Why Export ?

Dr. Gauri S. GuhaASU, Jonesboro

Global signals to globalize

• Examples of export led growth:– Japan: 3rd party resources, value added exports– Asian Tigers (S Korea, Singapore, HK, Taiwan)– Sleeping giants awake: India, China

• Removal of barriers to trade– Electronic Commerce = global outreach– Internet = instant knowledge

• Global competitiveness– Great survival strategy– Stimulates innovation

Gains from trade – your region

• Revenue – Direct income earner– Indirect benefits of higher visibility

• Spillover effects in region– Jobs, higher wages– Higher local procurement

• Cash-in comparative advantage– Resource ownership– Know-how

Gains from trade – your company

• International demand for your product(can also create demand)

• Higher prices abroad(less supply, weak dollar)

• Local competition = low margins(export lets you “stay-in-the-game”)

• Export revenue = leverage local market share(if you don’t use it, your competitor may!)

• Export market can stabilize year-round production(beat the seasonality of demand)

Look before you leap!

On average new exporters generate $2m, but getting into this business requires…

• Initial market research expenses

• Knowing many new procedures– Foreign exchange– Lines of credit– Shipping methods– Standards, certifications

So what’s new on the menu?

A. Sealing the deal

B. Dealing with the seals!

A. How to seal the deal

1. Identify buyer, negotiate contract

2. Product transportation and risk of loss

3. Select of harmonized system number and tariff c

onsideration

4. Forms of payment

5. Documentation for your export sale

A-1. Contracting…

• Initiate contact

– Market research

– Market visit

– Trade fairs, expos

• Contract - Offer - Acceptance

• UN convention on contracts for international sales

• Determine your price

A-2. Transportation

• Incoterms 2000: transportation and risk of loss

• Freight Forwarders

• Ocean Carriers and Shipping Rates

• Air Carriers and Shipping Rates

• Surface (Truck and Rail)

• Insurance

A-3. Tariff considerations

• Choosing a Schedule B number

• How to reduce your Foreign Purchaser's Tariff

Liability (so that you get a price advantage

• Dispute resolution

• Other contract considerations

A-4. Payment

• Letter of Credit

• Other terms of payment

• Hedging against FOREX risk

A-5. Documentation

• Commercial Invoice • Packing List • Air Waybill • Dock Receipt, Warehouse Receipt • Bills of Lading (Inland and Ocean) • Insurance Certificate • Shipper's Letter of Instructions (SLI) • Certificates of Origin • Consular Invoice, Customs Invoice

Now to deal with the regulations!

1. United states government export regulations

2. Copies of Documents and Distribution

3. Government Security Initiatives

4. Air Shipment Security Requirements -

Federal Aviation Administration

5. Certificate Issued Upon Completion.