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Managing Imports— the Other Side of the Coin

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Exhibit 16-5: Model of Importer Buyer

Behavior



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6. Managing Imports—

the Other Side of the Coin

– Model of Importer Buyer Behavior

Stage 1. Need recognition and problem formulation

(triggered by competition and unavailability)

Stage 2. Search (guided by country characteristics,

vendor characteristics, and information sources)

Stage 3. Choice (vendors evaluation and selection)



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7. Mechanics of Importing

• Steps in Importing

– Finding a bank that either has a branch in the

exporter’s country or has a correspondent bank

– Establishing a letter of credit with the bank

– Deciding on the mode of transfer of goods from

exporter to importer

– Checking compliance with national laws of the

importing country

– Making allowances for foreign exchange fluctuations

– Fixing liability of payment of import transactions and

warehousing

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7. Mechanics of Importing

• Import Documents and Delivery

– Entry documents filed by the consignee:















Entry manifest

Customs form 7533

Customs form 3461

Packing list

Commercial invoice

Also accompanied by evidence that a bond is posted

with customs to cover any potential duties, penalties,

and taxes



– For Special Permit for Immediate Delivery, use

Customs form 3461 for fast release after arrival.

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7. Mechanics of Importing

• Import Duties















Ad valorem duty

Specific duty

Compound duty

Antidumping import duty

Countervailing duty

Duty drawback:

• Direct identification drawback

• Substitution drawback

• All countries have procedures allowing for the

temporary importation of goods for across their borders.



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8. Gray Markets

• Gray market channel refers to the legal

export/import transaction involving genuine products

into a country by intermediaries other than the

authorized distributors.

• From the importer side, it is also known as parallel

imports.

• Three conditions are necessary for gray markets to

develop:

1. Products must be available in other markets.

2. Trade barriers must be low enough for parallel

importers.

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8. Gray Markets

3. Price differentials among various markets must be

great enough to provide the basic motivation for gray

marketers. Such price differences arise for various

reasons:















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Currency fluctuations

Differences in market demand

Legal differences

Opportunistic behavior

Segmentation strategy

The World Wide Web



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8. Gray Markets

• How to Combat Gray Market Activity

(See Exhibit 16-6.)

– Reactive Strategies

















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Strategic Confrontation

Participation

Price cutting

Supply interference

Promotion of gray market product limitations

Collaboration

Acquisition



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8. Gray Markets

– Proactive Strategies

















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Product/service differentiation and availability

Strategic pricing

Dealer development

Marketing information systems

Long-term image reinforcement

Establishing legal precedence

Lobbying



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Exhibit 16-6:

How to Combat Gray Market Activity



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Exhibit 16-6:

How to Combat Gray Market Activity, cont’d



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