Chapter 14
Export and Import Practices
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
• LO1: Identify the sources of export counseling and
support.
• LO2: Discuss the meaning of the various terms
known as Incoterms.
• LO3: Identify some sources of export financing.
• LO4: Describe the activities of a foreign freight
forwarder.
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Learning Objectives
• LO5: Outline, the export documents required.
• LO6: Identify import sources.
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Reasons Companies Hesitate to
Export
Preoccupation with vast U.S. market
Reluctance to assume risk of unknown
• Identification of foreign markets
• Payment and financing procedures
• Export procedures
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Sources of Export Counseling
Federal and state depts. of commerce
Banks
Small Business development centers
Private consultants
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Develop Marketing Plan
Does a market exist for product?
Sources of export information,
counseling and support
• Export.gov – Dept. of Commerce
• International Trade Administration
• World Trade Centers Association—private sector
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Export Marketing Plan
Similar to domestic marketing plan
Specific about
• Markets to be developed
• Marketing strategy and tactics
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Common Mistakes
made by New Exporters
1. Don’t obtain export counseling.
2. Lack top management’s commitment.
3. Careless selection of sales rep and distributors.
4. Chasing orders, not following a plan.
5. Neglect exports when home market booms.
6. Don’t treat international as equal to domestic.
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Common Mistakes
made by New Exporters
7. Generalize one successful technique acr. mkts.
8. Unwilling to localize (regulations and culture).
9. Failure to provide after sale in local language.
10. Won’t use export mgmt co.
11. Won’t consider licensing or JVs.
12. Don’t provide servicing.
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Incoterms
General transportation Incoterms
Ex Works: Goods available at named factory
FCA: Free carrier at named place
CPT: Carriage paid to named destination
CIP: Carriage and insurance paid to named place
DAT: Delivered at terminal
DAP: Delivered at place named
DDP: Delivered, duty paid
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Incoterms
Water transport Incoterms
FAS: Free alongside ship
FOB: Free on board
CFR: Cost and freight to destination port
CIF: CFR plus insurance to destination port
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Incoterms
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Payment Procedures
Payment Terms
• Cash in advance—adv to seller
• Open account—adv to buyer
• Consignment—mjr adv to buyer
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Letter of Credit (L/C)
Document issued by buyer’s bank
• Promise to pay seller specified amount
when bank has received stipulated
documents
• confirmed—Seller’s bank agrees to honor
• Irrevocable—once sellers accepts, not
changeable
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L/C
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Export Documents
Air Way Bill
Bill of lading issues by air carrier
Pro Forma Invoice
Exporter’s formal quotation
Export draft
Unconditional order drawn by seller
on buyer (sight or at future time)
that must be paid before buyer
receives shipping documents
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L/C Transaction
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Payment Risk/Cost Trade-Off
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Export Financing, private
Banker’s acceptance
Commercial paper
Factoring
Discounting account receivable
Forfaiting
Purchasing account receivable; risk born by forfaiter
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Export Financing, public
Ex-Im Bank
Overseas Private Investment Corporation
Discounting account receivable
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Other Export incentives
Foreign trade zones
Free trade Zones
Customs drawbacks
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Export procedures
Foreign freight forwarders
Agents for exporters
Prepare documents
Book space
Advise on markets, regulations, transport,
packing
Supply cargo insurance
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Export documents
Shipper’s export declaration
Validated/general export license
Export bill of lading
Insurance certificate
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Collection documents
Commercial invoice
Consular invoice
Certificate of origin
Inspection certificate
CE
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Export shipments
Container
LASH
RO-RO
Air freight
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Sea-Air Cost Comparison
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Ways to Identify Import Sources
Similar imported products are in the market
Inquiry at consulate or embassy
World Trade Centers’ electronic bulletin board
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Customs House Broker
Similar to foreign freight forwarders, for imports
Brings goods through customs
Tracks import quotas
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