Recently, the Chinese Embassy in Algeria issued through its official website: “Tips on the risk of receiving foreign exchange for trade with Algeria”.
The announcement said: Recently, the Embassy has received a number of cases of Chinese enterprises complaining against Algerian enterprises and banks for breach of trust in the process of trade transactions with Chinese exporters, such as the irregular release of bills, non-payment, and non-return of calls. The Embassy contacted the relevant enterprises and banks after summarizing the situation, urging them to respond to the Chinese enterprises’ demands as soon as possible and properly handle the money involved.
First, do a good credit investigation
Do due diligence and fully understand the background and strength of the counterparty before entering into a contract. Chinese enterprises can investigate the credit background of the counterparty through official channels (China Export and Credit Insurance Corporation and China Certification & Inspection (Group) Co., Ltd.) or other commercial channels (internet inquiry, understanding the counterparty from peer companies or industry chambers, etc.).
Second, choose the settlement method carefully
The Algerian government stipulates that international trade can only be accepted in two ways, namely cash on delivery (CAD) and letter of credit (LC): the CAD method is to deliver the documents to the bank with the goods to the importer, which is more risky and often Algerian importers receive the goods without paying the foreign exchange.
The cost of the LC method is slightly higher, and the Algerian government requires the importer to pledge 120% of the purchase price in advance in the bank, which requires high capital flow for the importer, and because of the economic downturn in Algeria, the problem of foreign exchange loss is serious, and the Algerian government exercises strict control on foreign exchange, the collection period of Chinese exporters is longer than the international average.
Third, Signing a formal contract
The Chinese exporter should sign a formal contract with the Algerian importer with detailed terms and conditions, especially on the payment method, progress, delinquency determination and compensation, and other matters of vital interest should be as clear as possible.
At the same time, it is recommended to clarify the ways to resolve delinquency issues, such as arbitration, etc. In case of changes in the specifications of goods, quantities, delivery dates, and other matters, the relevant details need to be confirmed in writing by both parties and properly kept, and the contract should be re-signed if necessary, so as not to become a reason for refusal to pay or delinquency.
IV. Strengthening risk prevention
Chinese enterprises should strengthen their awareness of export credit insurance and choose to take out the relevant insurance policies of China Export and Credit Insurance Corporation when trading with Arab enterprises to reduce export risks and possible losses.
In addition, the mechanism of Algerian banks is not very sound, the management is backward, and the quality of personnel varies, which leads to the irregular operation of banks, and the situation that they are not trustworthy and do not abide by international practices sometimes occurs.
V. Timely control of the situation
Once the importer of the A late payment, arrears, etc., it is recommended to immediately stop shipping and trade again after the importing party pays the arrears to keep the loss to a minimum. Do not take a chance or have concerns about canceling orders or affecting long-term cooperation, and avoid expanding trade volume in the case of existing arrears, resulting in increased arrears and increasing the burden on themselves.
Notes on Customs Clearance in Algeria
Algerian customs require importers to provide imported goods quality inspection certificate COC, if the export shipment is not a timely application for the issuance of inspection certificate COC, may lead to export goods in the Algerian port can not handle import customs clearance procedures.
What is COC certificate?
COC (Certificate of Conformity) is a certificate of product conformity. Some countries, in order to ensure the quality of imported products, to prevent unsafe, low-quality products into the domestic health and safety hazards, as well as taking into account the protection of the environment, require exporters/importers to entrust third-party inspection and certification bodies to test the products before shipment, an inspection of goods.
Products that meet the requirements of the importing country standards issued product conformity certificate (i.e. COC certificate), the goods can be smoothly cleared in the importing country, otherwise not imported, if the COC certificate is not provided as required, the goods will face high fines in the port of destination.
Algeria COC certification procedure
1, the exporter submits a fully completed application form Request for Certificate Form (RFC), pro forma invoice, and packing list
2, the above application form should detail the goods, and provide product quality documents such as test reports, technical parameters, quality management system certificate (if any), etc.
3、Determine the feasible implementation plan and applicable standards under the plan, take samples and implement laboratory tests
4、On-site inspection will be completed in the above steps after the inspection office near the inspection site to implement, all costs borne by the exporter.
5、After the completion of the inspection, the exporter submits the documents (commercial invoice and packing list)
COC inspection fees and other considerations
Algeria COC inspection cost.
Inspection fee: FOB*0.35%>=1950RMB (fee does not include VAT6%)
Algeria COC certification application information.
Application form, factory or trade affirmation, test report (IEC standard test report), inspection report, packing list, and form invoice
Algeria COC certification cycle.
Complete information, the certification cycle of about 7-10 working days out of the certificate. For no test report, the product needs to be tested first, the test cycle is not counted, different products test differently.
It is worth noting that the test report, giving priority to the Algerian IANOR standard, followed by international standards ISO or IEC standards, in addition to developed countries standards such as BS or EN standard report
Since the signing of the comprehensive strategic partnership agreement between the two countries in 2014, China has maintained its position as Algeria’s top source of imports for eight consecutive years, and now more than 1,000 Chinese companies have settled in Algeria!
Therefore, the relevant foreign trade enterprises in exporting to Algeria must pay special attention to the big risk of receiving foreign exchange, beware of money and goods empty!