Author: John J. Capela
Publisher: Dummies – A Brand Imprint of Wiley Publishing – 338 pages
Book Review by Sonu Chandiram
More than a regular book, this one by John J. Capela is an excellent reference guide that should be bought to be kept by anyone already in or intending to get into the import or exporting business. It contains a wealth of information essential for learning the process (including documentation involved) of buying goods from overseas and selling them in the U.S. or vice versa.
For wannabe exporters, the book contains details ranging all the way from what is an agency agreement (with an overseas company distributing your U.S. product) to a back-to-back letter of credit to a bill of lading to a C&F or CIF price quote; where and how to get a certificate of origin to how to fill up a commercial invoice or a dock receipt, to what information a packing list should contain to what details a proforma invoice should. How to get paid for the goods you exported through a regular letter of credit and what documents you need to present to the bank to get your payment.
For potential or in-business-already importers, a whole range of information is available in this book. Importers may need inspection certificates to ascertain the quality and correct quantity of the goods they are buying. Also what other documents will your letter of credit require of your goods supplier to present to the bank to get paid? If shipped by air, will your LC require that your supplier fax you the airway bill ahead of the flight departure? And if shipped by sea, will your LC require a bill of lading with a certified on-board stamp and-or a shipping manifest?
Get information on all these terms in the book’s index and appendices, and actually see the documents in this not only highly useful but essential book if you want to get into (or are already in) the export or import business.
Having had experience in both these fields, I can tell you that the monetary -rewards are high, but so is the risk. The potential for profit definitely exists in importing goods from overseas at what amounts to low cost due to the strength of the U.S. dollar and then selling those at a large profit. The main risk in that endeavor exists in price competition from other importers of the same or similar items. The other risks in importing have to do with getting goods exactly as per sample and getting them on a timely manner, especially if you have orders with cancellation dates.
Profit potential from exporting U.S. goods to developed or developing markets is also good and it is growing as the middle class grows in emerging markets. Ask the large U.S. companies that have distributors overseas or super-large ones who already have their own offices in a large or strategically-located country serving that country and others in the region. U.S. multinational companies capitalizing on the growth of emerging markets have reaped rich awards.
Most people are probably not aware that most of the companies in the Standard & Poor 500 list derive significant portions of their revenues from overseas. For India alone for example, about two years ago, a business magazine in New Delhi had indicated that about 375 or three-quarters of the S&P 500 firms had a presence of some sort in India, from a very large India presence of Microsoft that owns 12 buildings and probably employs hundreds of thousands of people there, to the smallest-revenue member companies that may have just a few thousand workers in India.
In 2009, the overseas revenue portion of the 500 largest U.S. firms represented in this elite list was a whopping 29.5 percent of their total revenue. The numbers for 2010 and 2011 are not to be found, but I suspect that due to faster economic growth of emerging markets such as Brazil, China and India, overseas revenue has grown to a more significant percentage for the member-firms of the S&P 500.
I believe sales of products and services of India-based branches of U.S. firms – including members of the S&P 500 – is not considered U.S. export revenue, and their net profits are probably not subject to U.S. taxation, since they pay taxes in India. But the amount of money that the members of the S&P 500 collectively make in India is significant, and will continue to grow in that market of 1.2 billion people. This major conglomeration of the largest 500 U.S. firms also employs millions of people in India, contributing to that country’s employment and economic growth.
Due to the highly favorable currency exchange rate of about 50 Indian rupees for each U.S. dollar, American companies imported $29.53 billion worth of goods and services from India, and exported $19.25 billion worth in 2010.
So far in 2011, the U.S. has imported from India $27.52 billion worth of goods and services in the nine months from January to September, a monthly average of $3.06 billion. At this average, U.S. imports from India would amount to $36.7 billion in 2011. And U.S exports to India total $15.99 billion for those nine months, and at $1.78 billion a month, it would amount to $21.31 billion for all of 2011.
With overseas markets growing rapidly, it makes sense perfect sense for U.S. firms to grow their revues from exports. And with a developed U.S. looking for good quality products at more affordable prices, it also makes perfect sense to import and distribute them here. This book is your guide to do either more profitably and with less risk.