MANA 4321 Ch 14

2nd purpose of bill of lading

Contract specifies that the carrier is obligated to provide a transportation service in return for a certain charge.

3rd purpose of bill of lading

Document of title can be used to obtain payment or a written promise of payment before the merchandise is released to the importer.

A draft is the instrument normally used in international commerce to effect payment.

It is an order written by an exporter instructing an importer or an importer's agent to pay a specified amount of money at a specified time.

MITI

Japan's Ministry of International Trade and Industry that is always on the lookout for export opportunities.

Sogo Shosha

Japanese trading companies; a key part of the keiretsu, the large Japanese industrial groups. Has offices all over the world, and they proactively, continuously seek export opportunities for their affiliated companies large and small.

1st purpose of bill of lading

Receipt indicates that the carrier has received the merchandise described on the face of the document.

A letter of credit is issued by

a bank at the request of an importer.

Bill of Lading

a document issued to an exporter by a common carrier transporting merchandise. It serves 3 purposes as a receipt, a contract, and a document of title which indicate:

Sight Draft

a draft payable on presentation to the drawee.

Time Draft

a promise to pay by the accepting party at some future date; allows for delay in payment—normally 30,60,90, or 120 days.

Counterpurchase

a reciprocal buying agreement, occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made.

Export-Import Bank (Ex-Im Bank)

agency of the U.S. government whose mission is to provide aid in financing and facilitate exports and imports.

Buyback

agreement to accept a percentage of a plant's output as payment for contract to build a plant, or supply technology, equipment, training, or other services to the country. For example, Occidental petroleum built several ammonia plants in Russia and as partial payment Russia receives ammonia over a 20-year period.

Offset

agreement to purchase goods and services with a specified percentage of proceeds from an original sale in that country from any firm in the country.

Bill of Exchange

an order written by an exporter instructing an importer, or an importer's agent, to pay a specified amount of money at a specified time. Normally used in international commerce to effect payment.

Draft

an order written by an exporter telling an importer what and when to pay.

A firm that insists on being paid in hard currency may be

at a competitive disadvantage vis-à-vis one that is willing to engage in countertrade.

Countertrade includes a range of

barter like agreements.

Neophyte exporter often become discouraged or frustrated with the exporting process

because they encounter many problems, delays, and pitfalls.

The problems arising from lack of trust between exporters and importers can be solved

by using a third party that is trusted by both, normally a reputable bank.

Due to the lack of trust

each party to an international transaction has a different set of preferences regarding the configuration of the transaction.

Export Management Company (EMC)

export specialist that acts as an export marketing department for client firms, offering a full menu of services to handle all aspects of exporting, similar to having an internal exporting department within your own firm.

Export management companies can also help

identify export opportunities.

Many of the pitfalls associated with exporting can be avoided

if a company hires an experienced export service provider (e.g., export management company) and if it adopts the appropriate export strategy.

One big impediment to exporting

is ignorance of foreign market opportunities.

The main disadvantage of countertrade

is that the firm may receive unusable or poor-quality goods that cannot be disposed of profitably.

Letter of Credit

issued by a bank, at the request of an importer, indicating that the bank will make payments, normally to the exporter, under specific circumstances.

U.S. exporters can draw on two types of government backed assistance to help finance their exports:

loans from the Export-Import Bank and export credit insurance from the Foreign Credit Insurance Association.

Drafts are either

sight drafts or time drafts. Time drafts are negotiable instruments.

The main attraction of countertrade is

that it gives a firm a way to finance an export deal when other means are not available.

It states that

the bank promises to pay a beneficiary, normally the exporter, on presentation of documents specified in the letter.

Barter

the direct exchange of goods or services between two parties without a cash transaction. The simplest arrangement, but not commonly used.

In the United States, a number of institutions

the most important of which is the U.S. Department of Commerce, can help firms gather information in the matchmaking process.

Countertrade

the trade of goods and services for other goods and services.

Primarily used when a firm exports

to a country whose currency is not freely convertible and may lack the foreign exchange reserves required to purchase the imports. (Countertrade)

The way to overcome ignorance is

to gather information.

A bill of lading is issued

to the exporter by the common carrier transporting the merchandise. It serves as a receipt, a contract, and a document of title.

Switch Trading

use of a specialized third-party trading house in a countertrade agreement. Occurs when a third-party trading house buys the firm's Counterpurchase credits and sells them to another firm that can better use them.

*When a firm enters a Counterpurchase or offset agreement with a country it often ends up with

what are called Counterpurchase credits, which can be used to purchase goods from that country.

Firms engaged in international trade must do business

with people they cannot trust and people who may be difficult to track down if they default on an obligation.