Exporting and Trading info

Terms of Sale In the domestic United States market, it is customary to quote, Free On Board (F.O.B.) factory. But in international business, suppliers use entirely different pricing terms, called Terms of Sale. Either of two versions of these terms might be specified so long as both parties agree: INCOTERMS-1980; or Revised American Foreign Trade Definitions-1941. If, when drawing up the contract, buyer and seller specifically refer to INCOTERMS or to the Revised American Definitions, they can be sure of defining their respective responsibilities. In so doing, buyer and seller eliminate any possibility of misunderstanding and subsequent dispute. You can order a copy of INCOTERMS for about $10.00, from: The ICC Publishing Corporation, Inc., 125 East 23rd St. Suite 300, New York, NY 10010. You can order Revised American Definitions from The National Council of American Importers, the National Foreign Trade Council, or the Chamber of Commerce of the United States, 1615 H Street, N.W. ...

INITIAL QUOTATIONS Initial quotes begin with a "request for quotation" (RFP) sent by the importer to the exporter or with an unsolicited offer from the exporter. A simple letter or telex can be a request for a quotation. Figure 2-1 shows a sample letter of inquiry. A pro forma invoice is often the document you would use to respond to a request for pricing information. The pro forma invoice, a normal invoice document visibly marked "Pro Forma", is the method you would use most often to initiate negotiations. Its purpose is to describe in advance certain items and details. Once accepted by the purchaser, it becomes a binding sales agreement or legal contract, and the seller is bound to the terms stated. Carefully think through any terms entered on this document. Figure 2-2 is an example of a pro forma invoice. Pro forma Invoice A provisional invoice forwarded by the seller of goods prior to a contemplated shipment advising the buyer of the kinds and quantities of...

MARKET RESEARCH Market research is vital to the success of your international import/export business. Is your product salable? Does anyone care? You must be able to sell enough of the product or service to justify undertaking the import/export project. If you are presenting a new product, you might have to create a market. A good rule of thumb for the new import/export business is: "If the market isn't there, get out of the project and find another product." International market research will save money and time. Unfortunately, too many newcomers plunge into import/export without determining whether they can sell the product at a profit. Following are checklists of research items for importers and exporters. Exporter Checklist    Is there already a market for the product?    What is the market price?    What is the sales volume for that product?    Who has market share, and what are the shares?    What is the location of the...

MAKING CONTACTS Importers and exporters need contacts to get started. The exporter must convince a U.S. manufacturer of his or her ability to sell the manufacturer's product or service internationally. The importer, on the other hand, must find an overseas manufacturer or middleman from whom to buy the product or service. Contacts are classified in two categories: 1. Sourcing (finding) a manufacturer or provider of the product or service you wish import or export. 2. Marketing or selling that product or service. The two ways to make contacts overlap. You can use them to expand your import/export network. Sourcing Contacts If you are an exporter, any product or service you select falls into an industry classification, and that industry very likely has an association. Almost every United States industry has a publication—if not a magazine, at least a newsletter. Begin looking for manufacturers of your product or service in the appropriate industry publication. Under ...

CHOOSING THE PRODUCT The question asked most often is, "What product should I select to import or export? Should it be rugs or machinery?" Keep it simple in the beginning. If your firm already manufactures merchandise or provides a service, that product or service is what you sell. But, for your own import/export business, your job will be to sell someone else's product or service. In other words, you will be the middleman. The Personal Decision Most people begin with a single product or service they know and understand, or have experience with. Others begin with a line of products, or define their products in terms of an industry with which they are familiar. Above all, product selection is a personal decision, but the decision should make common sense. For example, if you aren't an engineer, don't begin by exporting gas turbine engines. Or, if you are an electronics engineer, don't start with fashionable textiles. A good example is the established Am...

Launching a Profitable Transaction: Introduction THE NEXT FIVE CHAPTERS EXPLAIN THE BASICS OF IMPORTING AND exporting. They apply to manufactured products as well as the growing service industries such as computer software, construction engineering, or insurance. These basics are the bridge from producer to buyer. This bridge has been in place for many years, and so has been tested by time. Nevertheless, it is possible to perceive the fundamentals as obstacles. Don't let the learning process deter you. Anyone can learn the nuts and bolts of international trade. This chapter addresses the first 7 commonalities of an importing or exporting transaction. If you understand these concepts, your import/export business will get off to an excellent start toward early profitability. 1. Terminology 2. Homework 3. The product 4. Contact making 5. Market research 6. Initial quotations 7. Pricing for the bottom line Don't mistakenly assume that the order presented in this...