• The first step in the purchasing process is for the buyer to send a LOI (Letter of Intent) detailing the specific parameters of the order. The LOI must include:

• Type of sugar (ICUMSA 45, ICUMSA 150, ICUMSA 600-1200).

• The desired quantity of sugar (whether it is a Spot purchase or an annual contract).

• The destination port.

• The payment method (SBLC, DLC, Escrow Agreement, etc.).

• The LOI is essential for us to provide you with a customized quote based on the details of your purchase. If the LOI is sent by a third party, they must attach a purchase mandate note authorizing them to act on behalf of the buyer.

• Once the LOI is received, we conduct a compliance verification through our CIS (Customer Information System). This step is essential to ensure that the buyer complies with international legal and regulatory requirements. If the buyer passes the compliance verification, we proceed to the next step.

• ICPO (Irrevocable Corporate Purchase Order): Once the CIS is approved, the buyer must issue an ICPO (Irrevocable Corporate Purchase Order), which details the purchase terms, such as the type of sugar, quantity, and destination port.

• KYC (Know Your Customer): The buyer must also provide the KYC documentation to verify their identity and ensure the transaction complies with international regulations.

After both parties have agreed on the terms in the ICPO and KYC, the SPA (Sales and Purchase Agreement) will be signed. This contract will include the GACC number (General Administration of Customs of the People's Republic of China) of the ICUMSA sugar exporter, which is the registration number granted to exporters authorized by the General Administration of Customs of China.

This GACC number is necessary for the buyer's due diligence, as it provides assurance that the exporter is properly registered and authorized to operate in the international ICUMSA sugar trade with China.

Once the SPA is signed, the buyer can contact the exporter via email, providing the SPA contract number and the GACC number. This allows the exporter to formally confirm the transaction and validate the logistics details related to the shipment of ICUMSA sugar. The confirmation from the exporter is crucial, as it gives the buyer additional assurance that the contract will be fulfilled according to the agreed clauses, ensuring compliance with the terms of the transaction.

In this step, the buyer must provide a draft of the bank guarantee, which can be one of the following types, as agreed upon by both parties:

• SBLC (Standby Letter of Credit).

• DLC (Documentary Letter of Credit).

• Escrow Agreement.

• BG (Bank Guarantee).

• Chinese LC (Letter of Credit in RMB).

This draft of the bank guarantee serves to ensure that the payment will be made under the conditions agreed upon in the SPA once the terms of the transaction are met. The draft will be reviewed and approved by both parties before proceeding with the final issuance of the guarantee.

Once the SBLC draft is approved, the seller provides the Proof of Product (POP). This document confirms that the ICUMSA sugar is available for sale and ready for delivery according to the agreed terms. The POP is essential to guarantee the authenticity of the product.

Once the bank guarantee draft has been approved, the buyer must proceed with the final issuance of the chosen bank guarantee. The bank guarantee options include, but are not limited to:

• SBLC (Standby Letter of Credit).

• DLC (Documentary Letter of Credit).

• Escrow Agreement.

• BG (Bank Guarantee).

• Chinese LC (Letter of Credit in RMB).

The final bank guarantee will serve as payment assurance and provides security to the seller that the funds are available, under the conditions agreed upon in the SPA. This guarantee is key to proceeding with the transaction, ensuring that the buyer will make the payments as agreed.

The Performance Bond (PB) is a financial guarantee issued by the seller within 10 days of receiving the buyer's bank guarantee. This Performance Bond is equivalent to 2% of the value of the issued bank guarantee, which is based on the value of the goods to be delivered during the contract.

This 2% of the value of the bank guarantee will be deposited into a joint bank account between the buyer and the seller. The Performance Bond remains locked in the bank during the contract to ensure compliance with the terms of the agreement. In the event that either party fails to meet the agreed terms, the Performance Bond will be used to cover the costs or damages resulting from any non-compliance.

Once the sugar has been shipped, the seller will send the buyer the complete shipping documents. These documents are essential to confirm that the product has been loaded and is in transit to the destination port. The documents that will be sent along with the Bill of Lading (BL) include:

• Three (3) originals and three (3) copies of the Commercial Invoice: This document details the transaction value and is required for customs and payment processes.

• Three (3) originals and three (3) copies of a full set of clean Bill of Lading (B/L): The B/L must be marked as "Freight Pre-Paid," indicating that the shipping costs have been covered. The B/L acts as the official receipt for the product loaded onto the vessel.

• Two (2) originals and four (4) copies of the Quality, Quantity, and Weight Certificate issued by SGS: This certificate is necessary to confirm the quality, quantity, and weight of the ICUMSA 45 sugar.

• One (1) original and four (4) copies of the Certificate of Origin: This certificate must be issued by the Chamber of Commerce and Industry of the country of origin and guarantees that the sugar is produced in the indicated country.

• Shipping Company Certificate: Details of the vessel, departure date, and destination port, providing additional information about the shipment.

• One (1) original and four (4) copies of the Phytosanitary Certificate: Issued by the competent authority of the country of origin to ensure that the sugar meets the required phytosanitary standards.

• Fumigation Certificate: This document is required if the sugar needs to be fumigated before export to ensure there are no pests or contaminants.

• Seller’s Certificate: The seller must provide a statement confirming that three (3) copies of the documents were sent to the buyer by email or postal mail.

• One (1) original and three (3) copies of the Bulk List: This document contains details about the cargo and the distribution of sugar in the vessel.

• Additional documents as per the agreement:

  • Radiation Certificate: Issued by a competent authority, ensuring that the sugar’s radiation level is normal.

  • Export Authorization Certificate: This document guarantees that the sugar can be legally exported.

  • COVID-19 Test Report: If required, this certificate confirms that the product has been inspected to comply with international health regulations.

  • Additional specific certificates: As agreed between the parties, these may include GACC, HACCP, Kosher, HALAL, Euro 1, or any other certificate specifically requested by the buyer.

Explanation of the Process:

The set of shipping documents provided with the Bill of Lading (BL) ensures that the transaction is handled transparently and in accordance with the buyer's requirements. The documents confirm that the sugar meets quality and safety standards, and they also facilitate the customs process in the destination country. Additional documentation, such as the Radiation Certificate or COVID-19 Test Report, may be required depending on local regulations or specific agreements between the buyer and seller.

Once the sugar is loaded and the shipping documents are verified by the buyer, payment is made via MT103. This is a type of international bank transfer that confirms the payment of the agreed amount in the contract. The transfer is made under the terms set forth in the SPA, and once completed, it is confirmed that the funds have been released.

In the case of a long-term contract, the buyer must issue a monthly renewable bank guarantee, which covers the monthly payment for the duration of the contract. This renewable bank guarantee is issued for the value of one month’s supply of sugar, with a validity period covering the total months of the contract plus one additional day.

The guarantee is used to ensure payment for the quantity of sugar to be supplied in that month. Once the sugar delivery is fulfilled and the payment is credited, the buyer must request the bank to renew the guarantee for the next month, so the procedure is repeated each month, covering the agreed supply in the SPA contract.

This process continues until all deliveries have been made according to the terms of the contract. The renewable guarantee provides security for both the buyer and the seller, ensuring that the payment for each monthly shipment is made as agreed.

Contract Renewal: Two months before the expiration of the guarantee period, the parties may agree on a new price to renew the contract for a new period. This option allows the buyer to optimize time and costs, as renewing the guarantee for a new period will not require paying the bank’s issuance fees again, reducing operational costs for both parties.

Explanation of the Process:

The renewable bank guarantee ensures that the buyer will maintain the monthly payment according to the contract, while the automatic month-to-month renewal facilitates continuous compliance without needing to renegotiate the guarantee each time. Additionally, the option to agree on a new price and renew the guarantee without incurring new bank charges optimizes costs, benefiting the buyer in terms of long-term financial efficiency.