1. Global Marketing Management
Masaaki Kotabe & Kristiaan Helsen Third Edition John Wiley & Sons, Inc., 2004
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Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

2. Export and Import Management
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Export and Import Management
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Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

3. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004
Chapter Overview
1. Organizing for Exports
2. Indirect Exporting
3. Direct Exporting
4. Mechanics of Exporting
5. Role of the Government in Promoting Exports
6. Managing Imports—the Other Side of the Coin
7. Mechanics of Importing
8. Gray Markets
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Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

4. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004
Introduction
Exporting is the most popular way for many companies to become international.
Exporting is usually the first mode of foreign entry
used by companies.
Selling to foreign markets involves numerous high risks, arising from a lack of knowledge about and unfamiliarity with foreign environments, which can be heterogeneous, sophisticated, and turbulent.
Manufactured goods accounted for almost 60 percent of the exports of developing countries (see Exhibit 17-1).
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5. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004
Introduction (contd.)
Because of every export transaction, there is, by definition, an import transaction as well.
Aside from differences between the procedure and rationale for exports and imports, both are largely the same the world over.
For successful development of export activities, systematic collection of information is critical.
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Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

6. 1. Organizing for Exports
Research for Exports: The first step is to use available secondary data to research potential markets.
The identification of an appropriate overseas market involves the following criteria:
1. Socioeconomic characteristics
2. Political and legal characteristics
3. Consumer variables (lifestyle, preferences, culture, taste, purchase behavior)
4. Financial conditions
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Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

7. 1. Organizing for Exports (contd.)
Export Market Segments
Homogeneous market segments and clusters
Geographical and psychographic segments
Issues of standardization vs. adaptation
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8. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004
2. Indirect Exporting
Indirect exporting involves the use of independent middlemen to market the firm’s products overseas.
Combination Export Manager (CEM)
Export Merchants
Export Broker
Export Commission House
Trading Companies (sogoshosha; see Exhibit
17-1)
Piggyback Exporting
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10. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004
3. Direct Exporting
Direct exporting occurs when a manufacturer or exporter sells directly to an importer or buyer located in a foreign market (see Exhibit 17-2).
Export Department
Export Sales Subsidiary
Foreign Sales Branch
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11. 4. Mechanics of Exporting
The Automated Export System (AES) on the Internet
In the U.S., the AES which was launched in October 1999, enables exporters to file export information at no cost over the Internet. AES is a nationwide system operational at all ports.
Legality of Exports
Export license (general or validated license)
Export Transactions
The terms of sale
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12. 4. Mechanics of Exporting (contd.)
Monitoring the transportation and delivery of the goods to the assigned party
Shipping and obtaining the bill of lading
Bill of lading
A straight bill of lading
A shipper’s order bill of lading
Commercial invoice
Freight forwarders
Terms of Shipment and Sale
INCOTERMS 2000 (International Commercial Terms)
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13. 4. Mechanics of Exporting (contd.)
Terms of Shipment (see Exhibit 17-5):
Ex-Works (EXW) at the point of origin
Free Alongside Ship (FAS)
Free on Board (FOB)
Cost and Freight (CFR)
Carriage Paid To (CPT)
Cost, Insurance and Freight (CIF)
Payment Terms (see Exhibit 17-6)
Advanced Payment
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14. 4. Mechanics of Exporting (contd.)
Confirmed irrevocable letter of credit
Unconfirmed irrevocable letter of credit
Documents Against Payment (D/P)
Documents Against Acceptance (D/A)
Open account
Consignment
Currency Hedging
It is done through a banker or the firm’s treasury in case there is a foreign risk in the export transaction.
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15. 5. Role of the Government in Promoting Exports
Export promotion activities generally comprise:
1. Export service programs
2. Market development programs
Export Enhancement Act of 1992
Export - Import Bank (Ex-Im Bank; see Exhibit 17-7)
Tariff Concessions
Foreign Trade Zones
Foreign Sales Corporation (FSC)
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16. 5. Role of the Government in Promoting Exports (contd.)
American Export Trading Company
The Export Trading Company Act of 1982
Export Regulations:
The Trade Act of 1974
The Foreign Corrupt Practices Act (FCPA) of 1977
COCOM (Coordinating Committee for Multilateral Exports)
U.S. Antitrust Laws
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17. 5. Role of the Government in Promoting Exports (contd.)
Tariffs and local laws of foreign governments which may include: tariffs, local laws relating to product standards and classification, and taxes.
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18. 6. Managing Imports – the Other Side of the Coin
For organizations in the United States, importing is considerably easier than for most firms in the rest of the world.
About 60 percent of the world’s trade is still denominated in U.S. dollars.
Most of the time, a U.S. importer does not have to bother with hedging foreign exchange transactions or with trying to accumulate foreign currency to pay for imports.
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19. 6. Managing Imports – the Other Side of the Coin (contd.)
Model of Importer Buyer Behavior (see Exhibit
17-8):
Stage 1. Need recognition and problem formulation (triggered by competition and
unavailability)
Stage 2. Search (guided by country characteristics, vendor characteristics, and information sources)
Stage 3. Choice (vendors evaluation and selection)
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20. 7. Mechanics of Importing
Steps in Importing:
Finding a bank that either has a branch in the exporter’s country or has a correspondent bank
Establishing a letter of credit with the bank
Deciding on the mode of transfer of goods from exporter to importer
Checking compliance with national laws of the importing country
Making allowances for foreign exchange fluctuations
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21. 7. Mechanics of Importing (contd.)
Fixing liability of payment of import transactions and warehousing
Import Documents and Delivery
Entry documents filed by the consignee:
The bill of lading
Customs form 7533
Customs form 3461
Packing list
Commercial invoice
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22. 7. Mechanics of Importing (contd.)
Also accompanied by evidence that a bond is posted with customs to cover any potential duties, penalties, and taxes
For Special Permit for Immediate Delivery, use Customs form 3461 for fast release after arrival.
Import Duties in the United States:
Ad valorem duty
Specific duty
Compound duty
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23. 7. Mechanics of Importing (contd.)
Antidumping import duty
Countervailing duty
Duty drawback:
Direct identification drawback
Substitution drawback
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24. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004
8. Gray Markets
Gray market channel refers to the legal export/import transaction involving genuine products into a country by intermediaries other than the authorized distributors.
From the importer side, it is also known as “parallel imports.”
Three conditions are necessary for gray markets to develop:
1. Products must be available in other markets.
2. Trade barriers must be low enough for parallel importers.
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25. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004
8. Gray Markets (contd.)
3. Price differentials among various markets must be great enough to provide the basic motivation for gray marketers. Such price differences arise for various reasons:
Currency fluctuations
Differences in market demand
Legal differences
Opportunistic behavior
Segmentation strategy
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26. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004
8. Gray Markets (contd.)
How to Combat Gray Market Activity (see Exhibit 17-9):
Reactive Strategies:
Strategic Confrontation
Participation
Price cutting
Supply interference
Promotion of gray market product limitations
Collaboration
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27. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004
8. Gray Markets (contd.)
Acquisitions
Proactive Strategies:
Product/service differentiation and availability
Strategic pricing
Dealer development
Marketing information systems
Long-term image reinforcement
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28. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004
8. Gray Markets (contd.)
Establishing legal precedence
Lobbying
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29. Copyright © John Wiley & Sons, Inc., 2004
Chapter 17
Kotabe & Helsen's Global Marketing Management, Third Edition, 2004