A BEGINNER ’S GUIDE TO

IMPORTING & EXPORTING

PROSPERITY THROUGH TRADE TM

WHY PURSUE INTERNATIONAL 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 STEPS

1

Develop a Strategy

5

Logistics

2

Market Research

3

Finding Buyers/Suppliers

4

Modify Product/Service

6

Compliance

7

Pricing, Payments & Financing

8

After-Sales Service

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

DEVELOP A STRATEGY

STEP 1

PROSPERITY THROUGH TRADE TM

If you intend to export… 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 import… DO YOU UNDERSTAND YOUR PRODUCT?

• • • • • • Have you chosen the

right

place?

product from the right 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

MARKET RESEARCH

STEP 2

PROSPERITY THROUGH TRADE TM

GETTING STARTED WITH MARKET RESEARCH

 Obtain trade statistics  Identify potential markets  Understand least promising markets  Prioritize most promising markets  Examine product/service trends  Research the competition  Analyze marketing strategies  Identify any barriers  Identify 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

FINDING BUYERS OR SUPPLIERS

STEP 3

PROSPERITY THROUGH TRADE TM

SALES CHANNEL CONTINUUM

Sales Representatives Agents Distributors Foreign Retailers Direct End Users

Less

Exporter’s Contact w/Customer

More

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

Finding Buyers or Suppliers

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

– – – – – Coface Credit Reports, Country Credit Ratings

(WTC Denver)

Tour the Factory Hire Independent Inspectors

(e.g. SGS)

and

credible

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

MODIFY THE PRODUCT OR SERVICE

STEP 4

PROSPERITY THROUGH TRADE TM

• • • • • • • •

CONSIDER…

Electrical standards

(phases, cycles, voltages)

• Patent, Trademark, and Copyright Law Metric system

(instruction manuals)

Modifications for shipment • • Buyer preferences Local customs

(religious practices, use of leisure time, taste)

Installation, Warranties and After-Sales Service • Labeling standards • Language differences Standards of living Geographic and weather conditions Intellectual Property Considerations 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

LOGISTICS

STEP 5

PROSPERITY THROUGH TRADE TM

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 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

Buyer more Responsible

Logistics

Risk Continuum

Seller more Responsible

•

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

Many freight forwarders are also customs brokers

•

Freight Forwarders

Agents for moving cargo to an overseas destination •

Customs Brokers

Responsible for clearing products through customs when shipping globally

Couriers

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

COMPLIANCE

STEP 6

PROSPERITY THROUGH TRADE TM

U.S. EXPORT CONTROLS

• National Security Export Controls – Department of State – ITAR – • • Directorate of Defense Trade Controls – AECA Debarred List Department of Commerce – EAR • Bureau of International Security and Non-proliferation – Nonproliferation Sanctions 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

PRICING, PAYMENT, & FINANCING

STEP 7

PROSPERITY THROUGH TRADE TM

PAYMENT TERMS

Cash in Advance Letter of Credit Documentary Collection Open Account

Less More

Pricing, Payment, & Financing

Risk to Exporter Risk to Importer

More Less

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

AFTER-SALES SERVICE

STEP 8

PROSPERITY THROUGH TRADE TM

CUSTOMER SERVICE

Don

’

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 STEPS

1

Develop a Strategy

5

Logistics

2

Market Research

3

Finding Buyers/Suppliers

4

Modify Product/Service

6

Compliance

7

Pricing, Payments & Financing

8

After-Sales Service