1. Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved Ch. 8: International Vendors The proliferation & importance of imported products Gray markets Consumer attitudes about American-made versus foreign-made goods Finding international vendors & intermediaries Shipping costs & getting goods through U.S. Customs

2. Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved Why Buy Internationally? Lower costs U.S. shoppers no longer “swear loyalty” to American-made brands when price is a factor American-made markets no longer exist for some types of goods (notably electronics) International market offers wider range of products to choose from in trend-setting categories (clothing, wine, vehicles, etc.)

3. Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved Gray Market (Parallel Imports) Goods PROS CONS Name brands available at much lower prices A way for U.S. consumers to “fight back” against high prices High profitability for deep discounters Ethical & legal concerns about trademark infringement Legal questions of products’ “material difference” Damage to image, reputation of name- branded products

4. Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved Buying Foreign Goods from Domestic Sources Import merchant Wholesaler who usually stocks, sells one type or category of product Resident sales agent Represents multiple foreign manufacturers May or may not have product on hand Import commission house Represents multiple foreign manufacturers Imports & stores goods Paid on commission by manufacturers Buying office International offices represent retailers, locate product & negotiate with manufacturers

5. Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved Buying Foreign Goods from Foreign Sources Foreign export merchant Wholesaler whose business is strictly exporting Export sales representative Sells the manufacturer’s goods to retailers Shows samples but maintains no inventory Export commission house May represent multiple foreign manufacturers Paid on commission by manufacturers

6. Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved Buying Foreign Goods from Foreign Sources (continued) Foreign freight-forwarder Licensed by U.S. Maritime Commission to arrange shipping, proper documentation on behalf of exporters Commissionaire or purchasing agent Buying office that helps international buyers do business in nation where office is located Customs house broker Represents retailer by doing paperwork, paying duties, ensuring imported shipments meet U.S. Customs laws & requirements

7. Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved Customs Decisions for Every Shipment Duty rates – General rates, special rates, “Column 2” rates Types of duties – Ad valorem, specific, compound Value (on which duty & rate are based) – foreign value, export value, constructed value Formal entry – For shipments worth more than $2,000 in value; requires a bond from the importer