Chapter Discussion

Explain why firms export and the three problems of exporting.
Smaller firms, like larger ones, export to increase sales. Some begin to export accidentally, while others seek out foreign customers. Large multinationals export to serve markets where they have no manufacturing plants or the local plant does not produce all of the product mix. Some host governments require an affiliate to export, and many firms export to remain competitive in the home market. Exporting is also an inexpensive way to test foreign markets. A product’s life can be extended by exporting the product to markets with less advanced technology. The three problem areas of exporting are (1) locating foreign markets, (2) payment and financing procedures, and (3) exporting procedures.

Identify the sources of export counseling.
The Trade Information Center, Small Business Administration, Small Business Development Centers in universities, Department of Agriculture, state offices for export assistance, World Trade Centers Association, and Trade Point Global Network are some sources of export counseling.

Describe the main elements of the export sales assistance program of the U.S. Department of Commerce.
The Department of Commerce, the federal department in charge of export assistance, offers many programs covering all aspects of exporting. These include services that aid in conducting market research, such as the National Trade Data Bank, the Comparison Shopping Service, and various Commerce publications. Commerce can also assist in locating foreign representatives and making sales through trade fairs, matchmaker programs, and catalog and video shows.

Discuss the meaning of the various terms of sale.
Various terms of sale are possible in exporting. FAS (free alongside ship) means the seller pays all transportation expenses to ship’s side and requires all the sellers to clear the goods for export. CIF (cost, insurance, and freight) means the seller quotes a price that includes cost of goods, insurance, and transportation to a specified destination. CFR (cost and freight) is like CIF except that the buyer pays insurance costs. DAF (delivered at frontier) means that the seller’s obligations are met when the goods have arrived at the border and have been cleared for export. The buyer’s responsibility is to arrange for its forwarder to pick up the goods after they are cleared for export, clear them for importation, and make delivery.

Identify some sources of export financing.
Some sources of export financing are commercial banks, factors, forfeiting, the Export-Import Bank (Eximbank), and the Small Business Administration.

Describe the activities of a foreign freight forwarder.
Foreign freight forwarders act as agents for exporters. They prepare documents, book space on carriers, and function as a firm’s export traffic department.

Understand the kinds of export documents required.
Correct documentation is vital to the success of any export shipment. Shipping documents include export packing list, export licenses, export bill of lading, shipper’s export declaration, and insurance certificates. Collection documents include commercial invoices, consular invoices, certificates of origin, and inspection certificates.

Discuss some innovations in materials handling in sea and air transport.
Innovations in transportation and materials handling enable exporters to reach new markets and reduce theft and cost. These include the use of containers and LASH and RO-RO vessels.

Identify import sources.
Prospective importers can identify sources in a number of ways. They can examine the product label to see where the product is made and then contact the nearest embassy of that country to request the name of the manufacturer. Foreign chambers of commerce and trade organizations provide information on their countries’ exporters. Electronic bulletin boards and data banks are also useful.

Explain the Harmonized Tariff Schedule of the United States (HTSUSA).
The HTSUSA is the American version of the Harmonized System used by nations worldwide for classifying imported products. There is a sample page from the HTSUSA in the text.