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Ava Lee ebook: The Dragon Head of Hong Kong – Part III

Ava Lee ebook: The Dragon Head of Hong Kong – Part III

From the desk of Ian Hamilton

Exporting to China in the l990s was not for the faint of heart. Getting products there was the easy part. Getting paid was a tad more difficult.

In an ideal world, you would have demanded to be paid in advance. Except that didn’t happen unless you were Chinese and your first cousin was a senior military officer or the mayor of a large city or ran a bank.

That left the ordinary exporter to rely on international trade and banking regulations. Within North America, and between here and Europe, that wasn’t particularly demanding. Letters of Credit – issued bank to bank – covered most contingencies.  In essence, one bank committed to pay another if the conditions in the LC were met – and the conditions were typically minimal, i.e prove that the goods that were ordered were actually delivered.

In China, the problems started with the banks. Some of them operated  on whimsy. A Letter of Credit, which was supposed to be a binding legal document, could be refused to be paid for reasons that had nothing to do with the conditions that were set.  In one case, I know a company who was stuck because the Chinese bank said the officer who had signed the LC on their behalf wasn’t properly authorized to do so. Or so they claimed. Then what to do? Take the importer and/or the bank to court? Good luck with that in a legal system that was political and xenophobic.

No wonder businesses like Uncle’s were necessary.

— Ian Hamilton

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