IB 150 Lecture Notes - Lecture 19: Marine Insurance, International Trade Administration, Negotiable Instrument

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IB 150 – Lecture 19
Exporting and Countertrade
Three Support Pillars Sustaining International Commerce
International Financing: how to pay and get paid
International Freight/Shipping: how to get the goods to their destinations
International Cargo Insurance: how to protect oneself from losses during transit
Export Strategies
Asses export potential
Self-evaluation: product, technology
Market: sales potential, competition
Get expert counseling
International Trade Administration (ITA)
Small Business Administration
Select a market
Don't chase orders, select a market and build up distribution network
Set goals and get products overseas
Specific goals, know export procedures
Information sources
U.S. Department of Commerce
International Trade Administration
U.S. Foreign Commercial Service Agency
Trade counseling
Market Intelligence
Commercial Diplomacy
Exhibits and Trade Fairs
Business Matchmaking
Local Trade Commissions
Use Help of Export Firms
Export Management Company (EMC):export specialists who act as the international
department, or the export marketing department for their client firms.
2 types of projects
Start exporting for a firm, then give back
Start exporting, EMC continues the job to sell products on behalf of the firm
Strategies for Entering a Foreign Market with EMCs
Hire EMC or consultant
Enter one or handful of markets
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Enter on small scale to reduce risks
Hire additional people as sales increase
Build strong bridges with locals
Hire locals to expand sales
Study local conditions for production
Export Assistance
Two forms of government-backed assistance prospective U.S. exporters can draw on for
financing
Export-Import Bank
Export Credit Insurance
Export-Import Bank
Referred to as Exim Bank
Provides loans and loan-guarantee programs
Makes commercial banks more willing to lend cash to foreign enterprises
Lends money to foreign borrowers to purchase U.S. exports
Export Credit Insurance
Provided by Foreign Credit Insurance Association (FCIA)
Consists of private commercial institutions operating under the guidance of Export-Import
Bank
Provides credit insurance in case importer defaults in payment
Commercial and political risks taken into account
Export Procedures
Locating customers
e.g., use World Traders Data Report
Obtain export licenses
from Office of Export Admin. DOC
Collecting export documents
from various parties
Packing and marking
Shipping - Using a good freight forwarder
Receiving payment
Export Documentation
Bill of lading (B/L)
Letter of credit (L/C)
Insurance policy/certificate
Bill of exchange (Draft)
Invoice
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