Chapter 14

Export and Import Practices

Week 5

Sources of Export
Counseling

Federal and state dept. of commerce

Banks Ex-Im Banks (export/import)
Small business development centers
Private consultants

Develop Marketing Plan

Does a market exist for a product?
Sources of export information,
counseling and support
- Export gov. Dept. of Commerce
- International Trade Administration
- World Trade Centers Association
private sector

Export Marketing Plan

Similar to domestic marketing plan

Specific about
Markets to be developed
Marketing strategy and tactics

Why is it similar to domestic marketing plan?

Once the existence of a potential market is
established, the company must choose between
- Export indirectly through home based exporters
- Exporting directly using its own staf

Common Mistakes Made by New

Exporters
1. Dont obtain export counseling
2. Lack top managements commitment
3. Careless selection of sales rep and distributors
4. Chasing orders, not following a plan
5. Neglect export when home market booms
6. Dont treat international as equal to domestic
7. Generalize one successful technique across markets
8. Unwilling to localize (regulations and culture)
9. Failure to provide after sale in local language
10.Wont use export management companies
11.Wont consider licensing or JVs
12.Dont provide servicing

Incoterms

General Transportation Incoterm (International Commercial Terms)

Pre defined terms to facilitate international transactions
They address the following:
COSTS who is responsible for the expenses involved in a
shipment at a given time in the shipments journey
CONTROL who own the goods at a given point in the journey
LIABILITY who is responsible for paying damage to goods at a
given point in the shipments transit
Ex Works Good available at named factory
FCA Free carrier at named place (destination)
CPT Carriage and insurance paid to named place
DAT Delivered at Terminal
DAP Delivered at Place named
DDP Delivered, Duty Paid

Incoterms
Water Transportation Incoterm
(International Commercial Terms)
Pre defined terms to facilitate
international transactions
They address the following:
- FAS Free Alongside Ship
- FOB Free On Board
- CFR Cost and Freight to destination port
- CIF CFR + Insurance to destination port

Payment Procedures
Payment Terms
- Cash in Advance advance to seller
(usually to custom made orders)
- Open account advance to buyer
(usually ofered to existing or reliable
customers)
- Consignment major advance to
buyer (payment made upon selling usually head office sales to
subsidiaries)

Letter of Credit (L/C)

Document issued by buyers bank
that
- Promise to pay seller specified
amount when bank has received
stipulated documents
- Confirmed sellers bank agrees to
honor
- Irrevocable once sellers accepts, not
changeable

Export Documents
Air Way Bill bill of lading issues by
air carrier
Pro Forma Invoice exporters format
quotation
Export Draft unconditional order
drawn by seller on buyer (sight or at
future time) that must be paid before
buyer receives shipping documents
usual

Export Financing
Private Source Commercial Banks
Bankers acceptance
commercial paper that the bank will honor
or pay when due

Factoring
discounting account receivable company
sells open account to the bank at a discount

Forfaiting
purchasing account receivable, risk born by
forfaiter usually those whose credit terms
are >90 days

Export Financing
Public Source
Ex Im Banks

Other Export Incentives

Foreign Trade Zones - outside your
country
Free Trade Zones inside your
country
Happen in Europe

Export Procedures

Foreign freight forwarders

Agents for exporters
Prepare documents
Book space (on carrier, ship, etc)
Advise on markets, regulations,
transport, packing
- Supply cargo insurance

Export Documents
Shippers export declaration
Endures goods CAN BE exported and for
recording export statistics

Validated/ general export license

Regulates the export of strategic commodity
or a shipment to an unfriendly country

Export bill of lading

Proof that the carrier has taken over goods

Insurance certificate

Collection Documents
Commercial invoice
Official invoice from the seller

Consular invoice
Some importing countries require an invoice in their local language
or be endorsed by the local consular representative

Certificate of origin
Issued by the local Chamber of Commerce

Inspection certificate
That the product conforms with the description esp when food,
animals, etc. issued by the local agriculture or veterinary
authorities

CE
Conformite Euuropeene Mark EU mark that cetufucate the
product conform European standard

Ways to Identify Import

Sources
If similar imported products are already in the

market, visit a retailer and examine the

product label
If the product is not being imported, call the
nearest consul or embassy of that country
Use the electronic bulletin boards of the World
Trade Centers
Accidental importing also takes place

Using Importing Agents

Most countries utilized the
Harmonized System Code
This classification system has
200.000 commodities traded
internationally
The 6 digit code is used by all
member countries and knowing the
codes avoid wrong description
assigned to imports

Export Oriented Economies

Date back to the early 1960s
Between 1970 and 1984, four small
East Asian economies dubbed Asian
Tigers
South Korea, Hongkong, Singapore,
Taiwan

Led the way for other smaller

economies to re-think their economic
policies to one that is outward
looking

Export Oriented Economies

Export led growth rests on the Theories of
Absolute and Comparative Advantages
inspired by economist David Ricardo
Do you consider the following as Export
Oriented economies?
Cambodia
Indonesia
Malaysia
Philippines
Thailand
Vietnam