Why this matters
For a first-time buyer of Chinese pipe fittings, the letter of credit (L/C) is the bridge between "I do not know this supplier" and "the bank will only pay against documents that prove performance." UCP 600 — the ICC's Uniform Customs and Practice for Documentary Credits — governs L/Cs in 175 countries and roughly USD 1 trillion of trade per year. A poorly structured L/C either pays a bad supplier (because the document list is too thin) or blocks payment to a good supplier (because the document list is impossible). This guide structures a clean L/C for first-time China sourcing under UCP 600.
A letter of credit structuring approach grounded in UCP 600 protects both buyer and seller on the first PO.
Field-by-field L/C structure
1. Type of credit. Irrevocable, sight (or usance, e.g., 60 days after sight). Confirmed by a first-class bank in the seller's country if seller is unfamiliar with the buyer's bank.
2. Amount and currency. Match the proforma invoice. Add a tolerance ("+/- 5%" or "about") if the cargo is bulk-priced.
3. Beneficiary and applicant. Exact legal name and address as registered. Mismatches here are the #1 discrepancy cause.
4. Latest shipment date and expiry. Allow at least 21 days between shipment and expiry — UCP 600 Article 14(c) requires documents be presented within 21 days of shipment by default and within validity.
