How many times does the settlement of entrepot trade count exactly? Come and help me answer this question!
I've been researching knowledge related to entrepot trade recently, and I'm a bit confused about the number of times of settlement in entrepot trade. In entrepot trade, the goods are shipped from the producing country to the transit country and then transshipped to the consuming country. How many times does the settlement involved in this process count exactly? Is it twice, once between the producing country and the transit country, and once between the transit country and the consuming country? Or are there other situations? I hope that professionals can help me answer this question. Thank you!
Professional consultant answers
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
In entrepot trade, the settlement is usually counted twice. Firstly, there will be a settlement between the exporter in the producing country and the trader in the transit country. The exporter in the producing country sells the goods to the trader in the transit country, and the trader in the transit country pays according to the price and payment method agreed upon by both parties, such as common methods like letter of credit, telegraphic transfer, etc.
Secondly, when the trader in the transit country sells the goods to the importer in the final consuming country, both parties will conduct another settlement, and various payment methods can also be adopted. However, there are also special circumstances in actual business. If the trader in the transit country pays the exporter in the producing country only after receiving the payment from the importer in the consuming country, it seems that there is only one settlement, but essentially it is still the settlement behavior of two independent transactions, just with some overlap in time. So, from the essence of the trade process, the settlement of entrepot trade is generally counted twice.
William YangYears of service：5Customer Rating：5.0
International logistics consultantConsult
Normally, it is two times of settlement because there are two trading links. The producing country sells to the transit country, and the transit country sells to the consuming country, and both need to be settled.
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
Generally, it is two times. There is one settlement between the producing country and the transit country, and another between the transit country and the consuming country. This is in line with the trade process.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
Mostly, it is two times of settlement. But if the three parties have agreed in advance that the consuming country pays directly to the producing country, then the number of settlement times may change.
Sarah ZhangYears of service：8Customer Rating：5.0
Document expertConsult
Actually, it mainly depends on how the trade contract is signed. If only one contract is signed, the settlement may be different, but in most cases, it is still two times of settlement.
James LiuYears of service：10Customer Rating：5.0
Foreign trade tax refund consultantConsult
It should be two times. Entrepot trade involves the producing country, the transit country, and the consuming country. Two trading links correspond to two times of settlement.
Amanda YangYears of service：3Customer Rating：5.0
Cost control consultantConsult
Conventionally, it is two times of settlement. The producing country settles with the transit country, and then the transit country settles with the consuming country. This is the most common situation.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
Generally speaking, it is counted as two times. However, if the way of capital flow is special, such as having a third party make the payment on behalf of others, the number of settlement times may change.
Joseph ZhouYears of service：10Customer Rating：5.0
Senior foreign trade managerConsult
Usually, it is two times. After all, the goods have gone through two buying and selling processes. The producing country sells to the transit country, and the transit country sells to the consuming country, so there are two times of settlement.