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Importing, Exporting, and Sourcing

Importing, Exporting, and Sourcing. Global Marketing Chapter 8. This chapter looks at: Export selling and export marketing Organizational export activities National policies on imports and exports Tariff systems Key export participants. Introduction. Export Selling vs. Export Marketing.

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Importing, Exporting, and Sourcing

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  1. Importing, Exporting, and Sourcing Global Marketing Chapter 8

  2. This chapter looks at: Export selling and export marketing Organizational export activities National policies on imports and exports Tariff systems Key export participants Introduction

  3. ExportSelling vs. Export Marketing • Export selling involves selling the same product, at the same price, with the same promotional tools in a different place • Export marketing tailors the marketing mix to international customers

  4. Requirements for Export Marketing • An understanding of the target market environment • The use of market research and identification of market potential • Decisions concerning product design, pricing, distribution and channels, advertising, and communications

  5. National Policies Governing Exports and Imports • Most nations encourage exports and restrict imports • Goods and services imported into the U.S. almost doubled in seven years • In 2008, the total was $2.5 trillion

  6. Share of U.S. Apparel Market by Exporting Country, 2008 • China 35.4 • India 5.6 • Mexico 5.5 • Vietnam 5.3 • Indonesia 4.3 • Bangladesh 3.6 • Pakistan 3.2 • Honduras 2.7 • Cambodia 2.4 • Italy 2.4

  7. Government Programs that Support Exports • Tax incentives • Subsidies • Governmental assistance • Free trade zones

  8. Governmental Actions to Discourage Imports and Block Market Access • Tariffs ( “Three R’s”) • Nontariff barriers • Quotas • Discriminatory procurement policies • Restrictive customs procedures • Arbitrary monetary policies • Restrictive regulations Port Authority of Thailand: Laem Chabang

  9. Examples of Trade Barriers • Table 8.3 p. 277 • EU- 16.5% antidumping tariffs on Shoes from China • 10% on shoes from Vietnam • China- 28% on foreign made auto parts

  10. Governmental actions to discourage imports • A nontariff trade barrier (NTB) is any measure other than a tariff that is an obstacle to the sale of products in a foreign market. NTBs are also known as hidden trade barriers. • A quota is a government-imposed limit or restriction on the number of units or the total value of a particular product or product category that can be imported. • In 2005, for example, textile producers in Italy and other European countries were granted quotas on 10 categories of textile imports from China. • Discriminatory procurement policies can take the form of government rules and administrative regulationsthat give local vendors priority. • The Buy American Act of 1993

  11. Governmental actions to discourage imports • Discriminatory exchange rate policies distort trade in much the same way as selective import duties and export subsidies. • Restrictive administrative and technical regulations can also create barriers to trade. These may take the form of antidumping regulations, product size regulations, and safety and health regulations. • VW diesel engines in US • Restrictions on Japanese imports

  12. Tariff Systems • Single-column tariff • Simplest type of tariff • Schedule of duties in which rate applies to imports from all countries on the same basis • Two-column tariff • General duties plus special duties apply

  13. Tariff Systems Sample Rates of Duty for U.S. Imports

  14. Preferential Tariff • Reduced tariff rate applied to imports from certain countries • GATT prohibits the use, with three exceptions: • Historical preference arrangements already existed • Preference is part of formal economic integration treaty • Industrial countries are permitted to grant preferential market access to LDCs

  15. Customs Duties • Ad valorem duty • Expressed as percentage of value of goods • Specific duty • Expressed as specific amount of currency per unit of weight, volume, length, or other unit of measurement • $1 per pair of Shoes • Compound or mixed duties • Apply both ad valorem and specific on the same items

  16. Other Duties and Import Charges • Anti-dumping Duties • Dumping is the sale of merchandise in export markets at unfair prices • Special import charges equal to the dumping margin • 48.5% added to tax against Chinese imports of bicycles in EU • Countervailing Duties • Added duties to offset the subsidies granted in the export countries • Temporary Surcharges

  17. Foreign purchasing agents Export brokers Export merchants Export management companies Export distributor Export commission representative Cooperative exporter Freight forwarders Manufacturer’s export representatives Key Export Participants

  18. Organizing for Exporting in the Manufacturer’s Country • Exports can be handled • As a part-time activity performed by domestic employees • Through an export partner • Through an export department • Through an export department within an international division • For multi-divisional companies; each possibility exists for each division

  19. Organizing for Exporting in the Market Country • Direct market representation • Advantages: control and communications • Representation by independent intermediaries • Advantages: best for situations with small sales volume

  20. Export Financing and Methods of Payment • Documentary credits (letter of credit) • Documentary collections (bill of exchange) • Cash in advance • Sales on open account

  21. Flow Chart of Documentary Credit

  22. Sourcing • Must emphasize benefits of sourcing from country other than home country • Must assess vision and values of company leadership • Advantage can be gained by • Concentrating some of the marketing activities in a single location • Leveraging company’s know-how • Tapping opportunities for product development and R&D

  23. Factors that Affect Sourcing • Management vision • Factor costs and conditions • Customer needs • Logistics • Country infrastructure • Political risk • Exchange rate, availability, and convertibility of local money

  24. Duty Drawback • Refunds of duties paid on imports that are processed or incorporated into other goods AND re-exported • Reduce the price of imported production inputs • Used in the U.S. to encourage exports • After NAFTA, U.S. reduced drawbacks on exports to Canada and Mexico • China had to reduce drawbacks in order to join the WTO

  25. Looking Ahead to Chapter 9 • Global Market Entry Strategies: Licensing, Investment, and Strategic Alliances

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