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Exporting
from the United States
Vinita Bahri-Mehra | Fisher College of Business
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Strategy for Exports
+Exporting
is not an easy, quickly
mastered endeavor
+Requires
a lot of planning and
preparation before the first product can
be exported to a foreign markets
+Establishment
of reliable relationships
and the adaptability or strategies to local
developments needs to be considered
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Entry Routes
A. Direct Sales from U.S. (using freight forwarder).
+ Key considerations:
+ Use
accurate Incoterms 2010 for international sale or, even better, spell
out in detail who is responsible for what.
+ Most common terms:
+ EXW,
FOB, CIF, DDU, DDP
+Payment Terms
+ NOT Incoterms!
+ The Incoterms generally indicate WHAT must be paid by
each party not WHEN it must be paid.
+ Do not confuse liability with responsibility.
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Entry Routes
Payment Terms
+Usually determined in the purchase contract
+Major options, based upon increasing risk
+Paid
in advance.
+Letter of credit.
+Documents against payment.
+Open account.
+Interest on import bills allowed if overdue for less than 3
years at rate prescribed for trade credit from time to time.
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Entry Routes
+Decide
on: Who is the “importer of record”?
+Exporting
directly can suit high value products or
services. However, winning new customers is likely to
require significant investments in building relations
and several visits.
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Entry Routes
B. Technology Collaborations + Trademark License
+ Foreign entities can provide technical know-how and/or license their
trademark to Indian companies against payment of fee and royalty.
Key considerations:
+ Protection
of Intellectual Property.
+ Registration of trademarks, copyrights and patents (“first to file” – jurisdiction).
+ Trade Secrets: No statutory protection of trade secrets or confidential information.
However, several court precedents enforce confidentiality agreement through
mandatory injunctions.
+ Most global IP laws do not provide for automatic assignments.
+ Advantage of lower withholding taxes on royalty income
stream.
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Entry Routes
C. Agency Relationship
Creation:
+
Relationship between Agent and Principal is primarily contractual in nature and governed
by terms of contract entered into between them.
+
Agency contract should contain limitations, termination events, territory, products or goods,
commission structure and time of payment.
+
Depending upon conduct of the parties----exclusivity can be
presumed.
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Entry Routes
D. Distributor/Franchisee Relationship
+Relationship
between Distributor/Franchisee & Principal is
contractual in nature and governed by the terms of the
contract.
of Permanent Establishment (“PE”) status is
critical – most countries.
+Avoidance
+Restrictive
Covenants (i.e. non-compete and non-solicitation)
difficult to impose post-termination/expiration of
the agreement.
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7 Tips for Highly Effective Exports
1.
Develop a Long-Term Strategic Plan.
2.
Focus on Due Diligence.
3.
Think Global, Act Local.

Localize your products and services.
e.g.: KFC – China
McDonalds – India
Amazon - China
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7 Tips for Highly Effective Exports
4.
Pay attention to Geographic Diversity
5.
Be patient and commit to long term
6.
Ensure compliance
 Foreign
 Export
 Office
7.
Corrupt Practice Act.
Contract Regulations
of Foreign Asset Control (“OFAC”)
Rely on Experienced Global Business Advisors.
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Summary
In many countries, rights and obligations are outlined
in their constitution, as well as laws, decrees,
provisional regulations, ordinances and regulations
and in territorial connections and treaties.
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Legal Advice
This presentation is designed to provide an overview
of a number of legal principles and considerations.
As each legal issue is fact dependent, this
presentation should not be used or viewed as legal
advice, and your legal counsel should be consulted on
the application of your particular factual situation to the
current law.
Copyright: 2016 Kegler, Brown, Hill + Ritter
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Thank You!
Vinita Bahri-Mehra, Director
Director + Chair, Asia Pacific Practice
Kegler Brown Hill + Ritter
vmehra@keglerbrown.com
keglerbrown.com/bahrimehra
614-255-5508
614-464-2634 (fax)