Question

I need to write an essay on trade between any two countries. This trade should include exporting or importing of one specific product between two companies. I need to know the real names of the companies that which company is exporting what product to other company. Also, what is the unit price in incoterms of that product that is exported. which payment method companies are using for example payment in advance, letter of credit or documentary collections.what are the country risk, commercial risk , transportation risk and bank risks that bother importing and exporting companies are facing. it should include proper references

This is what instructor provided: You have recently applied for the International Trade Finance Specialist position with Royal Bank of Canada (RBC). Yesterday, you received an email request from RBC to submit an case analysis paper before they decide if they want to interview you. They asked you to do some research and find an interesting trade finance related story (can be anything you can find from 3^rd party sources but not something you make up by yourself). They want you to provide your own analysis and opinion of the story you find. They will use this paper to determine if you will actually be interviewed.

They specifically mentioned your story should cover at the following topics:

• INCOTERMS (can be logically and reasonably assumed)
• Payment terms

Parties	Exporter (Seller): Importer (Buyer):
Product
Payment Term
Unit Price in INCOTERMS: (INCOTERMS must be complete and in correct format)
Quantity
Total Amount
Departure Place (City, Country)
Destination Place (City, Country)
Transportation Mode
Additional notes you wish to provide for RBC to understand the above story (must be less than 100 words)
Story’s source link:

What risks are there for both parties in your story? Comment from the following perspectives – commercial risk, country risk, transportation risk, and bank risk. No more, no less. (5 points. Must be less than 300 words; violation may lead to zero mark)

From Exporter’s Perspective:

1. Commercial risk:
2. Country risk:
3. Bank risk:
4. Transportation risk:

Importer’s Perspective:

1. Commercial risk:
2. Country risk:
3. Bank risk:
4. Transportation risk:

Answer 1

Commercial Risks are caused due to the factors:

• Lack of knowledge about the foreign markets
• Inadaptability of the export product or change to the conditions of the foreign market requirements
• Longer transit time and
• Varying situations to be handled, not anticipated before export.

Most of the commercial risks are to be borne by the exporters. Exporters cannot shift these risks to the professional risk bearers, paying insurance premium.

Minimization of Commercial Risks: Commercial Risks can be minimized by using forecasting techniques and keeping a careful watch on the changing business conditions in the concerned country, in particular, and also keeping a track of the changes in the world economy. Exporters have to be prepared to face any eventually and wisdom lies in forecasting and anticipating.

Changes in Transport Costs: Transport Costs constitute, generally, a major part the invoice value and so any change in transport costs affects the competitive edge of the exporter. Change in transport costs does not affect FOB price. There, is no problem even in CIF contracts, which have escalating clause in respect of transport costs. Exports have to worry CIF contracts, which have escalating clause in respect of transport costs have to worry in case of CIF contracts that are net with escalation clause.

Country Risk - Country Risk is the risk that a foreign government will default on its bonds or other financial commitments. Country Risk also refers to the broader notion of the degree to which political and economic unrest affect the securities of issuers doing business in a particular country.

Banks play a critical role in international trade by providing trade finance products that reduce the risk of exporting. This paper employs two new data sets to shed light on the magnitude and structure of the business, which, as we show, is highly concentrated in a few large banks. The two principal trade finance instruments, letters of credit and documentary collections. Letters of Credit are employed the most for exports to countries with intermediate degrees of contract enforcement. Compared to documentary collections, they are used for riskier destinations.