Professional Documents
Culture Documents
Learning Objectives
17-2
Learning Objectives
• 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
17-4
Reasons to export? cont’d.
17-5
Reasons not to Export
17-8
Show and Sell
17-9
Export Marketing Plan
• Specific about
– Markets to be developed
– Marketing strategy for serving them
– Tactics to make the strategy operational
17-10
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)
17-11
Terms of Sale, cont’d.
– FAS
• Free alongside ship, port of call
– CIF
• Cost, insurance, freight, foreign port
– CFR
• cost and freight, foreign port
– DAF
• Delivered at frontier
17-12
Payment Procedures
– Consignment
• Goods shipped to buyer; payment made when
sold
• Payment risk assumed by seller
– Letter of credit (L/C)
• Document issued by buyer’s bank
– Promise to pay seller specified amount
when bank has received documents
stipulated in letter of credit
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Payment Procedures, cont’d.
• Letter of credit
• Confirmed L/C
– Correspondent bank in seller’s country
agrees to honor issuing bank’s L/C
• Irrevocable L/C
– Once the seller has accepted L/C,
buyer cannot alter or cancel it without
seller’s consent
17-15
Sample Letter of Credit
17-16
Letter of Credit Transaction
17-17
Documents
• Air Waybill
– A bill of lading issued by an air carrier
17-18
Export Payment Documents
• Export draft
– Unconditional order drawn by the seller that
instructs buyer to pay the draft’s amount on
presentation (sight draft) or at an agreed future
date (time draft) and that must be paid before
buyer receives shipping documents
17-19
Payment Risk/Cost Trade-Off
17-20
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
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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
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Other Public Incentives
17-24
Export Procedures
17-26
Shipping Documents
17-27
Shipping Documents, cont’d.
17-28
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
17-29
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
17-30
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
17-31
Sea-Air Total Cost Comparison,
Shipment and Spare Parts
17-32
Air Freight
17-33
Importing
17-34
Customhouse Broker
17-35
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
17-36
Page from the HTSUSA
17-37