Shipping Solutions Newsletter

In today’s world we must all be extremely diligent in our efforts to ensure that every export transaction is compliant with the applicable regulations, as well as ensure that all parties to an export transaction are aware of the fact that they are bound by United States export laws when exporting merchandise from the U.S.

The consequences of being found in non-compliance with your export transactions will have a significant impact on your ability to conduct transactions in the future as you could be subject to a steep monetary penalty and/or imprisonment.

Within the past few months, several news reports have surfaced regarding individuals and companies receiving hefty fines for being found in non-compliance of applicable laws and regulations governing the exportation of specific merchandise.

Interestingly enough, the most common violation is the exportation or re-exportation of merchandise to the Islamic Republic of Iran by both domestic and foreign companies! Most people should have a good working knowledge of what the do’s and don’ts are when it comes to dealing with Iran; no good will come from such an endeavor as things are right now!

In general, unless licensed by the U.S. Department of the Treasury’s Office of Foreign Asset Control (OFAC), nothing may be exported, re-exported, sold or supplied, directly or indirectly, from the U.S. or by a U.S. person, wherever located, to Iran or the Iranian government.

Another surprising violation is the exportation or re-exportation of defense articles, along with commerce controlled electronic devices, to the People’s Republic of China. Before conducting any transaction that would involve defense articles or dual-use items, be sure to consult the Bureau of Industry and Security’s EAR and the Department of State’s International Traffic in Arms Regulations (ITAR).

It is in your best interest to ensure that all of the applicable licenses have been obtained prior to finalizing the transaction. Doing your homework early will pay off greatly rather than finding out after the fact that you have made a huge mistake.

Regardless of who you are conducting business with, it should be your number one priority to ensure that your client is in fact who they say they are. You should obtain a clear understanding of their intended purpose for the merchandise, and you must believe that the intended purpose is legitimate. When working with any client, be sure that they are well aware of their obligations under the EAR and ITAR as their mistake could easily become a huge problem that you have to deal with!

Now is not the time to become complacent with regard to conducting an export transaction. The federal government is serious about enforcement; you don’t want to be the next news report about a violation of export laws and regulations!

Since the passage of the Customs Modernization Act, legal responsibility for properly declaring the correct value, classification and duty rate for imports has shifted from U.S. Customs and Border Protection to you, the importer.

Customs now informs you of your legal requirements and you must meet those requirements and supply Customs with timely and accurate data. If you fail to meet these requirements, you and your company are at significant risk of fines, penalties and even loss of import privileges.

It's up to you and your colleagues to stay on top of this changing landscape. But who's got the time? In these difficult economic times budgets are being frozen, staffing levels are being cut, and your workload keeps getting bigger.

That's why International Business Training (IBT) is offering a series of lunch-time webinars that let you participate from your desktop computer in live, two-hour presentations on the topics that are most important to you and your company:

Each two-hour session is held twice a day so both east coast and west coast attendees can participate over their lunch hours. Of course, if you've already got lunch plans, we don't mind if you register for the other session that day.

Each two-hour webinar is only $150 per person, and you'll receive a copy of the instructor's PowerPoint presentation prior to the webinar so you can take notes, and we'll mail you a Certificate of Completion at the end of each webinar. Additional attendees from your company can attend on the same internet connection for only $50 each.

Seats for each webinar are definitely limited, so don't delay. You can register online or by calling IBT at 1-800-641-0920. You'll be glad you did!

India's Unique Value Proposition

India, the world's fastest growing free-market democracy, presents lucrative and diverse opportunities for multinationals and smaller manufacturers and marketers with the right products, services, and commitment. India's infrastructure, transportation, energy, environmental, health care, high-tech and defense sector requirements for equipment and services will exceed tens of billions of dollars in the mid-term as the Indian economy globalizes and expands.

Despite financial turmoil, India's basic premise remains buoyant, and the country is poised to emerge as one of the largest economies in the world. Signs of improvement in economic fundamentals are already visible as inflation has come down, liquidity conditions are improving and industrial production has gone up. India's value proposition is reflected in its favorable investment policy, banking and financial services infrastructure, extensive pool of qualified engineers and scientists, youthful demographics, affluent and rising middle class, transformation of rural India, and growing demand for consumer goods. In this second in a series of articles I will describe India's unique value proposition. Future articles will describe the challenges and critical success factors for operating in India.

Favorable Regulatory Environment

Unlike many big emerging markets, India has a sophisticated commercial and legal code. Like the others, India has placed economic progress at the heart of its national policies, and in just the last few years it has succeeded in opening its economy to the rest of the world beyond anything that most observers would have imagined possible in so short a time.

India has taken positive steps towards liberalizing and introducing private investment and competition in multiple industry sectors. Its proximity to growing Asian markets makes India an attractive production and distribution destination for companies worldwide. Over the past decade, the evolution of knowledge sectors such as pharmaceuticals, biotech, and information technology (IT) services has led to the creation of patent laws.

In February 2009, the government of India announced detailed guidelines on liberal and investor-friendly foreign investment policy. Business entities with less than 50% foreign ownership will be considered domestic and allowed to invest downstream in all sectors, without limitations, seemingly giving foreign investors indirect access even to sensitive sectors such as retailing and insurance.

Strong Banking and Financial Infrastructure

Already, several major global players such as HSBC, Citibank, Standard Chartered and GE Money have built a presence in the country. A growing trend in recent years has been the signing of partnerships or the creation of joint ventures between foreign institutions in the credit and debit card payment industry and local Indian banks looking to expand their credit and debit cards offerings. In April 2009, the Reserve Bank of India (RBI) lifted restrictions on the activities of foreign banks making it easier for multinational players to open branches and acquire domestic banks.

Availability of Knowledge Workers

The durability of India's competitive advantage in terms of the size of its skilled workforce is secure because of its favorable demographics and strong tertiary education sector. It has a highly educated workforce with two million college graduates a year all of whom speak English. It has excellent international data communications links and good internet access in the major cities. The Indian Institutes of Technology or IITs, as they are known around the globe, have a long history of turning out top engineers. Thousands of their graduates have flourished in the global technology marketplace, with a good portion landing in California's bay area. Many have also stayed home or returned to India to help fuel the world's fastest-growing tech economy.

Companies such as ABB, Honeywell and Siemens in electrical and electronic products; Cummins, DaimlerChrysler and Toyota Motor in auto components and engineering; and Degussa as well as Rohm and Hass in specialty chemicals operate in skill-intensive industries requiring advanced technical expertise, areas in which India is likely to become a primary sourcing and manufacturing base.

Favorable Demographics

India's population, which until quite recently was seen as a potential liability, is proving to be its greatest asset. The number of Indians in the working-age group of 15-64 years is forecast to rise from 63% of the population in 2006 to 68% by 2026. India will enjoy a growing working-age population at a time when other countries (including China) will face increasing dependency ratios due to aging populations. Already one fifth of the world's population under 24 years old lives in India.

The boom in the services sector helped create a relatively affluent middle class, estimated to be 300 million strong. Rising incomes and increased access to credit have led to much higher spending on consumer durables such as cars, phones and other electronic items. About 40% of India's high-income urban population lives in Mumbai, Delhi, Calcutta, Chennai and Bangalore. India's middle class is well educated, world traveled, tech savvy and extremely brand conscious. Price sensitivity is non-existent in this market segment.

Transformation of Rural India

Large areas of rural India have been transformed into a distinctively "rurban" landscape, where farm, factory and office exist side-by-side. Increased purchasing power means that India's 557,137 villages are a large new market. Approximately 70% of radios, bicycles, mechanical watches, soap and cosmetics are sold and purchased in rural India. Fifty percent of motorcycles, wrist watches, televisions, cassette recorders, bicycles, electric irons and packaged tea are also marketed and purchased in rural India. More than 70 million mobile phone subscribers live in rural areas. The industry anticipates compound average annual growth of 18.4% per year until 2012, by which time there should be over 100 million rural subscribers.

According to McKinsey reports, India's growing market for consumer goods could reach $400 billion by 2010, making it one of the five largest in the world. Clothing stores, convenience stores and financial-services retailers are eagerly establishing their base in these metro areas to cater to 20 or 25 of the largest cities with populations greater than a million each.

International marketers, however, face multiple challenges when venturing into this land of opportunity, which I will describe in my next article.

Thousands of successful exporters are using Shipping Solutions to complete their export documents faster, easier and less expensively than ever before. Why aren't you?

If you're too busy trying to complete your export documents by hand to spend some time reviewing the Shipping Solutions Professional export documentation and compliance software yourself, let us do it for you! Sign up for one of our free online demos and let us give you a one-hour overview of the software.

We'll take you step-by-step through the process of completing your export forms, filing your SEDs electronically through AES, and checking your exports against the various government restricted parties lists and export regulations to make sure your shipments are in compliance, and you—and your company—stay out of trouble.

These free online demos are available on Tuesdays at 1:00 p.m. and Thursdays at 10:00 a.m. Central Time. All you need is an Internet connection to watch the demo and a phone to listen in and ask questions about the software. It's the perfect opportunity to get your first view of Shipping Solutions or to convince your co-workers and your boss that Shipping Solutions is the perfect solution for your company.

See why Shipping Solutions is America's #1 export software. Sign up for the free online demo today!

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