Intro To International Business


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Intro To International Business

  1. 1. Intro to International Business Wade Merritt Maine International Trade Center Ellsworth December 5, 2000
  2. 2. What is the Maine International Trade Center? <ul><li>One-stop shop for international business assistance </li></ul><ul><li>Export and import counseling </li></ul><ul><li>Access to international business expertise, both public and private </li></ul><ul><li>Membership organization </li></ul><ul><li>Economic development tool </li></ul>
  3. 3. More about MITC <ul><li>Formed by unanimous act of state legislature, 1996 </li></ul><ul><li>Receives partial state funding, through Department of Economic & Community Development </li></ul>
  4. 4. More about MITC <ul><li>Statewide organization, offices in Portland, Bangor, and Lewiston-Auburn </li></ul><ul><li>Works with many partners, including: </li></ul><ul><ul><li>US Department of Commerce </li></ul></ul><ul><ul><li>Manufacturing Extension Partnership </li></ul></ul><ul><ul><li>Eastern Maine Incubator Without Walls </li></ul></ul><ul><ul><li>Private sector support (banks, attorneys, etc.) </li></ul></ul>
  5. 5. A few figures <ul><li>Maine traditionally exports less than the national average (5.5% for Maine, 7% for the US) </li></ul><ul><li>95% of Maine’s companies have less than 20 employees </li></ul><ul><li>Small businesses account for 60% of economic growth, 28% of production, but only 14% of exports </li></ul>
  6. 6. A few more figures <ul><li>Maine exported $2.1 billion in 1999 </li></ul><ul><li>Maine exported to 130 different countries </li></ul><ul><li>Maine ranked xxth in total exports, but xxth in export growth </li></ul>
  7. 7. What are we sending? <ul><li>Semiconductors </li></ul><ul><li>Paper and Allied Products </li></ul><ul><li>Fish and Seafood </li></ul><ul><li>Lumber and Building Materials </li></ul><ul><li>Leather and Leather Products </li></ul><ul><li>Agricultural Products </li></ul>
  8. 8. Not just for big companies... <ul><li>Bear gall bladders to China </li></ul><ul><li>Harley-Davidson motorcycle gaskets to 37 different countries </li></ul><ul><li>Handmade soaps to 10 different countries from Talmadge (population 9) </li></ul><ul><li>Clipper program </li></ul><ul><li>Canada Desk </li></ul>
  9. 9. What is international business? <ul><li>Exporting </li></ul><ul><ul><li>increase sales of goods or services </li></ul></ul><ul><ul><li>expands business, hiring new employees </li></ul></ul><ul><ul><li>strengthen business by becoming more competitive </li></ul></ul><ul><ul><li>stabilize against domestic downturns (or downturns in current international markets) </li></ul></ul><ul><ul><li>niche markets for products </li></ul></ul><ul><ul><ul><li>older technology </li></ul></ul></ul><ul><ul><ul><li>Germans and Maine </li></ul></ul></ul>
  10. 10. What is international business? <ul><li>Importing </li></ul><ul><ul><li>more competitive component prices for manufacturing </li></ul></ul><ul><ul><li>sources of improved technology </li></ul></ul><ul><ul><li>new products to add to current lines </li></ul></ul><ul><ul><li>sources of unique products </li></ul></ul><ul><li>Foreign direct investment </li></ul><ul><ul><li>new money, new jobs for Maine’s people </li></ul></ul><ul><li>Idea is to strengthen and grow businesses! </li></ul>
  11. 12. The accidental exporter <ul><li>Lowering of global trade barriers </li></ul><ul><ul><li>WTO </li></ul></ul><ul><ul><li>NAFTA </li></ul></ul><ul><li>Pervasiveness of American culture </li></ul><ul><li>The “Maine Mystique” </li></ul><ul><li>Internet sites -- a “global storefront” </li></ul>
  12. 13. You’ve just received a foreign inquiry for 500 pieces of your product. The order came in through your domestic-oriented website. Now what?
  13. 14. The accidental exporter <ul><li>Stop screaming and take a deep breath </li></ul><ul><li>Assess the situation </li></ul><ul><ul><li>can you handle an order of this size and/or complexity? </li></ul></ul><ul><ul><ul><li>production schedule, shipping costs, payment delays </li></ul></ul></ul><ul><ul><li>do you know anything about the inquiring company? </li></ul></ul><ul><ul><ul><li>is this a real company? or are you about to send your products away for nothing? </li></ul></ul></ul><ul><ul><li>do you need help? do you know where to find it? </li></ul></ul><ul><li>Call MITC </li></ul><ul><ul><li>Bangor 990-3161, Portland 541-7400 </li></ul></ul>
  14. 15. The accidental exporter <ul><li>Call MITC (Bangor 990-3161, Portland 541-7400) </li></ul><ul><ul><li>can provide counseling on numerous issues </li></ul></ul><ul><ul><li>is it legal to do business in the market? </li></ul></ul><ul><ul><ul><li>Iran, Iraq, Libya, North Korea, Cuba, all off-limits </li></ul></ul></ul><ul><ul><li>is it legal to sell the product in the market? </li></ul></ul><ul><ul><ul><li>safety concerns </li></ul></ul></ul><ul><ul><ul><li>importing nation’s limits need to be respected </li></ul></ul></ul><ul><ul><li>do you know the buyer? </li></ul></ul><ul><ul><ul><li>international credit reports </li></ul></ul></ul><ul><ul><ul><li>background checks -- are your products going to end up someplace you never intended? </li></ul></ul></ul>
  15. 16. The accidental exporter <ul><li>Arrange for payment </li></ul><ul><ul><li>credit cards a good choice for small exporters </li></ul></ul><ul><ul><ul><li>currency exchange taken care of </li></ul></ul></ul><ul><ul><ul><li>lower fees </li></ul></ul></ul><ul><ul><ul><li>“instant” payment </li></ul></ul></ul><ul><ul><li>wire transfers </li></ul></ul><ul><ul><ul><li>fees vary, large banks tend to be less expensive </li></ul></ul></ul><ul><ul><li>foreign drafts </li></ul></ul><ul><ul><ul><li>take a long time to clear US banks </li></ul></ul></ul><ul><ul><li>letters of credit </li></ul></ul><ul><ul><ul><li>complex, offers good protection </li></ul></ul></ul>
  16. 17. The accidental exporter <ul><li>Prepare product for shipment </li></ul><ul><ul><li>labeled properly? </li></ul></ul><ul><ul><ul><li>language requirements </li></ul></ul></ul><ul><ul><ul><li>metric labeling </li></ul></ul></ul><ul><ul><ul><li>metric packaging </li></ul></ul></ul><ul><ul><ul><li>country-specific labeling requirements </li></ul></ul></ul><ul><ul><ul><ul><li>origin, ingredients, etc. </li></ul></ul></ul></ul>
  17. 18. The accidental exporter <ul><li>Getting your product out </li></ul><ul><ul><li>commercial, “retail” shippers </li></ul></ul><ul><ul><ul><li>UPS, FedEx, etc. </li></ul></ul></ul><ul><ul><ul><li>good for smaller (size or weight) shipments </li></ul></ul></ul><ul><ul><li>freight forwarders </li></ul></ul><ul><ul><ul><li>AN Deringer, PBB, etc. </li></ul></ul></ul><ul><ul><ul><li>“ travel agents” for freight </li></ul></ul></ul><ul><ul><ul><li>good for larger shipments </li></ul></ul></ul><ul><ul><ul><li>good for ongoing shipments </li></ul></ul></ul>
  18. 19. The accidental exporter <ul><li>Export documentation </li></ul><ul><ul><li>often prepared by shipper </li></ul></ul><ul><ul><li>varies from destination to destination </li></ul></ul><ul><ul><li>need harmonized code for product </li></ul></ul><ul><ul><li>commercial invoice </li></ul></ul><ul><ul><li>certificate of origin </li></ul></ul><ul><ul><li>shipper’s export declaration (over $2500) </li></ul></ul>
  19. 20. The accidental exporter <ul><li>Why bother? </li></ul><ul><ul><li>increase sales and profits </li></ul></ul><ul><ul><ul><li>95/5 rule </li></ul></ul></ul><ul><ul><li>expand global market share </li></ul></ul><ul><ul><ul><li>all companies have one, even if it’s miniscule </li></ul></ul></ul><ul><ul><li>reduces dependence on existing markets </li></ul></ul><ul><ul><ul><li>fends off domestic downturns </li></ul></ul></ul><ul><ul><li>extend sales potential of existing products </li></ul></ul><ul><ul><ul><li>typewriter parts </li></ul></ul></ul><ul><ul><ul><li>remember, not all countries are at US technology level </li></ul></ul></ul>
  20. 21. The accidental exporter <ul><li>Why bother? </li></ul><ul><ul><li>exploit corporate technology and know-how </li></ul></ul><ul><ul><ul><li>language skills in the company? </li></ul></ul></ul><ul><ul><ul><li>other employee skills or interests? </li></ul></ul></ul><ul><ul><ul><li>new technology or techniques? </li></ul></ul></ul><ul><ul><li>sell excess production capacity </li></ul></ul><ul><ul><ul><li>co-manufacturing leading to shared distribution </li></ul></ul></ul><ul><ul><ul><li>might as well use put that capacity to work (assuming you have it) </li></ul></ul></ul>
  21. 22. The accidental exporter <ul><li>Why bother? </li></ul><ul><ul><li>enhanced competitiveness at home </li></ul></ul><ul><ul><ul><li>exporting companies are stronger companies </li></ul></ul></ul><ul><ul><ul><li>more sure of markets </li></ul></ul></ul><ul><ul><ul><li>more sure of clients and customers and why they purchase </li></ul></ul></ul><ul><ul><ul><li>skills learned internationally translate well to domestic market (but not necessarily vice versa!) </li></ul></ul></ul><ul><ul><ul><li>improved manufacturing techniques or technologies </li></ul></ul></ul>
  22. 23. The accidental exporter <ul><li>Why bother? </li></ul><ul><ul><li>gain information on the competition </li></ul></ul><ul><ul><ul><li>for more active international businesses </li></ul></ul></ul><ul><ul><ul><li>research and know your international competition </li></ul></ul></ul><ul><ul><ul><li>it’s a global market! </li></ul></ul></ul><ul><ul><ul><li>“get the goods” away from home </li></ul></ul></ul><ul><ul><ul><li>don’t wait until the world knocks on your door! </li></ul></ul></ul>
  23. 24. The accidental exporter <ul><li>Downsides </li></ul><ul><ul><li>develop new marketing materials </li></ul></ul><ul><ul><ul><li>mainly for active exporters, rather than passive ones </li></ul></ul></ul><ul><ul><ul><li>translations, colour schemes, etc. </li></ul></ul></ul><ul><ul><li>subordinate short-term profits to long-term gains </li></ul></ul><ul><ul><li>added administrative costs </li></ul></ul><ul><ul><ul><li>phone, fax, postage </li></ul></ul></ul><ul><ul><li>getting paid takes longer </li></ul></ul>
  24. 25. The accidental exporter <ul><li>Downsides </li></ul><ul><ul><li>may need to modify product or packaging </li></ul></ul><ul><ul><ul><li>names (Chevy Nova, Pepsi gaffes) </li></ul></ul></ul><ul><ul><ul><li>metric </li></ul></ul></ul><ul><ul><ul><li>size </li></ul></ul></ul><ul><ul><li>apply for additional financing </li></ul></ul><ul><ul><ul><li>cover extended recievables </li></ul></ul></ul><ul><ul><ul><li>insurance </li></ul></ul></ul><ul><ul><li>may need to obtain special licenses or paperwork </li></ul></ul><ul><ul><ul><li>generally for high-tech or defense-related products </li></ul></ul></ul>
  25. 27. International sourcing <ul><li>International business is not just exporting </li></ul><ul><li>many businesses interested in importing </li></ul><ul><ul><li>adding international products to existing product lines </li></ul></ul><ul><ul><li>food products </li></ul></ul><ul><ul><ul><li>olive oils, pasta, candies, beverages </li></ul></ul></ul><ul><ul><li>handiwork/crafts </li></ul></ul><ul><ul><ul><li>furniture, handmade items, stoneware </li></ul></ul></ul><ul><ul><li>components for current products </li></ul></ul><ul><ul><ul><li>furniture pieces, wood, raw materials </li></ul></ul></ul>
  26. 28. Common export documents <ul><li>Certificate of Origin </li></ul><ul><ul><li>straight </li></ul></ul><ul><ul><li>NAFTA </li></ul></ul><ul><ul><li>other specialized </li></ul></ul><ul><li>Commercial invoice </li></ul><ul><li>Shippers’ Export Declaration </li></ul><ul><li>Call MITC or USDOC for specific countries </li></ul>
  27. 29. Commercial Invoice <ul><li>Three copies </li></ul><ul><li>Can use own, if same information is included </li></ul>
  28. 30. Non-NAFTA C/O <ul><li>For all destinations outside Canada & Mexico (and a few others) </li></ul><ul><li>Establishes origin of product for tariff classification </li></ul>
  29. 31. NAFTA C/O <ul><li>Only for Canada & Mexico </li></ul><ul><li>Establishes origin of product for NAFTA treatment </li></ul>
  30. 33. International sourcing <ul><li>Getting it in </li></ul><ul><ul><li>can you have (or purchase) product? </li></ul></ul><ul><ul><ul><li>same restrictions on origin as exports </li></ul></ul></ul><ul><ul><ul><li>safety and other restrictions applied by federal and states </li></ul></ul></ul><ul><ul><li>shipping </li></ul></ul><ul><ul><ul><li>international source will make suggestions on shipping </li></ul></ul></ul><ul><ul><ul><li>timing (how long to get product here) </li></ul></ul></ul>
  31. 34. International sourcing <ul><li>Getting it in </li></ul><ul><ul><li>customs brokers </li></ul></ul><ul><ul><ul><li>help ease passage of products across borders (land, sea, air) </li></ul></ul></ul><ul><ul><ul><li>completes entry documentation </li></ul></ul></ul><ul><ul><ul><li>can work with Customs to deal with problems </li></ul></ul></ul><ul><ul><ul><li>many have relationships with shipping companies </li></ul></ul></ul><ul><ul><li>dealing with Customs </li></ul></ul><ul><ul><ul><li>be honest! </li></ul></ul></ul><ul><ul><ul><li>get a good broker </li></ul></ul></ul>
  32. 36. What can MITC do to help? <ul><li>Educational programming </li></ul><ul><ul><li>region-specific programs </li></ul></ul><ul><ul><ul><li>Canada, China, Germany, Japan </li></ul></ul></ul><ul><ul><li>one-on-one export counseling </li></ul></ul><ul><ul><ul><li>company visits </li></ul></ul></ul><ul><ul><ul><li>range of handholding, from low to high </li></ul></ul></ul><ul><ul><li>resource library </li></ul></ul><ul><ul><ul><li>electronic and traditional resources </li></ul></ul></ul><ul><ul><ul><li>in the Portland office </li></ul></ul></ul>
  33. 37. What can MITC do to help? <ul><li>Market identification </li></ul><ul><ul><li>off-the-shelf research from USDOC </li></ul></ul><ul><ul><li>close examination of trade statistics </li></ul></ul><ul><ul><li>work with federal colleagues for on-the-spot research </li></ul></ul><ul><li>Foreign business contacts </li></ul><ul><ul><li>agent-distributor searches </li></ul></ul><ul><ul><li>company directories </li></ul></ul><ul><ul><li>distributor directories </li></ul></ul>
  34. 38. What can MITC do to help? <ul><li>International credit reports </li></ul><ul><li>Export documentation </li></ul><ul><ul><li>what do you need? </li></ul></ul><ul><ul><li>how do you fill it out? </li></ul></ul><ul><li>Assistance with product classification </li></ul><ul><ul><li>six-digit HS for documentation </li></ul></ul><ul><li>Assistance with determining foreign tariffs and non-tariff barriers </li></ul>
  35. 39. What can MITC do to help? <ul><li>Trade leads </li></ul><ul><ul><li>USAID, USTDA, MERX, TED, FAS, GTA, etc. </li></ul></ul><ul><li>Trade delegations </li></ul><ul><ul><li>inbound (Brazil, Nova Scotia) </li></ul></ul><ul><ul><li>outbound (Germany, Netherlands) </li></ul></ul><ul><li>News on trade shows and conferences </li></ul><ul><li>Information and resource referrals </li></ul><ul><li>Research services </li></ul>
  36. 40. Clipper program
  37. 41. Department of Commerce programs