Page 63 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes important function for implementing company’s international strategies. Importing is thus the
bringing of goods and services into a country and results in the importer paying money to the
exporter in the foreign country.
Import strategy refers to the ways and means of bringing quality goods and services into one’s
country from the foreign countries at the lowest price with the best terms and conditions. There
are two types of imports:
Industrial and consumer goods to independent individuals and companies.

Intermediate goods and services that are part of the firm’s global supply chain.
Generally, companies import because they can buy goods or services at lower prices from
foreign suppliers, because the goods or services are of higher quality than similar goods produced
locally, or because the goods or services needed in their production processes are unavailable
from local companies. Essentially, an importer seeks lower-priced or better-quality supplies,
materials, or components that help to improve its capability to create value.
It would be practically impossible to manufacture the same products in countries with high
labor costs, sell them at a reasonable price, and still make a profit. Similar situations exist in
industries with a high degree of global competitive rivalry. Such industries, like consumer
electronics and telecommunications, push the procuring company to try to combat import
competition by switching to foreign suppliers whose components then enable it to lower the
cost or boost the quality of its finished products. The automobile industry exemplifies this
situation. Global competition in this industry spurs companies to seek out the highest quality
inputs for the lowest price wherever they happen to be made and then import them into the
countries that house their factories.
Companies also import products that are unavailable in the local market. For example, North
America imports bananas from tropical climates because the climate of North America is not
suitable for growing bananas. Simply put, North Americans would not enjoy fresh bananas
were it not for imports. Similarly, a potential importer may seek new foreign products that
complement its existing product lines, thereby giving it more ways to create value. Finally, an
importer, like an exporter, might try to diversify its operating risks by systematically tapping
international markets.
There is less research, relative to the study of export strategies, of import strategies. Three broad
types of importers are identified.

3.4.1 Types of Importers

1. Those that opportunistically look for any product around the world that they can import
and sell.

2. Those that look at foreign sourcing to get the highest quality products at the lowest
possible price.
3. Those that use foreign sourcing as part of their global supply chain.

Essentials of Successful Importing

1. Importing requires a certain degree of expertise in dealing with institutions and
documentation: Not every company commands this proficiency. Consequently, a company
may opt to enlist an import broker to manage the process. The import broker obtains
various government permissions and other clearances before forwarding the requisite
paperwork to the carrier that is scheduled to deliver the goods to the importer. Import

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