2. Which one of these would you suggest be used by Arion? Explain. Arion Exports, a South...

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2. Which one of these would you suggest be used by Arion? Explain. Arion Exports, a South Korean company that specializes in producing automative replacement parts, had decided to enter the Canadian market. Raymond Lee, the general manager, turned his attention initially to specific arrangements for finance and shipment.

Arion’s intention originally was to have the customers of its Canadian agent, the Peterson Trading Company, finance shipments by letters of credit. On the first order received from Peterson, the letter of credit was delayed. Lee had wanted to make prompt shipment to show the Peterson organization and its customers the fast service and deliveries they could expect from Arion. For this reason he did not wait for the technicalities involved with the letter-of-credit delay to be resolved but proceeded with the shipment, using a ‘to order’ bill of lading to retain title and control of the merchandise.

As matters turned out, the shipment arrived in Canada before the letter of credit was received in South Korea. When it did arrive, Arion presented it and shipping documents to the South Korean bank involved.

The bank promptly made payments in won and airmailed the documents and clearances to its correspondent bank in Canada, where they were relayed to the customer.

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