PROSPERITY THROUGH TRADE TM IMPORTING & EXPORTING A BEGINNER’S GUIDE TO

PROSPERITY THROUGH TRADE TM

IMPORTING & EXPORTING

A BEGINNER’S GUIDE TO

WHY PURSUEINTERNATIONAL TRADE?

• Grow your bottom line

• Smooth business cycles

• Use production capabilities fully

• Defend your domestic market

• Increase your competitiveness in all markets

• Expand consumer choices and support

• Explore new travel opportunities

• Diversify consumption

EXPORT / IMPORT

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STEPS

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EXPORTING RESOURCES

• World Trade Center Denver (WTC)• Colorado Office of Economic Development &

International Trade (OEDIT)• Colorado Department of Agriculture• United States Export Assistance Center

(USEAC)• Small Business Administration (SBA)• Small Business Development Center (SBDC)• Other Chambers of Commerce• Other Trade Associations

IMPORTING RESOURCES• World Trade Centers (WTCs)• United States Customs and Border Protection • United States International Trade Commission• International Trade Administration• Foreign Embassies and Consulates• Chambers of Commerce (American and Foreign)• Industry Trade Associations• Customs Brokers

PROSPERITY THROUGH TRADE TM

DEVELOP ASTRATEGY 1

STEP

ARE YOU REALLY READY?

• Is management committed?– Biggest Challenge Corporate Culture

• What is your value proposition?• Can you increase capacity to meet demand?• Are you willing to reorganize your business?• Are you willing to retrain your workforce?

Develop a Strategy

If you intend to export…

DO YOU UNDERSTANDYOUR PRODUCT?

If you intend to import…

• Have you chosen the right product from the right place?

• Can the product be imported?• Are there quotas or other trade restrictions?• Do you need a special permit or license?• What is your value proposition?• Will it be advantageous to import vs. produce?

Develop a Strategy

PROSPERITY THROUGH TRADE TM

MARKET RESEARCH 2

STEP

GETTING STARTED WITHMARKET RESEARCHObtain trade statisticsIdentify potential marketsUnderstand least promising marketsPrioritize most promising marketsExamine product/service trendsResearch the competitionAnalyze marketing strategiesIdentify any barriersIdentify any incentives

Market Research

RESEARCH METHODS• Keep apprised on world events/news

• Analyze trade and economic statistics• Seek further advice from others

(e.g. trade associations, government officials)

• Check online trade tools – new.export.gov (Country Commercial Guides, Market

Research Reports)– A to Z World Trade– alibaba.com– Sourcing Databases

Market Research

PROSPERITY THROUGH TRADE TM

FINDING BUYERS OR SUPPLIERS 3

STEP

SALES CHANNEL CONTINUUM

Sales Representatives

Agents

Distributors

Foreign Retailers

Direct End Users

Exporter’s Contact w/CustomerLess More

Finding Buyers or Suppliers

As an importer, you will be one of these channels.

FINDING THE RIGHT PARTNERS

Buyers…• Goldkey Service• Industry trade shows• Advertising in industry

publications• Training or seminars in key

markets• Observe other firms with

complementary products• Observe competition• World Trade Centers

Association• Online

Suppliers…• Foreign Embassies,

Consulates

• Chambers of Commerce

• Trade Associations

• Trade Shows

• Trade Missions

• Online Resources

• Buying Agents

Finding Buyers or Suppliers

DUE DILIGENCE• Ensure partners are reliable and credible

– Coface Credit Reports, Country Credit Ratings (WTC Denver)– Tour the Factory– Hire Independent Inspectors (e.g. SGS)– Build in Safeguards in Payment Schedule– U.S. Government’s Goldkey Service (Distributor Due Diligence)

• Current status, history of the company• Background of current officers• Trade and bank references

Can they meet your requirements?

Finding Buyers or Suppliers

PROSPERITY THROUGH TRADE TM

MODIFY THE PRODUCT OR SERVICE 4

STEP

CONSIDER…• Electrical standards

(phases, cycles, voltages)

• Metric system(instruction manuals)

• Modifications for shipment• Installation, Warranties and

After-Sales Service• Labeling standards• Standards of living• Geographic and weather

conditions• Intellectual Property

Considerations

• Patent, Trademark, and Copyright Law

• Buyer preferences• Local customs

(religious practices, use of leisure time, taste)

• Language differences• Branding

– Is your product/service distinguishable?

– Are colors/numbers offensive in the local culture?

– Are local tastes and knowledge considered?

Modify the Product or Service

LABELING STANDARDS

• Country of origin• Regulatory Requirements

(FDA, Clothing labels)

• Contents• Ingredients

(appropriate language)

Modify the Product or Service

PROSPERITY THROUGH TRADE TM

LOGISTICS 5STEP

TRANSPORTATION METHODS

• Which method is most reliable?(consult your customs broker or freight forwarder)– Air– Ocean– Truck– Rail– Courier (e.g. FedEx,

UPS, DHL, others)– Mail (USPS)

Logistics

PACKING

• Pack in strong containers appropriate for product

• Evenly distribute weight• Place goods on pallets• Ensure packing material

is moisture-resistant• Straps, seals, and shrink-wrap to safeguard• Adhere to mandatory hazardous materials labeling• Comply with wood-packaging regulations

Potential Problems

– Breakage

– Moisture

– Security

– Excess Weight

Logistics

DOCUMENTATION

Consider a freight forwarder and/or customs broker to help prepare documents

Common Documents

• Air Waybills

• Bill of Lading

• Commercial Invoice

• Consular Invoice

• Certificate of Origin

• NAFTA Certificate of Origin

• Inspection Certificate

• Dock/Warehouse Receipt

• Shippers Export Declaration

• Export License (some products)

• Insurance Certificate

Logistics

• Define obligations, risks, and costs of the buyer and seller involving the delivery of goods that makeup the export transaction

• DIFFERENT THAN DOMESTIC TERMS (Uniform Commercial Code)

• INCOTERMS 2010 updated January 2011

Logistics

E Term

F Terms

C Terms

D Terms

Risk ContinuumBuyer more

Responsible

Seller more

Responsible

Logistics

CARGO INSURANCE• If not insured by the shipper,

– Obtain your own policy– Insure through a Customs or Insurance Broker

• Ocean Shipments – General Average

(when damage occurs, everyone shares)

• Air Shipment • Courier Insurance

Logistics

THIRD-PARTY LOGISTICS PROVIDER

Freight Forwarders

• Agents for moving cargo to an overseas destination

Customs Brokers

• Responsible for clearing products through customs when shipping globally

Many freight forwarders are also customs brokers

Couriers – handles all door-to-door services and clearing of single package or lighter goods

Logistics

PROSPERITY THROUGH TRADE TM

COMPLIANCE 6STEP

U.S. EXPORT CONTROLS• National Security Export Controls

– Department of State – ITAR• Bureau of International Security and Non-proliferation

– Nonproliferation Sanctions• Directorate of Defense Trade Controls

– AECA Debarred List

– Department of Commerce – EAR• Bureau of Industry & Security (BIS)

– Denied Persons List– Unverified List– Entity List

– Department of the Treasury• Office of Foreign Assets Control (OFAC)

– Specially Designated Nationals List– Embargoed Countries

Compliance

U.S. IMPORT CONTROLS

• Customs Border Protection– part of the Department of Homeland Security

• International Trade Administration• U.S. International Trade Commission

Compliance

FOREIGN CORRUPT PRACTICES ACT (FCPA)

• Prohibits bribery of foreign officials by U.S. firms and U.S. citizens to obtain an improper business advantage

• Two provisions:– Anti-bribery provisions– Accounting provisions

Compliance

PROSPERITY THROUGH TRADE TM

PRICING, PAYMENT, & FINANCING 7

STEP

PAYMENT TERMSCash in Advance

Letter of CreditDocumentary

Collection

Open Account

Risk to ExporterLess More

Risk to ImporterMore Less

Pricing, Payment, & Financing

EXPORT FINANCING

Consult the following…

• Banker• U.S. Department of Commerce Export

Assistance Center• Small Business Administration• Export—Import Bank• Colorado Office of Economic Development &

International Trade• Private Credit Insurance

Pricing, Payment, & Financing

PROSPERITY THROUGH TRADE TM

AFTER-SALES SERVICE 8

STEP

CUSTOMER SERVICEDon’t Make it an Afterthought

• Successful firms make it a priority to– Create systems to properly respond to inquiries

in their customer’s language– Differentiate between domestic and international

sales and support– Build positive relationships with partners– Provide excellent, ongoing customer service

Who is your customer going to call when your product breaks or service fails?

After-Sales Service

CROSS-CULTURAL PROTOCOL

• Answer queries with tact and professionalism

• Be understanding and patient with your customers

• Take time to develop personal relationships

• Learn at least some of the language if you can

After-Sales Service

SALES CONTRACT

• Consider…– Modification of Product– Pricing – Dumping, Countervailing– Incoterm– Use of Third-Party Logistics Provider– Packing, Labeling, and Shipping

Requirements– Payment Terms– After-Sales Service

EXPORT / IMPORT

1

2

3

4

5

6

7

STEPS

8