An online merchandise sourcing company that is also promoting an electronic alternative to the letter of credit (L/C) as a means of payment has established a joint venture in Bangladesh. This extends Cyber Merchant Exchange's (C-Me's) network of offices in Asia.

The California-based company operates in the textile and garment sectors and utilises the Internet to connect mainly Asian manufacturers with US retailers.

L/C alternative

To support its sourcing activities, C-Me has entered into a joint venture agreement with one of the largest US providers of factoring, accounts receivable management and lending services, CIT Commercial Services, and Taiwan's Bank SinoPac to develop the Global Financial Platform (GFP). This is designed to allow US retailers to purchase overseas merchandise without issuing a L/C.

The GFP aims to provide a more flexible trading and settlement system than L/Cs for both buyers and sellers. In L/C trades the bank pays on presentation of documents, regardless of whether the goods received by the buyer are satisfactory. In GFP transactions, if the quality of the merchandise received by the buyer is not as per the samples provided, the buyer has recourse with the seller.

Flexible benefits

Sellers can apparently benefit by using GFP because CIT will provide accounts receivable financing of up to 80 per cent to vendors once they have shipped the merchandise. C-Me also claims that the new system will provide more security for sellers in situations where goods are delivered to buyers that file for US Bankruptcy Protection while the issuing bank is still examining L/C documents. As with most electronic payment systems, C-Me says GBF transactions will be less hampered than L/C transactions by document discrepancies.

In Asia, C-Me now has representation in China, Hong Kong, India, Korea, the Philippines, Taiwan and Thailand as well as Bangladesh. US retailers that have signed up to C-Me include two New York listed companies, Factory 2-U and Burlington Coat Factory as well as California-based McWhorter's, Sacks SFO and Susie's Deals.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.