1 CHAPTER II ESTABLISHING AN IMPORT BUSINESS  Reasons for Importation  Requirements for a Successful Import Business  Legal Forms of a Business  Import Organizations

2 Reasons for Importation  Products unavailable in the domestic market  Products cheaper than domestic market  Products better quality than domestic market  Better Financing than domestic market

3 Requirements for a Successful Import Business  Selling ability  Reliable suppliers  Financing ability  Knowledge of import procedures and regulations  Persistence  Clear communication  Trust building with suppliers and buyers

4 Legal Forms of a Business  Sole proprietorship: Sole owner –Business license –Registration of fictitious name with the County & Ad 3 times in local newspaper –Unlimited liability. No double taxation  Partnership –General partner: Unlimited liability –Limited partner: Limited liability –Pass-through taxation (No double taxation)

5 Legal Forms of a Business  Corporation –C corporation: Limited liability. Double taxation –S corporation: Limited liability. No double taxation. Up to 100 shareholders. Family members single shareholder

Legal Forms of a Business  LLC (Limited Liability Company) –Limited liability. –No double taxation –May have one or more owners called Members –May be owned by any combination of individuals and business entities –Files Articles of Organization with the State –No minutes & No annual meetings required 6

7 Import Organizations  Import agents (Commission Agents) –Assume no title –Fewer than 10 employees –Carry Catalogs and samples of exporters  Import dealers –Do not carry stock –Directly from harbor to domestic buyers –Usually take title to the goods

8 Import Organizations  Import distributors –Products requiring after-sales service –Large inventory –Large organization –Sometimes owned by a foreign manufacturer –Advertising and promotion

9 Import Organizations  International trading companies –Large organization –Good marketing coverage and financial ability –Control domestic distribution networks –Importing arm of exporters –Japanese Sogoshosha  Manufacturers –Augment their product lines –Raw materials –Components