PACKING AND LABELING

• Introduction
• Packaging
• Labeling

Introduction

An important stage after manufacturing of goods or their procurement is their preparation for
shipment which involves packaging and labelling of goods to be exported. Proper packaging and
labelling not only makes the final product look attractive but also save a huge amount of money by
saving the product from wrong handling the export process.

Packaging
The primary role of packaging is to contain, protect and preserve a product as well as aid in its
handling and final presentation. Packaging also refers to the process of design, evaluation, and
production of packages. The packaging can be done within the export company or the job can be
assigned to an outside packaging company. Packaging provides following benefits to the goods to be
exported:

• Physical Protection – Packaging provides protection against shock, vibration, temperature,

moisture and dust.

• Containment or agglomeration – Packaging provides agglomeration of small objects into

one package for reason of efficiency and cost factor. For example it is better to put 1000
pencils in one box rather than putting each pencil in separate 1000 boxes.

• Marketing: Proper and attractive packaging play an important role in encouraging a potential
buyer.
• Convenience - Packages can have features which add convenience in distribution, handling,
display, sale, opening, use, and reuse.
 • Security - Packaging can play an important role in reducing the security risks of shipment. It
also provides authentication seals to indicate that the package and contents are not
counterfeit. Packages also can include anti-theft devices, such as dye-packs, RFID tags, or
electronic article surveillance tags, that can be activated or detected by devices at exit points
and require specialized tools to deactivate. Using packaging in this way is a means of loss
prevention.

Labeling
Like packaging, labeling should also be done with extra care. It is also important for an exporter to
be familiar with all kinds of sign and symbols and should also maintain all the nationally and
internationally standers while using these symbols. Labelling should be in English, and words
indicating country of origin should be as large and as prominent as any other English wording on the
package or label.
EXPORT DOCUMENTS:-
INTRODUCTION-

Export from India required special document depending upon the type of product and
destination to be exported. Export Documents not only gives detail about the product and its
destination port but are also used for the purpose of taxation and quality control inspection
certification.

Documents serve a key role to each party involved in international trade.

TO THE EXPORTER : Documents provide an accounting record of transactions,a receipt of

goods shipped,the means for export clearance of goods ,as well as information and
instructions to many individuals,companies and governmental agencies who transport,handle
or inspect the shipment.

TO THE IMPORTER : Documents provide an accounting record of transactions ,assurance that

the goods ordered are the goods shipped ,and the means for clearing goods through customsat
the country of destination.

TO THE BANK : documents provide instructions and accounting tools for collecting and
distributing payments.

To the all above documents provide a proof of ownership of goods at any time and place
throughout the transaction.
TRANSACTION DOCUMENTS :

These are the documents the buyer and seller generate to form the basis of their agreement
to sell and purchase specific goods under specific terms and conditions.The quantity and
formality of this type of documentation is greatly influenced by the nature of the relationship
of the buyer and the seller as well as the goods sold.

Transaction documents include the letter of inquiry request for proposal (RFP),
proposal, letter of intent, purchase order, contract of sale, pro-forma invoice, and commercial
invoice.

EXPORT DOCUMENTS:

These are the documents required by the export authority of a country. The quantity and
formality of this type of documentation is greatly influenced by the requirements of the
country of export and the nature of the goods being exported.

Export documents may include export licence and permits , a commercial invoice, bill of
lading, certificate of origin,export declaration and inspection certificate .In certain countries
an insurance certificate ,foreign exchange documentation and a bank draft may be required.
Not all transaction require each of these documents. In even the most simple transaction,
however, a commercial invoice, bill of lading, and simple export declaration are usually
equired.

KEY DOCUMENTS IN INTERNATIONAL TRADE :

• Shipping Bill / Bill of Export

 • Commercial invoice

• Packing List

• Certificate of Inspection

• Manufacturer's Certificate

• Certificate of Shipment

• Certificate of origin

• Bill of lading

• Export declaration

• Import declaration

Shipping Bill / Bill of Export

Shipping Bill/ Bill of Export is the main document required by the Customs Authority for allowing
shipment. A shipping bill is issued by the shipping agent and represents some kind of certificate for
all parties, included ship's owner, seller, buyer and some other parties. For each one represents a kind
of certificate document.

Documents Required for Post Parcel Customs Clearance

In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned below:

• Commercial Invoice – (Issued by the exporter/seller)

This is the key transaction or accounting document. It identifies the seller and buyer,
gives identifying numbers such as invoice number, date and shipping date, identifies the
mode of transport, delivery and payment terms, and gives a complete list and description of
the goods or services being sold including quantity, prices and discounts.

• Packing List - It shows the details of goods contained in each parcel / shipment.
 • Certificate of Inspection – It is a type of document describing the condition of goods and
confirming that they have been inspected.

• Manufacturer's Certificate - It is required in addition to the Certificate of Origin for few

countries to show that the goods shipped have actually been manufactured and is available.

• Certificate of Shipment - It signifies that a certain lot of goods have been shipped.

• BILL OF LADING – (issued by the shipping line or carrier of goods)

This is the key transportation document. It is issued by the carrier (such as a shipping line or air line)

To a shipper (the exporter or seller), signed by the captain, agent, or owner of a vessel and furnishes
written evidence of the receipt of the goods, the conditions on which transportation is made (contract
of carriage), and the engagement to deliver goods at the prescribed port of destination to the lawful
holder of the bill of lading. A bill of lading is, therefor, both a receipt for merchandise and a contract
to deliver it as freight. It can also serve as the title document, in which case whoever holds the
document can claim possession of the goods.

• THE CERTIFICAT OF ORIGIN –(issued by the exporter, local exporting country chamber
of commerce or other authorizing agency)

This document establishes the country of origin of the goods shipped. The importer must typically
submit it to the import authority of the country of import.

• THE EXPORT DECLARATION −(Issued by the exporter/seller)

This is the formal statement by the exporter to the import authority identifying the seller, buyer,
goods shipped, date of issuance, country of origin and the country of final destination of the goods,
quantity and description of the goods, and shipping details. This is used by the country of export to
control exports, compile trade statistics and assess fees.
• THE IMPORT DECLARATION –(prepared by the importer or a custom broker acting as
agent for the importer)

This is the formal statement by the importer to the import authority identifying the seller, buyer,
goods shipped, date of issuance, country of origin and the country of final destination of the goods,
quantity and description of the goods, and shipping details. This is used by the country of import to
control imports, compile trade statistics and assess fees.

INTERNATIONAL TERMS OF
 PAYMENT
Goods
Usual Time of Risk Risk to
Method Available Comments
Payment to Seller Buyer
To Buyer
Complete.
Seller's goods must be
Relies on
special in one way or
seller to ship another, or special
CASH IN After exactly the circumstances prevail
Before shipment None over normal trade
ADVANCE payment goods
practices (e.g., goods
expected, as manufactured to buyer-
quoted and only specification).
ordered
Commerical
Invoice must
match the Letters of Credit require
L/C exactly. total accuracy in
LETTER OF conforming to terms,
Dates must
CREDIT (L/C) conditions, and
be carefully documentaion. Consult
headed. your United Shipping
(See next two Associate member for
"Stale"
items.) determining feasibility of
documents terms and conditions.
are
unacceptable
for collection.
CONFIRED After shipment is After Gives the Assures The inclusion of a
IRREVOCABLE made, documents payment seller a shipment is second assurance of
payment (usually a U.S.
CREDIT presented to the bank. double made but
Bank) prevents
assurance of relies on surprises, and adds
payments. exporter to assurance that issuing
bank has been deemed
Depends on ship goods
acceptable by
the terms of as described confirming bank. Adds
the letter of in cost and an additional
requirement to seller.
credit. documents.
Terms may
be
 negotiated
prior to L/C
agreement,
alleviating
buyer's
degree of
risk.
Seller has
single bank
assurance of
payment and
seller
Credit can be changed
remains only by mutual
dependent agreement, as
on foreign stipulated in a sales
agreement. Becomes
UNCONFIRMED bank. Seller
Same as Same as open account with
IRREVOCABLE Same as above should buyer's bank as
above above
CREDIT contact his collection agent. Foreign
bank may have
banker to
problems making
determine payment in sum or
whether the timeliness.
issuing bank
has sufficient
assests to
cover the
amount.
A draft may be written
with virtually any term or
Drafts, by condition agreeable to
design, both parties. When
Remittance time from
DRAFTS should determining draft tenor
buyer's bank to
contain terms (terms and conditions),
seller's bank may still
and consult with your banker
(See next two take one week to one
conditions and freightforwarder to
items.) month.
mutually determine the most
agreed upon. desirable means of
doing business in a
given country.

SIGHT DRAFT On presentation of After If draft not Assures A draft can be a

collection instrument
 used to exchange
honored,
possession and title to
goods must shipment but goods for payment.
be returned not content, Seller is essentially
drawing a check against
or resold. unless
(with documents payment to the bank account of the
Storage, inspection or buyer. Buyer's bank
against draft to buyer. buyer's
handling, and check-in is must have pre-approval,
acceptance) bank. or seek approval of the
return freight allowed
buyer prior to honoring
expenses before the check. Payble upon
may be payment. presentation of
incurred. documents.

Assures Payable based upon the

shipment but acceptance of an
Relies on not content. obligation to pay the
TIME DRAFTS Before seller at a specified
buyer to Time of
(with documents On maturity of the payment, time. Although a time
honor draft maturity draft has more collection
against draft after
upon allows for leverage than an
acceptance) acceptance invoice, it remains only
presentation. adjustments,
a promissory note, with
if agreed to conditions.
by seller.
All terms of payment,
including extra charges
and terms should be
mutually understood
Relies and agreed upon prior
to open account
completely
OPEN As agreed, usually by Before initiation. Companies
on buyer to None conducting ongoing
ACCOUNT invoice payment
pay account business are candidates
for open account terms
as agreed
of payment. Seller must
measure not only
buyer's credit reliability
but the country's as well.

• Introduction
• Consignment Purchase
• Cash-in-Advance (Pre-Payment)
• Down Payment
• Open Account
 • Documentary Collections
• Letter of Credit

Introduction

There is no predefined definition of personal import. In general a personal import is a direct purchase
of foreign goods from overseas mail order companies, retailers, manufacturers or by an individual for
the purpose of personal use.

The most common terms of purchase are as follows:

• Consignment Purchase

• Cash-in-Advance (Pre-Payment)

• Down Payment

• Open Account

• Documentary Collections

• Letters of Credit

Consignment Purchase
Consignment purchase terms can be the most beneficial method of payment for the importer. In this
method of purchase, importer makes the payment only once the goods or imported items are sold to
the end user. In case of no selling, the same item is returned to the foreign supplier. Consignment
purchase is considered the most risky and time taking method of payment for the exporter.

Cash-in-Advance (Pre-Payment)
Cash in Advance is a pre-payment method in which, an importer the payment for the items to be
imported in advance prior to the shipment of goods. The importer must trust that the supplier will
ship the product on time and that the goods will be as advertised. Cash-in-Advance method of
payment creates a lot of risk factors for the importers. However, this method of payment is
inexpensive as it involves direct importer-exporter contact without commercial bank involvement.
In international trade, Cash in Advance methods of payment is usually done when-

• The Importer has not been long established.

 • The Importer's credit status is doubtful or unsatisfactory.

• The country or political risks are very high in the importer’s country.

• The product is in heavy demand and the seller does not have to accommodate an Importer's
financing request in order to sell the merchandise.

Down Payment
In the method of down payment, an importer pays a fraction of the total amount of the items to be
imported in advance. The down payment methods have both advantages and disadvantages. The
advantage is that it induces the exporter or seller to begin performance without the importer or buyer
paying the full agreed price in advance and the disadvantage is that there is a possibility the Seller or
exporter may never deliver the goods even though it has the Buyer's down payment.

Open Account
In case of an open account, an importer takes the delivery of good and ensures the supplier to make
the payment at some specific date in the future. Importer is also not required to issue any negotiable
instrument evidencing his legal commitment to pay at the appointed time. This type of payment
methods are mostly seen where when the importer/buyer has a strong credit history and is well-
known to the seller. Open Account method of payment offers no protection in case of non-payment
to the seller.
There are many merits and demerits of open account terms. Under an open account payment method,
title to the goods usually passes from the seller to the buyer prior to payment and subjects the seller
to risk of default by the Buyer. Furthermore, there may be a time delay in payment, depending on
how quickly documents are exchanged between Seller and Buyer. While this payment term involves
the fewest restrictions and the lowest cost for the Buyer, it also presents the Seller with the highest
degree of payment risk and is employed only between a Buyer and a Seller who have a long-term
relationship involving a great level of mutual trust.

Documentary Collections
Documentary Collection is an important bank payment method under, which the sale transaction is
settled by the bank through an exchange of documents. In this process the seller's instructs his bank
to forwards documents related to the export of goods to the buyer's bank with a request to present
these documents to the buyer for payment, indicating when and on what conditions these documents
can be released to the buyer.
The buyer may obtain possession of goods and clear them through customs, if the buyer has the
shipping documents such as original bill of lading, certificate of origin, etc. However, the documents
are only given to the buyer after payment has been made ("Documents against Payment") or payment
undertaking has been given - the buyer has accepted a bill of exchange issued by the seller and
payable at a certain date in the future (maturity date) ("Documents against Acceptance").
Documentary Collections make easy import-export operations within low cost. But it does not
provide same level of protection as the letter of credit as it does not involve any kind of bank
guarantee like letter of credit.

Letter of Credit
A letter of credit is the most well known method of payment in international trade. Under an import
letter of credit, importer’s bank guarantees to the supplier that the bank will pay mentioned amount in
the agreement, once supplier or exporter meet the terms and conditions of the letter of credit. In this
method of payment, plays an intermediary role to help complete the trade transaction. The bank deals
only in documents and does not inspect the goods themselves. Letters of Credit are issued subject to
the Uniforms Customs & Practice for Documentary Credits (UCPDC)(UCP). This set of rules is
produced by the International Chamber of Commerce and Industries (CII).

Documents Against Acceptance: Instructions given by an exporter to a bank that the documents
attached to the draft for collection are deliverable to the drawee only against his or her acceptance of
the draft.
 EXPORT MARKETING
INTRODUCTION: Marketing is defined as using all of the resources of the
organisation to satisfy customers needs for profit. The difference between export marketing and
domestic marketing is simply that it takes place across national borders. This means that you are
faced with barriers to trade that you will not have encountered before, such as differing languages,
politics, laws, govt. , cultures. You may need to account for getting the product half-way across the
globe to distant markets and pay the import duties imposed on these products by importing country.
You will also need to deal with the logistical and documentations problems surrounding exports.
These are just some of the problems you will face.

Export marketing also involves preparing an offering that will entice the foreign buyer and customer.
This offering comprises a product that is offered at a certain price and that is made available –
distributed-to foreign customers. At the same time , the offering is or promoted to the buyer using
certain communications or promotion channels. These elements – the product, price, distribution and
promotion are called Marketing mix.
The features of export marketing includes the
following:
1. It is a process-
Export marketing is a process of planning and implementing the production, and
distributing of goods and services, it consists of various activities such as branding ,
packaging, advertising etc.
2. Identification and satisfaction of consumer’s needs & wants:-
The heart of marketing is the identification of consumer
needs and wants. The exporter must constantly try to find out the problems or needs and
wants of foreign buyer , so export marketing adopts a total consumer oriented approach in the
foreign market.
3. Flow of goods and services:-
Export marketing involves flow of goods and services across the national
boundries.
4. Prominence of MNC’S:-
Export marketing is dominated by MNC’S. At present MNC’S from USA,
EUROP AND JAPAN play a dominant role in foreign trade. They are in position of develop
world wide contracts through their network of branches/offices/subsidiaries. These
companies are in position to carry large scale operation in foreign trade more efficiently ad
economically.
5. Large scale operations:-
Export marketing is carried in bulk quantities so as to derive the benefits of
large scale selling such as in respect of transportation, handling etc.
NEED AND IMPORTANCE OF EXPORT-MARKET
No country in the world, whether highly developed or not is self sufficient in every respect, more
ever every country want to be more and more economically developed and in order to do so, it has to
resort to foreign trade e.g. export and import , export trade bring in valuable foreign exchange which
can be utilised to pay for imports and at the same time enhances. Foreign exchange reserves of the
country.

The need and importance of export marketing can be explained from the view point of the country
and that of business organisation.

• VIEW POINT OF A NATION:

1.Foreign exchange-

Export bring valuable foreign exchange to the exporting country which is mainly
required to pay for import of capital goods raw material spares and components, also foreign
exchange is required to pay of imports of techniques and service external debts.

2.International relation-

All countries of the world want to proposer in a peace full environment , one way to
maintain political and cultural , it make relations with other countries is through international
trade.

3.Balance of payment-

A countries external economic strength depends upon its balance of payment position.
Since export brings foreign exchange , it helps a country to solve it balance of payment position.

4. Reputation in the world-

A country which is fore most in the field of export, commands a lot of respect,
goodwill and reputation from countries for instance, japan commands international reputation
due to its high quality product and in the export market.
 6. Employment opportunities-

Export trade calls for more production, more production opens the doors for more
employment opportunities not only in the export sector but also in allied sector like banking,
insurance etc.

7. Financing of development plans-

Export earnings can be a source of financing development plans through the

import of capital goods and sophisticated technology, thus the foreign exchange generated
through exports can be utilised for planned economic development of the country.

8. Higher standard of living-

Export trade calls for more production which in turn increases the employment
opportunities.

More employment means more power as a result of which people can enjoy better goods,
which in turn improve standard of living.

A view point of business organisation

1.Reputation-

A business organisation which under takes export business can bring from to its name not
only in the export market and but also in the home market i.e. soney, glaxo, tata etc enjoy
international reputation.

2. Optimum production –

It may be possible that the demand for a company’s product falls short of its
optimum production capacity in the home country however the company can export its excess
production there by the production can be carried on up to the optimum production capacity and the
company benefited from the economies of large scale production.

3.Spreading of risk-

When a business organisation face depression in the domestic market (low demand) it
will be naturally suffer losses.however the company can spread its risk of losses by selling products
of good price in the export market

4.Keeping alive old brand –

A product brand may have reached the stage of declined in the home market but
the same product may have good demand in the foreign market, so in that case the exporters would
benefits by export.

5.Improvement in organisation efficiency-

Export marketing requires constant improvement in skills and technique not
only in marketing aspects, but also production aspects thus research , training and experiences in
dealing with foreign market unable the export to improve the over all organisation efficiencies.

6. Improvement in product standards-

An export firm has to maintain and improve standards in quality unable to

international standards as a result of which consumer in the home market can better qualities of
goods.

7.Higher prices-

Export can fetch higher prices as compared to domestic markets for instance, prices of old
and petroleum products in the home markets of gulf countries are comparatively less than what they
earn from the foreign markets, and as a result of this exporters can earn higher profits.