TRADE WITH CHINA: LEASING. INFORMATION NOTE
1
Shortage of Foreign Exchange will be a continuing constraint
on China's ability to purchase foreign goods to fuel her expansion programme. She is thus actively looking for ways either of getting others to provide the foreign exchange (ie through joint ventures) or of paying for her imports through the supply of products rather
This latter technique known as counter trade, is discussed in the Department of Trade's Counter Trade Note.
than money.
2
A further option for easing China's immediate foreign exchange shortage might be for China to lease capital equipment through the
UK or through intermediaries in Hong Kong or elsewhere and exporters will wish to take account of this possibility when negotiating payment terms with the Chinese.
3
Essentially export leasing enables a UK supplier to export capital goods by leasing or selling them to an intermediary company (a leasing company) which becomes the Lessor. The leasing company would then lease them to a Chinese trading organisation the lessee
or to a second intermediary in Hong Kong. Lease payments would take the form of straight currency payments or the supply of counter trade goods.
4
ECGD provides support for leasing contracts made by UK leasors
in the ways described in Annex A. Where capital equipment is sold
by a UK exporter to an overseas lessor for onward lease to China,
☛
the sale to the lessor would be susceptible to normal ECGD support
as is any other contract of sale.
ADVANTAGES OF LEASING
5 There are a number of advantages to the Chinese in leasing
equipment:-
1
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