LOB 30203

EXPORTING AND IMPORTING

AMIRUL AZIM BIN SHUKOR
56212114067
MUHAMAD SYAZWAN BIN SUTERIS
56212114081
MUHAMMAD RAZIF FARKHAN BIN NASUHA
56212114082
MUHAMMAD SABIL RIDZUAN BIN NORZI
56212114092
MOHD FAIZAL BIN MOHD HANAPIAH
56212114098

EXPLAIN WHY FIRMS EXPORT OR

IMPORT. WHAT DO THEY GAIN FROM
EXPORT-IMPORT?

AnEXPORTis the sale of

goods to a foreign country.
AnIMPORTis the purchase of
foreign manufactured goods in
the buyer's domestic market.

THERE ARE MANY GOOD REASONS

FOREXPORTING AND IMPORTING.
EXPORT
Increasing sales
Exporting is one way of
increasing your sales potential;
it expands the "pie" that you
earn money from, otherwise you
are stuck trying to make money
only out of the local market.
Increasing profit
Exports can contribute to
increased profits because the
average orders from
international customers are
often larger than they are from
domestic buyers.

Lower unit costs

Exports help to put the production
capacity to work. This is generally
achieved the more efficient utilisation
of the existing factory, machines and
staff.
Economies of scale
Exporting is an excellent way to enjoy
pure economies of scale with products
that are more "global" in scope and
have a wider range of acceptance
around the world.
Untapped markets
A company may have a very unique
product that is not yet available
elsewhere in the world.

THERE ARE MANY GOOD REASONS

FOREXPORTING AND IMPORTING.
IMPORT
Reduced costs
You can really save a lot of money through importing as compared
to just getting the resources from your local area.
Good quality items
You can buy from professional sellers to ensure that you get quality
products.
Remote management
You can very easily manage the entire process. There are various
providers that offer the option of tracking your shipment.

DISADVANTAGES
IMPORT

EXPORT

Foreign goods are substituting

the domestic goods' markets,
so the domestic industries are
eliminated.
Trade deficit will cause the
currency devaluation, inflation.
The importing of important
industries will lose the
influence by importing country.

Low value-added exports

can only get a small profit.
Investment and labor flows
in the export sector, the
domestic production of
other industries lack of
funds or labor.
Exports will lead to the loss
of core technologies

DISCUSS THE FUNCTIONS OF EXPORT

INTERMEDIARIES.

WHAT IS EXPORT
INTERMEDIARIES

Indirect exporting through agents, export

management companies, export trading
companies and foreign freight forwarder. It
is easier we call them as intermediary firm.
In indirect selling, an export intermediary
normally assumes responsibility for finding
overseas buyers, shipping products, and
getting paid.

THE FUNCTION

Stimulate sales, obtain orders and conduct market research

Perform credit investigations and payment-collection activities
Handle foreign traffic arrangements and shipping details
Provide support for a clients sales, distribution and promotion
staff.
Intermediaries may work simultaneously for a number of
exporters for a commission, salary, or retainer plus
commission. Some intermediaries take title to the goods they
handle, buying and selling in their own name.

THE FUNCTION
The products of a trading companys various clients are
often related, although the items usually are not
competitive.
One advantage to using an intermediary is that it can
immediately make available marketing resources that
exporters might take years to develop on their own.
Acts as a manufacturers agent or buys merchandise from
manufacturers for international distribution.
Becoming involved in international trade as an
independent broker is to match domestic exporters to
foreign customers.

DESCRIBE THE EXPORT-IMPORT

PROCESS AND EXPLAIN THE
ROLE OF VARIOUS EXPORT
DOCUMENTATION INVOLVED IN
THE PROCESS.

EXPORT PROCEDURES
Subject to the
payment terms
specified in the sales
contract, the
exporter should
Getting Paid
present the required
documents to the
relevant parties for
payment
Arranging export
declaration and
Customs Clearance
applying for
export licence
when necessary
Producing or sourcing
goods
Packing and labelling
Arranging shipment
Preparing exports
documentation
Arranging insurance, if
necessary

Selecting target markets, methods of

exportation and channels
Setting foreign market objectives on
pricing and terms
Export regulations and
requirements
Overseas import
regulations and
Trade Regulations
requirements
Patent, trademark and
copyright
Enquiries from
interested
overseas buyers
Making Contacts
Checking buyer's
background from
banks

Market Research
and Setting
Objectives of
Distribution

Making offers and

quotation for potential
buyers
Contract Execution
Quotation and Terms
Costs, quotations and pro
forma invoices, and
terms of sale
Confirming the sales
contract and terms of
Sales Contract
transaction such as
payment terms

IMPORT PROCEDURES

Setting Market
Arranging customs
Setting market objectives on pricing and
Objectives
terms
clearance and import
declaration
Identifying potential
Receiving shipping
suppliers
Customs
advice and arrival
Sourcing

Sourcing channels of
Clearance
notice
Products
distribution
Receiving export
Import regulations and
documents from the
requirements, and
exporter
checking whether
Trade
Collecting goods
Acquiring
import licence is
Regulations
from the specified
Goods
required
shipping company
Patent, trademark and
Preparing
or forwarder
copyright
payments and
insurance specified
Sending enquiries
Preparing
Making
in sales contract
to suitable
Payment and
Contacts
Preparing
suppliers
Insurance
insurance, cover
note, when
necessary
Analysing the supplier's
Confirming the sales
Settling
quotation and offers
contract and terms of
Quotation and
Sales
Contract

Costs and terms of sale

transaction such as
Terms
payment terms
Preparing for working capital
Types of bank financing and
Financing the
application, such as exporter
Purchase
credit or other bank facilities

EXPORT DOCUMENTS
1. Proforma Invoice

INVOICE
15. Health
Certificate
14. Insurance
Certificate
13. Marine
Insurance Policy
12. Bill of
Exchange

2. Commercial
Invoice
3. Consular Invoice

MISCELLANE
OUS
DOCUMENTS

PAYMENT
DOCUMENTS

11. PP Form
10. GR Form

EXCHANGE
CONTROL
DOCUMENTS

CERTIFICATE

CUSTOMS
DOCUMENTS

4. Certificate of
Origin
5. Combined
certificate of Origin
and Value

6. Shipping
Bill

7. Mate Receipt

TRANSPORT
DOCUMENTS

8. Bill Of Lading
9. Airway Bill

PROFORMA INVOICE
Quote in an invoice
format that may be
required by the buyer to
apply for
import license
contract for pre-shipment
inspection
open a letter of credit
arrange for transfer of
hard currency

COMMERCIAL
INVOICE

CONSULAR INVOICE

Document used in
foreign trade.
It is used as a
customs declaration
provided by the
person/corporation
that is exporting an
item across
international
borders.

Certification by a
consular or
government official
covering an
international
shipment of goods.

CERTIFICATE OF
ORIGIN

Often abbreviated to
CO or COO.
A document used in
international trade.
It traditionally states
from what country
the shipped goods
originate.

COMBINED
CERTIFICATE OF
ORIGIN AND VALUE
This Document is
applicable to
commonwealth
countries only.
This document
certifies not only the
origin of goods but
also the value of
goods.

SHIPPING BILL

It is the main custom

document.
It is required by the
custom authorities
for granting
permission for the
shipment of goods.

MATE RECEIPT

A declaration issued by
an officer of a vessel
stating that certain goods
have been received on
board his vessel.
An acknowledgement of
cargo receipt signed by a
mate of the vessel.
The possessor of the
mate's receipt is
entitled to the bill of
lading, in exchange for
that receipt.

BILL OF LADING
) Sometimes referred
to as a BOL, or B/L
) Document issued by
a carrier to a
shipper,
acknowledging that
specified goods have
been received on
board as cargo for
conveyance to a
named place for
delivery to the
consignee who is

AIRWAY BILL

A receipt issued by
an international
courier company for
goods and an
evidence of the
contract of carriage,
but it is not a
document of title to
the goods.

GR FORM

It is an exchange
control document which
is to be submitted after
clearance from the
customs authorities.
It is designed mainly to
furnished guarantee to
remit the foreign
exchange earned from
the export shipment
within 180 days from
the date of export.

PP FORM

It is also an
exchange control
document.
It is used in place of
form GR when goods
are exported by post
parcel.

BILL OF EXCHANGE
(DRAFT)
A written order by
the drawer to the
drawee to pay
money to the payee.
A common type of
bill of exchange is
the cheque, defined
as a bill of exchange
drawn on a banker
and payable on
demand.

Insurance covers
the loss or damage
of ships, cargo,
terminals, and any
transport or property
by which cargo is
transferred,
acquired, or held
between the points
of origin and final
destination.

HEALTH CERTIFICATE

CERTIFICATE OF
INSURANCE

MARINE INSURANCE

A document issued
by an insurance
company/broker that
is used to verify the
existence of
insurance coverage
under specific
conditions granted
to listed individuals.

It is required for export

of food products,
seeds, animal meat
products, etc.
This certificate is
issued by the health
department of the
exporting country
certifying that these
items are free from
infection and
contamination.

IMPORT DOCUMENTS
BILL OF
ENTRY

CERTIFICATE
OF
INSPECTION

FREIGHT
DECLARATION

CERTIFICATE
OF
MEASUREMEN
T

FUMIGATION
CERTIFICATE

BILL OF ENTRY

A formal declaration
describing goods which
are being imported or
exported.
Examined by customs
officials to confirm that
the contents of a
shipment conform to the
law, and to determine
which taxes, tariffs, and
restrictions may apply to
the shipment.

CERTIFICATE OF
INSPECTION

Inspection report or
report of findings is
required by some
importers and/or
importing countries.
The export-trader
uses such a report in
the inspection of
goods purchased
from a manufacturer.

CERTIFICATE OF
MEASUREMENT
There are two ways
how freight can be
charged i.e. on the
basis of weight or
measurement.
When freight is
charged on the basis
of weight, the weight
declared by the
exporter is accepted.

FUMIGATION
CERTIFICATE

FREIGHT
DECLARATION

When the importer

agrees to pay the
freight or the
overseas supplier
pays the freight; in
both the cases
freight declaration is
needed from the
overseas supplier.

In order to ensure
safety against
spread of harmful
virus importer insist
on fumigation
certificate where the
cargo includes plants
& weeds.
Unless his certificate
is provided the cargo
will not be allowed to
enter into their

WHAT IS COUNTERTRADE?
WHY FIRMS OR GOVERNMENTS
ENGAGE IN COUNTERTRADE?

WHAT IS COUNTERTRADE?
Countertrade means exchanging goods or services which are
paid for in whole part with other goods or services rather than
with money.
Countertrade is an import/export relationship between nations or
large companies in which good and /or services are exchanged
for goods and services instead of money.
A monetary valuation can however be used in counter trade for
accounting purposes.
Countertrade have six types: barter, switch trading, buyback,
counter purchase, offset agreement and Compensation trade.

TYPES OF
COUNTERTRADE
BARTER
Direct exchange without money
The action or system of bartering
It is usually bilateral but may be
multilateral
For barter to occur between two
parties, both parties need to have what
the other wants.
SWITCH TRADING
Sale by a company of an obligation to
purchase from a country.

BUYBACK
Buying back of goods by the
original seller.
Export of industrial equipment in
return for products the equipment
produces.
Occurs when a firm builds a plant
in a country.
Agrees to take a certain percentage
of the plants output as partial
payment for the contract.
COMPENSATION TRADE
Is a form of barter in which one of
the flows is partly in goods and
partly in hard currency.

COUNTERPURCHASE
Offset a hard-currency sale to a nation with future hard-currency purchase.
(part of exported goods is produced in the importing country)
Agreement of an exporter to purchase a quantity of unrelated goods or
services from a country in exchange for and approximate in value to the
goods exported.
Example: company A may buy goods from company B in June, and then sell
different goods to company B in July.
Made for the mutual benefit of both companies.
OFFSET AGREEMENT
Offset a hard-currency sale to a nation.
Type of side deal, sometimes best described as a sweetener.
Agreement between two or more parties that provides additional benefits,
usually one that is meant to create jobs or wealth for the countrys economy.

WHY FIRMS OR GOVERNMENT

ENGAGE IN COUNTERTRADE?
One reason that companies engage in this practice is that some governments mandate
countertrade on very large-scale (over $1 million) deals or if the deal is in a certain
industry.
For example, South Korea mandates countertrade for government
telecommunications procurement over $1 million.
When governments impose counter purchase obligations, firms have no choice but to
engage in countertrade if they wish to sell goods into that country.
Countertrade also can mitigate the risk of price movements or currency-exchangerate fluctuations.
Because both sides of a countertrade deal in real goods, not financial instruments,
countertrade can solve the inflation risk involved in foreign currency procurement.
In effect, countertrade can be a better mechanism than financial instruments as a way
to hedge against inflation or currency fluctuations.

Countertrade helps in the sales of surplus stocks produced or stored.

For example: With the policy of countertrade, the businesses in
developed countries can sell their stock, which have become
outdatedor obsolete at home due to the advancement in technology
to the developing or poor countries of the world.
If it seems that a sale on credit can lead to bad debt situation, a
seller can avoid this situation, by adopting the policy of
countertrade.
By adopting countertrade is that the businesses can hide the selling
price of their product.
Hiding the price of goods sold sometimes becomes very helpful in
some situations.
For example: Price cartels are considered an evil in business
practices, in which producers in the same industry decide to cut
production to raise the price for the consumers.
If a member of the cartel wants to sell below the agreed prices, it can
be done by countertrade.

THANK
YOU