Transcript Chapter 13: Export-Import Management Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John.

Chapter 13: Export-Import Management
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
TOPIC PLAN
• Negotiation of an international sale
• Main methods of payment
• Trade finance techniques
– Credit, factoring, forfeiting, counter trade
• Australia’s exporters
• Export management in a multinational
company
• Exports of Small and Medium enterprises
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
Major steps in the negotiation of an
international sale
Exporter in
Country A
1.Enquiry
2. Quotation/Offer
3. Order
4. Order Acceptance/ contract
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
Exporter in
Country B
INCOTERMS
• Incoterms 2000
–
–
–
–
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EXW – Ex-Works
FCA- Free Carrier
FAS- Free Alongside Ship
FOB-Free on Board
CFR-Cost and Freight
CIF- Cost, Insurance and Freight
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
The four contractual relationships
• 1. The International Sale of Goods Contract
– Exporter and Importer
• 2. The Letter of Credit (L/C)
– Importer and the Importer’s bank
• 3. The Bill of Lading
– Carrier and Exporter( under CFR/CIF) or with
the Importer (under an FOB sale)
• 4. Insurance contract
– Insurance company and Exporter (CIF) and
Importer (CFR/CIF)
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International Trade and Investment by John Gionea
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Export Marketing issues
• Channels of distribution
– National market:producer-export agent-import agentmajor wholesaler-small wholesaler
– Modus operandi is different
• Pricing
– (1) requiring prices in export markets that yield higher
returns that are available in domestic markets
– (2) “one-price” strategy
– (3)pricing to yield lower returns, at least in the short run
– (4) pricing to sell production in excess of the domestic
needs
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
Trade financing-Methods of Payment
• Cash in Advance
• Documentary letters of credit
– Revocable credits
– Irrevocable credits
– Confirmed credits
• Draft(bill of exchange): the instrument normally used
in international commerce to effect payment.
– Drawer (“Maker”) and Drawee
– Sight drafts and time drafts
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
European
Importer
AUSTRALIAN
EXPORT SALE
TO EUROPE
Europea
n Bank
L/ C
ANZ
BANK
Aussie Exporter
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
TRADE FINANCING:Bank finance
• Credit to importer
– Supplier credit (by the exporter)
– Buyer credit(directly to the foreign buyer)
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•
•
Short term (up to 2 years)
Medium term (2-5 years)
Long-term (over 5 years)
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
Trade Financing:
Non-Bank Finance
•
•
Government loans and guarantees(Export credit
insurance):EFIC,COFACE etc.
Factoring
–
•
Forfeiting
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Factor buys export receivables at a discount of 2-4%
Exporter -ultimately liable in case of default.
Non-recourse export finance
Guarantee (avail) from the importer's government
Counter trade
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
COUNTERTRADE
•
Main forms
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Barter
Counter purchase
Buyback(Compensation)
Offsets(Local content)
Pro-active vs. Reactive counter trade
Disadvantages:Time-consuming;Costly
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
Government Loans and Guarantees
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Export credit insurance-guarantee programs
France-over 20% of exports
Japan-low interest loans to export companies
Brazil-favourable exchange rates to exporters
US-EXIMBANK
– "Mixed credit"
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
Australian Exporters
•
Small size by international standards
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Primary products dominate the top 50
placings.
ETM’s: the fastest growing export sector.
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Top 50 Australian exporters(Median:US $300m)
Top 50 US exporters(Median :US$ 1.3billion.)
150 “born-global” ETM exporters
Foreign ownership plays a dominant role
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
Selected indicators regarding the top 50
exporters in Australia and Canada
Australia
(1996/97)
Range of exports
sales(US$Million)
Median of export sales for
top 50(US$ Mill.)
Break-down of the top 50
exporters by main export
line(% out of 50)
-Primary products(%)
-Machinery&Equipment(%)
-Other manufactures(%)
-Services(%)
4300-250
Canada
(1999)
4000-160
570
510
68
10
12
10
10
28
48
14
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
Export Management for the MNE
•
•
•
More international options
(exports & foreign production)
Exports of complete products or only parts
Changes in Foreign business strategy
(Step 5-Bus.plan)
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•
Exports to MNEs affiliates
Choice of foreign currency
Transfer pricing
More local market knowledge than non-MNE's
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
SME's in global business activities
•
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Worldwide:37,000 transnational enterprises
with over 205,000 affiliates.
Contribution of SME's to nation's exports
–
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Taiwan
: 60 %
Denmark : 50 %
Sweden : 30 %
France
: 26 %
AUSTRALIA :< 10 %
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
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Australia's Small and Medium
Enterprises
•
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Total number of Australian SME's :about 530,000
Internationalised Small and Medium
Enterprises(ISME'S)
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Number of ISME's: at least 4,500
International turnover:A$ 6.5 b.
Direct domestic employment : ab.40,000
Over 20 % of turnover from global operators
Active in at least 5 countries(mainly SE Asia).
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
IMPORT MANAGEMENT
•
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Importing-neglected aspect of international
business strategy
Importing channels-Direct and Indirect
Importing-part of the purchasing function
MNE imports from off-shore manufacturing
affiliates
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea