Welcome!
Export and Import
Dr. Satyendra Singh
Professor, Marketing & International Business
Conference Chair, ABEM Conference
University of Winnipeg, CANADA
Learning Objectives
Export ready?
INCOTERMS
Payment terms
Letter of Credit
Export/shipping documents
Export finance
Forwarding agent and customhouse broker
Objective
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Export ready?
Reasons to export
Serve markets where no production facilities
Host government’s requirement
Price-competitive in the home market
Test foreign markets and competition inexpensively
Offset domestic market’s cyclical sales
Achieve additional sales
Extend a product’s life cycle
Reasons to not export
Home market is enough/not saturated
Risky overseas
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International Chamber of Commerce Terms of Sales (INCOTERMS)
INCOTERMS (revised every 10 years)
Ex-Works: Risk passes at factory door, US equivalent: FOB (free on board)
FAS: Free alongside ship, port of call
CIF: Cost, insurance, freight, foreign port
CFR: cost and freight, foreign port
DAF: Delivered at frontier
…
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CFR🡪 Cost, Freight, Foreign Port; FAS 🡪 Free Along Side 🡪 leave it there after clearing for export
FOB 🡪 Seller will load on board after clearing for export (Cost and risk shared INCOTERMS 2010)
FCA🡪 Free Carrier – clear for export and handover to named carrier
CPT🡪 Carriage Paid To – seller pays – named place of delivery
DEQ/DES🡪 Delivered Ex Quay/Ship – named port of delivery
DDP/DDU 🡪 Delivered Duty Paid/unpaid ; EXW 🡪 Just keep outside/warehouse
CIF🡪 insurance for maritime; DES🡪 CIF + insurance for goods as well
In 2010, eliminated!
DES, DAF, DEQ, DDU
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Payment terms offered by exporters
Cash in advance
When credit standing of the buyer unknown or uncertain
Open account
Reliable customers from stable countries, Seller assumes payment risk
Consignment
Payment made when sold, Seller assumes payment risk
Letter of credit (LC)
Promise to pay through bank, Confirmed LC, irrevocable LC
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Letter of Credit Transaction
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Export/shipping documents
Air Waybill: A bill of lading issued by an air carrier
Pro Forma Invoice: Price, INCOTERMS, delivery time, exporter’s formal quotation, license, description of the merchandise, Method of shipment, entry/exits ports
Commercial invoice: Export packing marks, clause for non transshipment
Consular invoice: Purchased from the consul of importing country, local language
Certificate of origin: Issued by local Chamber of Commerce
Inspection certificate: Frequently required for grain, food, live animals
…
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Export financing
Factoring
Factor pays the business the amount (account receivable) minus service fee
Short term.
Forfaiting
Bank buys accounts receivables. No more contact. Long-term. No recourse.
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Forwarding agent and customhouse broker
Independent business that handles export and import shipments
Customhouse broker brings goods through customs
May arrange transportation for goods after they leave customs.
Has good idea about custom duty, import quota, etc.
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Questions?�s.singh@uwinnipeg.ca