Nuts and Bolts Exports and Imports. Much of what follows was adapted from Export Import*, by Joseph A. Zodl * Betterway Books, Cincinnati, Ohio (1995)

Nuts and Bolts

Exports and Imports

Much of what follows was adapted from Export Import*, by

Joseph A. Zodl

*Betterway Books, Cincinnati, Ohio (1995)

Discovering Foreign Markets

• Libraries

• Federal Assistance

• State/Local Assistance

• World Trade Centers

• Small Business Administration

• Journal of Commerce

Libraries

• Public Library– International Directory of Importers

• University and College Libraries

Federal Assistance

• Dept. of Commerce– International Trade Administration (ITA)

http://www.ita.doc.gov/itahome.html

– National Trade Data Bank• CD-ROM that can access 90,000+ documents

– There is an additional charge for this!

– It may be available at a nearby library.

State/Local Assistance

• Each state has its own version– http://www.ohio.gov/

World Trade Centers

• World Trade Centers Association Headquarters– One World Trade Center– Suite 7701– New York, NY 10048– (212) 313-4600

Journal of Commerce

• Daily newspaper with extensive international coverage

An Example of Internet Resources

• http://www.tradeport.org/

Importing

• No organization for importers analogous to the ITA for exporters

• U.S. Customs Service is not in business to assist importers find sources for goods– But it can be of help

U.S. Customs Service

• Before you begin to import, or even go abroad…– Find the Customs office you’ll be using– Get a (free) list of Customs Brokers– Pick up a copy of “Know Before You Go”– Register any foreign made jewelry, cameras,

etc., so you won’t have to pay a duty when you return

Finding Sources for Products to Import

• Foreign Consulates– Locations at public libraries

• Directories of Importers– Public libraries

• Trade Organizations• Trade Journals• Trade Shows• Business Publications

Pitfalls: Things are Foreign in Foreign Places

• Will electrical products work here? – 220v is standard in many parts of the world– Prongs are different

• Will instructions/packages have to be translated?• Will there be spare parts?• Will the product meet Underwriters

Laboratory/federal/state standards?

Travel Agents for Stuff: The International Freight Forwarder

• The Federal Maritime Commission Forwarder

• The Air Freight Forwarder

Freight Forwarders

• Maritime– Quotes ocean freight

rates– Quotes surface rates to

move shipments to port

– Arranges for transport– Prepares necessary

documents

• Air Freight– Quotes air freight

rates– Quotes associated

surface freight rates– Arranges for the

transport– Prepares necessary

documents

Freight Forwarders

• Maritime– Regulated and

licensed by the Federal Maritime Commission under the Shipping Acts of 1916 and 1984

• Air Freight– No required

licensing– Some are regulated

by the International Air Transport Association (IATA agents)

Customs Brokers

• Licensed by the Customs Service of the U.S. Treasury Department

• Import Brokers are simply in the import business and are self-titled

Terms of Sale

• Ex Works (EXW)– Customer is responsible for all shipping

charges

• Free Carrier (FCA)– Seller is responsible for packing and loading on

the truck/ship/whatever the buyer sends to make the pickup

Terms of Sale

• Free Alongside Ship (FAS)– Buyer has made arrangements from port to

port, but wants you to get them to the shipping port

– You agree to do this, and charge accordingly

Terms of Sale

• Free on Board Vessel (FOB)– Buyer asks you to arrange for shipping as well– This can get more complicated, difficult, and

expensive

Terms of Sale

• All items should be insured for the entire duration of the shipment.

Terms of Sale

• The pro forma invoice (price quote) should contain…– Final shipping date– Expiration date of letter of credit– Other important deadlines, if any– What documents are needed– Special inspections or certifications required– Special packing or labeling instructions

Terms of Payment

• Letter of Credit– Over hundreds of years of international

commerce, this has become the standard method of payment

– Both sides participate in the creation, so both sides know exactly what needs to be done

– No unilateral deviation from the terms are permitted

International Chamber of Commerce

• Establishes guidelines for global commerce, including the standards for letters of credit

• http://www.iccwbo.org/

Letters of Credit

• Must include the word “irrevocable”

• Must arrive directly from a bank– Assume any other delivery is a fraud

• If issued by another bank, you can have your bank advise you (for a fee)

• Examine the document carefully

To examine a letter of credit(as suggested by Joseph Zodl)

• Make a photocopy

• Use two highlighter colors

• Go over document line by line

• Any clause that is different from the pro forma invoice, or will be difficult to satisfy, mark in one color on the copy

– Go over these with your associates later

• Any clause that is unclear, mark in the other color on the copy– Go over these with your banker later

• Do not mark the original!

Documentation

• The Commercial Invoice

• The Packing Slip

• The Bill of Lading

• Shipper’s Export Declaration

• Certificate of Origin

• Legalization and Consularization

Documentation

• Canada Customs Invoice

• NAFTA Certificate of Origin

• Export Vessel Movement Summary Sheet

• Postal Service Forms

• Insurance Policy

A Note on Prohibited Articles

• Counterfeit articles• Obscene, immoral, or seditious material• Products of convicts or forced labor• Endangered species of birds and animals, their

skin, tusks, fur, feathers, and derived products• Lottery tickets• White or yellow phosphorous matches• Switchblade knives

A Note on Prohibited Articles

• http://bxa.fedworld.gov/

The 12-Step Program for Exporting

• 1. Contact prospects• 2. Follow up• 3. Obtain request for pro

forma invoice• 4. Obtain clarification as

needed• 5. Obtain quotes from

freight forwarder• 6. Send pro forma invoice

• 7. Receive letter of credit

• 8. Contact banker and forwarder for advice

• 9. Manufacture or purchase goods

• 10. Ship goods

• 11. Receive payment

• 12. Follow up with customer

10 Steps for Importing

• 1. Obtain price lists, catalogs, sales materials

• 2. Obtain samples

• 3. Contact a Customs Broker

• 4. Contact other necessary government agencies

• 5. Request pro forma invoice

10 Steps for Importing

• 6. Be certain of all costs, time frames and regulations

• 7. Obtain as many buying commitments as possible

• 8. Advise the Customs Broker when goods are expected

• 9. Fill orders promptly

• 10. Follow up with customers

Most Common Mistakes in Exporting

· From Business America, December 7, 1987, pp. 14-5.

Most Common Mistakes in Exporting

* Failure to obtain qualified export counseling and develop a master international marketing plan before starting an export business

* Insufficient commitment by top management to overcome the initial difficulties and financial requirements of exporting.

Most Common Mistakes in Exporting

* Insufficient care in selecting overseas distributors.

* Chasing orders from around the world instead of establishing a basis for profitable operations and orderly growth.

Most Common Mistakes in Exporting

* Neglecting export business when the U.S. market booms

* Failure to treat international distributors on an equal basis with domestic counterparts.

* Assuming that a given marketing technique and product will automatically be successful in all countries

Most Common Mistakes in Exporting

* Unwillingness to modify products to meet the regulations or cultural preferences of other countries

* Failure to print service, sale, and warranty messages in local languages

* Failure to consider the use of an export management company

Most Common Mistakes in Exporting

* Failure to consider licensing or joint venture agreements

* Failure to provide readily available servicing for the product