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TRANSCRIPT
INTERNATIONAL MARKETING
WONKWANG UNIVERSITY
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Professor In Woo Jun / Bcom, MBA, Ph.D.2015
GLOBAL TRADING
I. GLOBAL TRADING 1. Benefits of International Trade2. Types of Trade3. The Process of International Trade 4. Companies involved in International Trade 5. Offer Sheet 6. International Contract 7. INCOTERMS 20108. Explanation of INCOTERMS 2010
CONTENTS
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1. Benefits of International Trade
International Trade is the purchase, sale or exchange of goods and services across national borders.
International Trade is opening doors to new business opportunity across the globe.
It also provides a country’s people with a greater choice of goods and services.
International Trade is an important engine for job creation in many countries. (The US Department of Commerce calculates that, for every U$1billion increase in exports, 22,800 jobs are created within the USA.)
GLOBAL TRADING
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1
Visible Trade
Physical products and goods (e.g. Machinery and Equipment, Metal, Petrochemical products, Foodstuffs, etc.)
Invisible Trade
Capital, Labor, Technology, Software, Services, etc.
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Direct Trade
Trade that occurs directly between an exporter and an importer without the third party’s involvement.
IndirectTrade
Trade that occurs indirectly between an exporter and an importer with the third party’s involvement. (e.g. General Trading Companies, Sales intermediaries, etc.)
3Counter Trade
Trade that occurs to make balance of export and import between nations (e.g. Barter Trade, Compensate Trade, Counter Purchase, etc.)
2. Types of Trade
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Turnkey-base Export(Project)
A type of project that is constructed by a developer and sold or turned over to a buyer in a ready-to-use condition. (Combination of technology, know-how, engineering, machinery and equipment, etc.)
5 Cyber Trade B2B, B2C, C2C, etc.
GLOBAL TRADING
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GLOBAL TRADING
• Market Selection
• Market Survey
• Feasibility Study
• Searching Biz. Partner
• Credit Inquiry
• Decision
• LC
• TT
• DA
• DP
• CAD (Cash against Document)
• COD (Cash on Delivery)
Business Proposal
Offer
Acceptance
Contract
LC Open
Dispute & Resolution
Payment
Shipment
3. The Process of International Trade
Source : Developed by In Woo Jun (2012)
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ManufacturerExporter
(GTCs, Ordinary Trading Firms)
Importer(GTCs, Ordinary Trading Firms)
Consumer
Ocean Transportation- Shipping Company- Freight Forwarder
Bank Bank
Negotiation & Contract
- Transportation Firm- Customs
-Transportation Firm- Customs
Others1) Chamber of Commerce 2) KOTRA & KITA 3) EXIM Bank , etc.
Payment
- Insurance Company
4. Companies involved in International Trade
Inland Transportation Inland Transportation
GLOBAL TRADING
Source : Developed by In Woo Jun (2012)
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- Description of goods- Quantity- Specifications - Unit price - Total amount - Price terms - Country of origin - Terms of payment - Packing method - Shipping date (Terms of delivery)- Validity of offer- Others (Shipping port, Unloading port, Inspection, Insurance, etc.)
5. Offer Sheet
GLOBAL TRADING
A formal written document stipulating a firm’s willingness tosell or buy products or services. The following things should be stipulated in the offer sheet.
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GLOBAL TRADING
Source : In Woo Jun (2013), 글로벌무역영어, 무역경영사
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6. International Contract
6.1) Basic Terms in International Contract
GLOBAL TRADING
There are eight (8) terms (conditions) in international contract ;
- Terms of Quality- Terms of Quantity - Terms of Price- Terms of Shipment- Terms of Payment - Terms of Insurance- Terms of Packing- Terms of Dispute Settlement
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6.2) Types of International Contract
There are several types of international contract (agreement) ;
- Sales Contract - Purchase Contract - Sales and Purchase Contract- Agency Contract - Exclusive Contract - Distributorship Contract - Licensing Agreement - Loan Agreement, etc.
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GLOBAL TRADING
Source : In Woo Jun (2013), 글로벌무역영어, 무역경영사
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GLOBAL TRADING
Source : In Woo Jun (2013), 글로벌무역영어, 무역경영사
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GLOBAL TRADING
Source : In Woo Jun (2013), 글로벌무역영어, 무역경영사
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7. INCOTERMS 2010
The purpose of INCOTERMS is to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade.
It consists of 11 terms :
- EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAT, DAP, DDP
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1) EXW (Ex Works)
- Seller becomes free from all risks and costs when the goods are delivered at its premises (e.g. factories or works) without exportcustom clearance
- The minimum obligation of the seller- Example: US$150 EXW ABC’s Ulsan Factory
Seller’s premises CY Loading
PortUnloading
Port CY Buyer
The turning point of Risk and CostCost on seller’s
account
8. Explanation of INCOTERMS 2010
GLOBAL TRADING
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2) FCA (Free Carrier)
- Seller becomes free from all risks and costs when the goods are delivered to the carrier designated by the buyer after export custom clearance
- Example: US$170 FCA Busan Seaport CY, Korea
Seller’s premises C Y CY
The turning point of Risk and Cost
Loading Port
Unloading Port Buyer
Cost on seller’s account
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3) FAS (Free Alongside Ship)
- Seller becomes free from all risks and costs when the goods are delivered at the alongside a ship after export custom clearance
- Example: US$200 FAS Busan Seaport, Korea
Seller’spremises CY Ship
The turning point of Risk and Cost
Loading Port
Cost on seller’s account
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4) FOB (Free on Board)
- Seller becomes free from all risks and costs when the goods are loaded on the vessel (i.e. On Board)
- Most frequently used term in practice- Example: US$220 FOB Busan Seaport, Korea
Seller’spremises CY Loading
portShip
The turning point of Risk and CostCost on seller’s
account
GLOBAL TRADING
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5) CFR (Cost and Freight)
- Seller becomes free from risks when the goods are loaded on the vessel (i.e. On Board)
- Seller should pay ocean freight up to unloading port- Example : US$250 CFR Osaka Seaport, Japan
The turning point of Cost
Seller’spremises CY Loading
port
The turning point of Risk
Ship Unloadingport
Cost on seller’s account
Cost on seller’s account (Only Ocean Freight)
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6) CIF (Cost, Insurance and Freight)
- Seller becomes free from risks when the goods are loaded on the vessel (i.e. On Board)
- Seller should pay ocean freight and insurance up to unloading port- Example : US$270 CIF Osaka Seaport, Japan- Most frequently used one in practice
The turning point of Cost
Seller’spremises CY Loading
portShip Unloading
port
The turning point of RiskCost on seller’s account
Cost on seller’s account (Ocean Freight & Insurance)
GLOBAL TRADING
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7) CPT (Carriage Paid to …..)
- Seller becomes free from risks when the goods are delivered to thecarrier designated by the seller after export custom clearance
- Seller should pay delivery cost up to destination designated by the buyer.
- Example : US$290 CPT Osaka Seaport CY, Japan
Seller’spremises CY Loading
portShip Unloading
port CY
The turning point of Risk
The turning point of CostCost on seller’s account
Cost on seller’s account (Only Ocean Freight)
GLOBAL TRADING
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8) CIP (Carriage and Insurance Paid to …..)
- Seller becomes free from risks when the goods are delivered to thecarrier designated by the seller after export custom clearance
- Seller should pay delivery cost and insurance up to destination designated by the buyer
- Example : US$300 CIP Osaka Seaport CY, Japan
Cost on seller’s account (Ocean freight and Insurance)
Seller’spremises CY Loading
portShip Unloading
port CY
The turning point of Cost
The turning point of RiskCost on seller’s account
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9) DAT (Delivered at Terminal )
- Seller becomes free from all risks and costs when the goods are delivered to the buyer at the named terminal with unloading from the arriving vehicle
- Example : US$320 DAT Osaka Seaport Terminal, Japan
The turning point of Cost & Risk
Seller’spremises CY Loading
portShip Unloading
portNamedterminal
Cost on seller’s account
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10) DAP (Delivered at Place)
- Seller becomes free from all risks and costs when the goods are delivered at the named place with ready for unloading.
- Example : US$340 DAP XYZ’s Factory, Japan
The turning point of Cost & Risk
Seller’s premises CY Loading
portShip Unloading
portNamed
place
Cost on seller’s account
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11) DDP (Delivered Duty Paid)
- Seller becomes free from all risks and costs when the goods are delivered to the buyer after paying import taxes and import custom clearance fee, but without loading at the buyer’s premises.
- The maximum obligations of the seller- Example : US$370 DDP XYZ’s Warehouse, Japan
The turning point of
Cost & Risk
Seller’spremises
Loadingport
Unloadingport
Buyer’spremises
CY
Cost on seller’s account
GLOBAL TRADING