The relationship between compensation trade parties belongs to the relationship between buyers and sellers within the scope of international trade. The buyer has complete ownership and right to use the purchased machinery, equipment or technical knowledge, and the seller does not hold shares in factories and enterprises. This form not only makes use of foreign capital, but also expands the sales channels of goods. Compensation trade is often combined with processing trade, which is usually called "three for one supplement". Because the compensation trade lasts for a long time, generally 10 ~ 20 years or longer, in most cases, financial institutions should participate directly or indirectly. The implementation of compensation trade can solve the shortage of funds and foreign exchange for buyers, and can take advantage of opportunities to open up overseas markets to earn foreign exchange; For the seller, it can expand product sales, increase exports and obtain stable supply. The disadvantages of compensation trade are inflexible form, difficult to reach an agreement, complicated procedures and high risks. 193 1 year, Germany first adopted this method, and the former Soviet Union and Eastern European countries often used this method in their trade with the West. China began to adopt this method after the reform and opening up.

Compensation trade, also known as product resale, means that one party to a transaction imports equipment and technology on the basis of the credit provided by the other party, and then the products produced with the equipment and technology repay the price and interest of the imported equipment and technology in installments.

The early compensation trade was mainly used to build large industrial enterprises. For example, at that time, the Soviet Union imported mining equipment worth 860 million US dollars from Japan and repaid it with 654.38 billion tons of coal. Poland imported $400 million worth of chemical equipment and technology from the United States, which was offset by the sales of related industrial products.

Post-compensation trade tends to be diversified, including not only large complete sets of equipment, but also small and medium-sized projects. In 1980s, 40% ~ 50% of Poland's electronic and mechanical products exported to the West returned in the form of compensation trade.

In 1980s, China introduced foreign advanced technology and equipment through compensation trade, but the scale was not large, and most of them were small projects. In recent years, foreign investors have entered China with equipment and technology as direct investment, so compensation trade tends to decrease. However, with the development of market economy in China, the advantages of compensation trade in utilizing foreign capital and promoting sales cannot be ignored.

Barter trade directly uses domestic products to exchange equipment, raw materials, spare parts or finished products with foreign manufacturers, and exchanges goods for goods.

There are the following differences between compensation trade and barter trade: both are direct exchanges between buyers and sellers, and generally there is no currency circulation, and currency is only a pricing means in these trades. The difference between the two is that barter trade is often a one-off behavior, and the buying and selling process occurs at the same time and ends at roughly the same time. Compensation trade often lasts too long, some as long as three to five years, some more than 10 years. Each transaction usually includes multiple buying and selling activities.

How to register compensation trade with customs?

Business units and production enterprises that implement compensation trade contracts shall apply to the customs for filing and registration within 1 month from the date of contract approval, and submit the following documents at the same time:

1. Letter of approval and contract filing certificate issued by the competent economic and trade department.

2. Business license issued by the administrative department for industry and commerce.

3. Copies of contracts signed with foreign countries.

4. Approval documents of export products subject to export license management approved by the competent department of foreign trade and economic cooperation.

5. Other documents and economic guarantees deemed necessary by the customs. After examining the above-mentioned documents, the Customs shall put the compensation trade conditions on record, issue the Registration Manual for Imported Goods in Processing and Assembly and Small and Medium Compensation Trade, and go through the customs declaration formalities for the goods.