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CHAPTER II ESTABLISHING AN CHAPTER II ESTABLISHING AN IMPORT BUSINESSIMPORT BUSINESS Reasons for Importation Reasons for Importation

Requirements for a Successful Import Requirements for a Successful Import Business Business

Legal Forms of a Business Legal Forms of a Business

Import OrganizationsImport Organizations

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Reasons for ImportationReasons for Importation

Products unavailable in the domestic Products unavailable in the domestic market market

Products cheaper than domestic market Products cheaper than domestic market

Products better quality than domestic Products better quality than domestic market market

Better Financing than domestic marketBetter Financing than domestic market

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Requirements for a Successful Requirements for a Successful Import BusinessImport Business Selling abilitySelling ability Reliable suppliersReliable suppliers Financing ability Financing ability Knowledge of import procedures and Knowledge of import procedures and

regulations regulations Persistence Persistence Clear communicationClear communication Trust building with suppliers and buyersTrust building with suppliers and buyers

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Legal Forms of a BusinessLegal Forms of a Business Sole proprietorship: Sole owner

– Business license – Registration of fictitious name with the

County & Ad 3 times in local newspaper– Unlimited liability. No double taxation

Partnership – General partner: Unlimited liability – Limited partner: Limited liability – Pass-through taxation (No double

taxation)

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Legal Forms of a BusinessLegal Forms of a Business Corporation

– C corporation: Limited liability. Double taxation

– S corporation: Limited liability. No double taxation. Up to 100 shareholders. Family members single shareholder

Legal Forms of a BusinessLegal Forms of a Business LLC (Limited Liability Company)

– Limited liability. – No double taxation– May have one or more owners called

Members

– May be owned by any combination of individuals and business entities

– Files Articles of Organization with the State

– No minutes & No annual meetings required

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Import OrganizationsImport Organizations

Import agents (Commission Agents) – Assume no title – Fewer than 10 employees – Carry Catalogs and samples of

exporters

Import dealers – Do not carry stock – Directly from harbor to domestic buyers – Usually take title to the goods

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Import OrganizationsImport Organizations

Import distributors Import distributors – Products requiring after-sales service Products requiring after-sales service – Large inventory Large inventory – Large organization Large organization – Sometimes owned by a foreign Sometimes owned by a foreign

manufacturer manufacturer – Advertising and promotionAdvertising and promotion

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Import OrganizationsImport Organizations International trading companiesInternational trading companies

– Large organization Large organization – Good marketing coverage and financial ability Good marketing coverage and financial ability – Control domestic distribution networks Control domestic distribution networks – Importing arm of exporters Importing arm of exporters – Japanese SogoshoshaJapanese Sogoshosha

ManufacturersManufacturers – Augment their product linesAugment their product lines – Raw materialsRaw materials – ComponentsComponents