What is International Marketing?

International marketing is simply the application of marketing principles to more

than one country. However, there is a crossover between what is commonly expressed
as international marketing and global marketing, which is a similar term. For the
purposes of this lesson on international marketing and those that follow
it, international marketing and global marketing are interchangeable.

The intersection is the result of the process of internationalisation. Many American and
European authors see international marketing as a simple extension of exporting,
whereby the marketing mix is simply adapted in some way to take into account
differences in consumers and segments. It then follows that global marketing takes a
more standardised approach to world markets and focuses upon sameness, in other
words the similarities in consumers and segments.

At its simplest level, international marketing involves the firm in making one or
more marketing mix decisions across national boundaries. At its most complex
level, it involves the firm in establishing manufacturing facilities overseas and
coordinating marketing

International marketing is the application of marketing orientation and marketing

capabilities to international business.

Mode of engagement in foreign markets

After the decision to invest has been made, the exact mode of operation has to be determined.
The risks concerning operating in foreign markets is often dependent on the level of control a firm
has, coupled with the level of capital expenditure outlayed. The principal modes of engagement
are listed below:

 Exporting (which is further divided into direct and indirect exporting)

 Joint ventures
 Direct investment (split into assembly and manufacturing)

Exporting
Direct exporting involves a firm shipping goods directly to a foreign market. A firm employing
indirect exporting would utilise a channel/intermediary, who in turn would disseminate the product
in the foreign market. From a company's standpoint, exporting consists of the least risk. This is so
since no capital expenditure, or outlay of company finances on new non-current assets, has
necessarily taken place. Thus, the likelihood of sunk costs, or general barriers to exit, is slim.
Conversely, a company may possess less control when exporting into a foreign market, due to
not control the supply of the good within the foreign market.

Joint ventures
A joint venture is a combined effort between two or more business entities, with the aim of mutual
benefit from a given economic activity. Some countries often mandate that all foreign investment
within it should be via joint ventures (such as India and the People's Republic of China). By
comparison with exporting, more control is exerted, however the level of risk is also increased.

Direct investment
In this mode of engagement, a company would directly construct a fixed/non-current asset within
a foreign country, with the aim of manufacturing a product within the overseas market.

Assembly denotes the literal assembly of completed parts, to build a completed product. An
example of this is the Dell Corporation. Dell possesses plants in countries external to the United
States of America, however it assembles personal computers and does not manufacture them
from scratch. In other words, it attains parts from other firms, and assembles a personal
computer's constituent parts (such as a motherboard, monitor, GPU, RAM, wireless card,
modem, sound card, etc.) within its factories. Manufacturing concerns the actual forging of a
product from scratch. Car manufacturers often construct all parts within their plants. Direct
investment has the most control and the most risk attached. As with any capital expenditure, the
return on investment (defined by the payback period, Net Present Value, Internal Rate of Return,
etc.) has to be ascertained, in addition to appreciating any related sunk costs with the capital
expenditure.

Export Formalities
An exporter, who has sent goods outside the country, has an obligation to
satisfy the Reserve Bank of India that he has received payment from his
overseas buyer. The government does not allow any exporter to export for
any other consideration. The exchange control regulations require all the
exporters to:

Make a declaration on the prescribed form to the Collector of customs that

foreign exchange, representing the full export value of the goods, has
been or will be disposed of in manner and within the period specified by
the RBI;
Negotiate all shipping documents, including those relating to sales on
consignment basis through authorized dealers; and

Receive payment by an approved method;

Exporters are required to realize the foreign exchange proceeds of export

within the specified period. If the exporter has any genuine difficulty in
obtaining he must seek the permission of the Reserve Bank for the
extension of the time limit. It is up to the exporter to prove that the delay,
if any, has not been caused because of his fault or negligence.

Exchange control regulations require an exporter to fill certain specific

forms and submit them to the Customs authorities. The information
sought in these includes the full value of the products that are exported
and such other particulars as the names of importers and their bankers,
deduction, deductions by way of commission, etc,

Insurance:

The goods that are exported may be subject to certain maritime perils.
The risks of such perils may be covered under marine insurance. Who
should bear the cost of the insurance depends on the terms of the sale.
For instance, under the CIF term, insurance is the responsibility of the
exporter.

Marine Insurance in India is undertaken by the four subsidiaries of the

General Insurance Corporation of India (GIC): The National Insurance
Company; New India Insurance Company; Oriental Insurance Company
and United India Insurance Company. Now even a few private insurance
companies are also authorized for Marine Insurance.

The Export Credit Guarantee Corporation (ECGC) covers certain export

risks, which are not covered by the general insurers.

Shipping the Goods:

Goods may be exported to foreign markets by sea, air, post, land and
river.

Shipping by Sea:

To obtain the permission of the port authorities for the movement of

goods into the port, it is necessary to present the cart ticket to the gate
warden/inspector/keeper at the port gate.

Sometimes the vessels accept export cargo at the jetty and sometimes
they load it in midstream. When the vessels are in midstream, the cargo
has to be taken by boats for purposes of loading. In such cases, the
exporter has direct touch with the ship without having to going through
the port Commissioner’s formalities. When the goods are loaded in the
shed vessel, they have to be sent to the Port commission’s jetty from
there loaded and taken care of by the staff of the Port commissioner.

Several charges have to be paid to the Port Commissioner before the

goods are sent to the shed. These charges vary from port to port and are
known as the Port Commissioner’s charges If the goods are sent for over
side loading (mid stream) only the river dues surcharge, ad valorem or
fixed toll and rent have to be paid. The exporter will, of course, have to
pay for the boat charges, which will depend on the quantity of cargo and
the rate of charge fixed between him and the boatman.

The exporter/forwarding agent should necessarily obtain the permission of

the Preventive Officer of the Customs Department, who supervises the
loading of the cargo on board the vessel. This permission, called the let
ship is given as an endorsement on the duplicate copy of the shipping bill.
The shipping company loads the cargo only after receipt of the shipping
bill with the let ship order.

After the cargo is loaded, the master of the vessel issues the mate receipt
which contains information about the name of the vessel; berth; date of
shipment; description of packages; marks and number ; condition of the
cargo at the time of its receipt on board the vessel.

TOPIC : Formalities of Registration for Export Units

REGISTRATION AS A BUSINESS ENTITY:-

No additional registration formalities are required for a domestic unit if it wants to enter exports. A new export unit
can be started as a proprietorship concern, a partnership concern or as a company with limited liability and the
formalities remain the same as for domestic units.

IEC NUMBER:-
Every individual, firm or a company seeking to export or import is required to obtain a code number, called Import
Export Code (IEC) number, from the office of Regional licensing authority of DGFT. This number is required for
communication with any office related to export and import.

REGISTRATION-CUM-MEMBERSHIP CERTIFICATE (RCMC)

RCMC means the certificate of registration and membership granted by an
Export Promotion Council/ Commodity Board/ Development Authority or other competent authority as prescribed
by Foreign Trade Policy to an exporting unit.

Any person, applying for (i) a licence/ authorisation/ certificate/permission to import/ export, or (ii) any other benefit
or concession under Foreign Trade Policy is required to furnish Registration-cum-Membership Certificate (RCMC).
RCMC is also required for executing a bond before Central Excise authorities, which exempts exporters to furnish
bank guarantees.

Export Promotion Councils have been set up by various ministries of the Central Government to promote and
develop the exports of particular group of products, projects and services. For certain group of products, which are
sensitive from the viewpoint of national consumption, there are commodity boards instead. Thus while we have
export promotion councils for apparel, leather, software, chemicals, engineering goods etc., we have commodity
boards for tea, coffee, jute etc.
REGISTRATION WITH SALES TAX OFFICE
Goods exported from India are exempt from central and state sales tax. However, for getting exemption of such
taxes or claming their refund, wherever permissible under Foreign Trade Policy, the exporting unit should be
registered with sales tax authorities.

REGISTRATION WITH EXCISE DEPTT

If the exporting unit is engaged in manufacture of the product, it needs registration with excise department and the
formalities remain the same as for any domestic unit. This registration is required for claiming refund of excise
duties under various schemes of the government.

Export documentation

Introduction

The export process is made more complex by the wide variety of documents that the exporter needs to
complete to ensure that the order reaches its destination quickly, safely and without problems. These
documents range include those required by the South African authorities (such as bills of entry, foreign
exchange documents, export permits, etc.), those required by the importer (such as the performa and
commercial invoices, certificates of origin and health, and pre-shipment inspection documents), those
required for payment (such as the South African Reserve Bank forms, the letter of credit and the bill of
lading) and finally, those required for transportation (such as the bill of lading, the airway bill or the freight
transit order). Documentation requirements for export shipments also vary widely according to the country of
destination and the type of product being shipped. Most exporters rely on an international freight forwarder
to handle the export documentation because of the multitude of documentary requirements involved in
physically exporting goods and it is strongly recommended that you also make use of a freight forwarder to
help you work your way through the maze of documentation

The benefits of documentation

Documentation is a key means of conveying information from one person or company to another, and also
serves as permanent proof of tasks and actions undertaken throughout the export process. Documentation
is not only required for your own business purposes and that of your business partner, but also to satisfy the
customs authorities in both countries and to facilitate the transportation of and payment for goods sold.

One value of documentation is that copies can be made and shared with the parties involved in the export
process (although you should always ensure that you make identical copies from an agreed-upon master - it
is no use making changes without the other party's agreement and then presenting these as the "latest"
copies). If the documentation is complete, accurate, agreed upon by the parties involved and signed by each
of these of these parties (or their representatives), the document will represent a legally binding document.

Function of export documentation

Export documentation may serve any or all of the following functions:

 • An attestation of facts, such as a certificate of origin
• Evidence of the terms and conditions of a contract if carriage, such as in the case of an airway bill
• Evidence of ownership or title to goods, such as in the case of a bill of lading
• A promissory note; that is, a promise to pay
• A demand for payment, as with a bill of exchange
• A declaration of liability, such as with a customs bill of entry
• A receipt for goods received.

Broad categories of export documentation

There are five broad categories of documentation you will encounter when exporting. These are:

1. Documents involving the importer

 The proforma invoice

 The export contract
 The commercial invoice
 The packing list
 Letter of credit
 Certificate of origin
 Certificates of health
 Fumigation certificate
 Pre-shipment inspection certificate

 Transport documents
2. Documents required to export goods from South Africa

 Exporter registration form

 Letter of credit
 Commercial invoice
 Bill of entry export
 Form F178
 Form NEP (no foreign exchange proceeds)
 Form E (repatriation of foreign exchange earnings)

 Export permit
3. Documents required for transportation

 Bill of lading
 Air waybill
 Freight transit order
 Road consignment note

 Export cargo shipping instruction

4. Documents required for payment

 Commercial invoice
 Letter of credit

 Transport documents
A Certificate of Origin (C/O) is required by some countries and is intended to certify to the importing
authorities as to which country the products being imported were manufactured in - that is, the C/O certifies
that the imported product meets the 'Country of Origin' requirements set by the importing country and which
are expected of their foreign suppliers. It may be required that the C/O include information such as local
material and labour content.

Certificates of Value (and Origin)

A Certificate of Value is intended to confirm the value of a cargo to assist in quick

clearing of the goods in the country of destination. Often the Certificate of value is
combined with a Certificate of Origin and is referred to as a Certificate of Value and
Origin (CVO). A CVO outlines details about the labour and packing costs, royalties or
commissions (if applicable), freight charges and any overseas insurance costs. The CVO
also provides an exporter's declaration and statement, in the form of clauses, about the
value and origin of the goods.

Fumigation certificate

Some countries, such as Australia, Canada, New Zealand, the US and the UK, are very strict about letting in
goods that might contain bacteria or insects that could harm their agriculture. For this reason, they may
require a fumigation certificate - also referred to as a 'pest control certificate - as proof that the packing
materials e.g. wooden crates, wood, wool etc., have been fumigated or sterilized. Fumigation certificates
usually contain details such as purpose of treatment, the articles in question, temperature range used,
chemicals and concentration used, etc. Sometimes they may be required for sea shipments, but not for air
shipments. Your freight forwarder should be able to advise you as to whether you require such as certificate.

Certificates of health

Certificates of health are normally required by the importing country to ensure that the imported goods
(plants, plant products, animals and animal products) are in good health and carry no diseases, pests or any
health-threatening organisms. Such certificates of health confirm (a) the origin of the shipment and, (b) that
local authorities have inspected the consignment and ensure its good health. Certificates of Health can be
divided into two types:

• Phytosanitary certificates which are required for the import of certain plants and plant products
such as seeds and flowers. Phytosanitary certificates are governed by the International Plant
Protection Convention and represent an internationally accepted means of pest risk mitigation.
• Veterinary certificates which are required for the import of live animals, as well as fresh, chilled or
frozen animal products.

The exact import requirements are set by the importing country but are usually communicated to the
corresponding authorities in South Africa (usually the Department of Agriculture). Your best option is
therefore to contact both the importer to determine what the import requirements are and the Department of
Agriculture to hear their side of the story. For Phytosanitary certificates, contact the Department of
Agriculture at:

The local authorities may charge a fee for such inspections and issuing of certificates.

Pre-shipment inspection certificates

It is not uncommon for importers to want to confirm that the to-be-exported goods meet their requirements.
This is particularly so in instances where it is essential that the goods meet certain standards. These same
importers unfortunately cannot always fly to all the countries from where they are buying their products and
for this reason, they may:

a. Require that the shipment be inspected just before loading by an independent third-party arranged
and generally paid for by the importer. The exporter will need to indicate an approximate time and
place for this inspection to take place.
b. Ask the exporter to obtain the pre-shipment inspection certificate from an independent third-party
inspection firm which is then forwarded to the importer. In this instance either the exporter or the
importer may pay for the inspection, depending what was negotiated in the contract.

The independent contractor - usually a recognised firm in this field - will undertake a detailed inspection of
equipment or materials after manufacture, but prior to shipment. The scope of the inspection includes
quantity and quality, packing and marking and supervision of loading. A Certificate of Inspection can be
provided against a Letter of Credit and may be authorised by a Chamber of Commerce. Occasionally, the
importer may ask a trusted individual to undertake the inspection on their behalf.

Furthermore, some countries may require certification for selected products (this is independently from the
importer) and in these instances a pre-shipment inspection is a necessary step to receive an import
certificate for the shipment. Without this certificate the shipment will not be able to clear customs in the
country of destination.

Details pertinent to the proforma invoice

The following details are pertinent to the setting up of the proforma invoice and need careful attention:

• A complete and clear description of the goods in question

• The quantity of goods in question including the number and kinds of packaging involved
• The total price of the goods (and unit price where applicable)
• The currency in which the goods will be sold (e.g. US dollars or rands)
• The likely delivery schedule and delivery terms
• The physical addresses of both the exporter (referred to as the shipper) and importer (sometimes
referred to as the consignee)
• The payment methods, for example cash in advance or L/C
• The payment terms, for example 30 days on sight
• The Incoterm to be used
• Who is responsible for the banking fees and other related costs (insurance and freight costs are
covered)
• The exporter's banking details
• The country of origin of the goods
• The expected country of final destination
• Any freight details such as the port of loading and discharge
• Any transshipment requirements
• Any other information relevant to the order

The Commercial Invoice

Introduction

After the pro-forma invoice is accepted, the exporter must prepare a commercial invoice - this is your
document, usually prepared on your stationery. The commercial invoice is required by both the exporter (to
obtain the necessary export documents to enable the consignment to be exported, to prove ownership and
to enable payment) and importer (who requires the commercial invoice to facilitate the import of the goods in
question). In exporting, the commercial invoice is considered a very important document as it serves
as the starting document that underpins an export transaction.

What should appear in the commercial invoice

The following details need to appear in the commercial invoice:

• The name of the shipper/exporter and their contact details, including physical address
• The name of the importer/consignee and their contact details, including physical address
• An order number of reference to correspondence between the supplier and importer
• A complete and clear description of the goods in question (including brand marks and the HS
number)
• The packing details unless provided in a separate packing list
• The quantity of goods in question including the number and kinds of packaging involved
• The external dimensions, cubic capacity, weight, numbers and contents of each package shipped.
• The total price of the goods (and unit price where applicable) usually quotes as a CIF/FOB price
• The currency in which the goods will be sold (e.g. US dollars or rands)
• The type and amount of discount given
• The likely delivery schedule and delivery terms
• The payment methods, for example cash in advance or L/C
• The payment terms, for example 30 days on sight
• The incoterm to be used
• Who is responsible for the banking fees and other related costs (insurance and freight costs are
covered)
• What the freight and insurance charges are
• The exporter's banking details
• A declaration of the country of origin of the goods
• The expected country of final destination
• Any freight details such as the port of loading and discharge
• Any transshipment requirements
• Any other information relevant to the order

Forms F178/NEP South Africa is one of the few countries that still applies fairly strict exchange control
regulations to the movement of foreign currency in and out of the country. In accordance with these
regulations, the exporter is expected to complete Form F178 (where foreign exchange will be generated
through the sale of the exported goods) or Form NEP (in instances where no foreign exchange is generated
- NEP stands for No Exchange Proceeds). These two documents are both referred to as exchange control
declarations. These forms are to be completed in duplicate and the original must be attested by the
exporter's commercial bank; if this is not done, the form will not be accepted by the Customs authority. The
bank will keep a copy, while the original and all additional copies, accompanied by the Customs Declaration

Form E This is a South African Reserve Bank form required to be completed by exporters once they have
sold their goods abroad and have received payment for these goods. Form E essentially underpins the sale
of the foreign currency received by the exporter, to the local commercial bank. The form needs to be
completed within 30 days of receipt of the foreign currency by the exporter. Form E need only be completed
if the amount is greater than R50 000. The details of the corresponding Form F178 that the exporter
completed at the start of the transaction must be reflected in Form E.

Packing List When you prepare your goods for shipment, you will be required to prepare a detailed
export packing list. This is a formal document that itemise quite a number of details about the cargo such as:
 • Your name and contact details
• The importer's/consignee's/buyer's name, address and contact details
• The gross, tare and net weights of the cargo
• The nature, quality and specifications of the product being shipped
• The type of package (such as pallet, box, crate, drum, carton, etc.)
• The measurements/dimensions of each package
• The number of pallets/boxes/crates/drums, etc.
• The contents of each pallet or box (or other container)
• The package markings, if any, as well as shipper's and buyer's reference numbers

It is also important that the details on the packing list (such as shipper's/importer's details, number of items
involved, etc.), match what is stipulated on the commercial invoice and bill of lading/airway bill. You can
imagine that if there is a mismatch between the packing list and the other transport/export documents that
this may lead to closer scrutiny of the cargo and may ultimately result in delays in the cargo arriving at its
destination! Note that pricing information is not required on the packing list.

Transport documents

• Bill of lading
• Air waybill
• Freight transit order
• Road consignment note
• Export cargo shipping instruction
•

Shipping Bill / Bill of Export

Shipping Bill/ Bill of Export is the main document required by the Customs Authority for
allowing shipment. A shipping bill is issued by the shipping agent and represents some kind of
certificate for all parties, included ship's owner, seller, buyer and some other parties. For each
one represents a kind of certificate document.

Documents Required for Post Parcel Customs Clearance

In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned
below:

• Customs Declaration Form - It is prescribed by the Universal Postal Union (UPU) and
international apex body coordinating activities of national postal administration. It is
known by the code number CP2/ CP3 and to be prepared in quadruplicate, signed by
the sender.
• Despatch Note- It is filled by the exporter to specify the action to be taken by the
postal department at the destination in case the address is non-traceable or the parcel
is refused to be accepted.
• Commercial Invoice - Issued by the exporter for the full realisable amount of goods as
per trade term.
• Consular Invoice - Mainly needed for the countries like Kenya, Uganda, Tanzania,
Mauritius, New Zealand, Burma, Iraq, Ausatralia, Fiji, Cyprus, Nigeria, Ghana, Zanzibar
etc. It is prepared in the prescribed format and is signed/ certified by the counsel of
the importing country located in the country of export.
 • Customs Invoice - Mainly needed for the countries like USA, Canada, etc. It is prepared
on a special form being presented by the Customs authorities of the importing country.
It facilitates entry of goods in the importing country at preferential tariff rate.
• Legalised / Visaed Invoice - This shows the seller's genuineness before the appropriate
consulate or chamber or commerce/ embassy.
• Certified Invoice - It is required when the exporter needs to certify on the invoice that
the goods are of a particular origin or manufactured/ packed at a particular place and
in accordance with specific contract. Sight Draft and Usance Draft are available for
this. Sight Draft is required when the exporter expects immediate payment and Usance
Draft is required for credit delivery.
• Packing List - It shows the details of goods contained in each parcel / shipment.
• Certificate of Inspection – It is a type of document describing the condition of goods
and confirming that they have been inspected.
• Black List Certificate - It is required for countries which have strained political
relation. It certifies that the ship or the aircraft carrying the goods has not touched
those country(s).
• Manufacturer's Certificate - It is required in addition to the Certificate of Origin for
few countries to show that the goods shipped have actually been manufactured and is
available.
• Certificate of Chemical Analysis - It is required to ensure the quality and grade of
certain items such as metallic ores, pigments, etc.
• Certificate of Shipment - It signifies that a certain lot of goods have been shipped.
• Health/ Veterinary/ Sanitary Certification - Required for export of foodstuffs, marine
products, hides, livestock etc.
• Certificate of Conditioning - It is issued by the competent office to certify compliance
of humidity factor, dry weight, etc.
• Antiquity Measurement – It is issued by Archaeological Survey of India in case of
antiques.
• Shipping Order - Issued by the Shipping (Conference) Line which intimates the
exporter about the reservation of space of shipment of cargo through the specific
vessel from a specified port and on a specified date.
• Cart/ Lorry Ticket - It is prepared for admittance of the cargo through the port gate
and includes the shipper's name, cart/ lorry No., marks on packages, quantity, etc.
• Shut Out Advice - It is a statement of packages which are shut out by a ship and is
prepared by the concerned shed and is sent to the exporter.
• Short Shipment Form - It is an application to the customs authorities at port which
advises short shipment of goods and required for claiming the return.

The export contract

Introduction

An export contract (also referred to as a sales contract) is essentially an agreement between you and a
foreign importer to do business. The export contract can take many different forms. For example:

1. A telephonic offer to sell, covering essential issues such as the product details, quantities
offered, price per unit, delivery particulars and payment terms, made by the exporter to the
foreign buyer (or an offer to buy from the importer to the exporter) and confirmed by the
second party is one example of a legitimate export contract. Such an agreement may or may
not be confirmed in writing. Telephonic contracts are somewhat risky and are not that common
in international trade. They may occur, however, between long-standing trade partners or
between reputable firms dealing in commodities that are subject to rapid price fluctuations.
 2. Similarly, any written offer (quotation), either contained in a formal written contract and posted
or couriered to the importer, or sent by e-mail, fax, telex or cable to the importer, and
confirmed (usually also in writing) by the importer, is another form of legitimate contract. Again
this could also be a written offer to buy, initiated by the importer, which is then confirmed by
the exporter, although this is seldom the way it works unless it is a long-standing customer.
3. A proforma invoice sent by fax, e-mail, courier or post to the importer (usually on his/her
request) and confirmed by the importer, is another common form of export contract. The
confirmation could be as simple as the importer writing "I agree to these terms and conditions"
on the proforma invoice and signing it or perhaps the importer may generate a separate,
signed document agreeing to the proforma invoice which is then attached as reference.
Alternatively, the importer may indicate that (s)he is happy with the proforma invoice, but may
request a formal contract containing the terms and conditions stipulated in the proforma
invoice to be drawn up and signed by both parties.

The first order

It is seldom the case that the importer will accept the first offer made by the exporter and normally this
first offer will be followed by a series of counter-offers sent back and forth between the exporter and the
importer until each party is satisfied with the terms and conditions outlined in the final offer and agree to
abide by it.

You need to be clear and precise

Whatever form the export contract takes, you need to be careful in formulating this document as they
are drawn up between companies from countries which may have very different legal systems,
regulations and attitudes to doing business. These differences may cause disputes even when trading
with other fairly developed nations. The challenge is to make your export contracts as clear, precise
and comprehensive as is possible.

The provisions in the contract

The basic provision of any contract for the sale of goods is that you, the seller (in this case, the
exporter), will transfer ownership of the goods to your buyer (the importer) in exchange for payment
(which, in international trade, made be made in a foreign currency). The export contract needs to
specify the terms and conditions for doing this, and should at least describe:

• Who is party to the contract

• The validity of the contracts
• The goods being sold (usually described in some detail)
• The purchase price of the goods and the currency in question
• The terms of payment
• Inspection of the goods if required
• Where the goods should be delivered
• At what point transfer of title to the goods takes place
• Any warranty and/or maintenance conditions associated with the sale
• Who is responsible for obtaining import or export licenses, if these are required
• What supporting documentation and/or certificates are required
• Who is responsible for paying import duties and other taxes
• Any contract performance security requirements, such as bank letters of guarantee
• What will happen if either of the parties defaults or cancels
• The provisions for independent mediation or arbitration to resolve disputes, and whether this
would take place in South Africa or the importer's country, or elsewhere
 • The contract's completion date

Make sure the contract is signed by all contracting parties

Also - and this would seem obvious, but it's sometimes overlooked - be sure that all parties to the
contract have signed it. For instance, if you're working through a representative, be sure that the actual
buyer signs the contract. The representative's signature is not necessarily enough, because without the
buyer's signature, there is no written evidence that the buyer owes you money. Last but certainly not
least, have the contract examined by a lawyer familiar with the export market.

EXPORT-IMPORT PROCEDURE

1 Seller and Buyer conclude a sales contract, with method of payment usually by
letter of credit (documentary credit).

2 Buyer applies to his issuing bank, usually in Buyer's country, for letter of credit
in favor of Seller (beneficiary).

3 Issuing bank requests another bank, usually a correspondent bank in Seller's

country, to advise, and usually to confirm, the credit.

4 Advising bank, usually in Seller's country, forwards letter of credit to Seller

informing about the terms and conditions of credit.

5 If credit terms and conditions conform to sales contract, Seller prepares goods
and documentation, and arranges delivery of goods to carrier.

6 Seller presents documents evidencing the shipment and draft (bill of exchange)
to paying, accepting or negotiating bank named in the credit (the advising bank
usually), or any bank willing to negotiate under the terms of credit.

7 Bank examines the documents and draft for compliance with credit terms. If
complied with, bank will pay, accept or negotiate.

8 Bank, if other than the issuing bank, sends the documents and draft to the
issuing bank.
 9 Bank examines the documents and draft for compliance with credit terms. If
complied with, Seller's draft is honored.

10 Documents release to Buyer after payment, or on other terms agreed between

the bank and Buyer.

11 Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange
for the goods or the delivery order.

STEPS INVOLVED IN EXPORT TRANSACTION:

Step 1
In the case of first time exporters–importers ,they need to apply to the
Director General of
Foreign Trade (DGFT) regional office for getting Importer-Exporter
Code (IEC) Number.
Step 2
The exporter has to register with the concerned export promotion
council in order to obtain
various permissible benefits given by the government. ,they need to
get registered with sales tax
office, and even Export Credit Guarantee Corporation.
Step 3
The exporter can now go in for procuring orders, by first sending a
sample, if required. The
importer sends a purchase order once both exporter and
importer have agreed upon the terms
and conditions of the contract like pricing, documents, freight charges,
currency etc.
Step 4
With export order in hand, the exporter starts manufacturing goods or
buying them from other manufacturers.
Step 5
The exporter makes arrangements for quality control and obtains a
certificate confirming the
quality of the goods from inspector of quality control.
Step 6
Exportable are then dispatched to ports/airports for transit.
Step 7
The export firm has to apply to an insurance company for marine/air
insurance cover.(The exporter asks the importer to take marine/ air
insurance under cost and freight , free on board etc. ,terms of
contract.)
Step 8
The exporter contacts the clearing and forwarding agent (C & F) for
storing the goods in
warehouses. A document called Shipping Bill, required for allowing
shipmentby Customs
Authority is presented by the forwarding agent.
Step 9
Once the goods are loaded into the ship ,a receipt called
‘Mate’sReceipt ‘ is issued byt he
captain to the ship superintendent of the port.
Step 10
The superintendent calculates port charges and handover to the
exporter /C&F agent.
Step 11
After making the port payments , the C&F agent or exporter gets the
Bills of Lading or
Airway Bill from the official agent of the shipping company or the airline
Step 12
The exporter applies to the relevant Chamber of Commerce for
obtaining Certificate of
Origin, stating that the goods originated from India.
Step 13
The exporter sends a set of documents to the importers, stating the
date of shipment ,nameof vessel,et c.
Step 14
Within 21 days after shipmentt he exporter must present all the documents at his bank
which scrutinizes these documents against the original letter of
credit /purchase order.
Step 15
The exporter’s bank sends these documents to the importer’s bank
which should make the payment on of before the due date

Packing and Labeling of Goods.

Introduction

An important stage after manufacturing of goods or their procurement is their preparation for
shipment which involves packaging and labelling of goods to be exported. Proper packaging and
labelling not only makes the final product look attractive but also save a huge amount of
money by saving the product from wrong handling the export process.

Packaging
The primary role of packaging is to contain, protect and preserve a product as well as aid in its
handling and final presentation. Packaging also refers to the process of design, evaluation, and
production of packages. The packaging can be done within the export company or the job can
be assigned to an outside packaging company. Packaging provides following benefits to the
goods to be exported:

• Physical Protection – Packaging provides protection against shock, vibration,

temperature, moisture and dust.
• Containment or agglomeration – Packaging provides agglomeration of small objects
into one package for reason of efficiency and cost factor. For example it is better to
put 1000 pencils in one box rather than putting each pencil in separate 1000 boxes.
• Marketing: Proper and attractive packaging play an important role in encouraging a
potential buyer.
• Convenience - Packages can have features which add convenience in distribution,
handling, display, sale, opening, use, and reuse.
• Security - Packaging can play an important role in reducing the security risks of
shipment. It also provides authentication seals to indicate that the package and
contents are not counterfeit. Packages also can include anti-theft devices, such as dye-
packs, RFID tags, or electronic article surveillance tags, that can be activated or
detected by devices at exit points and require specialized tools to deactivate. Using
packaging in this way is a means of loss prevention.

Labeling
Like packaging, labeling should also be done with extra care. It is also important for an
exporter to be familiar with all kinds of sign and symbols and should also maintain all the
nationally and internationally standers while using these symbols. Labelling should be in
English, and words indicating country of origin should be as large and as prominent as any other
English wording on the package or label.

Labelling on product provides the following important information:

• Shipper's mark
• Country of origin
• Weight marking (in pounds and in kilograms)
• Number of packages and size of cases (in inches and centimeters)
• Handling marks (international pictorial symbols)
• Cautionary markings, such as "This Side Up."
• Port of entry
• Labels for hazardous materials

Labelling of a product also provides information like how to use, transport, recycle, or
dispose of the package or product. With pharmaceuticals,food, medical,
and chemical products, some types of information are required by governments.

It is better to choose a fast dyes for labelling purpose. Only fast dyes should be used for labeling. Essential
data should be in black and subsidiary data in a less conspicuous colour; red and orange and so on. For food
packed in sacks, only harmless dyes should be employed, and the dye should not come through the packing
in such a way as to affect the goods.
If you are exporting your goods, you need to ensure that your packaging and labelling suits the
local market. For example:
 • you should ensure your packaging and labelling complies with the regulations of the country
you are exporting to
• you may need to translate your labelling into the local language or to mark the origin of
your goods
• you may need to follow local customs to make your goods acceptable to customers - eg in
some countries packaging containing food products carries a picture of the produce inside

Your packaging and labelling also needs to withstand the rigours of exporting, especially if the
products are fragile or perishable. As well as your usual product packaging and labels, you need to
think about the packaging and labelling you use to transport the goods, eg pallets, shrink wrapping
and cartons.

Your products may be transported using several modes of transport before reaching their final
destination. Your packaging needs to be suitable for each mode of transport and withstand repeated
loading and unloading. Clear labelling helps to prevent goods becoming lost in transit or delayed at
customs.

Your freight forwarding company may offer packaging services and be able to advise you on suitable
packaging and labelling.

Care labels are the labels inside clothing or fashion accessories that
provides wash care instructions, fiber content, country of origin, and a
few other important details of information. The care labels are
sometimes references as content labels, wash care labels, or care
instruction labels. Regardless of the name, the care label is a very
important component of any garment. In fact, there are legal
requirements in regarding to proper labeling.
Shipping container labeling

Technologies related to shipping containers are identification codes,bar codes, and electronic
data interchange (EDI). These three core technologies serve to enable the business functions in
the process of shipping containers throughout the distribution channel. Each has an essential
function: identification codes either relate product information or serve as keys to other data, bar
codes allow for the automated input of identification codes and other data, and EDI moves data
between trading partners within the distribution channel.
 Do not use hand hooks This way up Keep away from sunlight
Fragile

Clamp as indicated
Do not clamp as indicated

Keep away from water Centre of gravity

Export Pricing And Costing.

Introduction

Pricing and costing are two different things and an exporter should not confuse between
the two. Price is what an exporter offer to a customer on particular products while cost is
what an exporter pay for manufacturing the same product.

Export pricing is the most important factor in for promoting export and facing
international trade competition. It is important for the exporter to keep the prices down
keeping in mind all export benefits and expenses. However, there is no fixed formula for
successful export pricing and is differ from exporter to exporter depending upon whether
the exporter is a merchant exporter or a manufacturer exporter or exporting through a
canalising agency.

Determining Export Pricing

Export Pricing can be determine by the following factors:

• Range of products offered.

• Prompt deliveries and continuity in supply.
• After-sales service in products like machine tools, consumer durables.
• Product differentiation and brand image.
• Frequency of purchase.
• Presumed relationship between quality and price.
 • Specialty value goods and gift items.
• Credit offered.
• Preference or prejudice for products originating from a particular source.
• Aggressive marketing and sales promotion.
• Prompt acceptance and settlement of claims.
• Unique value goods and gift items.

Export Costing
Export Costing is basically Cost Accountant's job. It consists of fixed cost and variable
cost comprising various elements. It is advisable to prepare an export costing sheet for
every export product.

As regards quoting the prices to the overseas buyer, the same are quoted in the following
internationally accepted terms which are commonly known as Incoterm.

How to do Costing for Export?

The first step is to use below cost-plus method to determine the export pricing
competitiveness of yourproducts.

The Cost Plus Method of Calculation require a costing sheet so that it enable
the exporter or manufacturer to:

Check that every expense has been covered in arriving at the selling price and
provide a detailed record of the terms that have been quoted to the foreign buyer.

The items covered by the export costing sheet are:

1. Unit cost of Product - The starting point in export pricing is the production cost
per unit of the product. This would be the variable cost plus fixed cost or overhead.

2. Profit - Normally, profit will have already been included in the domestic price.
However, if it is insufficient for the risk involved in selling abroad, an extra allowance
for profit can now be added.

3. Agent's commission abroad - This is usually calculated on a percentage basis.

4. Packing - The cost of packing for overseas shipment will vary according to the
product, destination, and means of transportation. The manufacturer must include
reasonable provision for it.

5. Labels - These may have to be printed in a foreign language, perhaps containing

information not included in the labels used within the exporter's country. Also, from
the sales point of view, they must be suitable to the foreign consumer. The selling
price of the product must include sufficient allowance for these extra labeling costs.

6.Marking - A small cost is involved in stenciling an identification mark on each

package for export.
7.Strapping - Each carton may have to be wire-strapped to help prevent it from
being accidentally opened en route to its destination. Small packages must be wire-
strapped together to discourage pilferage and other loss.

8.Cartage - Allowance must be made for transporting the goods to be transported to

the local railway station or container depot.

9.Freight to seaboard - The cost of transporting the goods from the inland town or
city to the seaport for shipment abroad e.g. K.L. to Port Klang.

10.Unloading charge - There is a charge for unloading goods from railway cars or
trucks. This cost will be incurred when the goods arrive at the seaport.

11.Terminals - These are handling, wharfage and harbor dues that must be paid by
the exporter to the wharfage Company.

12.Long or heavy load charge - If the shipment is exceptionally long or heavy, an

extra charge may be incurred.

13.Consular Documents - These documents can be quite expensive, particularly in

the case of export to the Latin American countries. Initially, the exporter may wish to
quote to the foreign customer a price of so many dollars plus the cost of consular
documents. If not, it must make adequate provision in the price to cover their cost.

14.Other charges - Here, space is left for the inclusion of unexpected additional
expenses such as the cost of overseas telegrams or telephone calls, extra storage
charges etc.

15. Ocean freight - The cost of shipping the goods by sea to the foreign port. The
cost may be quoted by the ocean carrier in local currency or U.S. dollars.

16.Freight forwarder's fee - If the exporter uses the services of "Freight

Forwarder" for documentation and book the shipping space required, allowance must
be made for the fee involved. The amount of these fees can be obtained in advance
from the forwarder or shipping agent.

17.Financing charges - Until payment is received, the export firm will have part of
its working capital tied up in export merchandise. Even if no credit is given, it will
have to wait until the goods are shipped or delivered before payment is made.

If credit are given to the foreign customer, it may have to wait an additional 60,
90, or 180 days for payment. The selling price should include an amount to cover the
cost of this working capital.

If the exporter intends to discount at its bank a time draft that has been accepted
by the foreign importer, so that the exporter can obtain its money sooner. Then
allowance must be made in the export price for bank discount charges.

18. Export credits insurance - The exporter may buy insurance or "Factoring" on
its credit sales abroad. Allowance should be made for it.
19.Total (C. & F.) - The total of the previous items, each of which should be
rechecked, is the C. and F. cost of the export goods.

20.Marine insurance - The exporter will want to insure itself against financial loss
from all possible risks, including damage to the goods or theft, while they are being
shipped abroad. Usually, ocean ships are insured for 110 percent of their total cost to
cover anticipated profit and the interest cost of working capital tied up in the
shipment.

21. Total (C.I.F. local funds) - This is the total price of the goods calculated in
such a way as to include all the various costs involved, including insurance and
freight. It is the total in item 19, plus the insurance premium.

22. Conversion into Foreign Exchange

The foreign buyer will usually ask for a price quotation in U.S. dollars or perhaps in
German marks, Japanese yen, or some other currency. Therefore, the price in the
exporter's local currency must be converted to a price into the foreign currency.

Care must be taken to use the correct exchange rate. The exporter may wish to
eliminate the risk of an exchange loss by selling the foreign currency to a bank on a
forward basis, in exchange for local currency.

The cost of this bank service, which provides the exporter with a predetermined,
fixed rate of exchange for its foreign currency should be included in the export price
quoted to the foreign importer.