Unit One Introduction and Highlight 1
1.0 Nature of International Business 1
1.1 Motivations of Companies’Engagement in International Business 2
1.2 The Major Categories of International Business 3
1.2.1 Merchandise Exports and Imports 3
1.2.2 Service Exports and Imports 4
1.2.3 Investments 4
1.3 Some Essential Theories About International Trade 5
1.3.1 Protectionist Theories 6
Exercises 8
1.3.2 Free Trade Theories 11
1.3.2.1 Theory of Absolute Advantage 11
1.3.2.2 Theory of Comparative Advantage 14
1.3.2.3 Factor-proportions Theory 16
Exercises 18
Language Features for Unit One 20
Unit Two International Trade Policies 23
2.0 Overview 23
2.1 The Roles of GATT and WTO 24
2.1.1 Most-Favored-Nation Clause 25
2.1.2 GATT-sponsored Rounds 25
2.1.3 Tokyo Round 26
2.1.4 Uruguay Round 26
Exercises 27
2.2 Trade Barriers 28
2.2.1 Tariffs 28
2.2.1.1 Revenue Tariff 28
2.2.1.2 Protective Tariff 29
2.2.1.3 Prohibitive Tariff and Retaliatory Tariff 29
2.2.1.4 Regulatory Tariff 30
2.2.1.5 Anti-dumping Tariff 30
2.2.2 Non-tariff Trade Barriers 32
2.2.2.1 Import License 33
2.2.2.2 Government Procurement 33
2.2.2.3 Technological Barriers of Trade 33
2.2.2.4 Customs Valuation 34
Exercises 35
2.2.3 Export Encouragement Policies 37
2.2.3.1 Export Subsidy 37
2.2.3.2 Generalized System of Preference 39
2.2.3.2.1 Principle of the Place of Origin 40
2.2.3.2.2 The Principal Content of GSP 41
2.2.3.3 Other Export Encouragement Policies 42
Exercises 44
Language Features for Unit Two 45
Unit Three The Quality of Goods 49
3.0 Overview 49
3.1 Definition of Quality and Its Requirements 49
Exercises 51
3.2 Methods Expressing the Quality of Goods 52
3.2.1 Sales by Inspection 52
3.2.2 Sales by Samples 53
Exercises 55
3.2.3 Sales by Specifications，Grade，and Standard 55
3.2.4 Sales by Brand or Trade Mark 57
3.2.5 Sales by Place of Origin 58
3.2.6 Sales by Booklets，Drawings，or Diagrams 59
Exercises 60
3.3 Tolerance Clause 62
Exercises 64
Language Features for Unit Three 65
Unit Four The Quantity of Goods 67
4.0 Overview 67
4.1 Units of Measures and Weights 67
4.1.1 Weight 67
4.1.2 Length 69
4.1.3 Area 69
4.1.4 Volume 70
4.1.5 Capacity 70
4.1.6 Package Units 71
Exercises 71
4.2 The Calculation of the Weight of Goods 72
4.2.1 Gross Weight 73
4.2.2 Net Weight 73
4.2.3 Legal Weight 73
4.2.4 Net Net Weight 74
4.2.5 Conditioned Weight 74
4.2.6 Theoretical Weight 74
4.3 More or Less Clause 75
Exercises 76
Language Features for Unit Four 77
Unit Five Packing and Marking 81
5.0 Overview 81
5.1 Cargoes That Need Packing 81
5.2 Packing for Transportation 82
Exercises 83
5.3 Packing for Sales 85
Exercises 86
5.4 Various Kinds of Marks 87
5.4.1 Shipping Marks 87
5.4.1.1 Abbreviations of Consignees or Buyers 87
5.4.1.2 Reference No. 88
5.4.1.3 The Name of the Unloading Port 88
5.4.1.4 Package No. 88
5.4.2 Indicative Marks and Warning Marks 89
5.4.3 Dimension Mark，Weight Mark，and Mark of the Place of Origin 89
5.4.4 Universal Product Code 91
5.5 Neutral Packing and Brand Supplied by the Customers 91
Exercises 91
Language Features for Unit Five 93
Unit Six Price of Goods 95
6.0 Overview 95
6.1 Links and Liabilities 95
6.2 Price Terms 96
6.2.1 Ex Works Terms 96
6.2.2 F Terms 97
6.2.2.1 FAS—Free Alongside Ship 97
6.2.2.2 FCA—Free Carrier 98
6.2.2.3 FOB—Free on Board 99
Exercises 102
6.2.3 C Terms 103
6.2.3.1 CFR—Cost and Freight 104
6.2.3.2 CIF—Cost，Insurance，and Freight 106
6.2.3.3 CPT—Carriage Paid to(...named place of destination) 107
Exercises 108
6.2.4 D Terms 110
6.2.4.1 DAF—Delivered at Frontier(...named place) 110
6.2.4.2 DES—Delivered ex Ship(...named port of destination) 111
6.2.4.3 DEQ-Delivered ex Quay(duty paid) 111
6.2.4.4 DDU—Delivered Duty Unpaid(...named place of destination) 112
6.2.4.5 DDP—Delivered Duty Paid(...named place of destination) 113
6.3 Commission and Discount 114
6.4 Price Clause in Contract 115
6.4.1 Unit Price 115
6.4.2 Price Adjustment 116
Exercises 117
Language Features for Unit Six 120
Unit Seven Delivery of Goods 123
7.0 Overview 123
7.1 Time of Delivery 123
7.2 Place of Delivery，Place of Loading，and Place of Destination 126
7.2.1 Ways to State the Port of Shipment and the Place of Departure 126
7.2.2 Ways to State the Port or Place of Destination 127
7.2.2.1 General Rule 127
7.2.2.2 Optional Ports 127
7.2.2.3 Partial Shipment 127
7.2.2.4 Transshipment 128
7.2.2.5 Additional Points About the Port of Destination 128
Exercises 129
7.3 The Transportation of Goods 131
7.3.1 Marine Transport 131
7.3.1.1 Liners 132
7.3.1.1.1 Freight of Liners 132
7.3.1.1.2 The Calculation of the Freight of Liners 133
7.3.1.2 Tramps 134
7.3.1.2.1 Voyage Charter，Time Charter，Demise Charter 135
7.3.1.2.2 Charter Party 135
Exercises 137
7.3.2 Other Modes of Transport 139
7.3.2.1 Air Transport 139
7.3.2.2 Railway Transport 139
7.3.2.3 Parcel 139
7.3.2.4 Combined Transport 140
7.3.2.5 Containerized Transport 140
Exercises 141
7.4 Transport Documents 142
7.4.1 Marine Transport Bill of Lading 143
7.4.1.1 The Nature and Chief Content of B/L 143
7.4.1.2 The Varieties of B/L 145
7.4.2 Air Waybill 149
Exercises 150
Language Features for Unit Seven 151
Unit Eight Cargo Transport Insurance 154
8.0 Overview 154
8.1 Risks and Losses 155
8.1.1 Risks 155
8.1.1.1 Perils of the Sea 155
8.1.1.2 Extraneous Risks 156
8.1.2 Losses 156
8.1.2.1 Total Loss 156
8.1.2.2 Partial Loss 157
8.1.2.3 Expenses 158
Exercises 159
8.2 Ocean Marine Insurance Under C.I.C. 160
8.2.1 Basic Risks Coverage for Ocean Transportation Under C.I.C. 161
8.2.1.1 Free From Particular Average(F.P.A.) 161
8.2.1.2 With Average(W.A.) 162
8.2.1.3 All Risks 162
8.2.1.4 Commencement and Termination of the Insurance 163
8.2.1.5 Exclusions 163
8.2.2 Additional Risks Coverage for Ocean Transportation Under C.I.C. 164
8.2.2.1 General Additional Risks 164
8.2.2.2 Special Additional Risks 165
8.2.3 Specific Ocean Marine Insurance Coverage 166
8.2.3.1 Ocean Marine Insurance for Frozen Products 167
8.2.3.2 Exclusions 167
8.2.3.3 Commencement and Termination 167
8.2.4 Ocean Marine Cargo Insurance 168
Exercises 168
8.3 Overland，Air Transportation and Parcel Post Insurance 172
8.3.1 Overland Transportation Insurance 172
8.3.2 Air Transportation Risks Insurance 173
8.3.3 Parcel Post Insurance 174
Exercises 175
8.4 Institute Cargo Clauses 176
8.4.1 Institute Cargo Clauses A 177
8.4.2 Institute Cargo Clauses B 178
8.4.3 Institute Cargo Clauses C 179
Exercises 180
8.5 Export and Import Insurance Practice 182
8.5.1 Export Insurance Practice 182
8.5.1.1 Formalities in Export Insurance Practice 182
8.5.1.2 Conformity of Insurance Policy With Sales Contract and Letter of Credit 183
8.5.1.3 Insurance Documents 185
8.5.1.3.1 Insurance Policy 185
8.5.1.3.2 Insurance Certificate 185
8.5.1.3.3 Combined Certificate 185
8.5.1.3.4 Open Policy or Open Cover 186
8.5.1.4 Franchise and Right of Subrogation 186
8.5.1.5 Insurance Clauses in a Sales Contract 187
8.5.1.6 Insurance Claim Settlement for Damages to Exported Goods 187
Exercises 189
8.5.2 Import Insurance Practice 190
Exercises 193
Language Features for Unit Eight 195
Unit Nine Export Payment 198
9.0 Overview 198
9.1 The Amount of Payment 198
9.2 Payment Currency 199
Exercises 201
9.3 Instruments 202
9.3.1 Draft or Bill of Exchange 202
9.3.1.1 Definition，Parties，and Chief Contents 202
9.3.1.2 Types of Drafts 205
9.3.1.3 Stages in Handling a Bill of Exchange 207
Exercises 210
9.3.2 Promissory Note 212
9.3.3 Check 214
Exercises 215
9.4 Payment Methods 218
9.4.1 Remittance 218
9.4.2 Collection 220
9.4.2.1 The Parties Involved Under Collection 220
9.4.2.2 Varieties of Documentary Collection 222
9.4.2.2.1 Documents Against Payment(D/P) 222
9.4.2.2.2 Documents Against Acceptance(D/A) 224
9.4.2.3 Some Particular Remarks About Collection 225
Exercises 226
9.4.3 Letter of Credit 227
9.4.3.1 Definition and Performances 228
9.4.3.2 The Parties Involved 229
9.4.3.3 The Chief Contents of L/C 230
9.4.3.4 The Procedures Involved in the Use of L/C 231
Exercises 236
9.4.3.5 The Varieties of L/C 238
Exercises 249
9.4.4 Other Payment Methods 251
9.4.4.1 Letter of Guarantee 251
9.4.4.2 Standby L/C 253
9.4.4.3 Factoring 254
9.4.4.4 Combined Use of Different Method of Payment 257
9.4.4.4.1 Combination of L/C and Collection 258
9.4.4.4.2 Combination of L/C and Remittance 258
9.4.4.4.3 Combination of Documentary Collection and Down Payment 258
9.4.4.4.4 Combination of Documentary Collection and Standby L/C 259
Exercises 259
Language Features for Unit Nine 262
Unit Ten Business Negotiation and Conclusion of Sales Contracts 265
10.0 Overview 265
10.1 Preparation Before Business Negotiation 265
10.2 Negotiators’Training 267
10.3 What the Negotiators Should Know Before Business Negotiation 267
10.4 Business Negotiation 271
10.4.1 Inquiry 272
10.4.2 Offer 273
10.4.2.1 The Requirements for an Offer 274
10.4.2.2 The Time of Validity of an Offer 276
10.4.2.3 The Withdrawal and Revocation of an Offer 277
10.4.2.4 The Termination of an Offer 279
10.4.3 Counter-offer 279
Exercises 280
10.4.4 Acceptance 282
10.4.4.1 The Requirements of Acceptance 282
10.4.4.2 Late Acceptance 284
10.4.4.3 The Withdrawal of an Acceptance 284
10.5 Conclusion of a Written Contract 285
10.5.1 The Importance of a Written Contract 285
10.5.2 The Form of a Sales Contract 287
Exercises 289
Language Features for Unit Ten 293
Unit Eleven The Performance of Export Contract 296
11.0 Overview 296
11.1 Preparation for Shipment 296
11.2 Prepare Goods for Shipment 297
11.2.1 Fill in L/C Analysis 297
11.2.2 Produce Consignment Packing List 298
11.2.3 Produce and Issue Export Notice 298
11.2.4 L/C Reminding 298
11.2.5 Book and Number the L/C 299
11.2.6 Examine the L/C 299
11.2.7 Make Overall Examination 299
11.2.8 Examine Individual Clauses 301
Exercises 305
11.3 Amendment of the L/C 307
11.4 Producing the Outward Notice 307
11.5 Insurance，Commercial Inspection，and Export License 308
11.6 Producing Consignment Bill 308
11.7 Prepare the Required Documents and Conduct Settlement of Payment 309
11.8 Financing Receivables 314
Exercises 316
Language Features for Unit Eleven 320
Unit Twelve International Business Collaboration 323
12.0 Overview 323
12.1 The Choice of Foreign Operational Forms 324
12.1.1 Legal Factors 324
12.1.2 Cost 325
12.1.3 Experience 326
12.1.4 Competition 326
12.1.5 Risk 327
12.1.6 Control 328
12.1.7 Product Complexity 328
12.2 Licensing 329
12.2.1 Economic Motives 330
12.2.2 Strategic Motives 331
12.2.3 Political and Legal Motives 332
12.3 Franchising 332
Exercises 335
12.4 Management Contracts 339
12.5 Turnkey Operations 340
12.6 Custom Contracts 342
12.7 Access to Foreign Technology 342
12.8 Shared Ownership 344
12.8.1 100-percent Ownership 344
12.8.2 Reasons for Shared Ownership 345
12.8.3 Equity as a Control Mechanism 346
12.8.4 Joint Ventures 346
12.9 Management of Foreign Operations 348
Exercises 350
Language Features for Unit Twelve 353
Unit Thirteen Export and Import Strategies 357
13.0 Overview 357
13.1 Decisive Elements in Exporting 357
13.2 Export Strategy 359
13.2.1 Entry Mode 359
13.2.2 Exporting Motivation 360
13.2.3 Factors Favoring Exportation 361
13.2.4 Stages of Export 362
13.2.5 Potential Pitfalls 363
13.2.6 Designing an Export Strategy 364
13.3 Export Intermediaries 366
13.3.1 Direct Selling 367
13.3.2 Indirect Selling 369
13.3.3 Export Management Companies 369
13.3.4 Export Trading Companies 371
13.3.5 Piggyback Exports 372
Exercises 373
13.4 Foreign Freight Forwarders 377
13.4.1 Air and Ocean Freight 379
13.4.2 Export Documentation 380
13.5 Counter Trade 381
13.5.1 Barter Trade 382
13.5.2 Offset Trade 382
13.6 The Import Strategy 384
13.6.1 Role of Customs Agencies 385
13.6.2 Import Documentation 387
Exercises 389
Language Features for Unit Thirteen 393
Unit Fourteen Important Factors About Foreign Direct Investment 395
14.0 Overview 395
14.1 The Implication of Foreign Direct Investment 395
14.1.1 What Is Control 396
14.1.2 The Concern About Control From Different Parties 396
14.1.3 Means of Acquiring Assets 398
14.2 Trade Is Closely Related to Factor Mobility 399
14.3 Reasons for Foreign Direct Investment 400
Exercises 407
14.3.2 Resource-seeking Investments 411
14.3.2.1 Advantages of Rationalized Production 412
14.3.2.2 Governmental Incentives and Political Motives 413
14.4 The Alternatives of Buying and Building 415
14.4.1 Buying 415
14.4.2 Building 416
14.5 Advantages of Foreign Direct Investment 416
14.5.1 Monopoly Advantages Before Direct Investment 417
14.5.2 Advantages After Direct Investment. 418
14.6 Direct Investment Patterns 418
14.6.1 Sources of Foreign Direct Investment 419
14.6.2 Location of Investment 420
14.6.3 Economic Sector of Investment 420
Exercises 421
Language Features for Unit Fourteen 425