1 The Exporting Process Check for U.S. export requirements Arrange for payment Exporting Considerations Physical Distribution Considerations Packing & marking Documentation Logistics Importing Country Considerations Tariffs, taxes Non-tariff Barriers

2 Check Export Requirements Department of Commerce, Bureau of Export Controls ( What types of products have restrictions: –primarily weapons, technology, defense related U.S. boycotts: –Iran, Iraq, Cuba, __________

3 Cash in Advance Letters of Credit Forfaiting Bills of Exchange Open Accounts Getting Paid: Foreign Commercial Payments Risk to Exporter/Seller Least Highest Cost to Importer/Buyer Highest Least

4 Logistics Specialists Intermodal Marketing Companies (IMCs) IMC arranges entire distribution system from factory to customer’s port of entry a broker: takes a percentage of the cost Foreign-Freight Forwarder arranges documentation advises on scheduling, routing & rates checks consular, licensing, & labeling requirements checks export restrictions offers insurance provides warehouse storage will pack/containerize

5 Check on Import Restrictions Tariffs - taxes/duties levied against imported goods. Exchange Permits - due to rationing of host country currencies; permit allows exchange for U.S. $ Quotas - limits quantity of goods allowed in the host country Import Licenses - like quota, but on a case-by-case basis Boycotts - U.S. law prohibits U.S. firms from complying with unauthorized boycotts of certain countries Standards - health, quality, safety; protects citizens Voluntary Agreements - reciprocal limits between 2 countries to avoid penalties Other Restrictions - e.g.., language laws, product labels, religious conventions, etc..

International Channel-of-Distribution Alternatives Home Country Domestic producer or marketer sells to or through Open distribution via domestic wholesale middlemen Export management company or company sales force ExporterImporter Foreign agent or merchant wholesalers Foreign retailers Foreign consumer The foreign marketer or producer sells to or through Foreign Country

l Services provided by intermediaries l Line Breadth: variety of related products carried l Costs and Margins: due to infrastructure & traditions l Channel Length: number of intermediaries involved l Nonexistent Channels: e.g., parts of China l Blocked Channels: through gov’t protection or power among distributors l Stocking: getting intermediaries to carry adequate inventories l Power and Competition Variations in international distribution patterns

Factors Affecting Channel Choices Cost Capital Control Coverage Character Continuity

Locating, selecting & motivating intermediaries Locating Middlemen - lists provided by gov’ts, chambers of commerce, business publications, etc. Selecting Middlemen - screen carefully, be precise about what functions you want performed Terminating Middlemen - be aware that some countries have provisions to protect intermediaries from termination Motivating Middlemen - provide incentives

Monetary incentives for motivating intermediaries Inventory Financing Cumulative Rebates –for larger quantities, early payments, achieving sales targets, maintaining inventory levels, performing sales promotions, etc. Returns of Unsold Merchandise Promotion & Merchandising Assistance Displays Advertising In-store Displays Financial Assistance