INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Importing, exporting, and
sourcing
Europe is famous as a source for fine leather
goods such as handbags and shoes. Each year,
consumers in Europe buy 2.5 billion pairs of
shoes. Shoes from China currently account for
about 1/3 of the market; since 2001, when
China joined the WTO, Chinese imports have
increased ten-fold. Imports from Vietnam have
doubled in the same period.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Importing, exporting, and
sourcing
The flood of shoe imports from China and
Vietnam has been a boon for European retailers
and value-conscious consumers. However,
faced with a threat to their business,
manufacturers in Italy, Spain, and France sought
protection. In an effort to curb the tide of
imports, the European Commission imposed
tariffs for a period of two years: 16.5% on shoes
from China and 10% on shoes from Vietnam.
The narrow margin on victory for the tariffs
reflects divergent views in Europe about how to
deal with low-cost Asian goods.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Export selling
It does not involve tailoring the product, the
price, or the promotional material to suit the
requirements of global markets. The only
marketing mix element that differs is the
“place”; that is, the country where the product is
sold.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Export marketing
It targets the customer in the context of the total
market environment. The export marketer does
not simply take the domestic product “as is” and
sells it to international customers. It is the
integrated marketing of goods and services that
are destined for customers in international
markets.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Export marketing
It requires:
 An understanding of the markets of the
target market environment.
 The use of marketing research and
identification of market potential.
 Decisions concerning product design,
pricing,
distribution
and
channels
advertising, and communications.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Market visit
 It should confirm (or contradict) assumptions
regarding market potential.
 Gather additional data necessary to reach the
final go or no-go decision regarding an export
marketing program. Certain kinds of
information simply cannot be obtained from
secondary sources.
 Develop a marketing plan in cooperation
with the local agent or distributor.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
National policies governing
exports and imports
For centuries, nations have combined two
opposing policy attitudes toward the movement
of goods across national boundaries. On the one
hand, nations encourage exports, the flow of
imports, on the other hand, they are generally
restricted.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Government programs that
support exports
Any government concerned with trade deficits
of economic development should focus on
educating firms about the potential gains from
exporting. This is true at the national, regional,
and local government levels. Governments
commonly use four activities to support and
encourage firms that engage in exporting. These
are tax incentive, subsidies, export assistance,
and free trade zones.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Tax incentives
Treat earnings from export activities
preferentially either by applying a lower rate to
earnings from these activities or by refunding
taxes already paid on income associated with
exporting. The tax benefits offered by export
conscious governments include varying degrees
of tax exemption or tax deferral on export
income, accelerated depreciation of exportrelated assets and generous tax treatment of
overseas market development activities.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Subsidies
Direct or indirect financial contributions or
incentives that benefit producers.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Governmental assistance
Companies can avail themselves of a great deal
of government information concerning the
location of markets and credit risks. Assistance
may also be oriented toward export promotion.
Government agencies at various levels often
take the lead in setting up trade fairs and trade
missions designed to promote sales to foreign
customers.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Free trade zones
The export or import process can entail red tape
and bureaucratic delays. This is especially true
in emerging markets, such as China and India.
In an effort to facilitate exports, countries are
designating certain areas as free trade zones or
special economic zones. These are geographic
entities that offer manufacturers simplified
customs procedures, operational flexibility, and
a general environment of relaxed regulations.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Governmental actions to
discourage imports and
block market access
Measures such as tariffs, import controls and a
host of nontariff barriers are designed to limit
the inward flow of goods.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Tariffs and duties
Tariffs can be thought as the “three R’s” of
global business: rules, rate schedules (duties),
and regulations of individual countries. Duties
can be thought as “taxes that punish individuals
for making choices of which their governments
disapprove”.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Tariffs and duties
In spite of the progress made in simplifying the
tariff procedures, administrating a tariff is an
enormous problem. People who work with
imports must familiarize themselves with the
different classifications and use them accurately.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Tariffs and duties
A product classification can make a substantial
difference in the duty applied. For example, is a
Chinese-made X-men action figure a doll or a
toy? For many years, dolls were subjected to a
12% duty when imported in to the United
States; the rate was 6.8% for toys. Moreover,
action figures that represent non-human
creatures such as monsters or robots were
categorized as toys and qualified for lower
duties than human figures that the Customs
Service classifies as dolls. Duties on both
categories have been eliminated. The X-Men
toy case went in court and prove that it does not
represent humans.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Nontariff barrier
Any measure other than a tariff that is a
deterrent or obstacle to the sale of products in a
foreign market. Nontariff barriers include
quotas, discriminatory procurement policies,
restrictive customs procedures, arbitrary
monetary policies, and restrictive regulations.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Quota
A government-imposed limit or restriction on
the number of units or the total value or a
particular product or product category that can
be imported.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Discriminatory
procurement policies
Government
rules
and
administrative
regulations specifying that local vendors or
suppliers receive priority consideration.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Customs procedures
They are considered restrictive if they are
administered in a way that makes compliance
difficult and expensive. Formal disagreements
on procedures and product classifications that
cost time and money for both the importer and
exporter.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Discriminatory
rate policies
exchange
Distort trade in much the same way as selective
import duties and export subsidies. Some claim
that China is pursuing policies that ensure an
artificially weak currency which results in a
competitive price edge in world markets.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Restrictive administrative
and technical regulations
These may take the form of antidumping
regulations, product size regulations, and safety
and health regulations.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Organizing for exporting in
the manufacturer’s country
Home-country issues involve deciding whether
to assign export responsibility inside the
company or to work with an external
organization specializing in a product or
geographic area. Most companies handle export
operations within their own in-house export
organization. In such cases responsibilities can
be incorporated into job descriptions or as
separate division or organizational structure.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Organizing for exporting in
the manufacturer’s country
The advantage of including responsibilities into
domestic job descriptions is that it is a low-cost
option. However, attention is needed in terms of
competence of the people that are doing the job
as regards products, customer knowledge, and
international markets.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Organizing for exporting in
the market country
In addition to the latter a company must also
make arrangements to distribute the product in
the target market country. A decision is needed
whether the organization is going to rely on
direct market representation as opposed to
independent intermediaries. Direct market
allows
decisions
concerning
program
development, resource allocation, or price
changes to be implemented unilaterally.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Sourcing
In today’s competitive marketplace,
companies are under intense pressure to
lower costs and one way to do this is to
locate manufacturing and other activities in
China, India, and other low-wage countries.
A sourcing decision refers to whether a
company makes or buys its products.
Outsourcing refers to shifting production
jobs or work assignments to another country
to cut costs.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Sourcing
Several factors may figure in the sourcing
decision: management vision, factor costs
and conditions, customer needs, public
opinion, logistics, country infrastructure,
political factor, and exchange rates.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Management vision
Some chief executives are determined to
retain some or all manufacturing in their
home country.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Factor
costs
conditions
and
They include land, labour, and capital costs.
Labor include the cost of workers at every
level: manufacturing and production,
professional
and
technical,
and
management.
For
example
basic
manufacturing direct labour costs today
range from less than $1 per hour in a typical
emerging country to $6 to $12 per hour in
the typical developed country.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Customer needs
Sometimes
customers
are
seeking
something besides the lowest possible price.
For example Dell’s clients were unhappy
with Indian technical support so they went
to the higher cost option of moving their call
centre back to the United States.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Logistics
In general, the greater the distance between
the product source and the target market, the
greater the time delay for delivery and the
higher the transportation cost. However,
innovation
and
new
transportation
technologies are cutting both time and
money costs.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Country infrastructure
It is important that the basic physical and
organizational structures and facilities (e.g.,
buildings, roads, and power supplies) of a
society or enterprise be sufficiently
developed to support a manufacturing
operation. Consequently, a country may
have cheap labour, but may not have
supporting infrastructure for the specific
manufacturing activity.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Political factors
Political risk is a deterrent to investment in
local sourcing. Also, amendments that
influence marketing conditions should be
considered. Finally, another factor to take in
consideration market access issues such us
regional limitations, content laws, balanceof-payments problems.
Dr. Savvas Trichas
INTERNATIONAL MARKETING
IMPORTING, EXPORTING,
AND SOURCING
Foreign exchange rates
In deciding where to source a product or locate a
manufacturing activity, a manager must take into
account foreign exchange trends in various parts
of the world. The dramatic shifts in price levels
of commodities and currencies are a major
characteristic of the world economy today. Such
volatility argues for a sourcing strategy that
provides alternative country options for
supplying markets. Thus, if the dollar, yen, or the
mark becomes seriously overvalued, a company
with production capacity in other locations can
achieve competitive advantage by shifting
production among different sites.
Dr. Savvas Trichas