Intro To International Business

Intro to International Business

Wade Merritt

Maine International Trade Center

Ellsworth

December 5, 2000

What is the Maine International Trade Center?

• One-stop shop for international business assistance

• Export and import counseling• Access to international business expertise, both

public and private• Membership organization• Economic development tool

More about MITC

• Formed by unanimous act of state legislature, 1996

• Receives partial state funding, through Department of Economic & Community Development

More about MITC

• Statewide organization, offices in Portland, Bangor, and Lewiston-Auburn

• Works with many partners, including:– US Department of Commerce

– Manufacturing Extension Partnership

– Eastern Maine Incubator Without Walls

– Private sector support (banks, attorneys, etc.)

A few figures

• Maine traditionally exports less than the national average (5.5% for Maine, 7% for the US)

• 95% of Maine’s companies have less than 20 employees

• Small businesses account for 60% of economic growth, 28% of production, but only 14% of exports

A few more figures

• Maine exported $2.1 billion in 1999• Maine exported to 130 different countries• Maine ranked xxth in total exports, but xxth in

export growth

What are we sending?

• Semiconductors• Paper and Allied Products• Fish and Seafood• Lumber and Building Materials• Leather and Leather Products• Agricultural Products

Not just for big companies...

• Bear gall bladders to China• Harley-Davidson motorcycle gaskets to 37

different countries• Handmade soaps to 10 different countries from

Talmadge (population 9)• Clipper program• Canada Desk

What is international business?

• Exporting– increase sales of goods or services

– expands business, hiring new employees

– strengthen business by becoming more competitive

– stabilize against domestic downturns (or downturns in current international markets)

– niche markets for products• older technology

• Germans and Maine

What is international business?

• Importing– more competitive component prices for manufacturing

– sources of improved technology

– new products to add to current lines

– sources of unique products

• Foreign direct investment– new money, new jobs for Maine’s people

• Idea is to strengthen and grow businesses!

The accidental exporter

• Lowering of global trade barriers– WTO

– NAFTA

• Pervasiveness of American culture• The “Maine Mystique”• Internet sites -- a “global storefront”

You’ve just received a foreign inquiry for 500 pieces of your product.

The order came in through your domestic-oriented website.

Now what?


• Stop screaming and take a deep breath• Assess the situation

– can you handle an order of this size and/or complexity?• production schedule, shipping costs, payment delays

– do you know anything about the inquiring company?• is this a real company? or are you about to send your products

away for nothing?

– do you need help? do you know where to find it?

• Call MITC – Bangor 990-3161, Portland 541-7400


• Call MITC (Bangor 990-3161, Portland 541-7400)– can provide counseling on numerous issues

– is it legal to do business in the market?• Iran, Iraq, Libya, North Korea, Cuba, all off-limits

– is it legal to sell the product in the market?• safety concerns

• importing nation’s limits need to be respected

– do you know the buyer?• international credit reports

• background checks -- are your products going to end up someplace you never intended?


• Arrange for payment– credit cards a good choice for small exporters

• currency exchange taken care of• lower fees• “instant” payment

– wire transfers • fees vary, large banks tend to be less expensive

– foreign drafts• take a long time to clear US banks

– letters of credit• complex, offers good protection


• Prepare product for shipment– labeled properly?

• language requirements

• metric labeling

• metric packaging

• country-specific labeling requirements– origin, ingredients, etc.


• Getting your product out– commercial, “retail” shippers

• UPS, FedEx, etc.

• good for smaller (size or weight) shipments

– freight forwarders• AN Deringer, PBB, etc.

• “travel agents” for freight

• good for larger shipments

• good for ongoing shipments


• Export documentation– often prepared by shipper

– varies from destination to destination

– need harmonized code for product

– commercial invoice

– certificate of origin

– shipper’s export declaration (over $2500)


• Why bother?– increase sales and profits

• 95/5 rule

– expand global market share• all companies have one, even if it’s miniscule

– reduces dependence on existing markets• fends off domestic downturns

– extend sales potential of existing products• typewriter parts

• remember, not all countries are at US technology level


• Why bother?– exploit corporate technology and know-how

• language skills in the company?

• other employee skills or interests?

• new technology or techniques?

– sell excess production capacity• co-manufacturing leading to shared distribution

• might as well use put that capacity to work (assuming you have it)


• Why bother?– enhanced competitiveness at home

• exporting companies are stronger companies

• more sure of markets

• more sure of clients and customers and why they purchase

• skills learned internationally translate well to domestic market (but not necessarily vice versa!)

• improved manufacturing techniques or technologies


• Why bother?– gain information on the competition

• for more active international businesses

• research and know your international competition

• it’s a global market!

• “get the goods” away from home

• don’t wait until the world knocks on your door!


• Downsides– develop new marketing materials

• mainly for active exporters, rather than passive ones

• translations, colour schemes, etc.

– subordinate short-term profits to long-term gains

– added administrative costs• phone, fax, postage

– getting paid takes longer


• Downsides– may need to modify product or packaging

• names (Chevy Nova, Pepsi gaffes)

• metric

• size

– apply for additional financing• cover extended recievables

• insurance

– may need to obtain special licenses or paperwork• generally for high-tech or defense-related products

International sourcing

• International business is not just exporting• many businesses interested in importing

– adding international products to existing product lines

– food products• olive oils, pasta, candies, beverages

– handiwork/crafts• furniture, handmade items, stoneware

– components for current products• furniture pieces, wood, raw materials

Common export documents

• Certificate of Origin– straight

– NAFTA

– other specialized

• Commercial invoice• Shippers’ Export Declaration• Call MITC or USDOC for specific countries

Commercial Invoice

• Three copies

• Can use own, if same information is included

Non-NAFTA C/O

• For all destinations outside Canada & Mexico (and a few others)

• Establishes origin of product for tariff classification

NAFTA C/O

• Only for Canada & Mexico

• Establishes origin of product for NAFTA treatment


• Getting it in– can you have (or purchase) product?

• same restrictions on origin as exports

• safety and other restrictions applied by federal and states

– shipping• international source will make suggestions on shipping

• timing (how long to get product here)


• Getting it in– customs brokers

• help ease passage of products across borders (land, sea, air)

• completes entry documentation

• can work with Customs to deal with problems

• many have relationships with shipping companies

– dealing with Customs• be honest!

• get a good broker

What can MITC do to help?

• Educational programming– region-specific programs

• Canada, China, Germany, Japan

– one-on-one export counseling• company visits

• range of handholding, from low to high

– resource library• electronic and traditional resources

• in the Portland office


• Market identification– off-the-shelf research from USDOC

– close examination of trade statistics

– work with federal colleagues for on-the-spot research

• Foreign business contacts– agent-distributor searches

– company directories

– distributor directories


• International credit reports• Export documentation

– what do you need?

– how do you fill it out?

• Assistance with product classification– six-digit HS for documentation

• Assistance with determining foreign tariffs and non-tariff barriers


• Trade leads– USAID, USTDA, MERX, TED, FAS, GTA, etc.

• Trade delegations– inbound (Brazil, Nova Scotia)

– outbound (Germany, Netherlands)

• News on trade shows and conferences• Information and resource referrals• Research services

Clipper program

Department of Commerce programs