1、1Prepared By Frank ChenInternational Trade ManagementF The Global EnvironmentF International ComplexitiesF Trade managementF Summary第1页，共53页。2Prepared By Frank ChenManaging a Global business requires additional integrated processesTo buy,manufacture,distribute and sell any place on earthrequires kno
2、wledge of:Culture-Economics-distance-Governments第2页，共53页。3Prepared By Frank ChenA major difference in doing business internationally is integrating the regulatory requirements into business processesPolitical and Governmental Complexity:Changes in economic blocsTrade-an instrument of powerThe WTO ag
3、reementGlobal environmental concernsCountry specific interpretation and regulation for importing and exporting Automated,paperless,process based enforcementConstant Change第3页，共53页。4Prepared By Frank ChenWhy are governments involved?Impacts on national economiesOpportunity to apply taxes to commerceC
4、ontrol movement of goods or information第4页，共53页。5Prepared By Frank ChenHow do governments affect trade?TreatiesThe WTO agreementApplication of taxesTrade restrictionsTrade stimulatorsLogistics processes are directlyaffected by regulatory requirements第5页，共53页。6Prepared By Frank ChenGlobal markets can
5、 have considerable regulatory risk for companiesU.S.companies are not at liberty to do the business without restrictionsThe U.S.Government defines with we can do businessOver 500 years of suspended export privileges were levied in 1996Millions of dollars in fines and penalties were assessedNumerical
6、 companies are under criminal investigationIndividuals can be charged and imprisonedGenerally violations are not deliberateIn emerging markets,new businesses are formed daily and may be restrictedOld“Soviet Block”government agencies are changing names and missionsAny product can result in violations
7、,not just high tech productsGlobal purchasing leads to significant import exposuresThreat of terrorist activity emerges from many sourcesChina and other countries have similar but different rules regarding importing and exporting第6页，共53页。7Prepared By Frank ChenWhy would a company want to deal with a
8、ll this?Globalization is not an optional strategyCompetition and customers drive business globalGreater salesIncrease productivityGreater profitsLucrativebutComplex第7页，共53页。8Prepared By Frank ChenMany international regulatory complexities can beExplored and understood by asking three deceptivelysimp
9、le questionsKey:What are the goods?Where did they come from or where are they going?What is their value?第8页，共53页。9Prepared By Frank ChenWhat are the goods?A question every government asks,for which there are often many answersDescriptions lead to Classification using a harmonized codeA CRT?.Memory c
10、hips?An analytical device?A TV or a video device?An Electrical Array?Assembled Electronics?第9页，共53页。10Prepared By Frank ChenWhere goods come from is also asked by everygovernment,with a surprising number of answersCountry of origin-substantial transformationPercentage of Foreign ContentSpecial exclu
11、sions for trade agreementslocal consumption lawsExample of Uses:Importing-duty calculations,entry control and restrictions Exporting-product,country,organization,and individual sales controls Government procurement-such as the Buy America ACT International venture funding Trade Financing-EXIM Bank,A
12、ID,OPIC etc.Balance of trade allowances第10页，共53页。11Prepared By Frank ChenWhat is the value?Is a a question every government asks with a surprising number of possible answersSeller ExporterSeller ExporterBuyer ImporterBuyer ImporterExport Sales PRICEImport Buyer第11页，共53页。12Prepared By Frank ChenWhy i
13、s the price(Valuation)of the goods important?4Establishes the value of the goods4Enables the governments to apply taxes4Basis for the asset transfer from country to country第12页，共53页。13Prepared By Frank ChenTransaction value is the most commonly used method of valuationTransaction Value-price Paid or
14、 payable -Identical Merchandise -Similar MerchandiseDeductive ValueComputed Value第13页，共53页。14Prepared By Frank Chen“Price paid or payable”simple words,not sosimple in practiceMerchandiseSelling commissionsPacking costsAssists Certain royalties or license fees Proceeds of resale,disposal,or use that
15、accrue to the seller第14页，共53页。15Prepared By Frank ChenThe concept of“Assists”comes from WTO and creates basic process differences between domesticsand international transactions“Assist”means any of the following:I Materials,components parts,and similar items incorporated into theimported merchandise
16、II Tools,dies,molds,and similar items used in the production of the imported merchandiseIII Merchandise consumed in the production of the imported merchandiseIV Engineering,development,artwork,design work,plans,and sketchesthat are undertaken elsewhere than in the U.S.and are necessary for the produ
17、ction of the merchandise.第15页，共53页。16Prepared By Frank ChenA Simple Relationship?SellerBuyer第16页，共53页。17Prepared By Frank ChenThe“Simple Relationship”can quickly become very complexSellerBuyerToolingForeign DevelopmentIncorporated MerchandiseAdvancedPaymentsSet-upCostsCorrected InvoiceVolumeDiscount
18、s第17页，共53页。18Prepared By Frank ChenTaking advantage of“Trade Incentives”can be the difference between profit and lossGoods ReturnedGoods Exported for repair or AlterationGoods Assembled AbroadArticles of Metal Exported for ProcessingGeneralized System of PreferenceForeign Trade ZonesDuty DrawbackEU,
19、NAFTA or Other Trading Blocks Duty Provisions4第18页，共53页。19Prepared By Frank ChenLack of knowledge of“Trade Restrictions”canresult in fines,penalties,seizure and personal liabilityEmbargoes/Trading with the Enemy?country specific controlsGovernment Agencies requirements FCC-FDA-EPAAntidumpingCounterv
20、ailingQuotasExport Licensing for controlled products&technologyDenied parties第19页，共53页。20Prepared By Frank ChenTrade processes affect every segment of companys“Value System”ProductDesignInternational&DomesticProcurementBuyingOrderCreationRaw Materials,Components,&ManufacturingForwarders&Consolidator
21、sInternationalCarriersBrokersDomesticCarriersDistributionCentersLocal ConsolidatorsCustomersValue System information ChannelImport/Export ComplianceProcurementFinancemanufacturing TrafficStores&DistributionPricing&BuyingExecutive ManagementDCsValue SystemActivitiesReal-timeoperationalmanagementinfor
22、mation第20页，共53页。21Prepared By Frank ChenMany Operations and Organizations in a companyare involved and their responsibilities are complexExecutive management(domestics and international)-responsible and accountableto direct,inform,and educate business units and employees to comply with laws and regu
23、lationsMarketing and sales-must assure product is sold to customers allowed by US exportregulationsDistribution-ships and receives goods to and from approved customers and vendors and is the operational interface to trade regulatory agenciesManufacturing&procurement-sources products and components i
24、nternationallyand must obey COO,Classification and valuation(product costing),and Trading with the Enemy LawsFinance-related party transfer pricing,proper valuation of goods,country pricing,OEM pricing,royalties,subsidiary dividend remissions,foreign tax preparation,internal compliance audit program
25、sLegal-review of government agency inquires,handling of investigations,andretention of specialized legal assistance第21页，共53页。22Prepared By Frank ChenEveryone has a part to play in assuring compliance with regulations Compliance responsibility begins with the CEO and continues through to operations C
26、orporate officers are responsible to set policy,instruct,and assure documented processes and procedures and in place Operational units are responsible to carry out the policies,instructions,processes,and procedures All locations in the world are potentially subject to U.S.Government regulations and
27、audit第22页，共53页。23Prepared By Frank ChenSpecific actions are necessary to assure a solidcompliance program is in placeUnderstand business environment from a compliance perspective Kinds of products manufactured How product moves from suppliers,through plants and to customers The locations where devel
28、opment,manufacturing,and distribution are done Determine the proper compliance program processes and subprocesses Import process and subprocesses Export process and subprocessesDevelop basic trade documentation Policies,instructions,processes,and proceduresProvide compliance education to Management
29、Employees第23页，共53页。24Prepared By Frank ChenThe primary benefit of enhanced compliance focus isto reduce the risk of business interruptions and loss ofsales and profits due to compliance process failuresFewer compliance errors reduce the potential loss of import or export privilegesUnnecessary compli
30、ance related delays in goods movement result in lost sales,increased costs,higher inventories,and inventory lossesGood procedures and documentation establish intent for compliance and reduce the time spent on regulatory auditsThe risk of foreign nationals being barred from work will be minimized by
31、appropriate licensing processesDocumented export and import compliance processes reduce the risk of loss of exclusion from government and commercial contracts第24页，共53页。25Prepared By Frank ChenEfficiency and cost savings are an additional result of improved trade and logistics managementWell document
32、ed international shipment processes will result in:Elimination of duplicate or non-value add tasks Clear,standardized instructions for associates Control points to eliminate errors or identify them early in the process Measurements to monitor progress and identify areas for improvement Goods move fa
33、ster and cheaperDocumented processes and availability of trade information allow companies to increase profits Potential U.S.programs include Generalized system of preferences,Returned American goods,American Goods Assembled Abroad,Returned Goods for Repair,Duty Drawback and Foreign Trade Zoes Simil
34、ar duty saving programs can be developed for most other countries第25页，共53页。26Prepared By Frank ChenCompetitive advantage in international operationsis achieved through integrated trade managementInformation InvestmentSourcingLogisticsInventoryContractsCostsComply with Government Regulations Effectiv
35、e Contract ManagementEfficient Movement of Goods Satisfied CustomersCost Effective Sourcing Decisions “Just In Time”ManufacturingManagement of Financial Transactions第26页，共53页。27Prepared By Frank ChenPrice TermE Group-EXWF Group-FCA,FAS,FOBC Group-CFR,CIF,CPT,CIFD Group-DAF,DES,DEQ,DDU,DDP第27页，共53页。2
36、8Prepared By Frank ChenEXWEXW-EX Work(named place)The seller only need to put the goods on the Dockof the Factory/WarehouseThe Freight,Insurance,outbound Customs clearance fee and Cost of load the goods on the trucks are belong to the BuyerThis term is not recommended since it need seller to provide
37、 the export license第28页，共53页。29Prepared By Frank ChenFCAFCA-Free CARRIER(named place)The seller need finish the outbound Customs clearance andhand over the goods at the pointed place to the pointed carrier.The Freight,Insurance are belong to the Buyer第29页，共53页。30Prepared By Frank ChenFAS/FOBFAS-FREE
38、 ALONGSIDE SHIP(named port of shipment)FOB-FREE ON BOARD(named port of shipment)Only used for sea freightThe FCA is more general.第30页，共53页。31Prepared By Frank ChenCPTCPT-CARRIAGE PAID TO(named place of destination)The seller pay the freight to the pointed place.Insurance not covered第31页，共53页。32Prepa
39、red By Frank ChenCIPCIP-CARRIAGE AND INSURANCE PAID TO (named place of destination)The seller pay the freight to the pointed place.Insurance covered第32页，共53页。33Prepared By Frank ChenCFR/CIFCFR-COST AND FREIGHT(named port of destination)CIF-COST,INSURANCE AND FREIGHT (named port of destination)Only u
40、sed for sea freightThe CPT/CIP is more general第33页，共53页。34Prepared By Frank ChenDAFDAF-DELIVED AT FRONTIER(named place)The seller need finish the outbound Customs clearance andhand over the goods at the pointed frontier.第34页，共53页。35Prepared By Frank ChenDESDES-DELIVERED EX SHIP(named port of destina
41、tion)Used for sea freight.Inbound Customs clearance not covered第35页，共53页。36Prepared By Frank ChenDEQDES-DELIVERED EX QUAY(DUTY PAID)(named port of destination)Used for sea freight.Inbound Customs clearance coveredThis term is not recommended since it need the buyer to provide the import license第36页，
42、共53页。37Prepared By Frank ChenDDUDDU-DELIVERED DUTY UNPAID (named place of destination)The inbound Customs clearance fee is belong to the sellerbut the inbound duty and other tax not covered.This term is not recommended since it need the buyer to provide the import license第37页，共53页。38Prepared By Fran
43、k ChenDDPDDP-DELIVERED DUTY PAID (named place of destination)The inbound Customs clearance fee is belong to the sellerThe inbound duty and other tax covered by the seller.This term is not recommended since it need the buyer to provide the import license第38页，共53页。39Prepared By Frank ChenFreight CostF
44、 Air freight costF Sea freight costF Land freight costF Hub costF Customs clearance feeF Others第39页，共53页。40Prepared By Frank ChenAIR FREIGHT COSTAir Cargo-Used for heavy weight shipment The freight rate is depend on the route and the shipment weight/size*From Shanghai to Los AngelesMin 45kg 100kg 50
45、0kg 1000kg$65.00$4.20$3.80$3.45$3.20$2.95Fuel surcharges$0.10/kgExampleThe rate may changed in slack season and peak seasonThe Fuel surcharge also will changed based on the price of crude oil*the volume weight is equal to Volume/0.006第40页，共53页。41Prepared By Frank ChenAIR FREIGHT COSTCourier shipment
46、-Used for small package The freight rate is depend on the route and the shipment weight/size*ExampleThe rate is covered door to door service include Customs clearance fee.*the volume weight is equal to Volume/0.006 Weight(kg)Rate($)0.526.41.033.51.540.62.047.72.554.83.061.93.569.04.076.14.583.25.090
47、.35.597.46.0104.56.5111.67.0118.77.5125.88.0132.98.5140.09.0147.19.5154.210.0161.3Additional rates per kg thereafter$11.4第41页，共53页。42Prepared By Frank ChenSEA FREIGHT COSTFCL-Full container load 40 feet container-12.04x2.34x2.39M3 20 feet container-5.75x2.34x2.39M3 40 feet high cube container-12.04x
48、2.34x2.69M3LCL-Less than container load The freight rate is depend on the route and shipment sizeThe rate may changed in slack season and peak seasonExampleFrom Shanghai to Los AngelesFCL 40 feet$3200 all inFCL 20 feet$2200 all inLCL$120/M3 all in第42页，共53页。43Prepared By Frank ChenLAND FREIGHT COSTTh
49、e rate depend on the truck size and route The rate may changed in slack season and peak seasonExampleFrom Shanghai to Nanjing5 Ton truck-$1002 Ton truck-$75.第43页，共53页。44Prepared By Frank ChenHUB COSTThe Hub cost include:Storage-per carton,per month Receiving Tallying,System registration,Confirmation
50、 of receipt Put away,.Inventory Management Maintenance,Cycle counting,Handling Out EDI pick list,Picking,Kitting,Checking,hand shake 第44页，共53页。45Prepared By Frank ChenCustoms clearance The rate vary from country to country,broker to broker Inspection fee will occur if the shipment need to be examine
