International bussiness the challenge of global competition 11e chapter 17

chapter seventeen Export and Import Practices McGraw-Hill/Irwin International Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc All rights reserved Learning Objectives  Explain why firms export and problem areas of exporting  Identify the sources of export counseling and support  Discuss the meaning of the various terms of sale 17-3 Learning Objectives  Identify some sources of export financing  Describe the activities of a foreign freight forwarder  Understand the kinds of export documents required  Identify import sources  Explain the Harmonized Tariff Schedule of the United States (HTSUSA) 17-4 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 subsidiary have exports – To remain price-competitive in the home market – To test foreign markets and foreign competition inexpensively 17-5 Reasons to export? cont’d – – – – – To offset domestic market’s cyclical sales To achieve additional sales To extend a product’s life cycle To respond strategically to foreign competitors To achieve the success the firm’s management has seen others achieve – To improve the efficiency of manufacturing equipment 17-6 Reasons not to Export • Two major reasons – Preoccupation with the vast American market – Reluctance to become involved in a new, unknown and therefore risky operation • Not active in international markets due to – Lack of knowledge • Locating foreign markets • Payment and financing procedures • Export procedures 17-7 Sources of Export Counseling • Trade Information Center (TIC) – The federal government has to set this up as a first stop for information – Visit http:// www.export.gov/exportbasics/ticredirect.asp • International Trade Administration (ITA) – Offers a wide range of export promotion activities that include • Market Access and Compliance (MAC) • Trade Development • U.S and Foreign Commercial Services (US&FCS) 17-8 Sources of Export Counseling • Small Business Administration (SBA) – The office of International Trade of the SBA works through • Small Business Administration offices • Score Program • Small Business Development Centers • Centers for International Business Education and Research (CIBERs) 17-9 Show and Sell • Trade events to facilitate international trade – U.S pavilions – Trade missions – Product literature center – Reverse trade missions 17-10 Export Financing cont’d • Public Sources – Export-Import Bank (Ex-Imbank) • Principal government agency that aids American exporters by means of loans, guarantees, and insurance programs – Overseas 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 revolutions 17-24 Other Public Incentives • Foreign Trade Zone – Duty-free area designed to facilitate trade by reducing the effect of customs restrictions • Free Trade Zone – An area designated by the government as outside its customs territory • Customs drawback – Rebate on customs duties 17-25 Export Procedures • Foreign freight forwarders act as agents for exporters – Prepare documents – Book space – Offer advice about • Markets • Regulations • Transportation • Packing – Supply cargo insurance 17-26 Official Procedures for Importing and Exporting 17-27 Shipping Documents • Shipper’s Export Declaration – U.S Department of Commerce form to control export shipments and record export statistics • Validated export license – Document issued by the U.S government authorizing export of strategic commodity or shipment to unfriendly country • General Export License – Covers export commodities for which validated license not required; no formal application required 17-28 Shipping Documents, cont’d • Export Bill of Lading – Contract of carriage between shipper and carrier: straight bill of lading is nonnegotiable; endorsed “to order” bill gives holder claim on merchandise • Insurance Certificate 17-29 Collection Documents • Commercial invoice • Include origin of goods, export packing marks, and clause stating goods will not be transshipped – Consular invoice • Purchased from the consul and prepared in local language – Certificate of origin • Issued by local Chamber of Commerce – Inspection certificate • Frequently required for grain, food, live animals 17-30 Export Shipments  Containers  Reduce theft and handling costs  LASH (lighter aboard ship)  Barges for shallow inland waterways  RO-RO (roll on-roll off)  Can drive onto vessel  Air Freight  Can arrive in one day 17-31 Export Shipments • Containers – Reduce theft and handling cost • LASH (lighter aboard ship) – Barges for shallow inland waterways • RO-RO (roll on-roll off) – Can drive onto vessel • Air Freight – Can arrive in one day 17-32 Sea-Air Total Cost Comparison, Shipment and Spare Parts 17-33 Air Freight • Total cost may decrease • Either the firm or the product may be airdependent • The market may be perishable • Competitive position may be strengthened 17-34 Importing • Ways to identify import sources – If similar imported products are already in the market, visit a retailer and examine the product label – If the product is not being imported, call the nearest consul or embassy of that country – Use the electronic bulletin boards of the World Trade Centers 17-35 Customhouse Broker • Independent business that handles import shipments • Acts as agent for importer – Customhouse broker brings goods through customs – May arrange transportation for goods after they leave customs – Need to know when imports are subject to import quotas and how much of the quota has been filled 17-36 Importing • Bonded warehouse – Area authorized by customs for storage of goods on which payment of import duties is deferred until goods are removed • Automated Commercial System (ACS) – Used to track, control, and process all commercial goods imported into U.S • Import Duties – Importer must know how U.S calculates import duties • The Harmonized Tariff Schedule of U.S (HTSUSA) – American version of the Harmonized System used worldwide to classify imported products 17-37 Page from the HTSUSA 17-38 ... problem areas of exporting  Identify the sources of export counseling and support  Discuss the meaning of the various terms of sale 17- 3 Learning Objectives  Identify some sources of export financing... Administration (SBA) – The office of International Trade of the SBA works through • Small Business Administration offices • Score Program • Small Business Development Centers • Centers for International. .. achieve the success the firm’s management has seen others achieve – To improve the efficiency of manufacturing equipment 17- 6 Reasons not to Export • Two major reasons – Preoccupation with the vast