BASICS

OF
INTERNATIONAL TRADE

ŞEFİK ERGÖNÜL

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 BASICS OF
INTERNATIONAL TRADE

What shall we learn

• Basic concepts
• Basic definitions
• Most common mistakes
• Negligences

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 OFFER >< PRICE

• What is an offer?
• Components of an offer?
• What is a price?
• Structure of the price?

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 OFFER >< PRICE
What is an offer?
• It is an bunch of suggestions
• Submitted by the seller to the buyer
• To be agreed upon
• Including all details of a
sales/purchase transaction
• i.e. Product specifications, Packaging,
Price, Delivery Terms
• Payment Terms, Shipment,
Payment periods, etc.
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 COMPONENTS
OF AN OFFER
• Product Specifications
• Packaging
• Shipment
• Payment terms and Due date
• Delivery Terms and Period
• Guarantees
• PRICES e.t.c.

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 OFFER >< PRICE
What is a Price?

• It is the value
• That the seller is asking
• For what he is offering to the buyer

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 OFFER >< PRICE

According to What a price is accepted?

• If the seller delivers

A product or Service
• What is the buyer purchasing?
• According to What
the buyer evalutaes the price?
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 COMPONENTS
Of PRICE

1. Product: Raw material, semi-finished,

materials
2. Labor: Direct, Indirect
3. Energy : Direct, Indirect
4. Overheads: Direct, Indirect
5. Finance
6. Profit e.t.c.
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 INTERNATIONAL TRADE
CONCEPTS

Payment Terms (1)

• Cash in advance
 Partially or Totally
 Cash, Raw Material, Labor
• Cash Against Goods
• Sales on Consignment
• Barter

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 INTERNATIONAL TRADE
CONCEPTS

PAYMENT TERMS (2)

• Against Documents
 L/C
 At sight, Confirmed,
Deferred, Red Clause, Rotating,
Divisible / Transferable
 Cash Against Documents
 Cash, Deferred,
Deferred / Bank Guaranteed

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 INTERNATIONAL TRADE
CONCEPTS

DELİVERY TERMS

What is INCOTERMS

Components =

Risk / Expenses/ Transfer Points

Differences of INCOTERMS 2000 / 2010

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 INTERNATIONAL TRADE
CONCEPTS

Delivery Terms
EXW: Ex-Works
RULES FOR ANY MODE or
MODES OF TRANSPORT

FCA : Free Carrier

CPT : Carriage Paid to
CIP : Carriage and Insurance Paid to
DAT: Delivered at Terminal
DAP: Delivered at Place
DDP: Delivered Duty Paid

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 INTERNATIONAL TRADE
CONCEPTS
INLAND WATERWAY TRANSPORT

DELIVERY TERMS
RULES FOR SEA and

FAS: Free Alongside Ship

FOB: Free On Board
CFR: Cost and Freight
CIF: Cost Insurance and Freight

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 INTERNATIONAL TRADE
CONCEPTS

BASIC DOMESTIC DOCUMENTS

• INVOICE IN LOCAL LANGUAGE
For Customs Operations
• PACKING LIST
If product variety and
number of packaging at high quantity
• CUSTOMS DECLARATION
Ürünün yurt dışı edilebilmesi için (GÇB)

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 INTERNATIONAL TRADE
CONCEPTS

DOCUMENTS FOR ABROAD

• INVOICE
Proforma, Commercial
• CERTIFICATE for ORIGINS
Cert.Orig., ATR, Form A, Euro1, EuroMed
• PACKING LIST
Number nad Kind of Packages
• BILL of LADİNG
Overland, Sea, Air, Railway

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INTERNATIONAL TRADE
CONCEPTS

OTHER DOCUMENTS
Phytosanitary Certificate
Animal Health Certificate
Khosher and Halal Certificate
Control Certificate
Inspection Certificate
Analyses Certificate
Insurance Policy
Radiation report

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 EXPORT
MISTAKES

• Try to gain without expending

• Acting upon mouth-to-mouth information
• Under-estimating the value of information
• Not appointing an export responsible
• Not creating awareness for export
• Trying not for solutions but
searching for the guilty

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 EXPORT
MISTAKES

• Starting with wide area

• Inaccurate agent/distributor selection
• Shouldering domestic market with export
• Same Product / Same Startegy> All Markets
• Underestimating Cultural Differences
• Underevaluating language and
communication difficulties
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 EXPORT
MISTAKES

• Let’s start, may get organized on the way

• Underestimating Technical Differences
• Unawareness on legal requirements
• Who he comes, accepts my terms
• Not taking risk and inability to manage risks
• Logic of nonsense;
“ this goes well or nothing is better “
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 NEGLIGENCES

• Not to train onself and the team

• Not to attend informative meetings
• Government supports
• Visiting clientele
• Promotional material
in the language of target market
• Ex-Im Bank supports
• Bilateral Agreements
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