1. International Business David J. Boggs, Ph.D. Eastern Illinois University Importing and Exporting

2. Overview Review of entry modes Overview of exporting and importing Government involvement Websites for help and information Paying and collecting payment International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

3. Copyright © 2010 Pearson Education, Inc. publishing as Prentice HallInternational Business 5eChapter 13 - 3 Risk, Control, Experience

4. Exporting and Product Characteristics ValuedensityValuedensity Product’s value relative to its weight and volume Product’s value relative to its weight and volume The lower a product’s value density, the more localized is its distribution system The lower a product’s value density, the more localized is its distribution system International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

6. Export Research Trade shows and missions Interviews and focus groups Surveys Environmental scanning International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

7. Trade Shows http://www.globalspeak.com/html/export- gov/webcasts.asp http://www.globalspeak.com/html/export- gov/webcasts.asp International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

8. Avoiding Export Blunders Conduct market research Obtain export advice Consider a freight forwarder International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

9. Freight Forwarders Exporter-importer agent Can arrange to move cargo “dock-to-door" Advise on transport modes, packing, and costs (freight, port, consular, documentation, insurance, handling) Handle paperwork Reserve cargo space on a vessel, aircraft, train, or truck www.forwarders.com International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

10. Degree of Export Involvement Direct exporting (sell to buyers) Indirect exporting (sell to intermediaries) Sales representatives Distributors Sales representatives Distributors Agents Export management companies Export trading companies Agents Export management companies Export trading companies International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

11. U.S. States Go Global

12. Government Agreements WTO Most Favored Nation (MFN) status Generalized System of Preferences (GSP) Caribbean Basin Initiative (CBI) Andean Trade Preference Act (ATPA) International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

13. USA Free Trade Agreements North American FTA (NAFTA) Central American FTA(CAFTA-DR) U.S. – Israel FTA (ILFTA) U.S. – Jordan FTA (JFTA) The U.S. – Chile FTA (US-CFTA) The U.S. – Singapore FTA (US-SFTA) International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

14. Embargoed Countries Cuba Iran North Korea Sudan Syria Burma International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

15. Customs & Border Protection Government agency Collects taxes/tariffs/duties Clears or restricts imports and exports Protects health and security www.cbp.gov International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

16. Restricted or Prohibited Goods What do you think are goods that the USA Restricts? Prohibits? International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

17. Restricted or Prohibited Goods Cosmetics and prescription drugs Food and agricultural products Cuban cigars and Mexican marijuana Alcoholic beverages and firearms Radioactive materials and explosives Wildlife products (animals, furs, skins, shells) Obscene books Cultural Artifacts Matches, bongs, switchblades, lottery tickets, and more... International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

18. Quotas What do you think are goods that the USA restricts through the use of quotas? International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

19. Products with Quotas Olives, anchovies and tuna Brooms Ethyl alcohol Lamb Line pipe Milk and cream Cotton Wire rod International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

20. Customs Paperwork Commercial or pro forma invoice Entry manifest or packing list Certificate of origin Evidence of right to make entry Consider using a customs broker International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

21. Choose USPS for Value < $2000 Ease in clearing shipments Applicable duties collected by the letter carrier Small packages ship inexpensively No need to clear shipments personally Value < $250 for some goods (e.g. purses, gloves, footwear, toys, pillows) A courier can also provide seamless delivery International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

22. Helpful Websites Export.gov DOC.gov Fedstats.gov USITC.gov Trade.gov http://www.globalspeak.com/html/export- gov/webcasts.asp http://www.globalspeak.com/html/export- gov/webcasts.asp International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

23. Export/Import Financing International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

24. High-Risk Approaches Advance payment Importer pays exporter for merchandise for merchandise before it ships before it ships Advance payment Importer pays exporter for merchandise for merchandise before it ships before it ships Open account Exporter ships Exporter ships merchandise and merchandise and later bills importer later bills importer Open account Exporter ships Exporter ships merchandise and merchandise and later bills importer later bills importer International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

25. Documentary Collection Draft (bill of exchange) Bill of lading Bank acts as intermediary without accepting financial risk Document that orders an importer to pay an exporter a specified sum of money at a specified time Contract between an exporter and shipper specifying destination and shipping costs for merchandise International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

26. Documentary Collection Process International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

27. Letter of Credit Importer’s bank issues a document stating that the bank will pay the exporter when exporter fulfills document’s terms  Irrevocable  Revocable  Confirmed International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

28. Letter of Credit Process International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

29. Forms of Countertrade Barter Counterpurchase Offset agreement Switch trading Buyback Direct exchange without money Sale to a country in return for promise of future purchase from it Offset a hard-currency sale to a nation with future hard-currency purchase Sale by a company of an obligation to purchase from a country Export of industrial equipment in return for products the equipment produces International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

30. Review Review of entry modes Overview of exporting and importing Government involvement Websites for help and information Paying and collecting payment International Business 5e, Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

31. Customs brokers are licensed (e.g. power of attorney) to conduct customs transactions on behalf of others Bill of lading Airway bill Common carriers transport or take responsibility for transporting goods for the public and are typically liable for goods under their control Important Issues Merchandise description and tariff classification Country of origin Valuation Intellectual property violation Compliance with agency requirements (e.g. FDA, DOT, FTC, EPA) Policies that Constrain Imports Antidumping And Countervailing Duties Embargoes Other Notes Personal vs. Commercial Use Most commercial imports must be conspicuously and durably marked in English with the country of origin Foreign Trade Zones Avoid tariffs Assemble or reassemble products Hold stock for delivery Manufacture, ship, and tranship products Exporting Payment procedures Export restrictions Import legality Top 20 Metropolitan Area Exporters Ranked by First Half 2008 Export Value (in Millions of U.S. Dollars) Rank Metropolitan AreaFact sheets2007FH2007FH2008 1New York-Northern New Jersey-Long Island, NY-NJ-PA80,85239,72149,955 2Houston-Sugar Land-Baytown, TX62,81529,89440,199 3Los Angeles-Long Beach-Santa Ana, CA54,43325,98529,946 4Seattle-Tacoma-Bellevue, WA53,89325,05627,058 5Detroit-Warren-Livonia, MI49,16524,26223,123 6Chicago-Naperville-Joliet, IL-IN-WI30,63514,81817,667 7Miami-Fort Lauderdale-Miami Beach, FL26,19712,32516,189 8San Jose-Sunnyvale-Santa Clara, CA28,21013,94514,042 9Minneapolis-St. Paul-Bloomington, MN-WI21,6289,95412,901 10Boston-Cambridge-Quincy, MA-NH21,03110,35611,548 11Dallas-Fort Worth-Arlington, TX22,07910,65711,473 12Philadelphia-Camden-Wilmington, PA-NJ-DE-MD18,8829,07111,133 13San Francisco-Oakland-Fremont, CA20,0819,98810,382 14Portland-Vancouver-Beaverton, OR-WA15,7847,6159,978 15Cincinnati-Middletown, OH-KY-IN15,3597,2558,781 16San Juan-Caguas-Guaynabo, PR14,6426,9588,720 17San Diego-Carlsbad-San Marcos, CA14,3426,9477,995 18Atlanta-Sandy Springs-Marietta, GA12,5515,9827,038 19Peoria, IL11,2225,3326,805 20New Orleans-Metairie-Kenner, LA8,4493,7106,693 http://ita.doc.gov http://export.gov