Hundreds of new inventions and patents are being approved each day and many of these inventions can be utilized in markets outside China. Foreign banks with branches or representative offices in China can also issue letters of credit. China will not allow letters of credit issued by its banks to be confirmed by other banks, Chinese or foreign. As with letters of credit, the exporter submits a full set of trade documents of payment collection to the bank designated in the contract. The Chinese bank will send the documents to the home office, which examines them and, in some cases, passes them to the buyer for further examination.
Payment is made after the documents have met the approval of all parties.
Documents Against Payment provides rather thin coverage against default however it is less expensive than a Letter of Credit, but should only be used between parties that have a long, good and trusting relationship.