· Because the seller and buyer of the goods are in different countries, there are differences in laws, customs, languages, cultures, etc.
·Because you do not know much about your trading partner, you are worried about their ability and honesty in paying and delivering the goods.
·Because there is a time difference between the contract, the receipt of the goods, and the settlement of the payment, you are worried about whether they will be executed reliably.
·Because the settlement currency is different, you are easily affected by the fluctuations of the foreign exchange rate, and you are worried about the exchange rate risk.
Japan-China trade (total of exports and imports, including Hong Kong) was 22.2 trillion yen, surpassing the 20.5 trillion yen of the United States for the first time, and China became Japan's largest trading partner. Looking at the changes in the share of China and the United States in Japan's trade with the world, the United States, which had a share of nearly 30% in the late 1980s, has been declining in recent years, and in 2004, it fell below 20% for the first time.
In addition, Hong Kong is the only place outside mainland China where there is a market for trading in Chinese yuan. London and Singapore have expressed their interest in creating a market, and London became the first foreign city to start handling yuan-denominated bonds in April 2012. Japan is also preparing to open a market, and this direct transaction will put it one step ahead. Furthermore, if the trading volume expands, it will also be possible to urge China to apply international rules more strongly, such as market transparency.