Company X is considering expanding globally but lacks international expertise. The World Trade Society of Chattanooga advisory board meeting provided information on key considerations for going global including culture, legal, accounting, logistics, and finding expertise. Topics discussed included cultural education, legal structures and protocols between countries, tax implications, evaluating freight forwarders, export documentation, and product classification for customs. The meeting aimed to help identify resources to guide Company X's global expansion process.

1. WORLD TRADE SOCIETY OF CHATTANOOGA
Advisory Board Meeting
January 18, 2012
11:30 a.m. – 1:00 p.m.

2. HOUSE KEEPING
 Please eat during the presentation
 Please write your questions down during the
presentation
 Please ask the questions during our Q&A
session – we want your input!
 Please help us identify what are the top 3 – 5
immediate needs you have with which we
can help

3. SITUATION
Company X must decide if it will expand its
market globally, however it does not have
the internal expertise to do so. Because
of the wide range of decisions to be made
it can be overwhelming to accomplish.
Company X needs resources to guide it
through the process.

4. WHY GO GLOBAL
Rich Burkemper, President, RJB Associates
Market conditions offer expanded opportunity to:
 Increase sales opportunity
 Hedge domestic market fluctuations
 Take advantage of emerging markets
 Take advantage of Global and Regional trends
 Expand your knowledge base for use at home and
abroad

5. INTERNATIONAL DECISION DRIVERS
Tim Spires, President/CEO CRMA
CAGE:
 Culture
 Administration
 Geography
 Economy

6. FINDING THE EXPERTISE
World Trade Society of Chattanooga – The
resource for help on the following:
Culture
Legal
Accounting
Logistics
Market Research
Finance

7. CULTURE
Ju-Hsin Lusk, Managing Director Corporate
Training, Workforce Development & Continuing
Education – Chattanooga State Community College
Cultural education is the preeminent
success factor in doing business
overseas

8. LEGAL
Tom Hayslett, Member, Miller & Martin PLLC
 Substantive Law Differences/Structural
 Differences in the skill sets within the foreign legal
system
 Differences in the expectations of the role of lawyers
 Differences in legal specific protocols, norms
 Differences in broader social assumptions that impact
how legal issues are addressed
 Differences in the soundness of the system
(corruption/political risk)

9. LEGAL
Law firms Address the Above Issues with the
following:
 Foreign Offices
 Membership Alliances

10. ACCOUNTING
Jennifer Goodman
Assurance Principal
Joseph Decosimo & Company

11. TAX CONSIDERATIONS - INDIVIDUALS
 Generally US citizens and resident aliens pay US
income tax on worldwide income regardless of where
they live.
 “Substantial Presence” may create tax issues for your
employees.
 Exclusions, deductions and credits may be available for
foreign earned income, foreign housing and income
taxes paid to a foreign country.
 Tax treaties allow US citizens and resident aliens
certain credits, deductions, exemptions and reductions
in the tax rates of those foreign countries.

12. TAX CONSIDERATIONS - BUSINESSES
 Risk: Your business will be subject to tax in another
country by conducting activities in that country.
 Permanent Establishment “PE” – fixed place of
business which gives rise to income or VAT liability.
 You can have physical presence without PE.
 May also extend to agents rendering services on your
behalf.
 If you have PE you will need to consider business
entity and structure.

13. TAX CONSIDERATIONS - MISC
 Financial accounts in a foreign country? Tell
your CPA!
 IC DISC – Big tax break for exporters
 Exports with a pretax margin of 8% and >
produce a tax benefit of $100K for every $1M of
taxable income. Margins of <8% produce $8K
benefit for each $1M of export sales.
 ***Includes manufactured goods which are
incorporated in a product that is exported.

14. UTILIZE LOCAL PROFESSIONALS
 Local expertise is needed to understand
regional laws, regulations and policies.
 Ex. VAT liabilities
 National firms and regional firms are a good
resource to identify local expertise.
 Decosimo is member of Moore-Stephens
International connecting it to 314 other
accounting firms with 638 office in 97
countries.

15. FINANCIAL REPORTING CHALLENGES
 No single global accounting language.
 Foreign currency transactions.
 Impact on the bottom line
 Hedging foreign currency risk
 Lost in Translation” – difficulties communicating
across language barriers when meanings between
languages doesn’t match up.
 Translators MUST have a excellent knowledge of both source and
target languages AND accounting cultures.

16. LOGISTICS
Gary Shostak – Logistics Professional
 Forwarder & Broker Evaluations
 Documentation Requirements/Cost
 Transport Cost (Ocean & Ground)
 Custom Clearance issues/Cost

17. LOGISTICS
Evaluating Freight Forwarders
Top Freight Forwarders
 BDP International
 Pilot Freight Services
 *UPS
 *FedEx Trade Networks
 Expeditors Intl. Express
 Nippon Express USA
 Lynden Air Freight
 Kuehne + Nagel
 DB Schenker
 Wallenius Wilhelmsen
Criteria:
On-time performance
Value, Information technology
Customer Service,
Equipment & Operations
You want to have a Freight Forwarder with an office in the destination country you are exporting to. Many times a smaller
forwarder will utilize an agent in the destination country.

18. LOGISTICS
Legal
1. Giving the FF a power of attorney is a good thing.
This allows the forwarder to clear shipments on
your behalf.
2. Known Shipper.
3. Fraud.
a. Customer requests.
b. Foreign Corrupt Practices Act
c. Anti-boycott laws
d. Letters of Credit tied to shipping schedules

19. LOGISTICS
Getting your product ready for export
Classifying your commodity for Export:
Why? 1. Customs and the Census Bureau require it
2. The Destination country requires it for tax evaluation
Remember
Schedule B – Export / Harmonized Tariff Schedule (HTS#) – Import
Why is it important to have the correct number for your product?
Example:
Knives: 8211.92.0001-
Knives with cutting blades, serrated or not (including pruning knives), other than knives of heading 8208, and blades
and base metal parts thereof:
- - Other: - - Other knives having fixed blades
Cutlery
Table Cutlery: 8215.20.0000
- Spoons, forks, ladles, skimmers, cake-servers, fish-knives, butter-knives, sugar tongs and similar kitchen or
tableware; and base metal parts thereof:
The taxes in one country may be higher or lower for one product than the other. Also there may be an issue at the
customs agency at destination which might confiscate your cargo for improper categorization. Basically “Fraud”.

20. LOGISTICS
 Do I need a license to export? ITAR
In most cases NO except when your product has a, ECCN, stands for Export
Control Classification Number. An ECCN is an alpha-numeric classification used
in the Commerce Control List to identify items for export control purposes. An
ECCN is different from a Schedule B number, which is used by the Bureau of
Census to collect trade statistics. It is also different from the Harmonized Tariff
System Nomenclature, which is used to determine import duties.
All ECCNs will have 5 characters, for example, 1A001, 4B994, or 8D001. There
are 10 categories on the Commerce Control List. The first number of the ECCN
identifies the category to which it belongs, for example, 1 = Nuclear Materials
Facilities and Equipment, 4 = Computers, 9 = Propulsion Systems, Space
Vehicles and Related Equipment.
 NLR, No License required if you product falls under the EAR99, Knives do not

21. LOGISTICS
Paper Work or Electronic Submissions
Everything now must be transmitted electronically (AES) Automated Export System. Prior to 2009 shippers
needed to fill out a Shippers Declaration Doc. Most Shippers/Manufacturers do not have a Transportation
Management Software program to create AES submissions. The forwarders do.
A forwarder may send you a PDF with all the necessary fields for you to fill out. They enter it into the AES
systems with Customs. If you export a lot have the forwarder waive that fee.
What you need to present to your Freight Forwarder.
1. Packing List
a)List the quantity of each product in detail
b)total quantity
c)Weight
2. Commercial Invoice,
a)The heading must say Commercial Invoice
b)Schedule B number
c)Cost of the product
d)(INCO Term), International Commercial Terms; (CIF) cost insurance and freight etc…
e)DDU DDP Delevery and duties paid / Delivery and Duties Unpaid
f)http://www.export911.com/e911/export/comTerm.htm
Shippers Dec info.
Note: when shipping small parcel. Their system will transfer over what you type in. UPS/FedEx.
Make a copy of the above information and send it to your customer overseas over night

22. LOGISTICS
Notifications
Air shipments must be electronically filed at least 8 hours prior to departure
Sea shipments must be electronically filed at least 24 hours prior to departure
What you get in return from the FF, you get a copy of the waybill for tracking
and traces purposes. Forward a copy to your customer

23. LOGISTICS
Your shipment arrives overseas
The end user is responsible for clearing the shipment through customs and
paying any duties and taxes on the shipment based on the value and the
Schedule B number and making final delivery to their destination. Shipping
DDU
You can ship the cargo DDP Delivery and Duties Paid.
You will have to get the freight forwarder to contact the destination country
and get the costs for the shipments duties and taxes for the specific country
and local delivery charges. This may take up to 2 to 3 days based on time
zones. This is easier to get if the FF you use has an actual office at
destination.
If you want to quote your customer, this is referred to the landed costs
or all in costs.

24. LOGISTICS
Types of shipping
1. Small Parcel up to 70 lbs.
2. Ocean: Containers 20’, 40’,
Open Top, Dry, Racks, Roll On Roll Off (RO RO)
Refrigerated
Consolidated
3. Air: Whole Charter, & Small Parcel, Consolidated over 70lbs
General Costs for Shipping: Unlike domestics Shipment it is very
difficult to get quotes for more than 30 days, as the charges change
according to Market shifts and capacity and the FF may have certain
caveats for specific govt. charges BAF etc... The cost for exporting is
quite less for exporting due to the commerce balance of the United
States.

25. LOGISTICS
Shipping Samples to a potential Customer:
A Carnet or ATA Carnet (pronounced kar-nay) is an international customs and
export-import document. It is used to clear customs in 71 countries and
territories without paying duties and import taxes on merchandise that will be
re-exported within 12 months.
Carnet Merchandise
Virtually all types of goods can be transported under the ATA Carnet:
 Commercial Samples
 Professional Equipment
 Goods for Exhibitions
Exceptions: Consumable items such as agricultural
products, explosives, disposables and postal traffic cannot travel under an
ATA Carnet

26. LOGISTICS
Some Pitfalls:
 Time zones, Language, Cultures, Days of the work
week, Backlogs Ocean, missing flights, missing sail
schedules. *Customers
 Does the export location matter?
 You MUST Think Global!
 Have a professional on staff

27. MARKET RESEARCH
Lisa Goolsby, Associate Professor, Southern
Adventist University School of Business and
Management
 Economic Conditions
 Product or Service needs
 Competitive Environment
 Customers
 Culture

28. MARKET RESEARCH
MARKETING
PEOPLE PRODUCT PLACE PRICE PROMOTION
S
RESEAR

29. FINANCE
Talley Clower, SVP Cohutta Banking Company
 Foreign Exchange Risk
 Payment – Open Terms or Letter of Credit
 Credit Insurance on Foreign Accounts
Receivable
 Export – Import Bank of the United States

30. WORLD TRADE SOCIETY OF CHATTANOOGA
Q&A
Next Steps