14481503 International Business and Trading Indusrty Leather Coordinators

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International Business1. Complete detail of organization including mailing address and contact numbers + email2. Countries exported3. Commodity of organization4. Document used in export and import5. Purpose of each documents 6. Role of bank for import and export 7. Role of freight forwarders and custom clearing agents in import/export8. L/C and its types used in the organization9. Methods of receiving and sending money used by the org.10. Role of chamber of commerce

1. Leather Coordinators, a leading organization in Garment sector, is my selection for this report assignment.The establishment of LC in 1989 was in the shape of a single building near Pull Bazar with a total staff of 25, later on in 1991 it shifted to Tufail Shaheed Road and there the business expanded with a new building especially for manufacturing of leather garments.It has been establishing its roots with great care and it is the only garment industry situated at Sahiwal.It is actually a part the whole set-up which consists of a tannery and a garment manufacturing industry, both are situated on the same land and the tannery is the place which provides the industry with the leather that is cleaned with various chemicals.Initially the main objective of the organization was manufacturing and export leather goods. Mr. Sheik Muhammad Younis is the sole proprietor LC. Sheik Muhammad Younis is the Pioneer of leather industry at Sahiwal which is exporting the leather products. Muhammad Younis started his business with the tannery process. AchievementsWith the passage of time Leather Coordinator introduced the new era for the whole industry, so in 1995 they established a new stitching unit at pull bazaar Sahiwal with the help of only 10 stitching machines.And now leather Coordinator have 350 machines those are producing the 20,000 garments per month. Leather Coordinator is

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a quality exporting firm which has the ISO 9001 award, which shows its best quality aims.

Mission Statement:The organization where each grain & stitch is watched carefully.

Mailing List:Leather Coordinators,Tufail Shaheed RoadSahiwal

Contact numbers:Phn. numbers:0092-40-4220292 / 4Fax numbers: 0092-40-4461263

Email address:impexp@leathercoordinator.com

2. Following are the countries where Leather Coordinators is doing business with:

For EXPORT:1. United Kingdom2. France3. Germany4. Netherlands5. Hong Kong6. China7. Taiwan8. United States of America

For IMPORT:1. Germany2. Netherlands3. South Africa4. Hong KongIB report Linta Sama

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5. United States Of America6. Netherlands7. France8. Italy9. Belgium10. Turkey11. Spain

Following are the major import quality firms.

1. Red Skin (France)2. M.D.K (U.K) 3. Main Pol (Germany)

Parties include:REDSKINSARTUROMDKGURTEXHM MODENCRUSEMILESTONEJCC DONDERSDEKKERSARMALEDER INTINTERSTARSERGE PARIENTEVENT CONVERTAD INTERNATIONALNOBLELEATHER TEXA & S

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With over 350 stitching machines, LC is producing about 20,000 pieces per month of fashion garments like Polo, Rugby and Henley shirts along with basic garments.

3. Commodities being produced by this industry is are Leather and leather products.

Product linesAs the part of its long term plan the initial product line was that. Mans Jackets Womens Jackets Children Jackets Leather Trousers leather Waistcoats Leather Skirts Motorbike JacketsGarment types:Tops:(1) Crew neck(2) Polo(3) Rugby(4) Hood(5) Qzp(6) Full zipper(7) Raglan(8) Tank top(9) Henley(10) High neck(11) Mock neck(12) V-neck(13) V-insert(14) Sleeve less

Bottoms:IB report Linta Sama

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(1) Short(2) Boxer brief(3) Boxer short(4) PantFor Imports, Leather Coordinators is actually including commodities like:1- Chemicals for Processing and cleaning raw hides.2- Raw Hides

4. Documents used:&5. Brief description of the documents used:

Firm must be registered in export promotion bearue. If a firm has national tax number then that specific firm can export its products without registration.Then company prepares its products samples and shows to different buyers who want to purchase it. If the samples are up to the mark then they give sample order (trial order) to the company, the order consist of minimum quantity means only to check that the product is according to the sample. Buyer check the quality, color, dye, reactive dye, yarn dye, shrinkage, weight in grams, size, and freight charges etc. Freight charges mean who will bear the charges buyer or seller and what its effect on price per unit. Negotiations on price, when the price settled the buyer place the order.

To fulfill an order, the meeting held between managers to check the requirement. Arrange yarn Knitting Dyeing Drying Cutting Stitching Labeling Pressing Packing Packing list Shipment

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Prepare document, one copy send to Air port or sea port. Custom officers check these documents for clearance.Air way bill ----------- in case of air portBill of lading ----------in case of sea port

Term of shipment1. Freight on board (FOB)Freight charges from Faisalabad to Karachi are bear by factory other charges bear by the buyer.

2. Carriage and Freight (C & F)From factory to buyers destination port charges born by the seller.

3. Carriage, Insurance and Freight (CIF)From factory to buyers destination port charges born by the seller including insurance expenses. 4. Cash against documents (CAD)Payments at sight means when documents received by buyer then payment will be made.

Mode of shipment1. By Air.2. By Sea.3. Trans-shipment.

Types of documents1. Custom clearance documents.

Original commercial invoice (6 copies)Original packing list (6 copies)Form E. (incase of imports its replaced by i form)Narcotics certificate (if shipment by Air)

2. Buyers requirements.

Commercial invoice.

Packing list.

Bill of lading / Air way bill.

Certificate of origin.

Issued by Chamber of Commerce for Gulf countries, it is necessary for exporting

products to Gulf countries.

Single country declaration.IB report Linta Sama

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We give guarantee to buyer that the material used in this product was made only

in Pakistan.

Multiple countries declaration.

For the finished goods or completion of goods we used imported material from

different countries.

Quality control report.

Buyers agent checks the quality and other documents etc.

Inspection certificate.

This certificate is used only for export in Canada.

Canadian custom invoice.

General system of preference (GSP).

It is used for European countries. It is used for custom purpose in the

buyers countries.

Container sizes 20 feet (standard) 40 feet 40 feet high cube.

Here it is what actually the routne is:

Pakistan Import Documentation:

Nowadays import license is no MORE required to import into Pakistan. Only the following initial documents are required to import into Pakistan:

1. National Tax Number Certificate, which is issued by the Income Tax Department on filing of application form accompanied with one attested photocopy of NIC.

2. Current bank account is required for import proceedings and documents

3. Sales Tax Registration is required to import into Pakistan. For registration, Form ST-1 is required to send to the local sales tax registration office via post with acknowledgment due (courier is preferable). The local registration office shall transmit filled up applications to the Central Registration Office based in IB report Linta Sama

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CBR Islamabad. The previous requirements of furnishing supporting documents have been done away now there is no need to attach any document with the application. The Central Registration having on line access to database of NTN as well as of NADRA shall verify the particulars declared in the application with database. On verification, it shall generate and issue registration certificate to the applicant directly on his given address.

4. Membership certificate of Chamber of Commerce and Industries or any relevant trade association of Pakistan.

Pakistan Export Documentation:

Nowadays export license is no MORE required to export. Only the following initial documents are required to export: --National Tax Number Certificate, which is issued by the Income Tax Department on filing of application form accompanied with one attested photocopy of NIC. Commercial exporter is not required to register with sales tax department. But if you pay the sales tax on purchasing the goods from local market it will be better for you to get yourself register with sales tax department so that you may claim refund of your input tax deducting on your purchases. Once you are registered in sales tax department you will be obliged to file monthly sales tax return irrespective of the fact that you have been involved in any sales tax activity or not. Current bank account is required for export proceedings and documents. Membership certificate of Chamber of Commerce and Industries or any relevant trade association. Once the consignment, to be exported arrives at the port, usually a clearing agent's services are sought. The following documents are required to provide to clearing agent to clear the consignment: --

Packing list IB report Linta Sama

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Commercial invoice Letter of Credit (LC) Certificate of origin which is issued by the chamber of commerce National Tax Number CertificateForm "E" (State bank form):All exports from Pakistan which are subject to Foreign Exchange

Regulations are required to be declared on form 'E' which is in sets of four copies each. The exporter should submit the full set of Form 'E' to the bank after it has been completed and signed by the exporter himself or his authorized agent.

While certifying Form 'E', bank should ensure that exporters give only one address in Form 'E'. After the form is certified by the bank, it should be submitted to the Customs/Postal authorities at the time of shipment along with the shipping bill.

The Customs authorities will detach the original copy and after filling in the portion relating to them and affixing their seal and signature thereon forward it to the State Bank. The Customs authorities will return the duplicate, triplicate and quadruplicate copies to the exporter or his authorized agent who will retain the quadruplicate for his own record and submit the duplicate and triplicate copies to the Authorized Dealer along with the shipping documents within 14 days from the date of shipment.

Submission of Export Documents to the bank:-

All shipping documents covering goods exported from Pakistan and declared on form 'E' must be passed through the medium of bank within 14 days from the date of shipment. The exporter must submit the duplicate (bearing Customs seal and signature of Customs Officials with Code number) and triplicate copies of form 'E' along with the shipping documents, invoices etc., to the bank who had certified the form 'E'. An extra copy of the shipper's invoice must be attached to the triplicate copy of the form 'E'.IB report Linta Sama

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6. A bank plays a major role in import and export industries.i. Banks manage the statistical figuresii. Banks also manage the record paymentsiii. Banks use TT to make the payments of the Import or Export Shipments.iv. Basic function of an export-import bank is to provide export finance either directly or, more commonly, by guarantee or insurance of privately financed transactions.v. Export credits may be extended by export-import banks, private commercial banks, or by the exporter in the form of supplier or buyer credits.vi. The bank may provide insurance cover or guarantee the loans availed by the borrower for financing the goods to be exported or advance its own funds as loan in certain special casesvii. In addition, the bank may facilitate and participate in limited recourse project finance by way of loan or a guarantee or both.viii. Financing of services pertaining to engineering, construction, advisory may also be a part of the bank function.

7. Role Of Freight Forwarders:

A freight forwarder (often just forwarder) is a third party logistics provider. As a third party (or non asset based) provider a forwarder dispatches shipments via asset-based carriers and books or otherwise arranges space for those shipments. Carrier types include waterborne vessels, airplanes, trucks or railroads.

Freight forwarders typically arrange cargo movement to an international destination. Also referred to as international, they have the expertise that IB report Linta Sama

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allows them to prepare and process the documentation and perform related activities pertaining to international shipments. Some of the typical information reviewed by a freight forwarder is the commercial invoice, shipper's export declaration, bill of lading and other documents required by the carrier or country of export, import, or transshipment. Much of this information is now processed in a paperless environment.

PIFFA; The Pakistan International Freight Forwarders Association is having more than 400 Freight Forwarding companies as members, aims to provide effective representation and support for Pakistan freight services industry to observe the highest standards of professionalcompetence.

Objectives The objectives of these standards are to:

a. Uphold a high standard of business ethics and professional conduct among freight forwarders;b. Promote a high level of professional education and experience, essential to provide services;c. Encourage operation of financially sound and stable freight forwarders;d. Contribute to combating fraud by ensuring improved services by better qualified freight forwarders, ande. Provide guidelines to PIFFA in establishing and maintaining a freight forwarding system.

Definitions For the purpose of these standards:

Freight forwarder is one who undertakes forwarding of goods on behalf of his customer, including if necessary, procurement and coordination of one or more modes of transport. He may also undertake to perform more modes of transport. He may also undertake to perform other functions connected with the main contract such as warehousing (including storage in transit) groupage IB report Linta Sama

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or consolidation, packing, documentation, weighing and measurement of cargo container leasing, insurance, foreign exchange transaction etc

Minimum staff requirements and professional qualifications To be considered professionally qualified the freight forwarder must:

a. Employ two full-time competent persons qualified in the services and handling functions described in Article 5;b. Two such persons should have completed PIFFA approved freight-forwarding certified course or hold IATA or FIATA Introductory Course Diploma or equivalent, andc. One of these persons shall have completed a PIFFA approved training course in the handling of dangerous goods where such cargo is handled.

Commercial Presence

The freight forwarder shall:a. Maintain and operate at least one office, andb. Have adequate insurance to cover its liability for loss of or

damage to exporter / importers cargo.

Processing and Handling

The freight forwarder shall maintain and offer the public the premises, staff and equipment necessary for the performance of the following function as a minimum:

a. Quoting freight charges, rates and conditions pertaining to such rates and charges;

b. Required transport documentation of cargo;c. Assisting customers in completing the required formalities for the

transportation of cargo including reservation services, andd. Assisting customers in tracking of the cargo.

Financial Qualification

To be considered financially sound a corporate entity and where relevant the freight forwarder individually must:

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a. Have financial resources adequate to its business evidenced by references from sources such as banks, financial institutes, auditors, reputable credit references companies etc., andb. Have adequate liability insurance through an internationally recognized insurance company or mutual club to cover all professional liabilities.

The Freight Forwarder shall ensure that the above financial standards are maintained.Freight forwarders are of two kinds that are being involved in LC and these are:a. Clearing agentsb. Cargo agents

A. Clearing agents:

Clearing agents are responsible to get the clearing license from the Customers Authority (collector) and make sure that the goods are custom cleared.They make Shipping Bills (while exporting) and Bill of Entry (while importing).

B. Cargo Agents:

Cargo agents are the members of IATA that stands for International Air Traffic Authority and they are responsible for issuing B/L (Bill of Lading) or AWB of the carrier. They are also involved in the security aspects in the trading of any commodity.The cargo agents network members have overall knowledge, expertise and have at their disposal specialists in all fields of transportation, customs clearance, insurance, road, rail, barge, air transport as well as any other type of transport and logistics services.8. A standard, commercial letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking.

The LC can also be the source of payment for a transaction, meaning that redeeming the letter of credit will pay an exporter. Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another.

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They are also used in the land development process to ensure that approved public facilities (streets, sidewalks, storm-water ponds, etc.) will be built. The parties to a letter of credit are usually a beneficiary who is to receive the money, the issuing bank of whom the applicant is a client, and the advising bank of whom the beneficiary is a client. Almost all letters of credit are irrevocable, i.e., cannot be amended or canceled without prior agreement of the beneficiary, the issuing bank and the confirming bank, if any. In executing a transaction, letters of credit incorporate functions common Traveler's cheques. Typically, the documents a beneficiary has to present in order to receive payment include a commercial invoice, bill of lading, and documents proving the shipment were insured against loss or damage in transit. However, the list and form of documents is open to imagination and negotiation and might contain requirements to present documents issued by a neutral third party evidencing the quality of the goods shipped, or their place of origin.After a contract is concluded between buyer and seller, buyer's bank supplies a letter of credit to seller.Seller consigns the goods to a carrier in exchange for a bill of lading.Seller provides bill of lading to bank in exchange for payment. Seller's bank exchanges bill of lading for payment from buyer's bank. Buyer's bank exchanges bill of lading for payment from buyer.Buyer provides bill of lading to carrier and takes delivery of goods.A standard, commercial letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking.

It can be:a. Irrevocableb. Revocable

Letter of Credit (L/C) types that are used at the Leather Coordinators include:

1. L/C at sight

When seller submits documents into the bank then payment will be made to buyer.

2. 30 days from shipment date.

Payment will be made after 30 days of submission of documents.IB report Linta Sama

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3. 60 days from shipment date.

Payment will be made after 60 days of submission of documents.

4. 90 days from shipment date.

Payment will be made after 90 days of submission of documents.

5. 120 days from shipment date.

Payment will be made after 120 days of submission of documents

To make it simple, the export process can be described as:The export process starts from bargaining. A buyer contacts the company for the purchase of the yarn. The contract may be direct or through middleman. When the price and quality of the yarn is settled then contract from is filled. The terms and condition are settled by the director of the company. After the settlement of terms and conditions the buyer in the bank opens L.C. L.C is of two types. L.C at sight and L.C at issuance. L.C at sight means the L.C opening bank shall make the payment as soon as the shipping documents are presented on its counter by the negotiating bank. On the other hand L.C at since has different periods of maturity varying from 30 days to 150 days receiving original L.C from buyer, seller will dispatch the goods as per details given in the L.C. After shipment usually following documents are presented to negotiate

After a contract is concluded between buyer and seller, buyer's bank supplies a letter of credit to seller.IB report Linta Sama

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Seller consigns the goods to a carrier in exchange for a bill of lading.

Seller provides bill of lading to bank in exchange for payment. Seller's bank exchanges bill of lading for payment from buyer's bank. Buyer's bank exchanges bill of lading for payment from buyer.

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Buyer provides bill of lading to carrier and takes delivery of goods.

Bank for onward submission to L.C opening bank counter:

1. Commercial invoice

1. Bill of Lading

2. E- Form

3. GSP Form A

4. Bill of Exchange

5. Certificate of Origins

6. Beneficiarys Certificate

7. Certificate from Shipping Company

8. Packing List

These are classified as: Financial Documents Bill of Exchange, Co-accepted Draft Commercial Documents

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Invoice, Packing list Shipping Documents Transport Document, Insurance Certificate, Commercial, Official

or Legal Documents Official Documents License, Embassy legalization, Origin Certificate, Inspection Cert Transport Documents Bill of Lading , Airway bill, Lorry/truck receipt, railway receipt etc Insurance documents Insurance policy, or Certificate but not a cover note.

1- Commercial Invoice

It is a sort of list which shows what is they exporting showing the:

1 Contract

1 L.C

2 E- Form

3 Shipping Company Name

This commercial invoice is sent to the buyers Central Bank. One copy of this invoice is kept in Leather Coordinators.

2 - Bill of Lading

It is a list of goods issued by the shipping line stating that the good have been loaded on board, freight prepaid and other specifications.

3- E Form

Form E is the basic document of export. Government control foreign exchange through this form. Thus, it is one of the most important documents. Exporter fills and signs it. Bank also countersigns this form. It has four copies.

4- GSP from A:

It is used for European countries for custom purposes.

5- Bill of Exchange

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A bill of exchange or "draft" is a written order by the drawer to the drawee to pay money to the payee. A common type of bill of exchange is the cheque defined as a bill of exchange drawn on a banker and payable on demand. Bills of exchange are used primarily in international trade, and are written orders by one person to his bank to pay the bearer a specific sum on a specific date. Prior to the advent of paper currency, bills of exchange were a common means of exchange. They are not used as often today.

A non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date.

Bills of exchange are similar to checks and promissory notes. They can be drawn by individuals or banks and are generally transferable by endorsements. The difference between a promissory note and a bill of exchange is that this product is transferable and can bind one party to pay a third party that was not involved in its creation. If these bills are issued by a bank, they can be referred to as bank drafts. If they are issued by individuals, they can be referred to as trade drafts

6- Certificate of Origins

Issued by Chamber of Commerce for Gulf countries, it is necessary for exporting products to Gulf countries.

7- Beneficiarys Certificate

Beneficiary certificate is issued by the seller as required by the buyer. Usually the wording of this certificate is as

Certify that goods have been shipped per vessel shipping company name and the shipping documents have been dispatched to the applicant under L.C # _____.

8- Certificate from Shipping Company

Shipping company issues this certificate on the request of the buyer.

9- Packing List

Packing list contains the detail of all the items being exported. This list show the carton number, container number, goods description gross and net weight of total cartons and each carton.

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9. The method of sending and receiving money used by the Leather Coordinators is TT (Tele Transfer), in fact Export Payment; it is always done by receiving TT, i.e. Tele transfer

10. Chamber of Commerce:A chamber of commerce is a form of business network, e.g., a local organization of businesses whose goal is to further the business interests of the community. Business owners in towns and cities form these local societies to advocate on behalf of the business community. Local businesses are members, and they elect a board of directors or executive council to set policy for the chamber. The board or council then hires a President, CEO or Executive Director, plus staffing appropriate to size, to run the organization.Generally, chambers of commerce serve the following purposes: Creating a strong local economy Promoting the community Providing networking opportunities Speaking with government on behalf of business Political action, such as getting pro-business candidates elected to office

Chamber of Commerce has a very important role in every country. They are responsible for holding meetings of businessmen, every month, fortnight and weekly on various issues and convey the latest and necessary information.

The Chamber is continuously in touch with parties across the globe for the purpose of making clients for the industries of Pakistan, even Mr. Safdar from Leather Coordinator is in touch with the Chamber to know of any upcoming opportunity.

Recently in Hong Kong a Leather exhibition took place where LC got involved too. This was possible not only because of Chamber of Commerce but also other organizations like PGMA and PTA are kept in touch with.

Findings & Suggestion: From all the data and information collected and the interviews we conducted through face to face technique, it can be said that the staff is working hard to cope with any challenges that come up their way n exporting or importing the

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products but the company is lacking the number of people working in their departments, even in Export department.

The HR department needs to focus on this issue because one person has to cope with the work of more than one worker at a time doing extra work.

Other than that what we have concluded is the described as following:

STRENGTHS Latest machinery ISO 9001 Certificate Strong market image Products innovation abilities Strong Relations

WEAKNESSES Centralized management High cost of production Small international market share No motivated staff Less promotional activities Old staff

OPPORTUNITIES Potential in market Entering new markets Addition new product line Faster market growth

THREATS Political instability in country Economic instability Though competition Adverse government policies Easy access of buyers in world markets Technology

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Pakistan Import Documentation:These are classified as: