exporting and importing procedures

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EXPORT-IMPORT TRADE By, Prof. Nilesh Soni

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7/29/2019 Exporting and Importing Procedures

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EXPORT-IMPORT

TRADEBy,

Prof. Nilesh Soni

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Why Export?

Reasons to export –  To serve markets where the firm has

no or limited production facilities

 –  To satisfy a host government’s requirement that the local subsidiaryhave exports

 –  To remain price-competitive in the

home market –  To test foreign markets and foreign

competition inexpensively. Etc.

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Reasons to export? cont’d. 

 –  To offset domestic market’s cyclicalsales

 –  To achieve additional sales

 –  To extend a product’s life cycle  –  To respond strategically to foreign

competitors

 – To achieve the success the firm’smanagement has seen others achieve

 –  To improve the efficiency of manufacturing equipment

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12.1 Procedures of Export and Import Transaction

General Procedures of Export Transaction  

  Preparation for Exporting

Business Negotiation

Implementation of Contract

Settlement of Disputes

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12.1.1 General Procedures of Export Transaction

Preparation for Exporting

• Research on the countries or regions

• Research on the market

• Research on the customer

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12.1.1 General Procedures of Export Transaction

Business Negotiation

• Enquiry

• Offer and counter-offer

• Acceptance

• Conclusion of sales contract

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12.1.1 General Procedures of Export Transaction

(CIF Contract)

Implementation of Contract

• Preparing goods for shipment

• Inspection application

• Reminding, examining and modifying L/C

• Chartering and booking shipping space

• Customs formality

• Insurance

• Documents preparation for bank negotiation

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12.1.1 General Procedures of Export Transaction

(CIF Contract)

Settlement of Disputes

• Conciliation

• Arbitration

• Litigation

(cf: Fig.12-1 General Procedures of Export Transaction,CIF, Letter

of Credit, Sea Transportation, Commodity Inspection Stipulated) 

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Marketing and Promotion

Market Research

Credit Information

Enquiry

Offer

Acceptance

Contract

Chartering,Space Booking

Docks

Customs Formalities

Loading, Bill of Lading

Documents Preparation for Bank Negotiation

Settlement of Disputes (if any)

Checking Name of Commodity,

Specification, Quantity, Packing

and Marking

Good Preparation

Preparation for Exporting

Business Negotiation

Performance of 

Contract

Reply to Enquiry

Counter-offer

Reminding of L/C

Examination and

Amendment of L/C

Insurance Company

Insurance Policy

Inspection Authority

Inspection Application

Certificate of Inspection

Certificate of Inspection

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12.1.2 General Procedures of Import Transaction

• To conduct market investigation;

• To formulate import plan for a certain commodity;

• To send inquiries to the prospective sellers overseas;

• To compare and analyze the offers or quotations received;

• To make counter-offers and decide on which offer is most

beneficial;

• To sign a purchase contract;

• To apply to a bank for opening a letter of credit

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12.1.2 General Procedures of Import Transaction

• To book shipping space or charter a carrying vessel for taking

over the cargoes, if the contact is in terms of FOB;

• To effect insurance with the insurance company upon receipt

of shipping advice;

• To apply for inspection if necessary;

• To attend to customs formalities to clear the goods through the

customs;

• To entrust forwarding agents with all the transport

arrangements from the port to the end user’s warehouse; 

• To settle disputes (if any).

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12.2 Organizations Involved in Export and

Import Transaction• The exporters

• The shipping agents at the port or airport of loading

The railways(in some cases)in the exporter’s country • The road hauler(in some cases)in the exporter’s country 

• The port authority

• The shipping company(or sea freight)

• The airline(or air freight)

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12.2 Organizations Involved in Export and

Import Transaction

• The insurance company or brokers

• The exporter’s bank  

• The importer’s bank  

• The railways(in some cases)in the importer’s country 

• The road hauler(in some cases)in the importer’s country 

• The shipping agent at the port or airport of discharge

• The importers

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12.3 Specialist Involved in Export and

Import Transaction• A shipping agent and/or freight forwarder (forwarding agent)

will take responsibility for the documentation and arrange for

the goods to be shipping by air, sea, rail or road.• Airlines, shipping lines, railway companies or haulage

contractors will actually transport the goods.

• Both the importer’s and exporter’s banks will be involved in

arranging payments if a letter of credit or bill of exchange is

used.

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12.3 Specialist Involved in Export and

Import Transaction

• Customs and Excise officers may need to examine the

goods, check import or export licenses and charge dutyand/or VAT.

• A Chamber of Commerce may need to issue a certificate of 

origin, if this is required by the importer’s country. 

• An insurance company insures goods in transit.

• A lawyer if a special contract has to be drawn up.

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12.4 Documents needed in export and

import transaction

• Bill of Lading

• Commercial Invoice

• Packing List

• Weight Memo

• Certificate of Inspection

Certificate of Origin• Insurance Policy(certificate)

• Sales Contract