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Learning Objectives: Welcome To Class of Export Import Practices Dr. Satyendra Singh
Learning Objectives: Welcome To Class of Export Import Practices Dr. Satyendra Singh
Welcome to class of
Export Import Practices
Dr. Satyendra Singh
Learning Objectives
Objectives:
Why Export?
Reasons to export
To serve markets where the firm has no or limited production
facilities
To satisfy a host governments requirement that the local
subsidiary have exports
To remain price-competitive in the home market
To test foreign markets and foreign competition
inexpensively
Reasons to export?
To offset domestic markets cyclical sales
To achieve additional sales
To extend a products life cycle
To respond strategically to foreign competitors
To achieve the success the firms management has
seen others achieve
To improve the efficiency of manufacturing equipment
Lack of knowledge
Terms of Sale
INCOTERMS
Universal trade terminology developed by
the International Chamber of Commerce
Ex-Works
Risk passes at factory door
US equivalent: FOB (free on board)
Terms of Sale
FAS
Free alongside ship, port of call
CIF
Cost, insurance, freight, foreign port
CFR
cost and freight, foreign port
DAF
Delivered at frontier
Payment Procedures
Payment terms offered by exporters to foreign
buyers
Cash in advance
When credit standing of the buyer unknown or uncertain
Open account
When sale is made on open account
Seller assumes payment risk
Offered to reliable customers in economically stable countries
Payment Procedures
Consignment
Goods shipped to buyer; payment made when sold
Payment risk assumed by seller
Payment Procedures
Letter of credit
Confirmed L/C
Correspondent bank in sellers country agrees to
honor issuing banks L/C
Irrevocable L/C
Once the seller has accepted L/C, buyer cannot alter
or cancel it without sellers consent
CFR Cost, Freight, Foreign Port; FAS Free Along Side leave it there after clearing for export
FOB Seller will load on board after clearing for export (Cost and risk shared INCOTERMS 2010)
FCA Free Carrier clear for export and handover to named carrier
CPT Carriage Paid To seller pays named place of delivery
In 2010, eliminated!
DES, DAF, DEQ, DDU
DEQ/DES Delivered Ex Quay/Ship named port of delivery
DDP/DDU Delivered Duty Paid/unpaid ; EXW Just keep outside/warehouse
CIF insurance for maritime; DES CIF + insurance for goods as well
Documents
Air Waybill
A bill of lading issued by an air carrier
Export Financing
Private Source Commercial Banks
Bankers acceptance
Time draft with maturity of less than 270 days that has been
accepted by the bank on which the draft was drawn, thus
becoming the accepting banks obligation; may be bought and sold
at a discount in the financial markets like other commercial paper
Factoring
Discounting an account receivable without recourse
Export Financing
Forfeiting
Purchasing without recourse an account receivable
whose credit terms are longer than the 90 to 180 days
usual in factoring; unlike factoring, political and transfer
risks are borne by the forfeiter
Export Financing
Public Sources
Export-Import Bank (Ex-Imbank)
Principal government agency that aids American exporters by means of
loans, guarantees, and insurance programs
Customs drawback
Rebate on customs duties
Export Procedures
Foreign freight forwarders act as agents for exporters
Prepare documents
Book space
Offer advice about
Markets
Regulations
Transportation
Packing
Shipping Documents
Shippers Export Declaration
U.S. Department of Commerce form to control
export shipments and record export statistics
Shipping Documents
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
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
Export Shipments
Containers
Air Freight
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
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
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
Importing
Bonded warehouse
Area authorized by customs for storage of goods on which
payment of import duties is deferred until goods are removed
Import Duties
Importer must know how U.S./Canada calculates import duties