Bài giảng International Business - Chapter seventeen: Export and Import Practices

Export and Import PracticesMcGraw-Hill/IrwinInternational Business, 11/eCopyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.chapter seventeenLearning ObjectivesExplain why firms export and problem areas of exportingIdentify the sources of export counseling and supportDiscuss the meaning of the various terms of sale3Learning ObjectivesIdentify some sources of export financingDescribe the activities of a foreign freight forwarderUnderstand the kinds of export documents requiredIdentify import sourcesExplain the Harmonized Tariff Schedule of the United States (HTSUSA)4Why Export?Reasons to exportTo serve markets where the firm has no or limited production facilitiesTo satisfy a host government’s requirement that the local subsidiary have exportsTo remain price-competitive in the home marketTo test foreign markets and foreign competition inexpensively5Reasons to export? cont’d.To offset domestic market’s cyclical sales To achieve additional salesTo extend a product’s life cycleTo respond strategically to foreign competitorsTo achieve the success the firm’s management has seen others achieveTo improve the efficiency of manufacturing equipment6Reasons not to ExportTwo major reasonsPreoccupation with the vast American market Reluctance to become involved in a new, unknown and therefore risky operationNot active in international markets due toLack of knowledgeLocating foreign marketsPayment and financing proceduresExport procedures7Sources of Export CounselingTrade Information Center (TIC)The federal government has to set this up as a first stop for informationVisit Trade Administration (ITA)Offers a wide range of export promotion activities that includeMarket Access and Compliance (MAC)Trade DevelopmentU.S. and Foreign Commercial Services (US&FCS)8Sources of Export CounselingSmall Business Administration (SBA)The office of International Trade of the SBA works throughSmall Business Administration officesScore ProgramSmall Business Development CentersCenters for International Business Education and Research (CIBERs)9Show and SellTrade events to facilitate international tradeU.S. pavilionsTrade missionsProduct literature centerReverse trade missions10Export Marketing PlanEssentially same as domestic marketing planSpecific aboutMarkets to be developedMarketing strategy for serving themTactics to make the strategy operational11Terms of SaleINCOTERMS Universal trade terminology developed by the International Chamber of CommerceEx-WorksRisk passes at factory doorUS equivalent: FOB (free on board)12Terms of Sale, cont’d.FASFree alongside ship, port of callCIFCost, insurance, freight, foreign portCFRcost and freight, foreign portDAFDelivered at frontier13Payment ProceduresPayment terms offered by exporters to foreign buyersCash in advanceWhen credit standing of the buyer unknown or uncertainOpen accountWhen sale is made on open accountSeller assumes payment risk Offered to reliable customers in economically stable countries14Payment Procedures, cont’d.Consignment Goods shipped to buyer; payment made when sold Payment risk assumed by sellerLetter of credit (L/C)Document issued by buyer’s bankPromise to pay seller specified amount when bank has received documents stipulated in letter of credit15Payment Procedures, cont’d.Letter of creditConfirmed L/CCorrespondent bank in seller’s country agrees to honor issuing bank’s L/CIrrevocable L/COnce the seller has accepted L/C, buyer cannot alter or cancel it without seller’s consent16Sample Letter of Credit17Letter of Credit Transaction18 DocumentsAir WaybillA bill of lading issued by an air carrierPro Forma InvoiceExporter’s formal quotation: description of the merchandise, price, delivery time, method of shipment, ports of exit and entry, and terms of sale19Export Payment DocumentsExport draftUnconditional order drawn by the seller that instructs buyer to pay the draft’s amount on presentation (sight draft) or at an agreed future date (time draft) and that must be paid before buyer receives shipping documents20Payment Risk/Cost Trade-Off21Export FinancingPrivate Source – Commercial BanksBanker’s acceptanceTime draft with maturity of less than 270 days that has been accepted by the bank on which the draft was drawn, thus becoming the accepting bank’s obligation; may be bought and sold at a discount in the financial markets like other commercial paperFactoringDiscounting an account receivable without recourse 22Export Financing, cont’dForfeitingPurchasing without recourse an account receivable whose credit terms are longer than the 90 to 180 days usual in factoring; unlike factoring, political and transfer risks are borne by the forfeiter23Export Financing cont’d.Public SourcesExport-Import Bank (Ex-Imbank)Principal government agency that aids American exporters by means of loans, guarantees, and insurance programsOverseas Private Investment Corporation (OPIC)U.S. government corporation that offers American investors in developing countries insurance against expropriation, currency inconvertibility, and damages from wars and revolutions24Other Public IncentivesForeign Trade ZoneDuty-free area designed to facilitate trade by reducing the effect of customs restrictionsFree Trade ZoneAn area designated by the government as outside its customs territoryCustoms drawbackRebate on customs duties25Export ProceduresForeign freight forwarders act as agents for exportersPrepare documentsBook spaceOffer advice aboutMarketsRegulationsTransportationPackingSupply cargo insurance26Official Procedures for Importing and Exporting27Shipping DocumentsShipper’s Export DeclarationU.S. Department of Commerce form to control export shipments and record export statisticsValidated export licenseDocument issued by the U.S. government authorizing export of strategic commodity or shipment to unfriendly countryGeneral Export LicenseCovers export commodities for which validated license not required; no formal application required28Shipping Documents, cont’d.Export Bill of LadingContract of carriage between shipper and carrier: straight bill of lading is nonnegotiable; endorsed “to order” bill gives holder claim on merchandiseInsurance Certificate29Collection DocumentsCommercial invoiceInclude origin of goods, export packing marks, and clause stating goods will not be transshippedConsular invoicePurchased from the consul and prepared in local languageCertificate of originIssued by local Chamber of CommerceInspection certificateFrequently required for grain, food, live animals30Export ShipmentsContainersReduce theft and handling costsLASH (lighter aboard ship)Barges for shallow inland waterwaysRO-RO (roll on-roll off)Can drive onto vesselAir FreightCan arrive in one day31Export ShipmentsContainersReduce theft and handling costLASH (lighter aboard ship)Barges for shallow inland waterwaysRO-RO (roll on-roll off)Can drive onto vessel Air FreightCan arrive in one day32Sea-Air Total Cost Comparison, Shipment and Spare Parts33Air FreightTotal cost may decreaseEither the firm or the product may be air-dependentThe market may be perishableCompetitive position may be strengthened34ImportingWays to identify import sourcesIf similar imported products are already in the market, visit a retailer and examine the product labelIf the product is not being imported, call the nearest consul or embassy of that countryUse the electronic bulletin boards of the World Trade Centers35Customhouse BrokerIndependent business that handles import shipments Acts as agent for importerCustomhouse broker brings goods through customsMay arrange transportation for goods after they leave customsNeed to know when imports are subject to import quotas and how much of the quota has been filled36ImportingBonded warehouseArea authorized by customs for storage of goods on which payment of import duties is deferred until goods are removedAutomated Commercial System (ACS)Used to track, control, and process all commercial goods imported into U.S.Import DutiesImporter must know how U.S. calculates import dutiesThe Harmonized Tariff Schedule of U.S. (HTSUSA)American version of the Harmonized System used worldwide to classify imported products37Page from the HTSUSA38