Exim Intro

8/3/2019 Exim Intro

1/29

1

Global EXIM Management

8/3/2019 Exim Intro

2/29

2

Export and Import Management

8/3/2019 Exim Intro

3/29

3

Overview

1. Organizing for Exports

2. Indirect Exporting

3. Direct Exporting

4. Mechanics of Exporting

5. Role of the Government in Promoting Exports

6. Managing Importsthe Other Side of the Coin

7. Mechanics of Importing

8. Gray Markets

8/3/2019 Exim Intro

4/29

4

Introduction

Exporting is the most popular way for manycompanies to become international.

Exporting is usually the first mode of foreign entry

used by companies.

Selling to foreign markets involves numerous highrisks, arising from a lack of knowledge about andunfamiliarity with foreign environments, whichcan be heterogeneous, sophisticated, and turbulent.

Manufactured goods accounted for almost 60percent of the exports of developing countries

8/3/2019 Exim Intro

5/29

5

Introduction (contd.)

Because of every export transaction, there is, by

definition, an import transaction as well.

Aside from differences between the procedure and

rationale for exports and imports, both are largelythe same the world over.

For successful development of export activities,

systematic collection of information is critical.

8/3/2019 Exim Intro

6/29

6

1. Organizing for Exports

Research for Exports: The first step is to useavailable secondary data to research potentialmarkets.

The identification of an appropriate overseasmarket involves the following criteria:

1. Socioeconomic characteristics

2. Political and legal characteristics

3. Consumer variables (lifestyle, preferences,culture, taste, purchase behavior)

4. Financial conditions

8/3/2019 Exim Intro

7/29

7

1. Organizing for Exports (contd.)

Export Market Segments

Homogeneous market segments and clusters

Geographical and psychographic segments

Issues of standardization vs. adaptation

8/3/2019 Exim Intro

8/29

8

2. Indirect Exporting

Indirect exporting involves the use of independentmiddlemen to market the firms products overseas.

Combination Export Manager (CEM)

Export Merchants Export Broker

Export Commission House

Trading Companies

Piggyback Exporting

8/3/2019 Exim Intro

9/29

8/3/2019 Exim Intro

10/29

10

3. Direct Exporting

Direct exporting occurs when a manufacturer or

exporter sells directly to an importer or buyer

located in a foreign market (see Exhibit 17-2).

Export Department

Export Sales Subsidiary

Foreign Sales Branch

8/3/2019 Exim Intro

11/29

11

4. Mechanics of Exporting

The Automated Export System (AES) on theInternet

the AES which was launched in October 1999,

enables exporters to file export information atno cost over the Internet. AES is a nationwidesystem operational at all ports.

Legality of Exports

Export license (general or validated license) Export Transactions

The terms of sale

8/3/2019 Exim Intro

12/29

12

4. Mechanics of Exporting (contd.)

Monitoring the transportation and delivery ofthe goods to the assigned party

Shipping and obtaining the bill of lading

Bill of lading

A straight bill of ladingA shippers order bill of lading

Commercial invoice

Freight forwarders

Terms of Shipment and Sale

INCOTERMS 2000 (International CommercialTerms)

8/3/2019 Exim Intro

13/29

13


Terms of Shipment

Ex-Works (EXW) at the point of origin

Free Alongside Ship (FAS)

Free on Board (FOB) Cost and Freight (CFR)

Carriage Paid To (CPT)

Cost, Insurance and Freight (CIF) Payment Terms

Advanced Payment

8/3/2019 Exim Intro

14/29

14


Confirmed irrevocable letter of credit

Unconfirmed irrevocable letter of credit

Documents Against Payment (D/P)

Documents Against Acceptance (D/A)Open account

Consignment

Currency Hedging

It is done through a banker or the firmstreasury in case there is a foreign risk in theexport transaction.

8/3/2019 Exim Intro

15/29

15

5. Role of the Government in

Promoting Exports

Export promotion activities generally comprise:

1. Export service programs

2. Market development programs

Export Enhancement Act of 1992 Export - Import Bank (Ex-Im Bank;

Tariff Concessions

Foreign Trade ZonesForeign Sales Corporation (FSC)

8/3/2019 Exim Intro

16/29

16


Promoting Exports (contd.)

American Export Trading Company

The Export Trading Company Act of 1982

Export Regulations:

The Trade Act of 1974The Foreign Corrupt Practices Act (FCPA) of

1977

COCOM (Coordinating Committee forMultilateral Exports)

Antitrust Laws

8/3/2019 Exim Intro

17/29

17


Promoting Exports (contd.)

Tariffs and local laws of foreign governments

which may include: tariffs, local laws relating

to product standards and classification, and

taxes.

8/3/2019 Exim Intro

18/29

18

6. Managing Importsthe Other

Side of the Coin

For organizations in the United States, importing

is considerably easier than for most firms in the

rest of the world.

About 60 percentof the worlds trade is still

denominated in U.S. dollars.

Most of the time, a U.S. importer does not have

to bother with hedging foreign exchangetransactions or with trying to accumulate foreign

currency to pay for imports.

8/3/2019 Exim Intro

19/29

19

6. Managing Importsthe Other

Side of the Coin (contd.)

Model of Importer Buyer Behavior

Stage 1. Need recognition and problemformulation (triggered by competition and

unavailability)Stage 2. Search (guided by countrycharacteristics, vendor characteristics, andinformation sources)

Stage 3. Choice (vendors evaluation andselection)

8/3/2019 Exim Intro

20/29

20

7. Mechanics of Importing

Steps in Importing:

Finding a bank that either has a branch in theexporters country or has a correspondent bank

Establishing a letter of credit with the bankDeciding on the mode of transfer of goods from

exporter to importer

Checking compliance with national laws of the

importing countryMaking allowances for foreign exchange

fluctuations

8/3/2019 Exim Intro

21/29

21

7. Mechanics of Importing (contd.)

Fixing liability of payment of importtransactions and warehousing

Import Documents and Delivery

Entry documents filed by the consignee: The bill of lading

Customs form 7533

Customs form 3461

Packing list

Commercial invoice

8/3/2019 Exim Intro

22/29

22


Also accompanied by evidence that a bond isposted with customs to cover any potentialduties, penalties, and taxes

For Special Permit for Immediate Delivery, useCustoms form 3461 for fast release afterarrival.

Import Duties in the United States:

Ad valorem dutySpecific duty

Compound duty

8/3/2019 Exim Intro

23/29

23


Antidumping import duty

Countervailing duty

Duty drawback:

Direct identification drawback

Substitution drawback

8/3/2019 Exim Intro

24/29

24

8. Gray Markets

Gray market channel refers to the legalexport/import transaction involving genuineproducts into a country by intermediaries otherthan the authorized distributors.

From the importer side, it is also known asparallel imports.

Three conditions are necessary for gray markets todevelop:

1. Products must be available in other markets.

2. Trade barriers must be low enough forparallel importers.

8/3/2019 Exim Intro

25/29

25

8. Gray Markets (contd.)

3. Price differentials among various marketsmust be great enough to provide the basic

motivation for gray marketers. Such price

differences arise for various reasons:

Currency fluctuations

Differences in market demand

Legal differences

Opportunistic behavior

Segmentation strategy

8/3/2019 Exim Intro

26/29

26


How to Combat Gray Market Activity (

Reactive Strategies:

Strategic Confrontation

Participation Price cutting

Supply interference

Promotion of gray market product

limitations

Collaboration

8/3/2019 Exim Intro

27/29

27


Acquisitions

Proactive Strategies:

Product/service differentiation and

availability

Strategic pricing

Dealer development

Marketing information systems

Long-term image reinforcement

8/3/2019 Exim Intro

28/29

28


Establishing legal precedence

Lobbying

8/3/2019 Exim Intro

29/29

29

Copyright John Wiley & Sons, Inc., 2004

Date post:	07-Apr-2018
Category:	Documents
Upload:	sanjeet-kumar
View:	224 times
Download:	0 times