Getting started (Challenges to Exports/Imports) Lack of information about overseas Markets Lack of proper financing Lack long term commitment or plan 1MKT417

Getting started Why do you need to use trade statistics To find - whether import choices are produced locally. - Government has any restriction regarding product - Exporter – which country has the best market Importer- Which country is the best option for sourcing 2MKT417

Getting started Problems with Trade Statistics ◦ Too broad ◦ Old or no statistics at all ◦ Inclusion of parts as finished products ◦ Statistical figures are historical ◦ Confusion from Free Trade Zones 3MKT417

Product consideration: how and what to choose Specialize o Focus on single/ one type of product o Find a niche o Contact efficient manufacturer o increase variety after success in one o avoid competing products Know your product line Work with local companies Start small Consider your competencies 4MKT417

Checklist Domestic Market Trade Regulations o Country restrictions o Currency and tax regulations o Licensing and other requirements Foreign Market Access o Tariffs and quotas of importing countries o Currency restrictions o Internal taxes o Political factors Pricing Structure o Prices to end users o Trade markups o Transport costs 5MKT417

Export Import Management Pricing for Foreign Markets 6MKT417

Challenges to Exports/Imports Costs to Produce the Export Product Costs of Selling in the Foreign Market Costs of Moving Goods 7MKT417

Some Terms Pro-forma Invoice CIF C&F FOB EX 8MKT417

How to get Paid Cash with order or in Advance of Order Letter of Credit (L/C) Documentary Drafts (Bills of Exchange) Open Account Consignment 9MKT417

Cash with order or in advance of order This means having payment before the goods have left exporter’s hand Unless there is an extraordinary favorable seller’s market or a situation where the seller dominates the market, importers will be reluctant to pay in this format Prudent for customized or new products This is the most ideal payment method for exporters in terms of risk. Contrarily, it is quite risky for the importers. Very little business is conducted in this manner. 10MKT417

Ocean Freight Most popular and cheapest method Usually two types of loads: FCL (Full Container Load) – 20 Ft or 40 Ft containers –Usually cheapest on a per sq.m basis 11MKT417

Ocean Freight (Contd.) LCL (Limited Container Load) Part of a 20ft or 40ft container Usually more expensive on a per sq.m basis Usually more time consuming as: –Needs co-ordination with other pa1rties –Need to GET another party –More complications during Customs clearance. 12MKT417

Air Freight Becoming more popular as competition Increases Usually for fragile, delicate and urgent Items As weight and volume increases, rates fall As a result, Freight Forwarders are now acting as Consolidators 13MKT417

Parcel Post For samples etc State owned mailing system is the cheapest Implications in Bangladesh Specialized companies i.e. UPS, DHL. Truck and Rail 14MKT417

Insurance All shipments should be insured either by the importer or exporter. If CIF pricing is quoted by the exporter then insurance cost is included in the price of the merchandise paid by the importer. When exporting to USA or other developed country the importer might want C&F quote and make the coverage by themselves as they might find the service of foreign insurance companies to be dissatisfactory. If importing into Bangladesh, better to have price quoted in C&F because it will be easier to claim insurance. Insurance companies provide better packages for large volume business 15MKT417

Four Major Stages 1. Entry, or Filing of Documents 2. Inspection & Control 3. Liability for Duties 4. Liquidation 16MKT417

Four Major Stages 1. Entry, or Filing of Documents – Receipt of three sets of documents Commercial Invoice Bill of Lading LC copy – Goods start to incur “demurrage” after three days of arrival 17MKT417

Entry, or Filing of Docs (Cont.) Document Filing –H.S Code (Harmonized System of Codes) –Areas of Confusion for H.S Codes 18MKT417

HS Code Section: The first two digits are section heading. Like, is Animal and Animal Products Vegetable products 06 VEGITABLE PRODUCTS 07 EDIBLE VEGETABLES Heading: The first four digits are referred to as the heading. Like, 0701 potatoes (except sweet potatoes), fresh or chilled 0702 tomatoes, fresh or chilled 0703 onions, shallots, garlic, leeks etc, fr or chilled 0704 cabbages, cauliflower, kale etc, fresh or chilled Subheading: The first six digits are known as a subheading Seed Other Potatoes (Fresh or Chilled) 19MKT417

Inspection and Control After customs receive the file of documents from the importer, they will arrange inspection of the cargo as soon as possible. Representatives Inspection is done to ensure correctness of - HS Code - Valuation - Condition and the quantity - Undeclared goods 20MKT417

Liabilities for duties Duty cannot be prepaid Importer is liable at the time entry is filed Liabilities for unclaimed goods 21MKT417

Liquidation Liquidation is the final determination of the exact amount of duty. Releasing the goods What happens in case of disagreement 22MKT417