“能”，是以众议举宠为督：愚以为营中之事，悉以咨之，必能使行阵和睦，优劣得所。
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亲贤臣，远小人，此先汉所以兴隆也；亲小人，远贤臣，此后汉所以倾颓也。先帝在时，每与臣论此事，未尝不叹息痛恨于桓、灵也。侍中、尚书、长史、参军，此悉贞良死节之臣，愿陛下亲之、信之，则汉室之隆，可计日而待也
。
臣本布衣，躬耕于南阳，苟全性命于乱世，不求闻达于诸侯。先帝不以臣卑鄙，猥自枉屈，三顾臣于草庐之中，咨臣以当世之事，由是感激，遂许先帝以驱驰。后值倾覆，受任于败军之际，奉命于危难之间，尔来二十有一年矣。
先帝知臣谨慎，故临崩寄臣以大事也。受命以来，夙夜忧叹，恐托付不效，以伤先帝之明；故五月渡泸，深入不毛。今南方已定，兵甲已足，当奖率三军，北定中原，庶竭驽钝，攘除奸凶，兴复汉室，还于旧都。此臣所以报先帝而忠陛下之职分也。至于斟酌损益，进尽忠言，则攸之、祎、允之任也。
愿陛下托臣以讨贼兴复之效，不效，则治臣之罪，以告先帝之灵。若无兴德之言，则责攸之、祎、允等之慢，以彰其咎；陛下亦宜自谋，以咨诹善道，察纳雅言，深追先帝遗诏。臣不胜受恩感激。
今当远离，临表涕零，不知所言。
出师表
两汉：诸葛亮
先帝创业未半而中道崩殂，今天下三分，益州疲弊，此诚危急存亡之秋也。然侍卫之臣不懈于内，忠志之士忘身于外者，盖追先帝之殊遇，欲报之于陛下也。诚宜开张圣听，
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以光先帝遗德，恢弘志士之气，不宜妄自菲薄，引喻失义，以塞忠谏之路也。
宫中府中，俱为一体；陟罚臧否，不宜异同。若有作奸犯科及为忠善者，宜付有司论其刑赏，以昭陛下平明之理；不宜偏私，使内外异法也。
侍中、侍郎郭攸之、费祎、董允等，此皆良实，志虑忠纯，是以先帝简拔以遗陛下：愚以为宫中之事，事无大小，悉以咨之，然后施行，必能裨补阙漏，有所广益。
将军向宠，性行淑均，晓畅军事，试用于昔日，先帝称之曰“能”，是以众议举宠为督：愚以为营中之事，悉以咨之，必能使行阵和睦，优劣得所。
亲贤臣，远小人，此先汉所以兴隆也；亲小人，远贤臣，此后汉所以倾颓也。先帝在时，每与臣论此事，未尝不叹息痛恨于桓、灵也。侍中、尚书、长史、参军，此悉贞良死节之臣，愿陛下亲之、信之，则汉室之隆，可计日而待也
。
臣本布衣，躬耕于南阳，苟全性命于乱世，不求闻达于诸侯。先帝不以臣卑鄙，猥自枉屈，三顾臣于草庐之中，咨臣以当世之事，由是感激，遂许先帝以驱驰。后值倾覆，受任于败军之际，奉命于危难之间，尔来二十有一年矣。
先帝知臣谨慎，故临崩寄臣以大事也。受命以来，夙夜忧叹，恐托付不效，以伤先帝之明；故五月渡泸，深入不毛。今南方已定，兵甲已足，当奖率三军，北定中原，庶竭驽钝，攘除奸凶，兴复汉室，还于旧都。此臣所以报先帝而忠陛下之职分也。至于斟酌损益，进尽忠言，则攸之、祎、允之任也。
愿陛下托臣以讨贼兴复之效，不效，则治臣之罪，以告先帝之灵。若无兴德之言，则
腹有诗书气自华
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责攸之、祎、允等之慢，以彰其咎；陛下亦宜自谋，以咨诹善道，察纳雅言，深追先帝遗诏。臣不胜受恩感激。
今当远离，临表涕零，不知所言。
腹有诗书气自华
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