PROSPERITY THROUGH TRADE TM
IMPORTING & EXPORTING
A BEGINNER’S GUIDE TO
WHY PURSUEINTERNATIONAL TRADE?
• Grow your bottom line
• Smooth business cycles
• Use production capabilities fully
• Defend your domestic market
• Increase your competitiveness in all markets
• Expand consumer choices and support
• Explore new travel opportunities
• Diversify consumption
EXPORT / IMPORT
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STEPS
8
EXPORTING RESOURCES
• World Trade Center Denver (WTC)• Colorado Office of Economic Development &
International Trade (OEDIT)• Colorado Department of Agriculture• United States Export Assistance Center
(USEAC)• Small Business Administration (SBA)• Small Business Development Center (SBDC)• Other Chambers of Commerce• Other Trade Associations
IMPORTING RESOURCES• World Trade Centers (WTCs)• United States Customs and Border Protection • United States International Trade Commission• International Trade Administration• Foreign Embassies and Consulates• Chambers of Commerce (American and Foreign)• Industry Trade Associations• Customs Brokers
PROSPERITY THROUGH TRADE TM
DEVELOP ASTRATEGY 1
STEP
ARE YOU REALLY READY?
• Is management committed?– Biggest Challenge Corporate Culture
• What is your value proposition?• Can you increase capacity to meet demand?• Are you willing to reorganize your business?• Are you willing to retrain your workforce?
Develop a Strategy
If you intend to export…
DO YOU UNDERSTANDYOUR PRODUCT?
If you intend to import…
• Have you chosen the right product from the right place?
• Can the product be imported?• Are there quotas or other trade restrictions?• Do you need a special permit or license?• What is your value proposition?• Will it be advantageous to import vs. produce?
Develop a Strategy
PROSPERITY THROUGH TRADE TM
MARKET RESEARCH 2
STEP
GETTING STARTED WITHMARKET RESEARCHObtain trade statisticsIdentify potential marketsUnderstand least promising marketsPrioritize most promising marketsExamine product/service trendsResearch the competitionAnalyze marketing strategiesIdentify any barriersIdentify any incentives
Market Research
RESEARCH METHODS• Keep apprised on world events/news
• Analyze trade and economic statistics• Seek further advice from others
(e.g. trade associations, government officials)
• Check online trade tools – new.export.gov (Country Commercial Guides, Market
Research Reports)– A to Z World Trade– alibaba.com– Sourcing Databases
Market Research
PROSPERITY THROUGH TRADE TM
FINDING BUYERS OR SUPPLIERS 3
STEP
SALES CHANNEL CONTINUUM
Sales Representatives
Agents
Distributors
Foreign Retailers
Direct End Users
Exporter’s Contact w/CustomerLess More
Finding Buyers or Suppliers
As an importer, you will be one of these channels.
FINDING THE RIGHT PARTNERS
Buyers…• Goldkey Service• Industry trade shows• Advertising in industry
publications• Training or seminars in key
markets• Observe other firms with
complementary products• Observe competition• World Trade Centers
Association• Online
Suppliers…• Foreign Embassies,
Consulates
• Chambers of Commerce
• Trade Associations
• Trade Shows
• Trade Missions
• Online Resources
• Buying Agents
Finding Buyers or Suppliers
DUE DILIGENCE• Ensure partners are reliable and credible
– Coface Credit Reports, Country Credit Ratings (WTC Denver)– Tour the Factory– Hire Independent Inspectors (e.g. SGS)– Build in Safeguards in Payment Schedule– U.S. Government’s Goldkey Service (Distributor Due Diligence)
• Current status, history of the company• Background of current officers• Trade and bank references
Can they meet your requirements?
Finding Buyers or Suppliers
PROSPERITY THROUGH TRADE TM
MODIFY THE PRODUCT OR SERVICE 4
STEP
CONSIDER…• Electrical standards
(phases, cycles, voltages)
• Metric system(instruction manuals)
• Modifications for shipment• Installation, Warranties and
After-Sales Service• Labeling standards• Standards of living• Geographic and weather
conditions• Intellectual Property
Considerations
• Patent, Trademark, and Copyright Law
• Buyer preferences• Local customs
(religious practices, use of leisure time, taste)
• Language differences• Branding
– Is your product/service distinguishable?
– Are colors/numbers offensive in the local culture?
– Are local tastes and knowledge considered?
Modify the Product or Service
LABELING STANDARDS
• Country of origin• Regulatory Requirements
(FDA, Clothing labels)
• Contents• Ingredients
(appropriate language)
Modify the Product or Service
PROSPERITY THROUGH TRADE TM
LOGISTICS 5STEP
TRANSPORTATION METHODS
• Which method is most reliable?(consult your customs broker or freight forwarder)– Air– Ocean– Truck– Rail– Courier (e.g. FedEx,
UPS, DHL, others)– Mail (USPS)
Logistics
PACKING
• Pack in strong containers appropriate for product
• Evenly distribute weight• Place goods on pallets• Ensure packing material
is moisture-resistant• Straps, seals, and shrink-wrap to safeguard• Adhere to mandatory hazardous materials labeling• Comply with wood-packaging regulations
Potential Problems
– Breakage
– Moisture
– Security
– Excess Weight
Logistics
DOCUMENTATION
Consider a freight forwarder and/or customs broker to help prepare documents
Common Documents
• Air Waybills
• Bill of Lading
• Commercial Invoice
• Consular Invoice
• Certificate of Origin
• NAFTA Certificate of Origin
• Inspection Certificate
• Dock/Warehouse Receipt
• Shippers Export Declaration
• Export License (some products)
• Insurance Certificate
Logistics
• Define obligations, risks, and costs of the buyer and seller involving the delivery of goods that makeup the export transaction
• DIFFERENT THAN DOMESTIC TERMS (Uniform Commercial Code)
• INCOTERMS 2010 updated January 2011
Logistics
E Term
F Terms
C Terms
D Terms
Risk ContinuumBuyer more
Responsible
Seller more
Responsible
Logistics
CARGO INSURANCE• If not insured by the shipper,
– Obtain your own policy– Insure through a Customs or Insurance Broker
• Ocean Shipments – General Average
(when damage occurs, everyone shares)
• Air Shipment • Courier Insurance
Logistics
THIRD-PARTY LOGISTICS PROVIDER
Freight Forwarders
• Agents for moving cargo to an overseas destination
Customs Brokers
• Responsible for clearing products through customs when shipping globally
Many freight forwarders are also customs brokers
Couriers – handles all door-to-door services and clearing of single package or lighter goods
Logistics
PROSPERITY THROUGH TRADE TM
COMPLIANCE 6STEP
U.S. EXPORT CONTROLS• National Security Export Controls
– Department of State – ITAR• Bureau of International Security and Non-proliferation
– Nonproliferation Sanctions• Directorate of Defense Trade Controls
– AECA Debarred List
– Department of Commerce – EAR• Bureau of Industry & Security (BIS)
– Denied Persons List– Unverified List– Entity List
– Department of the Treasury• Office of Foreign Assets Control (OFAC)
– Specially Designated Nationals List– Embargoed Countries
Compliance
U.S. IMPORT CONTROLS
• Customs Border Protection– part of the Department of Homeland Security
• International Trade Administration• U.S. International Trade Commission
Compliance
FOREIGN CORRUPT PRACTICES ACT (FCPA)
• Prohibits bribery of foreign officials by U.S. firms and U.S. citizens to obtain an improper business advantage
• Two provisions:– Anti-bribery provisions– Accounting provisions
Compliance
PROSPERITY THROUGH TRADE TM
PRICING, PAYMENT, & FINANCING 7
STEP
PAYMENT TERMSCash in Advance
Letter of CreditDocumentary
Collection
Open Account
Risk to ExporterLess More
Risk to ImporterMore Less
Pricing, Payment, & Financing
EXPORT FINANCING
Consult the following…
• Banker• U.S. Department of Commerce Export
Assistance Center• Small Business Administration• Export—Import Bank• Colorado Office of Economic Development &
International Trade• Private Credit Insurance
Pricing, Payment, & Financing
PROSPERITY THROUGH TRADE TM
AFTER-SALES SERVICE 8
STEP
CUSTOMER SERVICEDon’t Make it an Afterthought
• Successful firms make it a priority to– Create systems to properly respond to inquiries
in their customer’s language– Differentiate between domestic and international
sales and support– Build positive relationships with partners– Provide excellent, ongoing customer service
Who is your customer going to call when your product breaks or service fails?
After-Sales Service
CROSS-CULTURAL PROTOCOL
• Answer queries with tact and professionalism
• Be understanding and patient with your customers
• Take time to develop personal relationships
• Learn at least some of the language if you can
After-Sales Service
SALES CONTRACT
• Consider…– Modification of Product– Pricing – Dumping, Countervailing– Incoterm– Use of Third-Party Logistics Provider– Packing, Labeling, and Shipping
Requirements– Payment Terms– After-Sales Service
EXPORT / IMPORT
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STEPS
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