Import

by John J. Capela

Import/Export

FOR

DUMmIES‰

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Import/Export

FOR

DUMmIES‰

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by John J. Capela

Import/Export

FOR

DUMmIES‰

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Import/Export For Dummies®

Published by

Wiley Publishing, Inc.

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Hoboken, NJ 07030-5774

www.wiley.com

Copyright © 2008 by Wiley Publishing, Inc., Indianapolis, Indiana

Published simultaneously in Canada

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About the Author

John Capela is an assistant professor of business at St. Joseph’s College in

New York, where he has taught marketing, management, and international

business courses for the past 20 years.

Prior to becoming a faculty member at St. Joseph’s, John was an assistant

professor of management at the School of Management at the New York

Institute of Technology, and a visiting professor of management at the Sy

Syms School of Business of Yeshiva University. He has conducted numerous

workshops and seminars throughout the New York metropolitan area on how

to start an import/export business. He also was a coauthor of the Dictionary

of International Business Terms (Barron’s), initially published in 1994 and cur￾rently in its third edition.

Prior to teaching, John served as the director of international operations for

one of the oldest and largest manufacturers and marketers of medical, surgical,

and healthcare products. He directed the startup of manufacturing operations

in Puerto Rico and served as its chief operating executive.

He is president of CADE International, a firm that provides consulting and

training in international business, specializing in communications, importing,

exporting, licensing, and foreign investment. The firm serves both American

and foreign exporters and importers.

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Dedication

I would like to dedicate this book to those family members and friends who

were always there to support me in my personal and professional endeavors.

A special thanks to my parents, who are missed and will always be part of my

life; my sons, John and Christopher; my “Cioci” Mary and Uncle Johnnie; and

Fred and Greg who guided me into my career in international business.

I would finally like to add a special thanks to Kathleen for showing a lot of

patience in putting up with me during the past several months while I was

working on this project.

Author’s Acknowledgments

I would like to thank Mike Baker, my acquisitions editor at Wiley, for his efforts

in finding me and providing me with this opportunity. I have always had a

passion for international business — I’ve been involved with importing or

exporting since 1970, having started out as an export assistant, then an

import assistant, an international traffic manager, director of international

operations, an entrepreneur, a seminar leader, and teacher — so writing this

kind of book is truly something I’ve always wanted to do. If it weren’t for Mike

finding me, I would never have had the opportunity to complete something

that was on my to-do list.

I would also like to express my thanks to the other members of the editorial

staff at Wiley, including my project editor, Elizabeth Kuball. Many thanks to

my good friend for many years, George Haber, who served as the technical

editor.

Finally, I would like to thank all those students who, over the past 20 years,

have sat through my “Build and Start Your Own Import/Export Business”

seminar. Their enthusiasm has always inspired me, and I have referred to

them and many of their stories throughout this text.

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Publisher’s Acknowledgments

We’re proud of this book; please send us your comments through our Dummies online registration

form located at www.dummies.com/register/.

Some of the people who helped bring this book to market include the following:

Acquisitions, Editorial, and

Media Development

Project Editor: Elizabeth Kuball

Acquisitions Editor: Mike Baker

Copy Editor: Elizabeth Kuball

Editorial Program Coordinator:

Erin Calligan Mooney

Technical Editor: George Haber

Senior Editorial Manager: Jennifer Ehrlich

Editorial Supervisor and Reprint Editor:

Carmen Krikorian

Editorial Assistants: Joe Niesen, David Lutton,

Jennette ElNaggar

Cover Photos: © Brand X Pictures/Steve Allen

Cartoons: Rich Tennant

(www.the5thwave.com)

Composition Services

Project Coordinator: Lynsey Stanford

Layout and Graphics: Reuben W. Davis,

Alissa D. Ellet, Melissa K. Jester,

Christine Williams

Proofreader: Toni Settle

Indexer: Valerie Haynes Perry

Publishing and Editorial for Consumer Dummies

Diane Graves Steele, Vice President and Publisher, Consumer Dummies

Joyce Pepple, Acquisitions Director, Consumer Dummies

Kristin A. Cocks, Product Development Director, Consumer Dummies

Michael Spring, Vice President and Publisher, Travel

Kelly Regan, Editorial Director, Travel

Publishing for Technology Dummies

Andy Cummings, Vice President and Publisher, Dummies Technology/General User

Composition Services

Gerry Fahey, Vice President of Production Services

Debbie Stailey, Director of Composition Services

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Contents at a Glance

Introduction .................................................................1

Part I: Breaking into the Import/Export Business.............7

Chapter 1: Introducing Import/Export.............................................................................9

Chapter 2: Figuring Out Your Role in the Import/Export Business............................19

Chapter 3: Rules and Regulations to Consider before You Get Started ....................35

Chapter 4: Organizing for Import and Export Operations ..........................................49

Part II: Selecting Products and Suppliers......................67

Chapter 5: Selecting the Right Products........................................................................69

Chapter 6: Connecting with Overseas Suppliers for Your Imports............................75

Chapter 7: Finding U.S. Suppliers for Your Exports .....................................................89

Part III: Identifying Your Target Market

and Finding Customers................................................97

Chapter 8: Looking at Marketing ....................................................................................99

Chapter 9: Researching Export Markets......................................................................121

Chapter 10: Researching Import Markets ...................................................................131

Chapter 11: Making Export Contacts and Finding Customers..................................141

Chapter 12: Locating Customers for Your Imports ....................................................153

Part IV: Completing the Transaction: International

Trade Procedures and Regulations..............................163

Chapter 13: Making the Sale: Pricing, Quotes, and Shipping Terms........................165

Chapter 14: Methods of Payment.................................................................................173

Chapter 15: Packing and Shipping — with the Right Documentation .....................195

Chapter 16: Getting Your Goods: Customs Requirements and the Entry Process....211

Part V: The Part of Tens ............................................233

Chapter 17: Ten Keys to Becoming a Successful Importer .......................................235

Chapter 18: Ten Keys to Becoming a Successful Exporter .......................................241

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Part VI: Appendixes ..................................................247

Appendix A: Glossary ....................................................................................................249

Appendix B: Resources..................................................................................................261

Appendix C: Distributor and Agency Agreement Outlines .......................................295

Index .......................................................................319

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Table of Contents

Introduction..................................................................1

About This Book...............................................................................................1

Conventions Used in This Book .....................................................................1

What You’re Not to Read.................................................................................2

Foolish Assumptions .......................................................................................2

How This Book Is Organized...........................................................................3

Part I: Breaking into the Import/Export Business ..............................3

Part II: Selecting Products and Suppliers ............................................3

Part III: Identifying Your Target Market and Finding Customers......3

Part IV: Completing the Transaction: International Trade

Procedures and Regulations .............................................................4

Part V: The Part of Tens.........................................................................4

Part VI: Appendixes................................................................................4

Icons Used in This Book..................................................................................5

Where to Go from Here....................................................................................5

Part I: Breaking into the Import/Export Business..............7

Chapter 1: Introducing Import/Export . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Defining the Import/Export Business ............................................................9

Exporting: Do you want what I’ve got? ..............................................10

Importing: Can I sell what you’ve got?...............................................12

Environmental Forces That Make International

Business Different.......................................................................................12

Forces you can control ........................................................................13

Forces you can’t control......................................................................13

Chapter 2: Figuring Out Your Role in the Import/Export Business . . .19

The Benefits of Import/Export .....................................................................20

Increasing sales and profits ................................................................20

Taking advantage of expanding international economies...............20

Making use of trade agreements ........................................................21

Lowering manufacturing costs ...........................................................24

Determining Your Place in the Food Chain: Import, Export, or Both? ....26

Deciding Whether to Become a Distributor or an Agent ..........................27

Distributor.............................................................................................28

Agent ......................................................................................................30

Analyzing Start-Up Costs...............................................................................32

Pondering Profit Potential.............................................................................33

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xii Import/Export For Dummies

Chapter 3: Rules and Regulations to Consider

before You Get Started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

If You’re Exporting .........................................................................................36

Export licensing....................................................................................36

Other export regulations.....................................................................39

Customs benefits available to exporters...........................................41

If You’re Importing .........................................................................................42

Import licensing, restrictions, and prohibitions ..............................43

Getting import help from commodity specialist teams ..................45

Figuring out the tariff classification of your imports.......................47

Chapter 4: Organizing for Import and Export Operations . . . . . . . . . . .49

Selecting a Company Name...........................................................................49

Choosing a Form of Organization.................................................................51

Sole proprietorship ..............................................................................52

Partnership ...........................................................................................54

Corporations.........................................................................................57

S corporations ......................................................................................59

Limited liability companies.................................................................59

Setting Up Your Business ..............................................................................60

Registering your business...................................................................60

Opening a bank account......................................................................60

Selecting an office location .................................................................61

Getting connected ................................................................................61

Opting for a Web Site .....................................................................................63

Planning for the kind of site you want...............................................63

Registering your domain name...........................................................64

Finding a Web host...............................................................................64

Considering content.............................................................................65

Working on Web design .......................................................................65

Promoting your site .............................................................................66

Part II: Selecting Products and Suppliers ......................67

Chapter 5: Selecting the Right Products . . . . . . . . . . . . . . . . . . . . . . . . .69

Choosing Whether to Be a Generalist or a Specialist................................69

Introducing the Three E’s of Product Selection .........................................70

Experience.............................................................................................71

Education...............................................................................................71

Enthusiasm............................................................................................71

Assessing a Product’s Potential ...................................................................72

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