OUTLINE

MODUL 1
MOTIVASI DAN MENGENAL
BISNIS EXPORT
A R I E F BU S TA M A N
F TA C E N T E R B A N D U N G
• Introduction: Export Motivation
– Elements of Entrepreneur
– Domestic VS International Business
• SESSION I: PREPARATION
– Six Commonalities
– Pricing for Profits

OUTLINE Arief Bustaman

-Education:
- Sarjana Ekonomi (UNPAD)
- Master of International Business

• SESSION II: EXECUTION - Master of Economics (Uni. Of Wollongong, AUS)

As Academician:
– Negotiations -Lecturer (FE Unpad) and Researcher (LP3E-FE-
Unpad)
- Deputy Director CEDS FEB UNPAD
– Travel Specialization: International Economics & Business

– Payment Method Email:

arief.bustaman@fe.unpad.ac.id
ariefbustaman@nafindo.co.id
– Formation of Sales Agreements Mobile:
0813 20417 900 (WA)
0878 2 1000 900
As Exporter:
- Past: Marketing Manager: CV Genta Persada; PT
Akusara International
- Current: Commissioner, PT Natural Fiber
Globalindo (www.nafindo.co.id)
Customers: Germany, England, Australia, NZ, Japan,
China, Sri Lanka, South Africa, USA, Canada etc.
 FTA CENTER EXPORT MOTIVATION
• Terdapat di 5 kota: Bandung, Jakarta, Surabaya,
Medan, Makassar
• Memberikan Konsultasi, Edukasi, dan Advokasi:
Elements Of Entrepreneur
– Ekspor Pursuit of Opportunities
– Pemanfaatan FTA
• FTA Center Bandung
Innovation
– Gedung Perindustrian dan Perdagangan Provinsi
Jawa Barat
JL Asia Afrika no 146 Bandung Growth
– ftacenter.bdg@kemendag.go.id
Long Term Vision

LONG TERM VISION Export Motivation

EXAMPLES Differences Between International And
• There is no such thing as “Modal sekecil-kecilnya, untung sebesar-besarnya”
Domestic Businesses
• In real business: profit VS loss.
– You must experiencing both
• The range of problems are wider and more
– Most likely no profit in first 1-3 year(s)
Keep this in complex.
• A lot of consequences from the following: mind if you want
to have a long – Countries are different. e.g., culture, law, tastes.
term business
– The intervention of governments may limit
Exporter Importer export.
• Intermediate Goods • Factory Final Consumer – The need to convert into different currencies.
• Final Products • Distributor/Retailer
– High competition
SIX COMMONALITIES SIX COMMONALITIES
1. Terminology
• If you understand the steps outlined below, your § Because of increasing international interdependency, trade literacy has become
import/export business will get off to an excellent as important in modern business as Internet and computer literacy.
start on the road to early profitability. § As you progress, refer frequently to the extensive glossary of commonly used
terms
1. Terminology
2. Homework Price Terms Documents Payments

3. Choosing the product • FOB • Packing List • Consignee

• CIF • Shipping Instruction • Doc. Against
4. Making contacts • CFR • Shipping Marks Payment
• EXW • CoO/SKA • Letter of Credit
5. Market research • Etc. • etc • etc
6. What’s the bottom line?

SIX COMMONALITIES SIX COMMONALITIES

3. Choosing the product
2. Homework – The question asked most often is, “What product
•Research is one of the keys to winning the trade game! should I select to import or export?
– Product selection is a personal decision, but the
•Think of it as an investment to reduce the number of decision should make common sense
inevitable mistakes. • Most people begin with a single product or service that they
know and understand or have experience.
• Start your business with a product or service with which you
have an advantage. You can gain that advantage because of
“People plan to fail because they fail to prior knowledge, by doing library research about a product,
by making or using contacts, or by understanding a language
plan” or culture
SIX COMMONALITIES SIX COMMONALITIES
4. Making contacts
3. Choosing the product § Contacts are classified in two categories. The two ways to
make contacts overlap, and they can be used to expand your
– Technical Marketing Decision
import/export network:
• Keep in mind that the product
you select may need to be – Sourcing (finding) potential buyers of the product you wish to export
adapted to the cultures of other • Industry/Association Publication
countries.
• Consulate office
– Product standards. E.g., ISO,
Certifications for Foods – Marketing (selling) that product or service
– Technical specifications and • Agents, distributors, wholesalers, retailers, trade show
codes
– Quality and product life
cycle Eventually, you will need to take a trip to the country
– Other uses with which you intend to trade. It will make a big
difference

SIX COMMONALITIES SIX COMMONALITIES

5. Market research
6. What’s the bottom line? P*Q
Checklist of Research Items: Profit is an internal, individualized decision that
• Is there already a market for the product? varies from product to product, industry to Profit = Revenue - Costs
industry, and within the market channel.
• What is the market price? Desirable profit relates to the goals you
• What is the sales volume for that product? plan for your import/export business. For
instance:
• Who has market share, and what are the shares?
– one person’s goal might be to cover
• What are the economics of the country, its gross national product expenses, take a small salary, and be
(GNP), major industries, and sources of income? pleased if the business supports travel to
exotic places.
• Is the government stable? Is it friendly to Americans? Does the country – Another might have the goal to expand
have a good credit record? the business to eventually become a
• What are the tariffs, restrictions, and quotas? major trading company.
– Another might set a goal to work for
• How do they move their goods? only tenyears, sell the business at a
profit, and retire on the capital gain.
PRICING FOR PROFITS PRICING FOR PROFITS
Pahami Rantai Distribusi
• The price of your product should be high enough
to generate a suitable profit but low enough to be
competitive
• It is important that you understand not only the
elements that make up your price, but also those
of your overseas trading associate.
• If at first exporting doesn’t appear profitable,
check your manufacturing costs. It may be
necessary to import less costly components in
order to compete internationally.

PRICING FOR PROFITS NEGOTIATIONS

Pricing Model

• The first step in preparing for international

negotiations is to develop a complete assessment of
your firm’s capabilities.
– Analyze your strengths and weaknesses, particularly in
terms of managerial skills, product delivery, production
capacities, and global resources.
– Next, analyze your target—the company or country you
intend to sell your product to.
NEGOTIATIONS
• Keep in mind that the human and behavioral
aspects of your negotiations will be vital. For
examples:
– Understand the place in the world where you will be
traveling.
• Know its culture, history, and political processes.
– What is the host government’s role in negotiations?
– How important are personal relations?
– How much time should you allow for negotiations?
– Be sure that the final agreement specifies terms for
the cost, quality, delivery of the product, and payment
terms.
TRAVEL
• Mistrust across international borders can be a
barrier to a successful import/export business.
Therefore, visiting the country and the people
who offer goods for your importation or the
agents or distributors who market your export
products is essential.
NEGOTIATIONS
• The following is a partial list of alternatives and
conditions you may wish to consider during
negotiations:
– Quantity price breaks (don’t offer just one price)
– Discounts for cash deals or even down payments
– Time payments
– Home factory trips for training
TRAVEL
• Planning A Trip:
– Prepare your itinerary: how long you can stay in each
place, and what you expect to accomplish.
– Make certain your local arrival time allows for time
changes and scheduled business meetings. Also, allow
time for rest prior to negotiating.
– Book hotels and transportation before
– Make the budget
 Methods of payment
TRAVEL
• Travel Tips:
– Travel light. Thec o m usual
p l e t i n arrival
g a succsequence
e s s f u l t r a is
nsaction 103

immigration followed by customs.

authority to purchase, letter of credit, and cash in advance. Table 5.1
summarizes
• Beand compares
ready the various
to open methodsand
your luggage of payment in order of
sometimes
decreasing risk to the exporter and increasing risk to the importer.
declare each item. Smile!
Other useful methods that enable paperless trading between companies
are Electronic Data Interchange, or EDI (www.EDI.com); Swift
(www.swift.com); and Bolero (www.bolero.net).
– Unless you are familiar with the better hotels
Open Account
in a country, you are usually better off staying
The open account is a trade arrangement in which goods are shipped to
at one
a foreign buyerthat is internationally
without guarantee of payment. recognized.
Though the riskiest,
many firms that have a long-standing business relationship with the same
– Plan
overseas firmfor
use the changing
this method. timeto zones.
Needless say, the key is to know your
buyer and your buyer’s country. You should use an open account when
the buyer has a continuing need for the seller’s product or service. Some
112 I m p ort / E x p ort
experienced exporters say that they deal only in open accounts. But they
Figure 5.3 The Three Phases of a Letter of Credit (L/C)

Table 5.1 Comparison of Various Methods of Payment Phase I: Issuing a Credit

(In order of decreasing risk to exporter and increasing risk to importer) Seller
Contract
Buyer
1
Goods
Available Usual Time Exporter Importer Informs seller
credit has been 4 2 Makes credit application
Method to Buyers of Payment Risk Risk issued

Open account Before payment As agreed Most: relies Least Advise/ Credit Issuing
confirm
on importer bank 3 bank
to pay account
Consignment Before payment After sold Maximum: Minor inventory Phase II: Presentation

exporter cost Goods

retains title Seller Buyer
5

Time draft Before payment On maturity High: relies on Minimal check

of draft importer to of quantity/ Documents 6 7 Money
pay draft quality Documents
Advise/
Sight draft After payment On presenting If unpaid, goods Little if confirm
8 Issuing
9 bank
draft to are returned/ inspection bank
Money
importer disposed report required
Phase III: Settlement
Authority to After payment On presenting Be careful of Little if
purchase draft recourse inspection Goods
Seller Buyer
report required 11

Letter of After payment When documents None None if

credit are available inspection Documents 10 Money

after shipment report required

Advise/ Issuing
Cash After payment Before shipment Least Most confirm bank
bank

Note that the proceeds of all letters of credit may be assigned. In this
instance the buyer opens the L/C as the beneficiar y and relies on the
middleman to comply so that the beneficiar y can be paid. A ny discrep-
 Commercial letter of credit charges are competitive, so you should
comparison shop. Typically they are like those shown in Table 5.2.

Table 5.2 Typical Letters of Credit Charges

Type of Credit
Import and domestic
Typical Charges
⁄8 of 1% of transaction with a minimum of $75 to $100
1
SALES CONTRACT PROCESS
Amendments: 1⁄8 of 1% flat, minimum $70
Payment fee: 1⁄4 of 1% flat, minimum $90 per draft
Acceptance fee: Per annum fee (360-day basis), minimum $75
for each draft accepted
Discrepancy fee: $40
It is
Export Advising: $60 important
Confirmation: Subject to country risk conditions, minimum $75 to go these
Amendments: $55 steps
Assignment of proceeds/transfers: 1⁄8 of 1% of the transaction thoroughly,
with a minimum of $75
Discrepancy fee: $45
including
Payment/negotiation: 1⁄10 of 1%, minimum $85–$95. buyer
Standby letters Issuance fee: An annual percentage (360-day basis) based on check
credit risk considerations, minimum $250
Amendment fee: Risk-related fee is charged, minimum $250
Payment fee: 1⁄4 of 1% flat, minimum $90 per draft
Collections—documentary Incoming: sight, $75; time, $95
Outgoing: sight, $75; time, $95

IMPORTANT PROVISIONS IN IMPORTANT PROVISIONS IN

SALES CONTRACT (STANDARD) SALES CONTRACT (OPTIONAL)
1. Contract Number, Date & Place 8. Warranties and Product Defects or Non
2. Selling and Purchasing Entities Conformity
3. Description of Goods & Quantity 9. Shipping marks
4. Pricing & Total Value 10.Pre-shipment Inspections
5. Currency 11.Export Licenses
6. Payment Methods 12.Import Licenses and Foreign Government Filings
7. Passage of Title, Delivery, and Risk of Loss 13.Governing Law
(INCOTERMS)
SAMPLES OF SALES CONTRACT