INDIVIDUAL ASSIGNMENT: EXPORT AND IMPORT

PRELIMINARY 

            International trade is one of the hot industries of the new millennium. But it's not new. Think Marco Polo. Think the great caravans of the biblical age with their cargoes of silks and spices. Think even further back to prehistoric man trading shells and salt with distant tribes. Trade exists because one group or country has a supply of some commodity or merchandise that is in demand by another. And as the world becomes more and more technologically advanced, as we shift in subtle and not so subtle ways toward one-world modes of thought, international trade becomes more and more rewarding, both in terms of profit and personal satisfaction.

            Importing is not just for those lone footloose adventurer types who survive by their wits and the skin of their teeth. It's big business these days--to the tune of an annual $1.2 trillion in goods, according to the US Department of Commerce. Exporting is just as big. In one year alone, American companies exported $772 billion in merchandise to more than 150 foreign countries. Everything from beverages to commodes--and a staggering list of other products you might never imagine as global merchandise--are fair game for the savvy trader. And these products are bought, sold, represented and distributed somewhere in the world on a daily basis. 

            But the import/export field is not the sole purview of the conglomerate corporate trader, according to the US Department of Commerce, the big guys make up only about 4 percent of all exporters. Which means that the other 96 percent of exporters--the lion's share are small outfits like yours wil be--when you're new, at least. 

EXPORT 

1. EXPORT DEFENITION 

          In national accounts "exports" consist of transactions in goods and services (sales, barter, gifts or grants) from residents to non-residents. The exact definition of exports includes and excludes specific "borderline" cases. A general delimitation of exports in national accounts is given below: 

           An export of a good occurs when there is a change of ownership from a resident to a non-resident; this does not necessarily imply that the good in question physically crosses the frontier. However, in specific cases national accounts impute changes of ownership even though in legal terms no change of ownership takes place (e.g. cross border financial leasing, cross border deliveries between affiliates of the same enterprise, goods crossing the border for significant processing to order or repair). Also smuggled goods must be included in the export measurement. 

        Export of services consist of all services rendered by residents to non-residents. In national accounts any direct purchases by non-residents in the economic territory of a country are recorded as exports of services; therefore all expenditure by foreign tourists in the economic territory of a country is considered as part of the exports of services of that country. Also international flows of illegal services must be included. 

2. DOCUMENTS REQUIRED IN THE EXPORT 

             As for important documents needed for export is : 

1) Commercial Invoice 

2) Packing list 

3) Bill of lading / Airway bill 

4) Certificate of origin 

5) Fumigation 

6) Quarantine of animals / plants / fish 

7) Quality Certificates / Certificates of lawful / healthy 

8) Sales contrak insurance if the existing and already approved by both parties 

9) LS / Reports Surveyor 

10) Other document required in accordance with the commodity 

3. EXPORTING CHALLENGES 

         small and medium size enterprises especially face some challenges when venturing in the international marketplace. 

· Extra costs 

Because it takes more time to develop extra markets, and the pay back periods are longer, the up-front costs for developing new promotional materials, allocating personnel to travel and other administrative costs associated to market the product can strain the meager financial resources of small size companies. 

· Product Modification 

When exporting, companies may need to modify their products to meet foreign country safety and security codes, and other import restrictions. At a minimum, modification is often necessary to satisfy the importing country's labeling or packaging requirements. 

· Financial Risk 

Collections of payments using the methods that are available (open-account, prepayment, consignment, documentary collection and letter of credit) are not only more time-consuming than for domestic sales, but also more complicated. Thus, companies must carefully weigh the financial risk involved in doing international transactions. 

· Export Licenses and Documentation 

Though the trend is toward less export licensing requirements, the fact that some companies have to obtain an export license to export their goods make them less competitive. In many instances, the documentation required to export is more involved than for domestic sales. 

· Market Information 

Finding information on foreign markets is unquestionably more difficult and time-consuming than finding information and analyzing domestic markets. In less developed countries, for example, reliable information on business practices, market characteristics, cultural barriers may be unavailable. 

Entering an export business requires careful planning, some capital, market know-how, access to quality product, competitive pricing strategy, management commitment and realizing the challenges and opportunities without them it is almost impossible to succeed in the export business. While there are no hard-and-fast rules that can help companies make decision to export and to become successful, understanding the advantages and disadvantages of exporting can help smooth entry into new markets, keep pace with competition and eventually realize profit. 

IMPORT 

1. IMPORT DEFENITION 

         "Imports" consist of transactions in goods and services (sales, barter, gifts or grants) from non-residents residents to residents. The exact definition of imports in national accounts includes and excludes specific "borderline" cases. A general delimitation of imports in national accounts is given below: 

· An import of a good occurs when there is a change of ownership from a non-resident to a resident; this does not necessarily imply that the good in question physically crosses the frontier. However, in specific cases national accounts impute changes of ownership even though in legal terms no change of ownership takes place (e.g. cross border financial leasing, cross border deliveries between affiliates of the same enterprise, goods crossing the border for significant processing to order or repair). Also smuggled goods must be included in the import measurement. 

Imports of services consist of all services rendered by non-residents to residents. In national accounts any direct purchases by residents outside the economic territory of a country are recorded as imports of services; therefore all expenditure by tourists in the economic territory of another country are considered as part of the imports of services. Also international flows of illegal services must be included. 

2. DOCUMENTS REQUIRED IN THE IMPORT 

            As for important documents needed for import is : 

1) Invoice 

2) Packing List 

3) Bill of Lading 

4) Taxpayer Identification Number (TIN) 

5) Identification number of imports (API) 

6) Customs registration 

7) Import approval from the relevant authorities (if necessary) 

8) Certificate of Origin / Certificate of origin (COA) (if needed) 

9) Decree facilities (if any) 

3. IMPORTING CHALLENGES 

         Importing quality products from around the globe can be highly profitable for entrepreneurs who do their homework. However, there are many hidden traps for novice importers that can result in expensive losses and even bankruptcy. Below is an analysis of the top 10 risks that can drain importer profits. 

· Damaged or Incorrect Shipments 

The worst scenario for any importer is when damaged or incorrect products are delivered to an importer. This sometimes happens when an exporter inadequately packs fragile goods like glass tabletop furniture for long-distance deliveries. Importers must photograph and clearly document the damaged or incorrect products. Importers must also have organized and have on hand all pertinent commercial, transportation and financial documents associated with the unsatisfactory delivery. 

· Currency Fluctuations 

Often, importers are affected by a strengthening or weakening of their local currency against the currencies of their global clients. When the US dollar appreciated to 35.2 Taiwan dollars on March 2 from 32.5 on December 18, American importers could buy 17% more with the stronger US currency compared with the earlier period. When the US dollar went back down to 32.7 Taiwan dollars in May, American imports from Taiwan cost about 15% more due to a weakened US currency. 

· Pilferage and Pirating 

Pilferage is a concern during the loading and unloading products in ports and inland hubs. This is particularly true for stops in certain developing countries like Nigeria and Angola. Still, theft is also a problem in more developed nations and even more so as the global economy sinks into recession. 

Pirating is a severe threat while shipments are in transit, particularly as vessels carrying valuable cargoes pass by Somalia's pirate-infested eastern coast. Pirates are becoming increasingly violent, and frequently demand multi-million ransoms before they will release captured cargo ships. 

· Dishonest Exporters 

Many importers have issued payments to exporters in other countries basing their trust on verbal or written assurances only. In return, they received nothing. Import entrepreneurs must thoroughly investigate a prospective exporter or supplier, including that exporter's history with other clients. Importers can visit the respective websites for Moody's and Standard and Poors to request information on a company. In Canada, entrepreneurs can contact the trade services of a commercial bank or Export Development Canada to check up on a potential supplier in another country. 

· Competing with Cheap Imports 

One of the biggest headaches for importers is battling cheap imports procured by other competitors. Cheap imports force regular importers to reduce the prices of their products, which in turn eats into company profits. In the past, importers have tried to win court injunctions that prohibit shipments of particular products into their territories. However, injunctions are highly expensive and difficult to obtain. 

A closely related issue is dumping, where importers bring goods into a country at a rate lower than the goods' net price. Governments do treat dumping issues seriously, since dumping can play havoc on local economies. 

· Gray Market Competition 

A gray market is where discounted or refurbished goods are sold below market prices. For example, many DVDs are available on eBay or Amazon online stores. These are legal markets, although consumers must be sure to receive and keep a receipt for any purchase. Also, gray market products are often sold without any warranties and the consumer risks receiving a faulty product. Still, importers should carefully analyze the degree to which gray markets could cut into their own sales and profits. 

· Technological or Fashion Changes 

A major disadvantage that many importing businesses have to face is a change in technology or fashion within the importer's industry. Market trends fluctuate steeply which can result in high levels of unsold inventory and lower profits. For example, importers who stocked up on VHS tapes and CDs now face falling demand as consumers migrate to DVDs and iPod players. Similarly, bell-bottom jeans haven't been in demand since the disco craze of the 1970s. 

Importers also face issues when there is lack of standardized technology among different countries. For example, electrical standards and voltages for Australian goods are much different than those in Canada. Therefore, importing a Canadian-made hair dryer into Australia requires a converter. Failure to do so will result in a minor explosion. 

· Exports Delays 

Delayed shipments from an exporter often lead to poor relations between importers and their ultimate buyers. Importers should therefore be knowledgeable of cyclical trends in the exporting country. Most importers require continuous supplies of product, and have demand peak periods around Christmas. To arrange alternative sources of supply during these peak periods, importers should contact their local Trade Commissioner Services for assistance. 

· Inadequate Cargo Insurance 

Novice importers pay to include the wrong clauses in their international cargo insurance policies, simply because they are unfamiliar with those contracts. To mitigate these risks, importers can work with established shipping companies such as UPS and Purolator or third-party freight forwarders to choose the most appropriate insurance policies for specific shipments. 

· High Banking Costs 

Banking costs can run very high in international trade. One of the first things that importers should do is request a cost schedule from his bank. These banking costs should be properly accounted for and incorporated into the final costs for a shipment. 

EXPORT IS PROFITABLE MORE THAN IMPORT 

      Exporting a product is a profitable method that helps to expand the business and reduces the dependence in the local market. It also provides new ideas, management practices, marketing techniques, and ways of competing, which is not possible in the domestic market. Even as an owner of a domestic market, an individual businessman should think about exporting. Research shows that, on average, exporting companies are more profitable than their non-exporting counterparts. 

There are many good reasons for exporting: 

The first and the primary reason for export is to earn foreign exchange. The foreign exchange not only brings profit for the exporter but also improves the economic condition of the country. 

Secondly, companies that export their goods are believed to be more reliable than their counterpart domestic companies assuming that exporting company has survive the test in meeting international standards. 

Thirdly , free exchange of ideas and cultural knowledge opens up immense business and trade opportunities for a company. 

Fourthly, as one starts visiting customers to sell one's goods, he has an opportunity to start exploring for newer customers, state-of-the-art machines and vendors in foreign lands. 

Fifthly, by exporting goods, an exporter also becomes safe from offset lack of demand for seasonal products 

Lastly , international trade keeps an exporter more competitive and less vulnerable to the market as the exporter may have a business boom in one sector while simultaneously witnessing a bust in a different sector. 

EXPORT COAL FROM NDONESIA 

          Coal shipments from Indonesia , the world's largest exporter of thermal coal, rose 12 percent in 2011 from a year earlier to 312 million tons, according to data released by the nation's trade ministry. Shipments of copper ore and concentrate fell 44 percent in 2011 to 1.17 million metric tons from the previous year, the ministry's data showed. 

          Freeport-McMoRan Copper & Gold Inc. declared force majeure Oct. 26 on copper shipments from its Grasberg mine in Indonesia's Papua, which holds the world's largest recoverable reserves of copper, after about 8,000 workers went on strike Sept. 15, demanding higher wages. The company and the employees agreed on pay increases Dec. 14, ending a three-month work stoppage. 

The ministry didn't offer an explanation for export results nor did it identify buyers. The figures which come from surveyors' reports before shipment, are subject to change. 

The following table shows exports of coal and metals in 2011 and in the previous year. Metal 

exports are in the form of ore and concentrates. Volumes are given in metric tons. 

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Commodity 2011 2010 % Change 

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Coal 312,137,257.98 277,858,003.80 12% 

Copper 1,175,247.02 2,112,423.61 -44% 

Nickel 32,626,844.88 16,979,694.89 92% 

Bauxite 39,683,559.48 26,885,049.86 48% 

Manganese 100,459.13 231,035.19 -57% 

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CONCLUSION 

        This term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer". In International Trade, "exports" refers to selling goods and services produced in the home country to other markets. Methods of export include a product or good or information being mailed, hand-delivered, shipped by air, shipped by boat, uploaded to an internet site, or downloaded from an internet site. Exports also include the distribution of information that can be sent in the form of an email, an email attachment, a fax or can be shared during a telephone conversation. 

         The term import is derived from the conceptual meaning as to bring in the goods and services into the port of a country. The buyer of such goods and services is referred to an "importer" who is based in the country of import whereas the overseas based seller is referred to as an "exporter". Thus an import is any good (e.g. a commodity) or service brought in from one country to another country in a legitimate fashion, typically for use in trade. It is a good that is brought in from another country for sale. Import goods or services are provided to domestic consumers by foreign producers. An import in the receiving country is an export to the sending country.