Tài chính doanh nghiệp - Chapter 13: Export-Import management

Negotiation of an international sale Main methods of payment Trade finance techniques Credit, factoring, forfeiting, counter trade Australia’s exporters Export management in a multinational company Exports of Small and Medium enterprises

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Chapter 13: Export-Import ManagementTOPIC PLANNegotiation of an international sale Main methods of paymentTrade finance techniquesCredit, factoring, forfeiting, counter tradeAustralia’s exportersExport management in a multinational companyExports of Small and Medium enterprisesMajor steps in the negotiation of an international saleExporter inCountry AExporter inCountry B1.Enquiry2. Quotation/Offer 3. Order4. Order Acceptance/ contractINCOTERMSIncoterms 2000EXW – Ex-WorksFCA- Free CarrierFAS- Free Alongside ShipFOB-Free on BoardCFR-Cost and FreightCIF- Cost, Insurance and FreightThe four contractual relationships1. The International Sale of Goods ContractExporter and Importer2. The Letter of Credit (L/C)Importer and the Importer’s bank3. The Bill of LadingCarrier and Exporter( under CFR/CIF) or with the Importer (under an FOB sale)4. Insurance contractInsurance company and Exporter (CIF) and Importer (CFR/CIF) Export Marketing issuesChannels of distributionNational market:producer-export agent-import agent-major wholesaler-small wholesalerModus operandi is differentPricing(1) requiring prices in export markets that yield higher returns that are available in domestic markets(2) “one-price” strategy(3)pricing to yield lower returns, at least in the short run(4) pricing to sell production in excess of the domestic needsTrade financing-Methods of PaymentCash in AdvanceDocumentary letters of creditRevocable creditsIrrevocable creditsConfirmed creditsDraft(bill of exchange): the instrument normally used in international commerce to effect payment.Drawer (“Maker”) and DraweeSight drafts and time drafts€ ANZ BANK L / C AUSTRALIAN EXPORT SALE TO EUROPEEuropean BankAussie ExporterEuropeanImporterTRADE FINANCING:Bank financeCredit to importerSupplier credit (by the exporter)Buyer credit(directly to the foreign buyer)Short term (up to 2 years)Medium term (2-5 years)Long-term (over 5 years)Trade Financing: Non-Bank Finance Government loans and guarantees(Export credit insurance):EFIC,COFACE etc.FactoringFactor buys export receivables at a discount of 2-4% Exporter -ultimately liable in case of default.ForfeitingNon-recourse export financeGuarantee (avail) from the importer's governmentCounter tradeCOUNTERTRADEMain formsBarterCounter purchaseBuyback(Compensation)Offsets(Local content)Pro-active vs. Reactive counter tradeDisadvantages:Time-consuming;CostlyGovernment Loans and GuaranteesExport credit insurance-guarantee programsFrance-over 20% of exportsJapan-low interest loans to export companiesBrazil-favourable exchange rates to exportersUS-EXIMBANK"Mixed credit"Australian ExportersSmall size by international standardsTop 50 Australian exporters(Median:US $300m)Top 50 US exporters(Median :US$ 1.3billion.)Primary products dominate the top 50 placings.ETM’s: the fastest growing export sector.150 “born-global” ETM exportersForeign ownership plays a dominant roleSelected indicators regarding the top 50 exporters in Australia and CanadaAustralia (1996/97)Canada(1999)Range of exports sales(US$Million)4300-2504000-160Median of export sales for top 50(US$ Mill.)570510Break-down of the top 50 exporters by main export line(% out of 50)Primary products(%)Machinery&Equipment(%)Other manufactures(%)Services(%)6810121010284814Export Management for the MNEMore international options (exports & foreign production)Exports of complete products or only partsChanges in Foreign business strategy (Step 5-Bus.plan)Exports to MNEs affiliatesChoice of foreign currencyTransfer pricingMore local market knowledge than non-MNE'sSME's in global business activitiesWorldwide:37,000 transnational enterprises with over 205,000 affiliates. Contribution of SME's to nation's exports Taiwan : 60 %Denmark : 50 %Sweden : 30 %France : 26 %AUSTRALIA :< 10 %Australia's Small and Medium EnterprisesTotal number of Australian SME's :about 530,000Internationalised Small and Medium Enterprises(ISME'S)Number of ISME's: at least 4,500 International turnover:A$ 6.5 b. Direct domestic employment : ab.40,000 Over 20 % of turnover from global operators Active in at least 5 countries(mainly SE Asia).IMPORT MANAGEMENTImporting-neglected aspect of international business strategyImporting channels-Direct and IndirectImporting-part of the purchasing functionMNE imports from off-shore manufacturing affiliates