Samples & Brochures

Re: [spiers] renmingbi

psnyder@alumni.caltech.edu> writes:

As I pack for my trip to Asia (part vacation, part visit to vendors in
>China to discuss product design),


***Hey,,what happened to the idea of buying info on payment transactions info in
trade in services internationally from banks and reselling it with a premium to
be the center of the world for info on trade in services worldwide...? Wasn't
that you?***

I think about my gnawing concern about
>the renmingbi, aka "soon to be cheaper Chinese currency".

***Now hang on... isn't the revaluation of the renminbiyuan (no "g" ..it means
people's liberated currency) supposed to make the RMBY more expensive, not
cheaper... make thinks more expensive in china? The idea of course is USA will
buy less from China, and china will buy more from USA?***

As per the bible
>according to Spiers, the importer assumes exchange risk.

***Yes, which we anticipate and hedge by either buying the rmby today, or
figuring in a premium to cover whatever the expected increase will be...***

Facing the
>possibility of such a devaluation occurring sometime between me agreeing to
>a price for my lamps with a vendor (a moderately distant event) and my
>sales reps collecting 1000 orders (a yet even more distant event!), what
>are my alternatives?


***See above...anticipate the worst case scenario and price accordingly...***

>Is it reasonable that if such an event occurs, I simply notify my reps of a
>price increase, and hope that not too many have been ordered?

***Remember, we trade in FREQUENCY not volume, so we clear out the fiurst
shipment and adjust prices on future orders too..***
>
>Raise price on already-ordered items?

***Usually should not be necessary...if so, indeed you eat some loss on that
deal..and make it on the next...***
>
>Risk eternal damnation and try to negotiate price in RMB?

***aint gonna happen, and aint necessary anyway...***
>
>And/or do you think that I should consider purchasing a currency contract
>(I'm looking at perhaps 25K - 50K USD FOB value for first shipment)?

***arrggh..the commissions would kill you... instead of that just open a bank
account in hong kong and deposit rmb...***
>
>As always thank you endlessly for your guidance and I am happy to report
>that your process has been validated every step of the way.
>
***thank you..and two illustrations...with first a side note...

never believe what the press or govt, and especially both, says will happen...
when they are not incompetent, they are lying. If China's RMBY gets more
expensive, why would China buy more from usa and USA buy less? That has never
happened before in the history of mankind, why would it happen now? I watched
the yen go from 270 back in circa 1972 to prox 104 today... meaning things from
Japan got far more expensive for americans and usa products got cheaper for
japan... did imports from japan dwindle as japanese things got more expensive,
not at all.

story #1. in april 2 of 1985 I ordered some goods from japan, opened letter of
credit in yen (which is another way to lock in exchange rate if workable...) and
then in may 2 goods arrived. in the intervening month currency swing made yen
30% more costly.. but no problem... i had locked in yen at beginning of month...
except...the clowns at People's Bank in seattle forgot to buy the yen to cover
the contract... and demanded another $400 from me... well..I was stuck...
ultimately the banks attitude was we are big, you are small... so die. I paid
the $400, got my goods, and made no money ..on that deal. But the year overall
was fine, because trading on frequency not volume allowed me to adjust prices
and turn a profit anyway..for the year...

I could have easily won my $400 back in small claims court, but I was ticked...
so instead 4 times a year at seminars in Seattle i used the documents from this
transaction to demonstrate what can go wrong in general and how rotten people's
bank in particular was, and had the documents to prove it..and named names.
prolly some 600 people were apprised of my experience. the 1987 finance crisis
wiped out peoples bank and I do hope I had something to do with those bankers
and their employees going on the unemployment lines...

Now let's look at the opposite action... goods get cheaper... nixon opened
trade with china in 1971, but duty rates on chinese goods were the anticommunist
50% or 100% or more ...what is called column two rates... I was buying carpets
on trips in '79 for my personal use, and decided to test importing carpets as a
biz, on the side... talked to retailers who said they'd try them out if I
brought them iin (if they didnt sell, I'd be happy to keep them for my self...)
I brought in about $5000 worth... sold just fine...test it again, this time with
special designs too... now it is 1980, and Jimmy Carter normalizes trade
relations with China, and the duty rates on chinese carpets drops from 50% to
nothing... this happens days before my shipment hits the docks..so where I was
expecting to pay $15000 duty on $30,000 in carpets, I paid no duty. And found
if I retailed carpets at 100% markup, I was still lower than anyone's wholesale
prices...by a third... which was nice until next time... by then the chinese
had simply jacked up their prices 50%, meaning they made more money and
importers were in essence paying the same again... the only carpets I was making
any molney on were the special design carpets..something that did not dawn on me
as significant... it took two years more working for an importer in San
FRancisco to finally put that key element in place. Then I finally went on my
own, and that was over 20 years ago...

I do go on... so i hope that answers the question...

also, consider, if you have a biz credit card..just paying in advance on your
credit card..with the sale stipulating that payment transfers now and shipment
later.. and if not, the charge is reversed... Visa is looking to own small biz
int'l trade trasnactions, steal the LC biz from the banks...

John

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