1、International Business 11eBy Charles W.L. HillCopyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the p
2、rior written consent of McGraw-Hill Education.Chapter 16Exporting, Importing, and Countertrade16-3Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Why Export? Exporting is a way to increase market si
3、ze and profits lower trade barriers under the WTO and regional economic agreements, such as the EU and NAFTA, make it easier than ever Large firms often proactively seek new export opportunities, but many smaller firms export reactively often intimidated by the complexities of exporting16-4Copyright
4、 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Why Export? Exporting firms need to identify market opportunities deal with foreign-exchange risk navigate import and export financing understand the challenge
5、s of doing business in a foreign market16-5Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.What Are the Pitfalls of Exporting? Common pitfalls include poor market analysis poor understanding of comp
6、etitive conditions a lack of customization for local markets a poor distribution program poorly executed promotional campaigns problems securing financing a general underestimation of the differences and expertise required for foreign market penetration an underestimation of the amount of paperwork
7、and formalities involved 16-6Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.How Can Firms Improve Export Performance? Many firms are unaware of export opportunities available Firms need to collect
8、information Firms can get direct assistance from some countries and/or use an export management companies both Germany and Japan have developed extensive institutional structures for promoting exportsJapanese exporters can use knowledge and contacts of sogo shosha - great trading housesU.S. firms ha
9、ve far fewer resources available16-7Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Where Can U.S. Firms Get Export Information? The U.S. Department of Commerce the most comprehensive source of expo
10、rt information for U.S. firms The International Trade Administration and the United States and Foreign Commercial Service “best prospects” lists for firms The Department of Commerce organizes various trade events to help firms make foreign contacts and explore export opportunities The Small Business
11、 Administration Local and state governments16-8Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.What Are Export Management Companies? Export management companies (EMCs) are export specialists that ac
12、t as the export marketing department or international department for client firms Two types of assignments are common:1. EMCs start export operations with the understanding that the firm will take over after they are established not all EMCs are equalsome do a better job than others16-9Copyright 201
13、7 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.What Are Export Management Companies?2. EMCs start services with the understanding that the EMC will have continuing responsibility for selling the firms products
14、but, firms that use EMCs may not develop their own export capabilities16-10Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.How Can Firms Reduce the Risks of Exporting? To reduce the risks of exporti
15、ng, firms should hire an EMC or export consultant to identify opportunities and handle paperwork and regulations focus on one or a few markets at first enter a foreign market on a small scale in order to reduce the costs of any subsequent failures recognize the time and managerial commitment involve
16、d develop a good relationship with local distributors and customers hire locals to help establish a presence in the market be proactiveconsider local production 3M, a manufacturer of household and office products, bases its export strategy on four principles: FIDO (First In Defeats Others), enter on
17、 a small scale to reduce risks, add additional product lines once the exporting operations start to become successful, and hire locals to promote the firms products. If you were competing with 3M for market share in a foreign country, how might you counter their strategy? Would you flood the market
18、with similarly priced goods? Wait for 3M to develop local demand and then export competing products at a lower price point? Immediately establish local production facilities? Launch a viral web campaign tailored to the target market to promote your products?Copyright 2017 McGraw-Hill Education. All
19、rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.16-12Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.How Can Firms Overcome the Lack of Tr
20、ust in Export Financing? Because trade implies parties from different countries exchanging goods and payment, the issue of trust is importantexporters prefer to receive payment prior to shipping goods, but importers prefer to receive goods prior to making payments To get around this difference of pr
21、eference, many international transactions are facilitated by a third party - normally a reputable bank adds an element of trust to the relationship16-13Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Educatio
22、n.How Can Firms Overcome The Lack Of Trust in Export Financing?The Use of a Third Party16-14Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.What Is a Letter of Credit? A letter of credit is issued b
23、y a bank at the request of an importer states the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documentsmain advantage is that both parties are likely to trust a reputable bank even if they do not trust each other16-15Copyri
24、ght 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.What Is a Draft? A draft an order written by an exporter instructing an importer, or an importers agent, to pay a specified amount of money at a specified t
25、ime the instrument normally used in international commerce for payment also called a bill of exchange16-16Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.What Is a Draft? A sight draft is payable on
26、 presentation to the drawee A time draft allows for a delay in paymentnormally 30, 60, 90, or 120 daysonce a time draft has been “accepted” it becomes a negotiable instrument that can be sold at a discount from its face value16-17Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduc
27、tion or distribution without the prior written consent of McGraw-Hill Education.What Is a Bill of Lading?The bill of lading is issued to the exporter by the common carrier transporting the merchandise It serves three purposes 1. It is a receipt - merchandise described on document has been received b
28、y carrier2. It is a contract - carrier is obligated to provide transportation service in return for a certain charge3. It is a document of title - can be used to obtain payment or a written promise before the merchandise is released to the importer16-18Copyright 2017 McGraw-Hill Education. All right
29、s reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.How Does an International Trade Transaction Work?A Typical International Trade Transaction16-19Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the
30、 prior written consent of McGraw-Hill Education.Where Can U.S. Firms Get Export Assistance?1. Financing aid is available from the Export-Import Bank (Ex-Im Bank) an independent agency of the U.S. government provides financing aid to facilitate exports, imports, and the exchange of commodities betwee
31、n the U.S. and other countries achieves its goals though loan and loan guarantee programs16-20Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Where Can U.S. Firms Get Export Assistance?2. Export cre
32、dit insurance is available from the Foreign Credit Insurance Association (FCIA) provides coverage against commercial risks and political risks protects exporters against the risk that the importer will default on payment16-21Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction
33、or distribution without the prior written consent of McGraw-Hill Education.What Is Countertrade? Countertrade - a range of barter-like agreements that facilitate the trade of goods and services for other goods and services when they cannot be traded for money emerged as a means purchasing imports du
34、ring the1960s when the USSR and the Communist states of Eastern Europe had nonconvertible currenciesgrew in popularity in the 1980s among many developing nations that lacked the foreign exchange reserves required to purchase necessary importsnotable increase after the 1997 Asian financial crisis16-2
35、2Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.What Are the Forms of Countertrade? There are five distinct versions of countertrade1. Barter - a direct exchange of goods and/or services between tw
36、o parties without a cash transaction the most restrictive countertrade arrangement used primarily for one-time-only deals in transactions with trading partners who are not creditworthy or trustworthy16-23Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution witho
37、ut the prior written consent of McGraw-Hill Education.What Are the Forms of Countertrade?2. Counterpurchase - a reciprocal buying agreement occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made 3. Offset - similar to counterpurchase - one par
38、ty agrees to purchase goods and services with a specified percentage of the proceeds from the original sale difference is that this party can fulfill the obligation with any firm in the country to which the sale is being made16-24Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduc
39、tion or distribution without the prior written consent of McGraw-Hill Education.What Are the Forms of Countertrade?4. A buyback occurs when a firm builds a plant in a country or supplies technology, equipment, training, or other services to the country agrees to take a certain percentage of the plan
40、ts output as a partial payment for the contract 16-25Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.What Are the Forms of Countertrade?5.Switch trading - the use of a specialized third-party tradin
41、g house in a countertrade arrangement when a firm enters a counterpurchase or offset agreement with a country, it often ends up with counterpurchase credits which can be used to purchase goods from that country switch trading occurs when a third-party trading house buys the firms counterpurchase cre
42、dits and sells them to another firm that can better use them16-26Copyright 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.What Are the Pros of Countertrade? Countertrade is attractive because it gives a firm
43、 a way to finance an export deal when other means are not available it give a firm a competitive edge over a firm that is unwilling to enter a countertrade agreement Countertrade arrangements may be required by the government of a country to which a firm is exporting goods or services 16-27Copyright
44、 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.What Are the Cons of Countertrade? Countertrade is unattractive because it may involve the exchange of unusable or poor-quality goods that the firm cannot dispose of profitably it requires the firm to establish an in-house trading department to handle countertrade deals Countertrade is most attractive to large, diverse multinational enterprises that can use their worldwide network of contacts to dispose of goods acquired in countertrade deals sogo shosha
