Chapter 2 General Procedures of Import and Export.docx
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Chapter 2 General Procedures of Import and Export.docx
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Chapter2GeneralProceduresofImportandExport
GeneralProceduresofImportandExport
PartAText
GeneralProceduresofExportandImportTransaction
SectionOneProceduresofExportandImportTransaction
WhatisExporting
Inyourlifetime,whetherornotyouareconsciousofit,youareorwillbeselling.Manufactures
selltheproductstheymakeandfarmersselltheproducetheygrow.Theaterssellentertainment;
insurancecompaniessellfinancialprotectionagainstfutureloss;ideasurgingactionscanbesoldtoo.
Sellingistheprocessofassistingand/orpersuadingaprospective^customertobuyabeneficial
productorserviceoractuponanideathathasbusinesssignificancetohim.Later,sellingextended
itsnarrowmeaningandcrossedtheborderofothercountries.Tillnowithasbecomeawell-accepted
formofexporting.Adefinitionsuitablefortodayisthatexportingistheprocessofearningmoney
byprovidingtherightproductattherightprice,attherighttime,intherightplacebeyondyour
homeboundary.Theultimategoalistomakesurethattheexporteristobepaidforthegoodshe
sells.
Exportingisanorderly,methodicalandasomewhattechnicalprocessofadaptingChinese
productsandexportingmethodstoconditionsincountriesoutsideChina.Exportmarketinghas
muchincommonwithinternalselling.Butbusinessenvironmentvariesgreatlybecauseofdifferent
inlanguage,customs,andtradition.Tosomeextent,thisgapcanbefilledbyexportmarketresearch
beforerealexportingisundertaken.Inmovingtotheforeignmarket,theexporterwhosquarely
confrontstheproblemofseekingatarget,orlocatingthepromisingcustomerforhisproductsfinds
himselffacingmanydistinctbutrelatedproblems,whichinvolveusingavarietyoftechniquesanda
wholesetofproceduresinasuitableandsystematicway,makingaseriousofrightdecisionsabout
manydifferentoptionsthatonehas,andalwaysbearinginmindtherequirementsandcharacteristics
ofthemarketitselfAboveall,italladdsupto"marketingmix".
Theproceduresofanexportorimportbusinessissocomplicatedthatitmaytakequitealong
timetoconcludeatransaction.Variedandcomplicatedprocedureshavetobegonethroughinthe
courseofexportorimporttransaction.Fromtheverybeginningtotheendofthetransaction,the
wholeoperationgenerallyundergoesfourstages:
preparingforexportingorimporting,business
negotiation,implementationofthecontract,andsettlementofdisputes(ifany).Eachstagecovers
somespecificsteps.Sincetheexportandimporttradesaretwosidesofthesamecoin,andone
country'sexportisanothercountry'simport,hence,wewilltaketheproceduresofexport
transactioninthefollowingdiagramtoillustratethegeneralproceduresofexportandimport
transaction.Beforeproceedingtothefollowingunits,we’dbetterkeepthisgeneralpictureinmind.
2.ProceduresofExport
Themostdifficultpartofexportingistakingthefirststep.Differentcountrieshavedifferent
economicpoliciesorsystems.Sobeforedoingbusinesswithforeigncountries,onehasto
understandthewholeproceduresofexport.
(1)Makingmarketresearch
Anyexporterwhowantstosellhisproductsinaforeigncountrymustfirstconductalotof
marketresearches.Marketresearchisaprocessofconductingresearchintoaspecificmarketfora
particularproduct.Exportmarketresearch,inparticular,isastudyofagivenmarketabroadto
determinetheneedsofthatmarketandthemethodsbywhichtheproductscanbesupplied.Theexporter
needstoknowwhichforeigncompaniesarelikelytousehisproductsormightbeinterestedinmarketing
anddistributingtheproductsintheircountry.Hemustthinkwhetherthereisapotentialformakinga
profit.Hemustexaminethemarketstructuresandgeneraleconomicconditionsinthoseplaces.If
theeconomyisinarecession,thedemandforallproductsisusuallydecreased.Sotheexporter's
productsmightnotsellwellatsuchtimes.(SeeFig.2-1GeneralProceduresofExportTransaction)
(2)MarketingandPromotion
Afterstudyingtheinformationanddataobtainedthroughmarketresearches,themakerorthe
exportermaydecidewhethertherearegoodprospectsforhisgoodsintheforeignmarket,andthen
takeeffectivemeasurestopromotetheexportofthegoodstothatmarket.
Tohelpstartanexportbusiness,theexportermaynotonlycollectinformationordatafrom
outsidesourcesbutalsomakehisproductsknowntoothersabroadonhisowninitiative.Nowadays,
newequipments,newproductdevelopmentsandexpandedresearcheshavebroughtaboutanentirely
newpointineconomicdevelopment.Thereisnolongeramarketwaitingtoconsumeeverythingthe
factoriesturnout.Ithasbecomeevidentthatbusinessmanwillhavetosellandpromoteaggressively
inordertodevelopandexpandthemarketsnecessarytoconsumeallthethingsthefactoriesproduce.
Itmeansthatbusinessmanhastodeterminebeforehandwhat,howmuch,atwhatpriceandunder
whatcircumstancestheultimateconsumerwillpurchase.Accordingly,variousmarketingstrategies
havebeendeveloped.Underlyingallmarketingstrategiesis"TheMarketingConcept"whichcanbe
illustratedinthefollowingdiagram(SeeFig.2-2TheMarketingConcept).
Themarketingconcept
Wemustproducewhatpeoplewant,notwhatwewanttoproduce
I
Thismeansthatweputthecustomerfirst
Weorganizethecompanysothatthishappens
i
Wemustfindoutwhatthecustomerwants
Wecarryoutmarketresearch
J
Wemustsupplyexactlywhatthecustomerwants
—
Wecandothisbyofferingtherightmarketing
1.therightproduct
2.therightprice
3.availablethroughtherightchannelsofdistribution:
place
4.presentedintherightway:
promotion
Fig.2-2TheMarketingConcept
3.WhatisImporting
Importingisreferredtothepurchaseactivitiesofforeignproductsproducedintheworldmarket
orthoseservicesprovidedbyforeigncompanies.
Proceduresofimporttransaction
Sofar,wehavestudiedthegeneralproceduresofexporttransactionanddealtwithdifferent
stagesandstepsintheviewofexporter.Havingbeenfamiliarwiththeprocessoftheexportbusiness,
wefinditmucheasiertounderstandhowanimporterhandleshisimportbusiness.Afterall,the
exportandimporttradesaretwosidesofonecoin.Whenhandlinganimporttrade,thetrade
conditionsandtermsyouarestrivingforaresometimesjusttheoppositetothoseyoudoinanexport
trade.Thetermsofdeliveryremainthesamemeaningregardlessofwhetheryouworkasan
importeroranexporter.Abillofladingisabillofladingnomatterwhousesitforsomepractical
purposes.Theknowledgewehaveacquiredfromtheprevioussectionsisalsoapplicabletoimport
procedures.Withthefundamentalknowledgeofexportprocedureswecangrasptheessentialpoints
ofimportprocedureseasilyandmanageimporttradewellandsmoothly.
Thegeneralproceduresofimporttransactioncanbesummarizedasfollows:
(1)Toconductmarketinvestigation.
(2)Toformulateimportplanforacertaincommodity.
(3)Tosendinquiriestotheprospectivesellersoverseas.
(4)Tocompareandanalyzetheoffersorquotationsreceived.
(5)Tomakecounter-offersanddecideonwhichofferismostbeneficial.
(6)Tosignapurchasecontract.
(7)Toapplytoabankforopeningaletterofcredit.
(8)Tobookshippingspaceorcharteracarryingvesselfortakingoverthecargoes,ifthe
contractisintermsofFOB.
(9)Toeffectinsurancewiththeinsurancecompanyuponreceiptofshippingadvice.
(10)Toapplyforinspectionifnecessary.
(11)Toattendtocustomsformalitiestoclearthegoodsthroughthecustoms.
(12)Toentrustforwardingagentswithallthetransportarrangementsfromtheporttotheend
user'swarehouse.
(13)Tosettledisputes(ifany).
4.PartiesInvolvedinExportandImportTransaction
Thepartieswhoareinvolvedinexportandimporttransactionsarenumerousandcanbe
describedasvariously.Thebasicpartiesarethebuyerwhopurchasesthegoodsandthesellerwho
providesthegoods.Mainpartiesinvolvedinanexportandimporttransactionareasfollows:
(1)Theexporters.
(2)Theshippingagentsattheportorairportofloading.
(3)Therailway(insomecases)intheexporter'scountry.
(4)Theroadhauler(insomecases)intheexporter'scountry.
(5)Theportauthority.
(6)Theshippingcompany(forseafreight).
(7)Theairline(forairfreight).
(8)Theinsurancecompanyorbrokers.
(9)Theexporter'sbank.
(10)Theimporter'sbank.
(11)Therailways(insomecases)intheimporter'scountry.
(12)Theroadhauler(insomecases)intheimporter'scountry.
(13)Theshippingagentattheportorairportofdischarge.
(14)Theimporters.
5.SpecialistsInvotvedinExportandImportTransactions
Manyspecialistsmaybeinvolvedinexportandimporttransaction,including:
(1)Ashippingagentandforforeignforwarder(forwardingagent)willtakeresponsibilityfor
thedocumentationandarrangeforthegoodstobeshippedbyair,sea,railorroad.Theseservices
maybecarriedoutbythesupplier'sownexportdepartment,iftheyhavetheexpertise.
(2)Airlines,shippinglines,railwaycompaniesorhaulagecontractorswillactualtransportthe
goods.
(3)Boththeimporter'sandexporter'sbankswillbeinvolvedinarrangingpaymentsifaletter
ofcreditorbillofexchangeisused.
(4)CustomsandExciseofficersmayneedtoexaminethegoods,checkimportorexport
licensingandchargedutyand/orVAT.
(5)AchamberofCommercemayneedtoissueacertificateoforigin,ifthisisrequiredbythe
importer'scountry.
(6)Aninsurancecompanyinsuresgoodsintransit
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