UNIT 1

 5 Marks

1. Trademark

2. Patent

3. Confidentiality & NDA

10 marks

1. Explain the export preliminary considerations in detail

2. Describe in brief the Export controls and licenses patent?

3. Explain the importance of copyright registration

4. Explain the process of generation of enquires 

INTRODUCTION

 1Q) Importing and Exporting

Importing and Exporting are means of Foreign Trade. Foreign trade is carried out in goods and services – including imports, exports, and the balance of foreign exchange – is presented separately for goods and services. The total imports, exports, and balance of foreign trade are presented as summaries of goods and services.

Exporting refers to the selling of goods and services from the home country to a foreign nation. Whereas, importing refers to the purchase of foreign products and bringing them into one’s home country. Further, it is divided into two ways, which are,

1. Direct exporting:  Direct exporting is a type of exporting where the company directly sells products to overseas customers. All the deals are done directly between the companies without any intermediaries. This way, the companies have more control over the processes. Direct exporting also increases profits as the intermediary is eliminated, reducing costs. Direct exporting also creates a stronger bond between the supplier and the buyer, and maintaining business relationships is crucial for business success.

   Despite the advantages mentioned above, direct exporting also demands more resources from the exporting company. This exporting type requires more personnel, resources, and time than it would if the export process were to happen through an intermediary.

   Direct exporting is the best strategy for companies trying to penetrate new markets globally for the long term.

ii. Indirect exporting: Indirect exporting is a type of exporting practiced by companies that sell products to other countries with the help of an intermediary. The company has various intermediaries, such as foreign agents, export merchants, expert management companies, etc. Here, businesses have lesser control over the processes. 

• The intermediaries are present in the country producing the product. They are responsible for sending the products to the customer's country and finishing all the paperwork, transport, and marketing. The first intermediary may sell directly to the customer or the customer's intermediary.
• Indirect exporting is less expensive than direct exporting. It is easier to cancel indirect exports than direct exports. The main disadvantage of indirect exporting is the transfer of power to the intermediaries. As a result, companies may lose the opportunity to build long-term relationships and offer after-sales services to customers.
• Indirect exporting is a strategy best suited for companies trying to increase profits quickly.

Every nation is blessed with certain resources, assets, and abilities. For instance, a few countries are rich in natural reserves, for example, petroleum products, timber, fertile soil, or valuable metals and minerals, while different nations have deficiencies in these resources.

Advantages of Import and Export

• It is one of the simplest routes of entering into the global trade and import and export generate huge employment opportunities.
• Requires less investment in terms of time and money when contrasted with other
  methods of entering into global trade.
• Is comparatively less risky when compared with different routes of entering international business.
• As no nation can be 100% self-sufficient, import and export are very crucial for the functioning and growth of that nation.
• Can help Countries to access the best technologies available and the best products and services in the world.
• It gives better control over the trade than setting up a market and the risk is considerably low.

Limitations of Import and Export

• It includes extra packaging, transportation protection, and insurance costs which build up the total cost of items.
• Exporting isn’t doable if the foreign nation prohibits imports.
• Domestic organizations that are closer to the client could serve them better than firms outside their national borders.
• Merchandise is subject to quality standards any low-grade merchandise that is exported will result in the Country's reputation and remarks on the country.
• Obtaining licenses and documentation for foreign trade is a difficult and frustrating task.
• If you are not careful, you can lose grip on the domestic market and existing customers.

2Q) Export Trade Procedure

Exports are explained as the goods and services manufactured in one country and acquired by citizens of another country. The export of goods or services can be anything. This trade can be done through shipping, e-mail, or transmitted in private luggage on a plane. Basically, if the product is manufactured domestically and traded in a foreign country, it is known as an export.

In International trade, exports are one of the components. The other component is imported which means the goods and services purchased by a country’s citizens that are manufactured in a foreign country. Both the exports and imports combined contribute to the country’s trade balance. Whenever the country’s exports are more than the imports, it is called a trade surplus. However, when the import is more than the export, it is known as a trade deficit.

Objectives of Export Trade:

(1) Sale of Surplus Production

• A country may produce more than it requires.
• Then, in that case, the surplus may be sold to foreign countries.

(2) Optimum Utilization of Domestic Resources

• Every country has some natural resources in plenty.
• These resources can be utilized to increase production and sell to those countries where these are in shortage.

(3) Employment Opportunities

• International business helps business enterprises to focus on more production which requires more manpower which means more employment opportunities.

(4) Earning of Foreign Exchange

• A country with surplus production may earn foreign exchange by selling goods and services to other countries.

(5) Increase the National Income

• Earning of foreign exchange due to exports adds to the national income of a country.
• This helps in improving the standard of living of people.

The Procedure of Export Trade

(1) Trade Enquiry and Sending Quotations	The international buyer who wishes to buy goods from another country sends an inquiry relating to price, desired quality, terms, and conditions for the export of goods which is known as a Trade inquiry. The exporter sends a reply to the inquiry in the form of a quotation. The quotation is also known as ‘Proforma Invoice’ which contains information about the selling price, quantity, quality, mode of delivery, etc.
(2) Receipt of Order or Indent	After the receipt of the ‘Quotation’, if the prospective buyer finds the information suitable to him, he places the ‘Order/Indent’ for the import of goods.
(3) Assessing the Creditworthiness	Before proceeding further, the exporter wants to satisfy him regarding the payment of goods. For this, he demands a Letter of Credit (L/C) from the importer. This L/C is issued by the importer’s bank in favor of the exporter’s bank. Through the (L/C), the bank gives assurance to the exporter of accepting the bill of exchange of a certain amount. If required, the exporter can ask for advance payment also from the importer
(4) Obtaining Export Licence & Apply Pre-shipment Finance and	After satisfying himself with the payment, the exporter has to get an export license. To receive the export license, he has to apply to the office of the controller of imports and exports. Along with the application, he has to deposit a certain fee. The Controller of Imports and Exports checks the application thoroughly and after having satisfied himself, issues an export license to the exporter. The exporter can apply for Pre Shipment Finance based on a Confirmed Indent, Letter of Credit, and Export License.
(5) Procurement or Production of Goods	Exporting firm has to either procure ready-made goods from the market or procure raw materials and start producing the goods according to the specification of the importer.
(6) Obtain Inspection Certificate and Excise Clearance	An exporter must approach a Govt. Authorized Agency for Quality Check and Inspection of Goods meant for Exports and obtains an Inspection Certificate. After Inspection, The exporter has to apply to the Excise Commissioner to obtain the excise clearance from the excise duty. The exporter needs to check if he is covered under the duty drawback scheme.
(7) Obtaining a Certificate of Origin	This certificate certifies the origin of the country in which the goods are produced and exported.
(8) Packaging, Forwarding, and Insurance	The products are correctly prepared and labeled with necessary details (Prepare PACKING List) such as: Title and address of the importer Net and Gross weight Port of destination and cargo Country of origin Road / Railway Receipt The exporter must ensure the Goods are meant for Export and obtain a valid Insurance Policy (in the case of sea Transport – a Marine Insurance Policy is required)
(9) Custom Clearance	The goods can be loaded on the ship after the customs duty has been paid.
(10) Obtaining Mate’s Receipt	Then the products are boarded on the ship. The captain or the mate of the ship delivers the mate’s receipt to the port superintendent.
(11) Payment of Freight and Issuance of Bill of Lading	After the freight receipt, the freight company delivers a bill of lading. Bill of lading is a document which works as proof that the sailing company has received the products for shipping to the assigned destination.
(12) Preparation of Invoice	After shipping the goods, the exporter prepares a receipt of the transmitted goods. The invoice is mentioned with the number of goods shipped and the expense to be cleared by the importer.
(13) Securing Payment	Once the shipment is done, the exporter notifies the importer about the consignment. The importer requires different documents to declare the ownership of goods on reaching the destination and making them customs cleared, such as : Verified copy of the invoice Invoice of lading Packing list Insurance policy Certificate of origin Letter of credit

3Q) Export Preliminary Considerations

Starting an export business is not an easy task; it needs proper guidelines and an understanding of the foreign market. The basis of every successful business is proper planning and proper knowledge of all the aspects of business.

So, these are the preliminaries that one should consider before starting an export business.

1. Selection of business

2. Selection of mode of operation

3. Selection of name for the business

4. Selection of product

5. Select effective correspondence way of business

6. Selection of Markets

7. Selection of prospective Buyers

8. Selection of Channel of Distribution

9. Understanding risks in International trade

1. Selection of business

The first and foremost important thing for a prospective exporter is to decide about the kind of business for export. The proper selection of business will depend upon:

* Ability to raise finance

* Capacity to bear the risk

* Desire to exercise control over the business

* Nature of regulatory framework applicable to you

2. Selection of mode of operation

You can do export in many ways like:

Be a Merchant Exporter: By this, you can buy the goods from actual manufacturers and then export these goods.

Be a Manufacturer: By this, you can manufacture the goods on your own and then export them.

Be a Sales Agent/Commission Agent/Indenting Agent: By this, you can export the goods on behalf of another seller and charging commission.

3. Selection of name for the business: 

After making the final decision about the form of business organization, naming the business is an essential task for every exporter. The name and style should be attractive, short, and meaningful and indicate the nature of the business.

4. Selection of product:

It's important that you know the products you are selling, so if you have a particular interest in a certain product that you are familiar with, this will bode well when it comes to selling. It will be effectively targeting the right markets. The selected product must be in demand in the countries where it is to be exported. Besides, while selecting the product, it has to be ensured that you are familiar with government policy and regulations in respect of products selected for export. As well as you should also know import regulations in respect of such commodities by the importing countries.

5. Select the effective way of business correspondence

You must also keep in mind that the aim of your business correspondence is not only to finalize the buyer's order but also to obtain the necessary information about the buyer's expectation from your product. The best way of correspondence is that you must use a beautiful letter head on airmail paper and a good envelope, nicely printed, giving fully particulars of your firm's name, telephone, telex and fax number etc. Your language should be polite, soft, brief and to the point, giving a very clear picture of the subject to be put before the customer and preferably in the language of the importing country.

6. Selection of Markets

Foreign markets should be selected carefully. You must consider the various factors like the political embargo, scope of the exporter's selected product, demand stability, preferential treatment to products from developing countries, market penetration by competitive countries and products, distance of potential market, transport problems, language problems, tariff and non-tariff barriers, distribution infrastructure, size of demand in the market, expected life span of market and product requirements, sales and distribution channels. For this purpose, you should collect adequate market information before selecting one or more target markets. This information can be collected from the following sources:

* Export Promotion (EPCs)/Commodity Boards Council

* Federation of Indian Export Organization (FIEO)

* Indian Institute of Foreign Trade (IIFT)

* Indian Trade Promotion Organization (ITPO)

* Indian Embassies Abroad

* Foreign Embassies in India

* Import Promotion Institutions Abroad

* Overseas Chambers of Commerce and Industries

* Various Directories, Journals, Market Survey Reports etc.

7. Selection Buyers of perspective:

You can collect the addresses of the prospective buyers of the commodity from the following sources:

* Enquiries from friends and relatives or other acquaintances residing in foreign countries.

* Visiting/ participating in International Trade Fairs and Exhibitions in India and abroad.

* Contact with the Export Promotion Councils, Commodity Boards, and other Government Agencies.

* Collecting addresses from various Private Indian Publications Directories available on cost at Jain Book Agency, C-9, Connaught Place, New Delhi-1. (PH. 3355686, Fax.3731117).

* Collecting information from International Trade Directories/ Journals/periodicals available in the libraries of the Directorate General of Commercial Intelligence and Statistics, IIFT, EPCs, ITPO, etc.

* Making contact with Trade Representatives of overseas govt. in India and Indian trade & other representatives/ international trade development authorities abroad.

*Visiting Embassies, Consulates, etc. of other countries and taking note of addresses of importers for products proposed to be exported.

* Advertising in newspapers having overseas editions and other foreign newspapers and magazines etc.

* Contacting authorized dealers in foreign exchange with whom the exporter maintains a bank account. is maintaining a bank account.

8. Selection of Channel of Distribution:

Some of the channels of distribution in the exporting Business are as follows:

* Exports through Export Consortia

* Export through Canalizing Agencies

* Export through Other Established Merchant Exporters Export Houses, or Trading Houses

* Direct Exports

* Export through Overseas Sales Agencies

After the selection of channels of distribution, you should negotiate with them without any conflict. Finally, when you receive a confirmed order from your prospective buyer. You should proceed to enter into a formal export contract with the overseas buyer. An export contract should not contain any ambiguity regarding the exact specifications of goods and terms of sale including export price, mode of payment, storage and distribution methods, type of packaging, port of shipment, delivery schedule, etc.

9. Understanding risks in International trade: 

While selling abroad, you must consider the following risks:

(i) Credit risk

(ii) Currency risk

(iii) Carriage risk

(iv) Country risk

These risks can be insured to a great extent by taking appropriate steps.

4Q)