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