A BEGINNER’S GUIDE TO
IMPORTING &
EXPORTING
PROSPERITY THROUGH TRADE TM
WHY PURSUE
INTERNATIONAL TRADE?
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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
5
Logistics
6
Compliance
3
Finding
Buyers/Suppliers
7
Pricing, Payments
& Financing
4
Modify
Product/Service
8
After-Sales Service
1
Develop a Strategy
2 Market Research
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
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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
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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 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
STEP
MARKET
RESEARCH
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
Finding Buyers or Suppliers
Suppliers…
• Foreign Embassies,
Consulates
• Chambers of Commerce
• Trade Associations
• Trade Shows
• Trade Missions
• Online Resources
• Buying Agents
DUE DILIGENCE
• Ensure partners are reliable and credible
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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
MODIFY THE
PRODUCT OR
SERVICE
STEP
4
PROSPERITY THROUGH TRADE TM
CONSIDER…
• Electrical standards
(phases, cycles, voltages)
• Metric system
(instruction manuals)
• Patent, Trademark, and
Copyright Law
• Buyer preferences
• Local customs
• Modifications for shipment
(religious practices, use of
leisure time, taste)
• Installation, Warranties and
After-Sales Service
• Language differences
• Labeling standards
• Branding
– Is your product/service
• Standards of living
distinguishable?
• Geographic and weather
– Are colors/numbers
conditions
offensive in the local
culture?
• Intellectual Property
– Are local tastes and
Considerations
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
STEP
LOGISTICS
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
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Air Waybills
Bill of Lading
Commercial Invoice
Consular Invoice
Certificate of Origin
NAFTA Certificate of Origin
Logistics
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Inspection Certificate
Dock/Warehouse Receipt
Shippers Export Declaration
Export License (some
products)
• Insurance Certificate
• 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
STEP
COMPLIANCE
6
PROSPERITY THROUGH TRADE TM
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
PRICING,
PAYMENT, &
FINANCING
STEP
7
PROSPERITY THROUGH TRADE TM
PAYMENT TERMS
Cash in Advance
Letter of Credit
Documentary
Collection
Open Account
Less
More
Risk to Exporter
Risk to Importer
Pricing, Payment, & Financing
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
STEP
AFTER-SALES
SERVICE
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
5
Logistics
6
Compliance
3
Finding
Buyers/Suppliers
7
Pricing, Payments
& Financing
4
Modify
Product/Service
8
After-Sales Service
1
Develop a Strategy
2 Market Research