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Indirect product compensation refers to repayment of the: cost of the imported capital goods with products wholly or partially produced with equipment other than that imported. In other words, the equipment supplied by the foreign company is not paid for by the local company or manufacturer with the products produced with the imported equipment, but with other products than those produced with the imported equipment. This may happen when the foreign company is unwilling to accept the former products. Under this arrangement, payments for the imported equipment and for the products to be supplied to the foreign company are to be accounted for separately and offset each other.5. In what way should we deal with the processing in international business operation？
There are two ways for us to deal with the processing in international business operation.The first way is to use the materials supplied by clients abroad for processing. In this case, all raw materials and packaging required are provided by the foreign company. The local company or manufacturer undertaking the process will charge a processing fee for working on the materials provided.
The second way is to process according to the samples supplied by clients abroad. The foreign company provides samples for processing or production by the local company or manufacturer, who supplies raw materials to produce the goods according to designs and specifications provided by the foreign company. The local company or manufacturer will charge a fee for processing, which normally includes the cost of raw materials supplied although in certain instances the cost of such materials may be separately accounted for and charged.