international business david j. boggs, ph.d. eastern illinois university importing and exporting

International Business

David J. Boggs, Ph.D.Eastern Illinois University

Importing and ExportingImporting and Exporting

OverviewOverview Review of entry modes Overview of exporting and importing Government involvement Websites for help and information Paying and collecting payment

International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 13 - 3

Risk, Control, ExperienceRisk, Control, Experience

Exporting and Product Exporting and Product CharacteristicsCharacteristics

ValueValuedensitydensityValueValuedensitydensity

Product’s value relativeto its weight and volumeProduct’s value relativeto its weight and volume

The lower a product’s valuedensity, the more localizedis its distribution system

The lower a product’s valuedensity, the more localizedis its distribution system


Export ResearchExport ResearchExport ResearchExport Research

Trade shows and missionsTrade shows and missionsTrade shows and missionsTrade shows and missions

Interviews and focus groupsInterviews and focus groupsInterviews and focus groupsInterviews and focus groups

SurveysSurveysSurveysSurveys

Environmental scanningEnvironmental scanningEnvironmental scanningEnvironmental scanning


Trade ShowsTrade Shows http://www.globalspeak.com/html/export-

gov/webcasts.asp


http://www.globalspeak.com/html/export-gov/webcasts.asp


Avoiding Export BlundersAvoiding Export BlundersAvoiding Export BlundersAvoiding Export Blunders

Conduct market researchConduct market researchConduct market researchConduct market research

Obtain export adviceObtain export adviceObtain export adviceObtain export advice

Consider a freight forwarderConsider a freight forwarderConsider a freight forwarderConsider a freight forwarder


Freight ForwardersFreight Forwarders Exporter-importer agent Can arrange to move cargo “dock-to-

door" Advise on transport modes, packing, and

costs (freight, port, consular, documentation, insurance, handling)

Handle paperwork Reserve cargo space on a vessel, aircraft,

train, or truck www.forwarders.com


http://www.forwarders.com/

Degree of Export Degree of Export InvolvementInvolvement

Direct exportingDirect exporting(sell to buyers)(sell to buyers)

Indirect exportingIndirect exporting(sell to intermediaries)(sell to intermediaries)

• Sales representatives

• Distributors

• Sales representatives

• Distributors

• Agents• Export management companies• Export trading companies

• Agents• Export management companies• Export trading companies



U.S. States Go GlobalU.S. States Go Global

Government AgreementsGovernment Agreements WTO Most Favored Nation (MFN) status Generalized System of Preferences (GSP) Caribbean Basin Initiative (CBI) Andean Trade Preference Act (ATPA)


USA Free Trade AgreementsUSA Free Trade Agreements North American FTA (NAFTA) Central American FTA (CAFTA-DR) U.S. – Israel FTA (ILFTA) U.S. – Jordan FTA (JFTA) The U.S. – Chile FTA (US-CFTA) The U.S. – Singapore FTA (US-SFTA)


Embargoed CountriesEmbargoed Countries Cuba Iran North Korea Sudan Syria Burma


Customs & Border Customs & Border ProtectionProtection Government agency Collects taxes/tariffs/duties Clears or restricts imports and exports Protects health and security www.cbp.gov


Restricted or Prohibited Restricted or Prohibited GoodsGoods What do you think are goods that the USA

Restricts? Prohibits?


Restricted or Prohibited Restricted or Prohibited GoodsGoods Cosmetics and prescription drugs Food and agricultural products Cuban cigars and Mexican marijuana Alcoholic beverages and firearms Radioactive materials and explosives Wildlife products (animals, furs, skins, shells) Obscene books Cultural Artifacts Matches, bongs, switchblades, lottery

tickets, and more...


QuotasQuotas What do you think are goods that the USA

restricts through the use of quotas?


Products with QuotasProducts with Quotas Olives, anchovies and tuna Brooms Ethyl alcohol Lamb Line pipe Milk and cream Cotton Wire rod


Customs PaperworkCustoms Paperwork Commercial or pro forma invoice Entry manifest or packing list Certificate of origin Evidence of right to make entry Consider using a customs broker


Choose USPS for Value < Choose USPS for Value < $2000$2000 Ease in clearing shipments Applicable duties collected by the letter

carrier Small packages ship inexpensively No need to clear shipments personally Value < $250 for some goods (e.g.

purses, gloves, footwear, toys, pillows) A courier can also provide seamless

delivery


Helpful WebsitesHelpful Websites Export.gov DOC.gov Fedstats.gov USITC.gov Trade.gov http://www.globalspeak.com/html/export-

gov/webcasts.asp




Export/Import FinancingExport/Import Financing


High-Risk ApproachesHigh-Risk Approaches

Advance paymentAdvance payment

Importer pays exporterImporter pays exporter for merchandisefor merchandise before it shipsbefore it ships

Advance paymentAdvance payment

Importer pays exporterImporter pays exporter for merchandisefor merchandise before it shipsbefore it ships

Open accountOpen account

Exporter shipsExporter ships merchandise andmerchandise and later bills importerlater bills importer

Open accountOpen account

Exporter shipsExporter ships merchandise andmerchandise and later bills importerlater bills importer


Documentary CollectionDocumentary Collection

Draft (bill of exchange) Bill of lading

Bank acts as intermediary without accepting financial risk

Document that orders an importer to pay an exporter a specified sum of money at a specified time

Contract between an exporter and shipperspecifying destinationand shipping costsfor merchandise


Documentary Collection ProcessDocumentary Collection Process


Letter of CreditLetter of Credit

Importer’s bank issues a document stating that the bank will pay the exporter when

exporter fulfills document’s terms

Irrevocable Revocable Confirmed


Letter of Credit ProcessLetter of Credit Process


Forms of CountertradeForms of Countertrade

Barter

Counterpurchase

Offset agreement

Switch trading

Buyback

Direct exchange without money

Sale to a country in return for promise of future purchase from it

Offset a hard-currency sale to a nationwith future hard-currency purchase

Sale by a company of an obligation to purchase from a country

Export of industrial equipment in return for products the equipment produces


ReviewReview Review of entry modes Overview of exporting and importing Government involvement Websites for help and information Paying and collecting payment


Customs brokers are licensed (e.g. power of attorney) to conduct customs transactions on behalf of others Bill of lading Airway bill Common carriers transport or take responsibility for transporting goods for the public and are typically liable for goods under their control Important Issues Merchandise description and tariff classification Country of origin Valuation Intellectual property violation Compliance with agency requirements (e.g. FDA, DOT, FTC, EPA) Policies that Constrain Imports Antidumping And Countervailing Duties Embargoes Other Notes Personal vs. Commercial Use Most commercial imports must be conspicuously and durably marked in English with the country of origin Foreign Trade Zones Avoid tariffs Assemble or reassemble products Hold stock for delivery Manufacture, ship, and tranship products Exporting Payment procedures Export restrictions Import legality Top 20 Metropolitan Area Exporters Ranked by First Half 2008 Export Value (in Millions of U.S. Dollars) Rank Metropolitan Area Fact sheets 2007 FH2007 FH2008 1 New York-Northern New Jersey-Long Island, NY-NJ-PA 80,852 39,721 49,955 2 Houston-Sugar Land-Baytown, TX 62,815 29,894 40,199 3 Los Angeles-Long Beach-Santa Ana, CA 54,433 25,985 29,946 4 Seattle-Tacoma-Bellevue, WA 53,893 25,056 27,058 5 Detroit-Warren-Livonia, MI 49,165 24,262 23,123 6 Chicago-Naperville-Joliet, IL-IN-WI 30,635 14,818 17,667 7 Miami-Fort Lauderdale-Miami Beach, FL 26,197 12,325 16,189 8 San Jose-Sunnyvale-Santa Clara, CA 28,210 13,945 14,042 9 Minneapolis-St. Paul-Bloomington, MN-WI 21,628 9,954 12,901 10 Boston-Cambridge-Quincy, MA-NH 21,031 10,356 11,548 11 Dallas-Fort Worth-Arlington, TX 22,079 10,657 11,473 12 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 18,882 9,071 11,133 13 San Francisco-Oakland-Fremont, CA 20,081 9,988 10,382 14 Portland-Vancouver-Beaverton, OR-WA 15,784 7,615 9,978 15 Cincinnati-Middletown, OH-KY-IN 15,359 7,255 8,781 16 San Juan-Caguas-Guaynabo, PR 14,642 6,958 8,720 17 San Diego-Carlsbad-San Marcos, CA 14,342 6,947 7,995 18 Atlanta-Sandy Springs-Marietta, GA 12,551 5,982 7,038 19 Peoria, IL 11,222 5,332 6,805 20 New Orleans-Metairie-Kenner, LA 8,449 3,710 6,693 http://ita.doc.gov http://export.gov

international business david j. boggs, ph.d. eastern illinois university importing and exporting

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