How to Build a Successful Export Business | From Any Country

There are many success stories of entrepreneurs who remarkably expanded globally in a very short time based on great ideas. One such success story is that of Mukesh Ambani, the chairman and largest shareholder of Reliance Industries, based in Mumbai, India.

Mukesh Ambani joined Reliance Industries, founded by his late father Dhirubhai Ambani, in 1981 and has since transformed it into one of India's largest conglomerate companies with interests in petrochemicals, refining, oil and gas exploration, and retail.

Under his leadership, Reliance Industries has become a significant player in the global market, with its oil and gas subsidiary, Reliance Petroleum, being one of the largest refineries in the world. The company has also made significant investments in developing new technologies, such as the launch of Jio, a 4G LTE mobile network that disrupted India's telecommunications market and brought affordable internet access to millions of people in India.

Mukesh Ambani's entrepreneurial vision, business acumen, and leadership skills have made Reliance Industries a globally recognized brand and a shining example of Indian entrepreneurship on the world stage.

In the next lecture, Dr. Jain shares with you another interesting story of a highly successful person from India who, while based in Paris on a work assignment, founded a million-dollar global business company in Europe that became an instant success.

Hello friends!

In this section, my idea is to share with you one very interesting case study that I have developed for this course.

This case study is based on real events, although the exact details of the people and the company involved are not shared.

The idea is for educational purposes.

So this case study will give you a fairly good idea about how certain simple ideas can get converted into big business, and what is involved in the journey to make those ideas successful.

What are the difficulties that are generally faced by global business professionals?

So all those things are covered in this case study.

So I'll be sharing this case study in the form of a story.

The story of this person, Mr. Krishna Reddy, who hails from India and works in France.

So how did he get the idea of a new business and how convert his idea into a very big global company?

So, this case study I have titled Bringing Indian Service Industry to the World, this case study is about one Mr. Krishna Rao, who is from Bangalore.

He's an IIT, IIM graduate and got a job, and campus placement in the technology department of an MNC French MNC headquartered in Paris, France.

So he was located in Paris, France.

Although he had very different ideas about his career, he took the opportunity because he found it very interesting to get some experience in an overseas location where he had never ventured.

He never went outside India at any time in his life.

So this was a great opportunity to learn about the world and how businesses are done globally.

He was quite impressed, actually, with the global entrepreneurs.

He wanted to become a global entrepreneur, and he found this opportunity as a gateway for learning about his future career.

So an Indian middle-class person with an IIT, IIM graduation, uh, he joined this MNC company that is into the electric business based in Paris, France.

So, being in Paris, France, it was a new experience for him, and he always wanted to remain in touch with his Indian roots.

So he found that there are a lot of Indian families who are living in France and neighboring countries, and through WhatsApp groups, he was very much in touch with many, many families who are migrants working not only in France but in other countries.

And he wanted to be communicative with them.

He wanted to visit them.

Luckily, his job in the technology new technology department of the company required him to travel to different European countries for work, and during his free time in his trips, he remained in touch with Indian families in different countries and attended events, any event or any family functions wherever he was invited, so he readily accepted those offers, and he used to visit those families in various countries wherever he went.

He had friends.

He also had some relatives in different countries working there.

So he was very social by nature.

This social nature came from his father and his grandfather back in India, who gave him the instinct to remain social and who taught him the power of being a social animal among the Indian communities.

So he was very much interested to, uh, attend. he liked to attend the events and functions wherever he was invited.

What he realized in one of the events he was attending in France, with one of the Indian families, he realized how expensive it was for an Indian family to organize even small events, because those events were to be India-like.

And the merchandise and the services for those events that were India-like were not available, or they were very expensive.

If they were available in France or in other European countries.

He realized that there is a demand for organizing such events at cheaper prices, but it is very expensive.

Even at European salaries, these Indian families were not able to afford to organize such events, but they wanted to organize such events.

That is what he realized.

And he got an idea of, uh, providing such services pan Europe, or maybe even on a world scale.

He wanted to provide these services using the latest technology and the latest products that were available not only from India but from other countries like China.

So he always had this entrepreneurial instinct.

He wanted to be a global entrepreneur.

After hearing so many success stories of global entrepreneurs from India, in one of the global meetings organized at IIM Ahmedabad, where he was doing his MBA.

So he always wanted to be a global entrepreneur, and this job was for him, just a gateway to realize his dream.

So he realized that many of these services and merchandise could be made available at a fraction of the price if done in a very organized manner and sourced from India and China.

And some of these services could be easily provided using the latest digital tools and new technologies.

And he was very much upbeat about it.

I will now be talking about this whole case study about his idea and how he converted it into a successful service and merchandise venture in Europe, as well as in many other countries outside Europe.

Selling these services and specific products related to a wide variety of religious events and rituals.

I will now talk about this complete case study that gave him the idea of successfully setting up an extremely successful service -- merchandise venture in Europe specifically, but also in other countries related to the Indian services to start with, and the specific products that were related to various religious events and many general events that were very, very common with the migrant families in Europe as well as he realized in many other countries it is possible.

So that is where he started.

And I'll just discuss with you this complete case study.

In this case study, I will also talk about his seven-year journey from scratch to the current turnover of more than Euro 250 million in just seven years.

In this journey, he faced at least three salvos of shocks when the business was almost on the brink of collapse, and he survived those salvos.

So I'll be talking about all these things in this case study.

Keep watching.

As I was talking about this case study, I will just give you some background about Krishna, Krishna Reddy from Bangalore. Krishna Reddy is a foodie. He liked to have Indian food and wanted to be social with the Indian families, working families who are there in many European countries, including France. So he wanted to be socially active. He liked to be socially active. He visited those families during his work tours, and during his social visits to these families, he was totally mesmerized by the success of these Indian people abroad. So whether they were working for some companies or doing their own business, they were all very successful people. And he was really impressed with the way they were progressing. So, as I mentioned about his realization of this idea, in one of the events when he was visiting one of the families, an Indian family, he realized how expensive it was for an Indian family to organize even trivial, small India like events.

And he could easily see that it was possible to organize such events in an organized manner, and the fraction of the price, if done professionally. So that was his realization, and he really wanted to convert it into a successful business. So some of the details background I have given in the download section of this lecture. You can download some written text from the download section of this lecture, where you will get a more detailed background about his idea. One interesting part of this idea was that he realized that the diverse cultures and regional backgrounds of the Indian diaspora that were present in those countries required different versions of the ways these events are held. So that meant customized services required by the different, culturally different people from India in those countries.

He saw great potential for the event management services or the merchandise like pooja items, or for Hindu families, services of Panditji, who could read Indian hymns for the events. So he could pinpoint so many things that were required, and the families were ready to pay for it, because getting these things was either impossible in some of the locations in Europe, or they were too expensive. I will now talk about the birth of his business from this idea. So, Krishna was quite confident of his idea, having seen the life of Indian families in Europe. The problem he was about to solve was real and had value in it.

His background,

Krishna's background and passion ensured that he felt confident to try out his luck and start this business, to provide the services related to the Indian events and the merchandise and the products to the Indian diaspora, to start with. At the very start, confining his business to France only, or maybe to neighboring countries. So what he did he take a sabbatical from his job and stationed himself for several months in India to study the idea, to know the different ways of the people carrying out these kinds of events. What kind of products are required? What are the sources of those products? So he spent months learning about all these things and, uh, the things that were related to religious functions, ceremonies, marriages, birthdays, and festival celebrations. So he studied all that for months in India.

He also included the idea of selling the traditional dresses that Indian families would like to wear during such events. So he did all this research for months in India. So when he was in India doing this research, by chance, he met one person. His name was Ramarao. He was at present in India, but he was also working in France, only in one of the cities near Paris. And he had a successful family business back in India that was run by his brother and father. This was an event management company serving Indian marriages and some of the specialized events within India only, so they had not ventured into overseas markets. So this was a successful event management company in India only. So Ramarao was also working with another MNC in uh, France. And he was having very common ideas, very similar to the ideas of Krishna.

They found many things in common. They met actually in one of the pubs in Bangalore. And uh, the conversations really struck a business partnership. So they realized that they could really work together back in France to start a company in partnership. So they actually made it happen, went back to France to set up this company. Krishna was to look after the marketing side, that is, the front side of the business, and Ramarao was to look after the arranging of the men and material from India, managing the sourcing of the products from India and running the operations. So that is how they decided to start this company, initially confining themselves to the families in France and some of the European countries.

This is how the birth of this business happened. The idea actually got converted into a real business. If you talk about the marketing side of the operations, in the initial phases, Krishna relied heavily on digital marketing as well as WhatsApp marketing. Because of his already developed social groups. He had already really worked on these social groups for the last two years, working in France. He had an initial flip from these groups, the social networks, and in the first years of the operations, they were already doing brisk business. By this time, both the partners had left their jobs and Krishna was spending full time in marketing, visiting various contacts and families, and the social events and groups that were organized on a community basis, where he was sharing his ideas with Indian families and, Indian diaspora in the Indian events. He was able to pick up all these unturned stones, and he got a very good response from the Indian families, not only from France but neighbouring countries.

The turnover in the first year had already reached Euro 2 million, so they provided many services that were related to the religious functions or the general events that were very, very frequent among the Indian families. They also tried their hands at small marriage functions in the Indian way. They also supplied the wedding dresses, the traditional dresses, and many of these services were available online as well as offline. For example, Panditji was available both online and offline as per the choice of the clients. So in the first year itself, due to the very smart marketing by Krishna and the very able support given by Rama Rao in the operations, the company became a very well-known brand name among the Indian families, not only in France but also in some of the neighbouring countries.

Beginner's luck is a phenomenon where a novice or inexperienced person has an unusually high degree of success in a particular activity or endeavor, especially during their initial attempts. This can refer to a variety of activities, such as gambling, sports, investing, or even creative pursuits like writing or painting.

The idea behind beginner's luck is that because someone is new to an activity, they may approach it with a fresh perspective and a lack of preconceived notions or habits that could limit their success. This can sometimes result in unexpected and favorable outcomes, leading to the impression that the person has a natural talent or affinity for the activity.

It's worth noting that while beginner's luck can be a real and sometimes exciting experience, it's important not to rely solely on it. As a beginner becomes more experienced, their initial success may level out, and they will need to develop new skills and strategies to continue improving and achieving their goals.

The first shock to Krishna Reddy’s company came in the second year of operations. It appeared in the form of an article in a European newspaper targeted at the migrant population.

The article alleged that Krishna’s company was using child labor in India, claiming this was the reason why its products and services were so cheap.

As a result of this news, the company faced a complete boycott from the Indian migrants in France and neighboring countries. In only the second year, this shock was strong enough to nearly collapse the business. Sales growth came to a complete halt.

Krishna Reddy maintained that the news article was not well researched and was purely based on hearsay. He suspected the hand of some European competitors, as well as rivals in India.

Adding to his troubles, his partner Rama Rao decided to return to India to join his family business. He also wanted to sell his stake in the company. Despite facing financial difficulties from the crisis, Krishna managed to buy out Rama Rao’s stake to his satisfaction. The two remained good friends, even to this day.

Krishna somehow managed to swim through the second year, and by the third year, sales growth picked up exponentially. He even set up a new operations, training, and sales management office in Lyon, France—a large facility aimed at training recruits not only from India but also from Eastern European countries.

The recruits received the best training possible to serve not only Indian clients but also those from other nationalities. By then, Krishna Reddy was receiving inquiries from across Europe and even from the US, Canada, Japan, and Australia.

The company was no longer serving only Indian migrants but also migrants from many other countries. They had created a niche in the migrant community market. Many nationalities required similar services connected to their cultural roots. Krishna carefully studied their requirements, trained his team accordingly, and expanded merchandise sourcing not only from India but also from China.

The operations began to flourish, growth was healthy, and this was the moment Krishna had been waiting for.

But soon came a second shock, equally devastating. Once again, the company came to the brink of collapse.

The main European financier of the operations suddenly backed out. The situation forced Krishna’s company to consider selling a majority stake—something that would have been personally and financially painful for him.

By this time, Krishna was married to a girl from India, whom he had met a year after starting his company. She came from a finance background and had begun taking an active role in the business.

In the third year, the company was already in major expansion mode. Many new orders had been placed, and new operational units were under development in different countries. Krishna was traveling extensively to the US, Japan, and across Europe, monitoring progress. At such a time, the withdrawal of the main financier was a huge blow.

The company desperately needed funds, but valuations were weak. Selling a majority stake at that stage would have meant great losses for Krishna—both in value terms and in the time and effort he had invested over more than two years.

Fortunately, at this critical point, Krishna’s wife managed to arrange a soft loan from an Indian state bank under a new export promotion scheme of the Government of India.

This loan, on favorable terms, came as a godsend. It saved the company from the need to sell its majority stake. Thanks to this lifeline, Krishna’s business survived the second major crisis.

During these times, sales growth remained very healthy. It never slowed down.

Krishna's company had become a major brand, a household name among migrants not only from India but also from various other nationalities. Expansion continued at a steady pace.

Many internal problems were smoothly managed by Krishna through well-established standard operating procedures, developed over three years of experience and supported by smart technologies and high-quality international logistics.

According to Krishna, the key to success lies in integrity and honesty. These values gave his company a winning edge when dealing with vendors and partners in different countries.

All franchisees and associates praised Krishna’s integrity and fairness. Unlike others who faltered, Krishna never resorted to false promises or unethical practices. He often said, “It is better to lose money doing the right thing than to gain by doing the wrong thing.” This principle, along with his honesty, became the cornerstone of the company’s success.

But then came the third shock, which once again brought the company to the brink of collapse.

The COVID-19 pandemic delivered a huge blow to Krishna’s business. Europe was hit especially hard. Sales dropped sharply, and global operations came to a standstill. The company could barely manage to pay salaries to its permanent staff.

Several advance payments were stuck in India, China, and other Southeast Asian countries. Goods were never delivered in most cases, though for genuine reasons.

As the pandemic eased, sales began to recover, but the company’s finances were in very bad shape. By mid-2021, the business was on the verge of closure—not because of a lack of orders, but due to blocked payments and the absence of much-needed finance after the collapse caused by COVID.

At this critical point, and perhaps by God’s grace, one of the largest event management companies in the world offered to buy a 50.5% stake. The deal allowed Krishna, his wife, and his core team to remain with the company. Krishna retained 49.5% ownership and continued as chairman, staying at the helm of affairs.

Under the new arrangement, 50% of the existing staff were retained, while the rest received a golden handshake. This outcome was the best possible for the company, its employees, and all those who had stood by Krishna through thick and thin—including his wife, who had remained the CFO throughout.

With this acquisition, the company became part of one of the world’s biggest event management groups, primarily serving migrant working families in developed countries.

By 2022, the company’s worldwide turnover had crossed €220 million—an achievement even Krishna himself had not imagined, despite his big dreams.

The business had faced three major shocks, each threatening its survival, yet it emerged stronger every time.

This case study, based on real events, illustrates resilience, values, and strategic decision-making in business. I am sure it gives you many lessons, ideas, and questions to reflect upon.

Based on this case study, I have prepared an assignment for you. Please go through the assignment carefully, review the questions, think deeply about them, and submit your answers as instructed.

So friends, before we go forward, let’s try to understand some common terms used in export operations.

You need not worry too much about them right now. If you understand these terms while I discuss them, that’s fine. All of these terms will appear again in this course in subsequent lectures, where I will give you full explanations. For this lecture, just listen carefully and try to remember the terms. That’s all that is required here.

I will take up these terms one by one and give you a brief explanation.

Before I begin, let me throw some light on why people or companies enter international markets. There are many reasons—some advantages, some push factors, and some pull factors.

Some people go abroad for glamour, some for a better future, some for knowledge. Some companies go international because they have no option. Their domestic market may already be saturated, leaving no room to expand. In many countries, markets are small, and companies must go global to grow.

For example, Nestlé, a Swiss company. The Swiss market is so small that Nestlé had to become global. You will be surprised to know that 95% of Nestlé’s revenue comes from international markets, not Switzerland.

So whether companies are small, medium, or large, each has different reasons for going international. Many small exporters start because they have relatives or friends abroad, and they feel these contacts can help them establish a foothold in those markets. Often, this does happen. Depending on the product, situation, and strategy, profit margins in international trade can be very attractive.

It is difficult to list all reasons for exports—there are too many. So let’s now move on to the common terms used in export operations. Just try to remember them.

Customs Bonded Area
This is an area at a dry port, wet port, customs office, or a warehouse under the control of the customs department. Goods landed in this area remain under customs control. Without customs examination and permission, goods cannot move out.

Export General Manifest (EGM)
This is a document published by the shipping company after a ship has sailed from the port. Once all export goods are loaded and the ship has departed, the company issues the Export General Manifest. It lists all the shipments loaded on that vessel. I will explain its significance in a later lecture.

Dry Port
A dry port is an inland port, away from the seashore, where goods can be cleared by customs. Facilities available at seaports (wet ports) are also available at dry ports. Goods cleared here can be loaded onto trains or trucks under customs seal for export. Dry ports help reduce congestion at seaports.

Wet Port
A wet port is simply a seaport where ships dock to load and unload cargo.

Inland Container Depot (ICD)
This is another term for a dry port, specifically handling containerized cargo. Since 90% of global trade now moves in containers, ICDs deal mainly with containerized shipments rather than breakbulk (loose) cargo.

Container Freight Station (CFS)
A CFS is similar to an ICD but usually located a little away, where land and space are cheaper. CFS facilities are used for goods that take longer to clear or need consolidation—for example, less than container load (LCL) cargo that must be grouped with other shipments. Goods are held here before being moved to an ICD (dry port) or a wet port.

Compliant Documents
These are documents presented to the bank under a letter of credit (LC). An LC specifies certain documentary conditions that the exporter must meet. Once goods are shipped, the exporter arranges all required documents (such as transport documents and other certificates mentioned in the LC) and presents them to the bank. If the documents comply with LC conditions, the bank releases payment. Hence, compliant documents are essential for receiving payment in international trade.

AD Number (Authorized Dealer Number)
This number is allotted to banks authorized to handle foreign exchange transactions. Exporters must register their AD number at the port of shipment. In India, for example, the AD number identifies the bank where the exporter will receive international payments. Different countries may use different names for this.

IEC Number (Importer Exporter Code)
This is an identification number issued by the relevant authority to exporters and importers. In India, it is called the IEC number and is issued by the Directorate General of Foreign Trade (DGFT). Central banks, such as the RBI in India, use the IEC to monitor the inflow and outflow of goods and foreign exchange. In effect, it acts as an export-import license.

ICC Clauses
These refer to Institute Cargo Clauses (ICC), which are standard terms related to cargo insurance.

ICC (International Chamber of Commerce), Paris
This ICC is a global body that plays a very important role in international trade. It issues documents, rules, and guidelines used by banks and businesses, such as Incoterms (FOB, CIF, etc.). International trade operates across different national laws, which can create complications. The ICC helps standardize and align trade practices, making cross-border transactions smoother.

You will understand its role better when we go deeper into Incoterms and related topics in the coming lectures.

So, friends, there is another term called EDI.

EDI stands for Electronic Data Interface.

Now, what is this Electronic Data Interface? Internationally, all countries are not the same. Some are very rich, some are moderately developed, while others are poorly developed. Not every country has digital systems for filing or handling documents.

That is why international trade has still not fully adopted a digital documentary system. There is no common EDI system worldwide, especially for the commercial principal documents that move with the goods. This is mainly due to differences in the level of development across countries.

However, local governments often require many regulatory or auxiliary documents to be filed, which have nothing to do with the buyer. These documents do not travel with the goods but are usually filed digitally to make trade faster and smoother.

So, export or import clearance becomes easier in those countries where local governments have invested in digitalization. This digital filing system is called EDI – Electronic Data Interface.

In other countries, it may have different names. For example, in the US, it is called the Automated Export System (AES). Just remember this term for now—we will talk about it later in the course.

Another important term is Pre-shipment Credit.

Pre-shipment means anything done before the goods are loaded on the ship. The act of loading is called “shipment.” So, any financing required by the exporter before this stage, obtained from a commercial bank, is called pre-shipment credit.

Similarly, Post-shipment Credit refers to any financial support required after the goods have been shipped.

Next is MR – Mate’s Receipt.

This is a document issued by the captain of the ship when goods are loaded. It acts as proof that the goods have been loaded, and it includes the captain’s remarks about their condition—whether the goods are in good order, damaged, short-delivered, or if there are other issues such as theft.

Exporters use the Mate’s Receipt to obtain the main transport document.

Now let’s talk about Incoterms – International Commercial Terms.

As I mentioned earlier, these are issued by ICC Paris (International Chamber of Commerce). Incoterms provide standard guidelines that exporters and importers worldwide use to understand trade terms such as FOB, CIF, DAP, DDP, etc.

Currently, there are 11 Incoterms under the latest version, Incoterms 2020, which will remain valid for the next decade. These terms align and standardize contract conditions across countries, making trade smoother.

You probably already know about WTO – the World Trade Organization.

WTO is the apex global body with more than 180 member countries. It monitors international trade to ensure it is free and fair. It reviews the foreign trade policies of member states and ensures these comply with WTO agreements.

Another key concept is UCP – Uniform Customs and Practices.

These are rules governing trade finance, especially documentary credit. They are issued by ICC Paris. UCP has different versions (400, 500, 600), with the latest being UCP 600.

Banks follow UCP rules for handling payments under letters of credit. This again shows the crucial role of ICC Paris in international trade.

Next is the Usance Period.

In trade finance, Usance refers to the time gap between the acceptance of documents by the buyer or bank and the actual payment. During this gap, the buyer or bank uses the exporter’s money.

For example, if a letter of credit is not payable at sight but is a Usance LC, it means payment will be made after a specified period. Obviously, there is a cost involved.

Now, let’s move to BL – Bill of Lading.

A Bill of Lading is the transport document issued by the shipping company once the goods are loaded on the ship and the ship has sailed. To obtain it, the exporter submits the Mate’s Receipt and other necessary documents.

The Bill of Lading is critical—it serves as proof of shipment and is almost always required as a documentary condition under a Letter of Credit (LC).

Next, LCL – Less than Container Load.

This means the exporter’s goods are not enough to fill a full container. Containers are typically 20 ft or 40 ft long (with 40 ft being most common, having a capacity of about 26–27 tonnes depending on volume and density).

If goods do not fill a full container, they are consolidated with others and shipped as LCL. When goods occupy a full container, it is called FCL – Full Container Load.

Then comes FOB – Free on Board.

This is one of the most common Incoterms. It means the seller’s responsibility ends once the goods are loaded on the ship.

Another Incoterm is CIF – Cost, Insurance, and Freight. This includes FOB plus insurance and freight.

EXW – Ex Works means the seller delivers goods at their factory gate, and the buyer bears all costs and risks from there.

Another term is B/E – Bill of Exchange.

This is a bank document, also called a bank draft, used in trade finance.

Next, Pallets.

Pallets are wooden bases used for unitizing goods. Instead of loading cartons loosely, goods are placed on pallets, shrink-wrapped, and loaded into containers. This makes the cargo seaworthy, standardized, and easier to handle with forklifts.

A 40 ft container typically holds around 20 pallets, depending on their size. Palletization simplifies logistics, container stuffing, and cargo movement.

Finally, Breakbulk.

Breakbulk refers to loose cargo that cannot be containerized or palletized—such as coal, iron, logs, or certain commodities. These are exported in bulk form without standard packaging.

In this lecture, I have given you a gist of some important terms commonly used in international trade. My intention was not to fully explain each term, but to make you familiar with them so that you recognize and remember them as we progress.

In the next section, I will talk about trade theories—the principles that explain why international trade benefits countries, companies, and individuals.

Keep watching!

So, friends, now that you have some idea of what we are going to achieve in this course, the contents we will cover, and the structure I have already discussed with you, I feel it is time to go back into history and understand a little about the background of international trade.

If you look at the scenario in ancient times—or even less than 50 years ago—you will find the situation was completely different.

So much technological advancement has taken place in recent times that we now take it for granted that even daily-use items are available in our markets from overseas, and often at a fraction of the price. But this was not the case in the past.

By sharing with you the concepts of those earlier times, I can give you a strong background that will help make your understanding clearer. You will see the chronology of events—how things developed—and especially understand the economic theories that explain the thinking behind the benefits of international trade.

What were those economic theories? What about the non-economic theories, or even the general thinking of how trade should be done in those days, and what was expected from international trade? All of these perspectives will no doubt improve your overall understanding.

I will not go into too much depth about every detail of those events, but I will highlight the major points—important economic theories and significant milestones. These will give you both a solid conceptual foundation and a sense of the “rules of the game.”

Along with this, I will also discuss the framework of a typical export transaction: how goods move between the buyer and the seller, how payment flows, who the intermediaries are, how documents move, and what role those documents play. This general structure of an export transaction will make you aware of the rules that are very important to follow.

We will also look at the latest economic thinking. This is not just history—it is the current understanding of the benefits of international trade, and I will share that with you as well.

I am sure that the lectures in this section will develop a strong thought process in your mind, one that will help you build your learning from this course. I aim to make things clearer and simpler for you in this section.

So friends, let me now give you a brief synopsis of the history of international trade.

From time immemorial, trade has been taking place among people from different continents. International trade existed in some form or the other since ancient times.

What we know from historical evidence is that trade initially happened through the exchange of goods—the so-called barter trade. This was the form of trade that continued for a very long period.

Over time, in different eras, intermediate commodities began to be used for exchange. What we now call “currencies” did not exist then, so people used rare metals, agricultural products, or precious stones as mediums of exchange. Many such items were tried, and some became very popular and widely accepted.

We have evidence and recorded history of these practices. In fact, one could write an entire book about the different eras of international trade and the variety of methods used—methods very different from what we see today.

By the Middle Ages, when Europe began to dominate international trade, we started seeing a shift towards what we now recognize as modern trade. Goods were exchanged through official currencies or precious metals like gold, and intermediaries began to play an important role in moving goods from one continent to another.

It was during this time that banks came into the picture, and the framework of modern international trade, as we know it today, began to take shape.

At the same time, political analysts, philosophers, and economists observed these developments and offered their ideas. Traders, in turn, drew from those ideas to increase profits and expand their businesses.

Over decades—and even centuries—these ideas evolved into well-known economic theories, both classical and modern. Some of them became highly influential, not only for traders but also for policymakers and administrators of countries engaged in foreign trade.

In subsequent videos, I will briefly discuss some of these classical theories, as well as modern theories that remain very popular in international trade.

Keep watching.

So, friends, welcome back to the course.

Let me share with you one of the earliest economic theories, along with the philosophical thinking related to international trade during the Middle Ages—an era marked by European colonization and expeditions in search of new routes across the world. By this time, European countries had conquered the high seas, enabling long voyages that opened new trade routes. This period also saw significant industrialization and a rapid expansion of international trade.

On the foundation of this came the theory of Mercantilism. It suggested that nations should industrialize, export value-added goods at higher prices, and import raw materials for manufacturing. The ultimate aim was to accumulate gold reserves, which were believed to represent national power and global dominance.

And indeed, during that era, European countries dominated vast regions under colonial rule. Whether the surge in industrialization and trade caused this theory, or whether the theory itself arose from these developments, is debatable—but that is how it unfolded.

Mercantilism is considered the first classical theory of international trade. However, its flaw was clear: if some nations accumulated gold, others inevitably lost it. This meant only certain nations benefited, while others suffered losses. Such an approach was unsustainable and led to growing resentment in the colonies. Politically and commercially, the backlash weakened imperialist activities, and mercantilism gradually lost relevance.

This shift led economists and social scientists to think in a new direction—towards theories that could ensure sustainable benefits of international trade for all nations.

It was then that the renowned social scientist Adam Smith, often regarded as the father of economics, published his famous work The Wealth of Nations. He introduced the theory of Absolute Advantage.

Adam Smith proposed that all nations could benefit from international trade if they focused on producing goods where they held an absolute advantage—that is, where they could produce more output with the same limited resources compared to other countries. Whether industrialized or not, colonies or colonizers, every country had some area of strength. By focusing on those strengths, nations could create wealth for themselves and for the world at large.

This idea gained enormous popularity, and as it spread, imperialism began to decline. Whether this was caused by the theory or was simply a natural shift is debatable, but the fact remains that the world moved toward a more inclusive wave of industrialization. The theory of Absolute Advantage remains relevant even today.

Building on Adam Smith’s ideas, another economist, David Ricardo, introduced the theory of Comparative Advantage.

Ricardo argued that countries often had absolute advantages in producing multiple products. However, instead of producing everything, they should specialize in producing the goods where they have the greatest comparative advantage—that is, the strongest relative efficiency compared to other goods. The remaining goods could be produced by other nations, following the same principle.

This specialization meant countries could produce even more with their limited resources. It also implied that nations should engage more deeply in international trade for the products they chose not to produce themselves.

Ricardo’s theory was an extension of Adam Smith’s absolute advantage and showed that the wealth of nations could grow even further when countries focused on comparative advantages.

These classical theories remain highly relevant in today’s globalized economy. Over time, more economists proposed modern theories—more sophisticated, more revealing, and better aligned with observed realities of trade.

In the next lecture, I will discuss some of these modern theories that further explain the benefits of international trade for participating nations.

Friends, let us now talk about some modern theories, so-called modern theories, that were proposed from time to time by different economists, and these became popular.

These became popular with the countries.

These became popular with firms—the practicing firms that were in international trade, who participated in international trade.

So, some of the examples we will be taking are of these modern theories.

The first theory we will look at is called Linder's Country Similarity Theory, which was given in 1961 by a Swedish social scientist, Stefan Linder.

As per this economic theory, which is a modern theory, firms start manufacturing certain goods and sell those goods in the domestic market. They become successful in selling those goods because they can understand the demand of the customers in their home country. They understand the market.

They modify and adapt their goods to the preferences and requirements of the customers in the home country, and they gain experience in the home country.

So these firms that are successful in the domestic market then look for new markets abroad, and the best chance for them happens to be in those countries that are similar to the home country. This similarity can be in terms of the level of development, such as similar per capita income, and the possibility of customers in that foreign market expecting and preferring goods of a similar nature to what the firm is already manufacturing and selling successfully in the domestic market.

So, according to this theory, the best chances of the firm remain in similar countries—similarity in terms of economic development, per capita income, and the expectations of the customers.

Now, this similarity can also be in terms of cultural similarity or shared cultures.

For example, if you take South Asian countries like India, Bangladesh, Sri Lanka, Nepal, and Pakistan, you will find that they have a very similar history, because of which the cultural ethos is very similar.

So the possibility of these countries buying the goods that are manufactured by Indian firms is very high, and they are likely to prefer and accept those products in these South Asian markets also.

So there is no hard and fast rule that the host country and the home country must be geographically closer. It is not necessary.

It depends basically on the historical ethos and, of course, economic development.

So the idea is what defines country similarity, and whether the customers prefer goods that are similar in nature and features.

This is a very popular theory, and it is a firm-based theory.

Firms that are new and looking for international markets find this theory very useful.

Now, let us look at another interesting theory called the Product Life Cycle Theory.

This modern theory is also very popular. It is based on the proposition of Raymond Vernon, who proposed the theory of the four marketing stages—the four phases of the product life cycle in a market.

The theory assumes that a product has been innovated in the home country and first introduced in the home country.

It follows a four-phase marketing product life cycle, and these four phases, in terms of sales and time dimension, mean that in the initial period, sales grow. This is the introduction stage.

The product then enters a growth phase, wherein the growth of sales is quite strong and even exponential. This is, in fact, the best phase for the product in that market.

The third phase is maturity, when sales growth begins to taper off.

Finally, the fourth stage of the cycle witnesses the decline of the product, and possibly even its disappearance from the market.

This basic theory of the product life cycle, when extended to international trade, means that at a certain stage of time, the same product, when introduced in a new market, will go through the same four stages in that new market—but at a later time.

That would mean the introduction phase, the growth phase, the maturity phase, and the decline phase all over again in the new market, but shifted in time.

What happens is that because of the introduction of the product—innovated in the home country and then introduced later in a new market—the overall product life cycle gets elongated.

Now, this elongation of the product life cycle is very attractive and good news for the innovator and the manufacturer. The product, which would have declined or died at time T1, now has its life extended and may only decline at time T2.

So this T2 time is extended, and it becomes a big advantage for the international trader.

The Product Life Cycle Theory, therefore, explains the benefit of the elongated or shifted life cycle due to international trade.

This theory also became very popular.

For example, let us consider desktop and laptop computers introduced by US companies into developing countries.

These computers were first innovated and launched in the US, where they went through the stages of introduction, growth, maturity, and decline.

Later, when desktops began to decline in the US, the same products were introduced in developing countries such as India and China, as well as many others.

In these markets, the products again went through the four stages of introduction, growth, maturity, and decline, but at a later time.

As a result, the overall product life cycle of desktop and laptop computers increased manifold. Even today, these products are still active, still being sold internationally, and directly or indirectly, the innovators and original manufacturers continue to earn revenue from their innovations.

That is a very good example of the Product Life Cycle Theory in action.

Then friends,

There are many modern, sophisticated theories that are based on strategic advantages.

Now, these strategic advantages could be both firm-based strategic advantages or country-based/national competitive advantages, and also industry-based.

When we say industry, we talk about the industry of a particular nationality. For example, the auto industry in India or the auto industry in China. The advantages these industries may have in those countries need to be analyzed to derive certain inferences about the benefits of international trade.

So let us look at these strategic advantages. I will give you one example of a strategic theory based on this idea.

Strategic advantages are nothing but a combination of advantages for specific industry sectors in specific countries. These are national competitive advantages, as I just mentioned. They can also take many other forms.

For example, there can be geographic advantages. If we look at countries like Dubai in the UAE or Singapore, they are located on major international sea routes. Because of these strategic geographic advantages, they are heavily engaged in international trade.

So, it is not always just a combination of different advantages. Sometimes, there may be very compelling strategic advantages that countries enjoy.

Now, the second part of this theory talks about firm-based strategic advantages.

Some firms, especially large multinationals, derive advantages because of their size, assets, patents, or their long experience in particular product lines. They may also benefit from big international brands, well-known worldwide, which they know how to sell.

These firms have the learning curve and experience to analyze the right markets, adopt the right entry strategies, and operate on a very large scale. They manufacture not only in their domestic market but also at multiple multinational locations across the world.

Such firm-based advantages—emerging from internal as well as external talents that companies deploy—play a very important role. Some large multinationals enjoy these advantages, and as a result, they dominate international trade and markets.

Now, let us look at one example of a strategic advantage theory, a very sophisticated one: Porter’s Diamond Theory.

According to this theory, Porter proposed that a combination of different strategic advantages for a specific industry in a specific country can make that industry highly competitive in international trade by having the right combination of factors at the right time.

The model identifies four principal factors, the combination of which provides a strategic advantage:

1. Factor Conditions – These include the resources required for manufacturing: men, material, and money. It covers skills, inputs, infrastructure, and finances. If factor conditions are favorable, they strongly contribute to competitive advantage.

2. Firm Strategy, Structure, and Rivalry – The existence of companies in that sector with the right strategies and healthy competition. For example, avoiding cartels that drive up costs. Healthy competition lowers manufacturing costs, improves product features, and leads to more satisfied customers in both domestic and international markets.

   • If we take the small car industry in India as an example, it is characterized by an open structure. Companies from anywhere in the world can enter or exit freely. Competition is professional, and rivalry is healthy, which benefits customers and strengthens the industry globally.

3. Demand Conditions – The existence of strong, consistent, and growing domestic demand for products in that industry. For example, the continuous demand for small cars in India has helped Indian auto manufacturers become globally competitive in producing small cars.

4. Related and Supporting Industries – The presence of suppliers and vendors that provide essential inputs for final assembly. In the Indian auto industry, local suppliers provide tires, batteries, shock absorbers, and steering systems. Additionally, international supply chains provide high-tech components such as chips at competitive prices. This global value chain further strengthens competitiveness.

When these four pivot factors are supported by:

• Chance (favorable external conditions such as no wars, disasters, or pandemics), and

• Government Policies (supportive policies for the industry)

The result is a powerful combination of strategic advantages. These provide national competitive advantages that allow industries to become global leaders in their products.

China provides a strong example. By leveraging such conditions, Chinese firms have become globally competitive in electronics, automobiles, pharmaceuticals, and many other sectors. Chinese products today dominate world consumer markets.

This is a very good example of the Strategic Advantage Theory – Porter’s Diamond Model. Many extended versions of this model also exist, such as the Single Diamond Model and the Double Diamond Model, which are widely studied and applied.

Another theory that reflects a similar ethos is the Push and Pull Factors Theory.

This is a firm-specific theory based on forces that propel firms to move internationally. These forces may be due to country-specific, sector-specific, or firm-based factors.

• Push Factors: Adverse conditions in the domestic market, such as market saturation or limited domestic demand, push firms to explore foreign markets.

• Pull Factors: Attractive conditions in international markets, such as large size, higher profit margins, or better price realization, pull firms toward those markets.

Firm-based factors also play a role, such as strong internal capabilities or the vision of founders keen on international expansion. With the right strategies and learning, they guide the company toward global markets.

So, the Push and Pull Factors Theory is also very popular and has a significant impact on understanding why firms engage in international trade.

So, friends, these were some of the very sophisticated modern theories that, as a successful exporter, you should know.

The idea of this particular section was to provide you with a foundation of knowledge, the thinking, and the economic rationale of doing international trade.

So now you have this idea, you have this knowledge, and you are equipped with these theories— the thinking that developed in historical times with the growth of international trade.

You can talk about these things when you communicate with your business partners overseas, and you can impress upon them that you have a thought process in your mind that provides the right rationale and basis for doing international trade, and also inspires you.

These were some of the very sophisticated and modern theories that I really wanted you to understand in this particular section. The idea was that you become confident in having this understanding of these different theories—the gems of knowledge that emerged from time to time.

They explain much about history, the lives of people on this planet, as well as the industrial sectors, markets, and demand.

What happened in historical times? Why were goods traded from one country to another? What kind of thinking propelled that trade?

That is the kind of knowledge base I really wanted to provide you in this section—so that you feel confident and equipped with the right understanding to discuss with your business partners overseas, impress them, get their favorable response in trade, secure orders, and maintain good relationships with them.

That was the main theme of this section.

Thank you very much.

Hello friends,

Welcome back to the course.

In this section, I am going to share with you some essential things that you should know before we go forward in this course. Just like in the earlier sections where we discussed the common terms frequently used in the export business, and in another section where we talked about international trade theories and a brief history of international trade, which would have given you some confidence in understanding export operations—

In this section, the few things I will be discussing with you will further boost your confidence in understanding the whole export operation.

We will talk about what kind of attitude you should have to be very successful in export operations. What is that attitude? I am going to talk to you about that.

Also, I will be talking about the home research you have to do before you solicit orders. What kind of preparations should you make? What kind of product research should you do? All of those things I will be sharing with you.

In this section, I will also share a typical export transaction framework that will explain the whole game plan—what is the game plan of this course, and what is the game plan of the overall export business?

If you understand these rules of the game, things will become much clearer to you.

In the next lecture, Dr. Jain discusses the implicit skills that are developed over the years implicitly by every person. Learning these in one go is too difficult. So what can you do about it?

Welcome back to the course.

So friends, in this particular lecture, I am going to discuss with you some very important ideas based on my own experience.

Whatever ideas I am going to share in this lecture, you will not find anywhere on the net or in any book. These ideas are purely based on my own practical experience.

In this lecture, I will tell you about the implicit internal personal skills you need to be successful in the export business.

Why am I talking about these skills at this stage, at the initial stage? Because it is very important to know whether you have these skills, as they are difficult to acquire at a certain age. Once you cross adulthood, it becomes very difficult to acquire these implicit skills. External skills can probably be acquired through training, such as the type we provide as tutors.

I have many courses on Udemy that teach numerous skills in the export area through the VJ Exports Mastery series of courses. These are the external skills you can acquire by going through online learning. But the implicit skills are very difficult to acquire from external sources. You need to identify whether you have those skills or not.

So, I will list out a few implicit skills or personal traits. You have to identify whether you have those traits. Then you will feel confident that you can really make it big in the export business.

The first very important skill a potential successful exporter requires is flexibility.

What is the meaning of flexibility? It means being open to dealing with people of different cultures.

In international business, you will meet, discuss, interact, and communicate with people of different nationalities, with very different cultures, communication styles, eating habits, religious beliefs, and ways of life.

You need to be flexible. You need to find merit in their ideas at times, and you cannot reject their ideas outright without understanding their perceptions, habits, and beliefs.

You need to be a good listener, observe the reasons behind their habits and beliefs, and try to find the silver lining in what they do. At times, you must adapt to some of those ideas or habits temporarily. You cannot hold rigid views about your own beliefs, daily routines, or eating habits.

If you have this flexible attitude, it will go a long way in making you successful in the export business.

The second very important implicit personal skill is patience.

International business is highly competitive but very rewarding. However, you cannot expect results very quickly.

You need patience. You need to work on your product, your offer, and your customers for a long time. If you are lucky, you may get results faster, but generally, it takes time.

So, patience and perseverance are essential traits. You must identify whether you have them or not.

The third most important skill is being observant and having an eye for detail.

In international trade, you must be meticulous about product research. You should pay attention to details, analyze international data, and stay aware of global news and developments.

This ability to observe what is happening around you and internationally—this global awareness—comes with strong observation. That is the third most important skill you should identify in yourself.

The fourth very important skill is the ability to take risks.

In international trade, there are several types of risks. The most significant is that export transactions are usually very large.

When you deal with big-ticket business, you have the chance to make large gains but also face the possibility of large losses.

You must have the ability to absorb both failures and successes. Your risk-taking capability plays a very important role in international business.

The fifth most important personal skill is the ability to organize.

How organized are you in your day-to-day work, your business dealings, and in managing product information? How organized are you in collecting and handling information from international buyers, field research, and desk research?

Organization is key to successful business management. These organizing skills must be inherent in you. They are not easy to acquire externally.

You may still develop them if you lack them, but it is difficult.

In this lecture, my idea was to highlight these inherent personal traits—implicit skills—that you must have to become successful in the export business.

You need to identify whether you have developed them through your childhood to adulthood, shaped by your environment, your family and friends, your teachers, and the people who have influenced you throughout your life.

Whether you have been able to acquire these personal skills is something you must reflect upon and identify.

In the next lecture, Dr. Jain will talk about what homework is required to start the exciting journey of becoming a truly global business person and starting exporting.

So, friends, in this lecture, let us talk about the homework that is required to carry out a successful export transaction.

Before you start soliciting orders, it is very important that you do your home research.

What kind of home research?

The most important home research is to find a product for exports—a product of world-class quality.

It may not be the best product. I am not saying it has to be the best possible product, although your approach should always be towards that. But it is not necessary.

What you must have is a very good product, with very good quality, and available in sufficient quantities that are scalable, whether you manufacture it yourself or procure it from manufacturers.

Whatever the case may be, you have to prepare a product strategy.

What is the product strategy?

If you are selling a few items of large-scale and mass consumption, then you will probably have to look into the possibilities of manufacturing.

Or, if you are acting as a merchant exporter—that means procuring the product—then you have to create a broader range of products so that, as a merchant exporter, you add value for the foreign buyers by providing a complete range of products in one window.

So, this strategy of choices—your product strategy—has to be prepared. The product has to be identified.

All information about the product—its specifications, photographs, video clips, and every possible detail—has to be clearly understood.

This requires a lot of home research. It requires time. It requires effort.

So, before you solicit orders, before you embark upon finding international markets and buyers, you have to do this work.

You need to do your product research and product strategy-making.

In this, you have to look into the easy availability of the product at the right prices—prices that can work in the international market.

You need to research and compare your prices with your competitors.

So some amount of desk research will be required, as well as discussions with people who can provide information—maybe government bodies or trade promotion organizations.

They will help you find actual market intelligence regarding pricing, product specifications, and product features that are required.

You have to prepare your product along with the features and the kind of offer you are going to make.

There are many things that need to be clubbed with the product—that is, the needs of the customers in the target market.

You must understand those markets. You must understand the needs of the customers and try to provide for those needs along with your product.

Your product may not be the best. Your product may not have the lowest price.

But if you can combine your product with a complete offer that is attractive to international customers, it will work. And that is the right approach.

Later, in another lecture, I will talk about the market-focused strategy that you must follow.

For that, you will need to understand the market thoroughly, gain deeper knowledge of the market, and understand the customers.

As of now, you have to create product strategies. Collect all the data, keep your database ready, and have all the specifications and resources related to the product organized—either on your laptop or in whatever form you prefer.

You must keep it ready.

In today’s time, you need very good images, video clips, and detailed text descriptions about your product that can be conveyed to potential overseas buyers through digital media.

In addition to this, you must also find out about all the compliances required—whether in your home country or in potential host countries.

What compliances are required?
What regulations apply to that product?
What product standards are needed?
What certifications are required to sell your product in target markets?

All of this information has to be collected.

A lot of desk research is required.

I am not trying to discourage you in this process of setting up your export business, but your efforts at this stage, before you start soliciting export orders, will save you a lot of money, time, and effort later.

The more intense the research you do at this stage, the more it will save you in the future and the more successful you will be in the export business.

All this information should be within your reach. It will create an entry barrier for your competitors, because this information is with you—it is private, in your custody, and not to be shared with competitors or with anyone not connected to your product line.

This is how you can really become a successful exporter.

The next lectures are devoted to a discussion on the complete game plan of exporting and importing. Dr. Jain will discuss the broad rules of the game to get going forward.

So, friends, in this lecture, let us discuss a very important part that you need to understand at this stage. That is: what are the rules of the game? How is this game played? What is the broader perspective? What is the flow of goods? What is the flow of documents? What is the flow of payment? And very importantly, what are all the steps required to get the business?

Many of these details we will be discussing in the next sections in great detail. Here, I am just giving you a synopsis of this framework—that is the idea.

You start with product research, as I discussed with you in the last lecture. Through product research, you gain knowledge and confidence if you have a product with potential, one that can bring you business. You also have your product strategy in place, and based on that strategy, you either work as a manufacturer exporter or a merchant exporter. Whatever the strategy, the idea is to get business as soon as possible.

Once you get the business, the next step is to sign an export contract.

In this export framework, the exporter and the importer come into contact with each other. The exporter wants to sell goods, the importer requires those goods, and a kind of matchmaking happens. The importer is interested in the goods, the exporter is interested in supplying the goods, and both parties reach an export contract.

Now, based on this export contract, the exporter wants to be sure about the payment due from the importer. The importer, on the other hand, wants to ensure that the goods sold and dispatched are in good condition, that all due diligence has been done by the exporter, and that the system ensures the goods reach on time and in good order.

So, what happens? To make this possible, the importer approaches a bank in his own country—here we call it the importer’s bank—and requests the bank to make it possible to pay the exporter once the goods are shipped.

What does the bank do? The bank opens a Letter of Credit (LC) in favor of the exporter.

What is a Letter of Credit? It is a conditional guarantee by the bank that once the goods are shipped from the exporter’s country, and the exporter can prove that the goods were shipped on time and in good order and condition, the importer’s bank will guarantee that payment will be made to the exporter.

So, in this situation, the exporter is assured that once the goods are shipped properly and the bank is satisfied, he will get the payment, because the payment is guaranteed not by the importer but by a reputed international bank. Thus, the interest of the exporter is taken care of.

Similarly, the bank gives this conditional guarantee to ensure that the exporter makes the shipment on time, with the right quality and quantity. The conditions imposed by the bank are in the form of original documents that must be produced by the exporter, ensuring the importer’s interests are protected.

So, in this system, the interests of both the exporter and the importer are taken care of by the bank that has opened the LC. Normally, this bank is called the issuing bank.

Now, what happens? The issuing bank does not open this LC directly with the exporter. Instead, it involves another bank in the exporter’s country. This LC—normally written in very technical banking language to ensure sanctity of the system—is advised to the exporter by a local bank.

This local bank, located in the exporter’s country, becomes the advising bank. Its purpose is to ensure that the exporter fully understands the conditions of the LC. The exporter can approach this advising bank for clarification regarding the conditions imposed by the importer’s bank.

So now, in this system, the role of two banks is created:

1. The issuing bank (the importer’s bank).

2. The advising bank (in the exporter’s country).

By involving these two banks, the system ensures the interests of both the exporter and importer are protected, and international payment, along with the dispatch of goods, can take place smoothly.

Once the Letter of Credit is opened by the importer’s bank and advised by the advising bank in the exporter’s country, the exporter feels confident. He knows that if he dispatches the goods and exports them on time, he will receive payment.

So, what does he do? He prepares the goods and, through the port of loading—whether by sea, air, or any other means—he exports the goods on time. The goods are then received by the importer through this LC system.

This is how a typical export-import framework takes place, and how the roles of both the importer’s bank and the exporter’s bank—meaning the issuing bank and the advising bank—come into the picture.

This is how the system works.

Hello friends,

Welcome back.

As I discussed with you in the last lecture, documents are provided by the exporter to the issuing bank. That is the documents presentation.

If the whole set of documents is compliant as per the LC requirements, the importer’s bank will pay against the Letter of Credit.

It is the duty of the importer’s bank because the guarantee is given by the importer’s bank.

In the meantime, the goods have already reached the port of discharge, and now the interest in the goods lies with the importer.

So, what will the importer do?

The importer will approach its bank—its local bank—that has the complete set of documents. These documents are required by the importer in order to collect the goods and get them cleared from customs, that is, the customs of the host country.

So, what will the importer do?

The importer will settle any dues with the issuing bank.

All dues will be cleared by the importer. The account of the importer will be debited by the issuing bank against the LC payment, whatever payment has been made by the importer’s bank, that is, the issuing bank.

Additionally, whatever bank charges, interest charges, or any amount payable by the importer to the bank, all those payments will also be debited from the importer’s account by the issuing bank.

If everything is in order and payment has been made, the documents will be handed over to the importer along with an NOC, in case the transport documents are consigned to the bank (issuing bank).

In such a case, an NOC will be given to the importer with respect to the collection and possession of the goods. With this NOC and all the documents, the importer will approach the shipping company to take possession of the goods and get them cleared by the local customs.

In this typical export transaction framework, it is important to understand the role of the different intermediaries that are involved.

So, what is the role of the issuing bank?
What is the role of the advising bank?
What is the role of the negotiating bank?
What is the role of the home country's customs/border control?
What is the role of the host country's customs/border control?
What is the role of the carrier—that is, the shipping company or the airline?

In addition, what is the role of the freight forwarder or the C&F agent—that is, the clearing and forwarding agent?

These are some of the very important intermediaries involved in a complete export transaction.

So, in this typical export transaction, you will understand the rules of the game and the logic of different aspects with respect to the movement of goods, documents, and payment.

When a transaction takes place between two countries, that means two countries with different laws of the land, and such complications can only be managed through this framework. There is no other way.

Whatever you want to understand with respect to export operations and export transactions, this framework gives you the right background.

This is the background. This is the basis. This is the foundation you have to understand.

The rest—about getting orders, finding markets, and finding buyers—comes from your ingenuity.

It depends on your hard work. It depends on the product research you have done, on your product strategy, and on your market strategy.

So as far as product research is concerned, and product strategy is concerned, I have already discussed that part.

I shared with you that intense research is required about the product.

You have to understand the product. You have to know all aspects related to the product.

What are the strengths and weaknesses of your product and your complete package of the offer? That should work.

If it is workable and suitable for the international market, you then have to carry out the search for markets and buyers, think of the marketing strategy, and adopt a market-focused approach. Those things I will be discussing in subsequent lectures.

So I hope with this typical export transaction framework, you now have a very clear understanding of the whole process. At this stage, it is very important that you feel confident that you have the product, you will be able to find the market, and you will be able to find the buyers.

Then what?

When you get the orders, when you sign the export contracts, what all has to be done?

This part is quite different from the domestic market.

In the international market, this part has to be carried out in a very meticulous manner.

Any mistakes in these documents, any weaknesses in the processes, or anything left incomplete in this process can lead to severe consequences.

That is the reason this lecture comes so early in the course—so that you have a very good awareness of the total framework involved in carrying out export operations.

I am very sure that whatever I have shared with you in this lecture will help you clearly understand what I am going to share in the course in the subsequent sections and lectures.

Things will become very easy for you in this course if you have understood this typical export transaction framework.

In case, in these last two lectures, you have not understood something, you can write to me, send me your query, or revisit these lectures to review what I have discussed.

And don’t worry if you are not able to understand any of the aspects or steps at this stage. These things will be repeated again in the subsequent lectures.

So whatever you might not have understood, don’t worry about that.

Simply try to understand the whole game plan—how this game is played—and things will become very easy for you.

When you complete this course, you will be absolutely up to date with the knowledge about export transactions, getting business, and setting up your export business—all of these things I am going to cover.

In the next section, I will be discussing the international business environment—understanding the ground where this game has to be played, and understanding the landscape of this planet.

There are different countries.

These countries have different economic standards and statuses. They have different cultures, and they have different histories.

All these things create differences and form a very diverse landscape of the international business environment and geopolitics.

I’ll be discussing all these things with you, so you will feel more confident about the markets, and it will become easier for you to understand the whole playground, where you can find buyers, find countries to sell your goods, and understand the entire concept and logic behind international trade and finding buyers and markets.

So this next section will be very useful for you to understand the international business environment and the geopolitical landscape of the world, especially the current situation.

What is the current scenario of the world today?

How do geopolitics and the environment impact international trade?

These are the things I will be discussing in the next section.

You will find this course very simple and clear.

You need not get bogged down with the many terms I am using in this course. These terms will come again and again, and you will become very conversant with all these terms and terminologies.

Hi there!

I hope you are doing well and making great progress in this course.

I wanted to take this small moment to congratulate you on your remarkable progress in this course.

Your dedication and commitment to learning have truly impressed me.

I have been following your journey closely, and I must say, I’m delighted with the efforts you are putting in.

As a token of appreciation for your hard work, I would like to offer you a complimentary copy of my recent book on a similar topic to what you are learning in this course, which I believe will further strengthen your learning and your grip on the subject.

You can download the PDF copy of this book from the resource section of this lecture.

This course is part of the VJ Export Mastery Courses Series, a collection of 28 different courses focused on export management, designed to equip you with the knowledge and skills needed to excel in the field of export and international trade.

On my part, I am committed to helping you expand your learning journey by providing access to more courses in the series. But at the same time, on your part, I have a small request as well.

Your feedback is incredibly valuable in refining this course and ensuring it remains world-class and continually improved.

So, I kindly ask you to leave a rating for the course along with your honest feedback, if you have not yet done so. Your input will help me continue to improve and tailor the course to meet your needs and those of future learners.

Thank you once again for your dedication and enthusiasm.

Keep up the fantastic work you are doing, and remember, I am here to support you every step of the way.

Together, let’s continue on this journey of learning and growth.

The foreign trade policy of any country is affected by several external and internal factors. The role of WTO is important in framing and alignment of foreign trade policy of democratic countries. Internal factors like per ca pita GDP, unemployment, and internal political factors have their own role to play in framing the foreign trade policy.

To become a successful exporter, it is very, very important that you have a fairly good idea about what is a foreign trade policy of a country, how it affects the process of exporting, how it helps exporters, how it serves the different objectives, which it has for the country and for the exporting community as well as for the importing community. So, in short foreign trade policy helps exporters to understand the concept of exporting. So, it is very, very important for exporters to have a fairly good knowledge of the respective trade policy of their country.

So, friends, who are basically involved in the making of the foreign policy and implementation of the policy. So, who are the players who implement or make the foreign trade policies? So, in general, the foreign trade policy of a country is made by the respective government. So, the main players in the making and implementation of foreign policies are the government, and they do it with the help of the central banks in those countries.

Like for example, in India, we have the Reserve Bank of India, which is the central bank of India. Then the actual formulation of the policy is done by the Ministry involved in different countries; different ministries work on the foreign trade policy of their country. In India, for example, the Ministry of Commerce is the main ministry that is entrusted with the job of formulating the foreign policy. But, of course, the Ministry of Commerce takes advice and help from other ministries also.

Then, in each country, the foreign trade policy is made, which is implemented and regulated by certain bodies, which may be called directorates or controllers. For example, the Controllers of Export and Import. For example, in India, there used to be a Controller of Export and Import, but presently, it has been redesignated as the Director General of Foreign Trade. Earlier, the Chief Controller of Export and Import is now redesignated as Director General of Foreign Trade.

So, every country has its own Directorate, Controllers, who control the export and import transactions. They make policies, and they make sure that those policies are implemented, and people abide by the rules and regulations of those policies. So, that is the role of the Controllers or the Directorates.

Now, friends, it is important to understand what the factors are that affect policy-making. So, these factors sometimes dictate the formation of the policy, foreign trade policy amendments, modifications, etc., from time to time. Not only in India, but in all countries, there are certain factors. Most of these factors are either external factors or internal factors. So, the governments, while formulating the foreign trade policies, are affected by the external factors and their internal factors, which shape the foreign trade policy making and even implementation, and further amendments and notifications, or corrections. So, they are affected by changing external and internal factors and the environment.

One of the biggest external environment factors for the foreign trade policies of most of the country is the World Trade Organization. Friends World Trade Organization is the main international body that regulates the flow of goods internationally. The main objective of the World Trade Organization is that there are fewer trade barriers the world over and the flow of goods is smooth well well-managed. And for that reason, the WTO has a strong say in the foreign trade policy-making in all the member countries.

So, as per the understanding, all countries that are member of the World Trade Organization have to submit their original foreign trade policies, which they are currently implementing, and any modifications, any amendments, which they make later on. They have to notify within a reasonable time to the World Trade Organization, and the World Trade Organization has a designated department that keeps track of these foreign trade policies of the member countries. Then, friends, another external factor, which is very important, is the Free Trade Agreements that countries have with other countries. So, these free trade agreements can be between two countries, or they can be between several countries in a region, which is also called REC- Regional Economic Cooperation, or there could be some trade partnerships.

A very good example of such, for such Free Trade Agreement is the European Union. So, the European Union has a free trade agreement, which is one of the most successful free trade agreements in the world among the 28 countries of Europe. So, these kinds of agreements also dictate the Foreign Trade Policy-making and further amendments.

Then, Friends, the geopolitical environment is continuously changing both on the regional front as well as on the global front. So, for example, if we look at the geopolitical environment, which is drastically changing in recent times around India is the relationship between India and China. Because of the deteriorating situation of the relationship between India and China, because of the border skirmishes between India and China, what is happening is that the Indian Government is very quickly making modifications in foreign trade policy to make sure that any wrongdoings are not done by the neighboring country, which is China, with India.

So, there can be several changing geopolitical regional environmental factors, which can have a major impact on the foreign trade policy making as well as amendments. Similarly, Friends, due to the Coronavirus, a lot of geopolitical changes are happening in different parts of the world. And because of these changes in the geopolitical environment, not only between India and China, but in the case of many regional equations between different countries, the geopolitical environment, the regional geopolitical environment is changing very fast. And because of this, a lot of reviews, and amendments are happening in foreign trade policies of several countries at present, because of this situation. Then, friends, the internal factors also play a very dominant role in the foreign trade policy making, as well as further modifications in those foreign trade policies of respective governments.

So, there can be some immediate pressing issues, which are there in the case of a particular country, in the context. For example, I just gave you an example of a very major pressing issue with India, which is the aggressive and bullying tactics of its neighbor, China, as well as Pakistan on the other side of India. So, it has become a very major pressing issue for India, and it will definitely have an impact in the near future on the foreign trade policy-making and amendments.

Similarly, friends, the economic status also has a strong bearing on the foreign trade policy-making. If the unemployment rate in a country is very, very high, obviously it will have an impact on foreign trade policy making, where the objective will also be - how to generate employment? So foreign trade policy will have a lot of incentives for investment in India, in the sectors of exports. And also for developing special economic zones, Free Trade Zones, so that the employment opportunities for the people of the country increase. So, the economic status of any country also plays a very, very important role in foreign trade policy making and its maintenance.

Then, friends, the internal political environment of a country also plays a very important role in foreign policy-making. For example, if you compare the political environment in China and in India, they are drastically different. If we compare the political environment in India and in China, we will find a lot of differences in the political environment because of the differences in the ideologies, the political ideology of China, and the political ideology of India.

Which is quite different. And if we compare these two countries, two large economies, you will see that the internal and political environment in both cases is quite different. And because of this difference, there is a lot of difference in the foreign trade policies of China and India. Similarly, the changing political environment in any country also has a strong bearing on the changes that are happening in the foreign policy of that country.

Friends, let us now try to understand what the main objectives of making foreign trade policies of different countries are. One very important objective of making a foreign trade policy of any government is to strengthen the rule of law. So, rules and regulations govern the external trade of a country, overseas payments, and international investments. So, those rules and regulations are defined and clarified in foreign trade policies because they have a direct impact on the economic, political, and demographic structure of a country.

So these rules and regulations definitely vary from country to country, and those differences are seen in the foreign policy of different countries. The second objective of any foreign policy of any country is to provide information and to explain the procedures and documentation required for carrying out external trade and investments. So this kind of information and these kinds of procedures, which may relate to the act of exporting or the act of importing

1. How to deal with the government?

2. How to deal with these central banks?

3. How to deal with the controller of export and import, or the director general of export and import?

4. And what are the compliance requirements?

5. What are the obligations of exporters? and

6. What are the obligations of importers, and how to deal with the banks?

7. What is the role of banks in the act of exporting and the act of importing?

So this kind of information procedures customs-related information, customs-related procedures, clearing of goods, and the use of port facilities for sending your goods by air or by sea. So this kind of information and procedures are the main idea behind the formulation of foreign trade policies, which gives a lot of explanation of the kind of information that exporters must know and the procedures that exporters and importers must follow.

Then Friends third objective of any foreign trade policy in any of the countries is to broadcast and announce to the general public and the business community the various schemes, incentives and support which government of that particular country provides to exporters, as well as to the importers to facilitate external trade of the country and to benefit the economy from such overseas trade and also to manage foreign exchange for the country.

So these schemes, incentives, programs, and support are very well defined, clarified, and listed in most of the foreign Trade policies of different countries. Then, Friends, the fourth very important objective of making foreign trade policies is to list out what is prohibited for export, and what is prohibited for imports.

What are the different types of restrictions that are applied to certain goods for export and certain goods for import? So friends, to convey this list of goods and services which are prohibited or which are restricted, foreign trade policies are very, very important. And it very clearly defines what things an exporter can export and what other things an exporter cannot export.

Similarly, what other things which an importer import and what other things cannot an importer import? So these things are very clearly mentioned in foreign trade policies. Then, friends fifth objective of any foreign trade policy is to announce the various customs duties, tariffs, and non-tariff barriers which are the respective government applies on goods and services for external trade.

So these duties, tariffs, non non-tariff barriers. are very well explained and defined in foreign policies, and from time to time, amendments are made to these rates of customs duties, tariff structure, the method of import, and various non-tariff barriers that are applied on certain products by the respective government.

So these things are notified by the governments through the amendments and notifications of their respective foreign trade policies. Friends, then last but not least is one of the major objectives of foreign trade policy is to be able to manage the foreign exchange of a country. Because, as I had explained to you earlier, in an earlier lesson, the foreign exchange is very, very important for the economy of a country.

And all the governments keep an eye on the flow of foreign exchange into the country and out of the country. So, such foreign exchange management requires special acts and rules and regulations, which are normally called as Foreign Exchange Management Acts. For example, in India, we have the Foreign Exchange Management Act 1999, which is enforced with time-to-time modifications and rectifications. This act still applies to all foreign exchange transactions and payments. And Friends, the main objective of these foreign exchange management acts is to achieve two major objectives.

The first is facilitating the external trade and overseas payments. So this becomes one of the major objectives out of these two objectives. The second objective is the development of the foreign exchange market in the domestic context of any country. Because a very dynamic, resilient, and progressive financial market is required in every country in line with the international financial market, which governs the international agreements. Then, Friends, let us try to understand that what is the general impact of such policies that are related to foreign trade, external trade, and foreign exchange management.

So, Friends, if these policies are liberal, open, modern, proactive, and inclusive, they help the economy of a country very much. If you take the example of India, the trade policy, foreign policy of India before 1991 were very narrow-minded. It was very restrictive. It was very stern and strict.

And the result was that before 1991, the Indian economy suffered a lot. But after 1991, the government of India came out with the liberation, privatization, and globalization and which was reflected in the new foreign trade policy, which was ratified in the year 1991. And since then, India has not looked back. Its economy has grown. Its food production has increased. The scarcity of employment, the scarcity of food, and the scarcity of consumer goods have been totally wiped out.

The living standards, the GDP per capita, and the life of consumers in India have improved a lot after the ratification of the new foreign trade policy, which was very conducive to both exports as well as imports. And the approach was for the development of the trade rather than the restriction of the trade. So, friends, if the trade policies of respective governments are open, it has a very positive impact on the external trade of that country. And the overall different types of foreign trade policy in different countries with different hues and colors and with different types of approaches to external trade, the result is the higher or lower international trade barriers, which is the domain of the World Trade Organization.

So the WTO wants to bring down International trade barriers, both tariff as well as non-tariff barriers. So if the policies of different countries are made open, the objective of the World Trade Organization is to bring down the international trade barriers. And this objective can be achieved by having good foreign trade policies in line with the regional as well as internal environment of respective countries, internal status of the respective countries, and internal situation of the respective countries. And World Trade Organization encourages governments to address their internal affairs also when they form foreign policy.

But at the same time they make sure, WTO make sure that the policies are open, liberal, and globalized. And then, friends, the nature of these foreign trade policies of different countries also has a very strong bearing on the investment scenario and the flow of investments from one country to another. So these policies can have barriers to international investments. As I explained to you in the example, a recent example of the skirmishes and a standoff between India and China border standoff.

And because of this, the government of India has also put in certain investment barriers with regard to the Chinese firms in India. So, due to certain current events, due to certain immediate breaking events which are happening at the country level and the regional level, there can be certain amendments, modifications in the foreign trade policies, which have a strong bearing on the investment scenario of that region.

Local trade bodies, industry associations, and industry representations provide grassroots inputs and feedback that is most valuable for the formulation of FTP of any country.

Now, the next point to understand is: who implements these foreign trade policies? Typically, in any country, whichever country you belong to, it is important to understand who the implementer of these foreign trade policies.

Generally, there are dedicated government bodies for implementation.

For example, in India, there is a directorate called the Directorate General of Foreign Trade (DGFT).

In every country, local governments have entrusted this job to some specialized and knowledgeable body that understands the provisions of foreign trade policy.

They are specialized and have expertise in the implementation of foreign trade policies. Like in India, we have the DGFT.

So every country will have some similar kind of organization sponsored by the government of that country.

The second very important constituent of the implementation infrastructure in any country is the central bank.

Why central banks?

Because central banks are concerned with monitoring the inflow and outflow of capital from the country.

For example, in India, the central bank—the RBI (Reserve Bank of India)—is entrusted with the job of monitoring the inflow and outflow of capital.

So whether money is coming in from investments, coming in for trade, or going out for imports—whatever the different types of foreign exchange transactions are—they are monitored by the central bank.

In the case of India, it is the RBI, which is a part of the implementation architecture of the foreign trade policy.

Then, naturally, comes the job of border control—that is, customs.

For example, in India, the Customs and Excise Department is entrusted with the role of guarding the borders and ensuring that goods exported from different wet ports and dry ports—whether seaports or airports—comply with the provisions of the foreign trade policy.

The Department of Customs is fully conversant with the latest provisions of the foreign trade policy and implements the rules and regulations enshrined in the latest foreign trade policy of the country.

So, these are the three major pillars of the implementation architecture of foreign trade policy.

Now, what is the role of independent bodies that support, directly or indirectly, the formulation and implementation of the foreign trade policy?

Which are these independent bodies, and why are they important?

Without their role, it is very difficult for the formulation body or the implementation body to really act effectively. On a country level, they become very important.

The first very important independent bodies in this respect are the export promotion bodies.

For example, in India, we have EPCs (Export Promotion Councils).

Their job is to develop exports of certain product categories.

So, what do these EPCs do?

They include as members most of the significant exporters of the goods under their mandate. They gather feedback from exporters about their difficulties or their expectations regarding provisions in the foreign trade policy.

They collect this feedback and provide it to the policy formulation bodies.

For example, in India, EPCs collect this information and feed it to the Department of Commerce, which operates under the Ministry of Commerce.

The role of EPCs as a bridge between exporters and policy formulation bodies like the Department of Commerce is very important.

Because this flow of information from the grassroots level to the ministry helps ensure that the foreign trade policies formulated from time to time are effective and widely accepted.

Industry bodies perform the same job.

They are in touch with exporters, manufacturers, and corporate bodies.

For example, in India, we have CII (Confederation of Indian Industry).

CII provides feedback to policy-formulating bodies like the Department of Commerce and the Ministry of Commerce.

This kind of information flows from industry to government, is critical in forming robust and correct foreign trade policies in line with the changing environment.

Another similar organization in India is FIEO (Federation of Indian Export Organisations).

FIEO represents the main exporters of all categories of goods exported from India.

In every country, such industry bodies are present and do similar jobs.

Another category of independent bodies that also provide feedback from industry to government is the chambers of commerce.

For example, in India, we have FICCI (Federation of Indian Chambers of Commerce and Industry).

FICCI also bridges industry requirements and government policy formulation.

So, these major independent organizations—present in every country—play a crucial role in supporting both the formulation and the implementation of foreign trade policy.

In the next lecture, Dr. Jain discusses the common factors that may generally influence or drive the provisions included or excluded from an FTP.

Now it is very, very useful to understand what the factors are that influence the formulation and implementation of the foreign trade policy.

If we look at the external factors, a very important external factor is the World Trade Organization (WTO).

The World Trade Organization comprises more than 180 member states that agree to comply with its rules and regulations. These rules and regulations are based on the provisions of the foreign trade policies of the respective state governments.

So, whatever provisions are in the foreign trade policy of local governments that are members of the WTO, they have to comply with and align their foreign trade policies as per the rules and regulations of the WTO, which are based on multilateral and bilateral agreements among the member states.

These agreements provide the template for the rules and regulations of the WTO. The principle of the WTO is to establish a regime of free and fair trade in the world, requiring the right provisions that are not contrary to its basic principles.

The WTO has a separate department that monitors the foreign trade policy of each country. If certain provisions are not in line with the rules and regulations of the WTO, it can red-flag those rules and regulations, and this is done regularly.

Similarly, the free trade agreements (FTAs) that a country has—whether bilateral agreements with a few countries, a single country, or a group of countries, or free trade agreements in a region—also dictate the inclusion or exclusion of certain provisions in foreign trade policies.

So, they also have a direct impact on foreign trade policy.

Additionally, the current international business and geopolitical environment that is prevalent in the world has a strong bearing on the formation of foreign trade policy.

So, these are the external factors that have a direct impact on the formulation as well as the implementation of foreign trade policy.

Similarly, there are internal factors for each country that dictate the formulation and implementation of policies.

For example, what are the pressing national issues?

Every country is located in different places on this planet with different environments, sizes, and cultures. So, they have different pressing local issues.

These depend on many factors, but such national issues have to be resolved in all kinds of policies—whether domestic policy, industrial policy, or foreign trade policy. All these policies must address those local issues.

So, the influence of these factors is very high.

Similarly, the economic status of the country also matters—whether it is a rich country, a developing country, or a least developed country. The economic status of the country also dictates the formulation and implementation of foreign trade policy.

And not to forget, the internal political environment also has a strong bearing on the formulation and implementation of foreign trade policy.

So, these are the main factors that influence the formulation and implementation of foreign trade policy.

So, having talked about all the different aspects related to foreign trade policy, we come back to the question: what are the objectives of a typical foreign trade policy?

What are the main objectives, the main goals?

Obviously, one of the major goals of any foreign trade policy is to frame rules and regulations. As we had already discussed in one of the earlier lectures, the law of the land is sacrosanct.

So, rules and regulations based on the law of the land have to be complied with by all traders—whether exporters, importers, or manufacturers. Whoever is involved in external trade has to comply with a certain set of rules and regulations that are framed by the local sovereign government based on the law of the land.

That is the main objective.

The second major objective of any typical foreign trade policy is to provide information about these rules and regulations, the different provisions, restrictions, and, very importantly, the procedures—the procedures that have to be used to carry out external trade, whether exports or imports.

Whatever trade is done within the country or from the country with other countries of the world, the procedures to be followed are generally aligned with the provisions enshrined in the foreign trade policy. Typically, all over the world, these comply with the rules and regulations of the WTO (World Trade Organization).

All these rules, regulations, and procedures have to comply with the rules and regulations of the WTO.

Another objective of a typical foreign trade policy is to devise innovative schemes and support mechanisms.

If you remember, I discussed the different types of support that are given by local governments to exporters and importers—especially to exporters—and these mainly relate to two areas:

1. Demand-side support

2. Supply-side support

This support is provided through various innovative schemes targeted to address both local issues and international issues. The pressing national issues we talked about earlier are also considered here.

The schemes are framed in such a way that they provide supply-side support, demand-side support, and also resolve the national and international issues related to that particular country.

That is one of the major goals of any foreign trade policy.

We also discussed earlier that the policy provides information about prohibitions and restrictions—what is restricted and what is prohibited.

These may vary from country to country, although certain prohibitions and restrictions will show a lot of convergence among different countries. But many prohibitions and restrictions are based on local culture, religion, the way people think, and local situations.

Every country on this planet with different geographies and climates.

So, a lot of variations exist in the world in terms of the challenges people face daily.

These prohibitions and restrictions are local in nature, but still in compliance with international rules and regulations.

Therefore, prohibitions and restrictions are listed in the main document of the foreign trade policy as one of the major goals of such policies.

Another objective of the foreign trade policy is to list out, based on the classification of products or goods traded in external trade:

• Local taxes

• Import duties

• Tariffs and non-tariff restrictions

There can also be non-tariff barriers.

So, certain kinds of barriers are generally present in external trade conducted by any country. These barriers can be in the form of tariff barriers and non-tariff barriers.

Local taxes, duties, surcharges, or whatever taxation structure is applied on imported goods must also be part and parcel of the foreign trade policy document, and this becomes one of the major goals of the policy.

Finally, the major goal of any foreign trade policy is foreign exchange management.

When we say foreign exchange management, it means managing the inflow and outflow of foreign exchange and ensuring the country has sufficient reserves.

A country must have foreign exchange reserves—convertible reserves—to meet normal demand, emergency demand, or future needs.

So, some kind of corpus has to be maintained by all countries in the form of foreign exchange reserves.

This foreign exchange management, usually handled by the central bank in each country, becomes one of the major goals of any typical foreign trade policy.

It is very useful, friends, to know what the related acts and regulations are.

Typical acts and regulations.

Although there are many acts and regulations related to foreign trade policies—local foreign trade policies, directly or indirectly—the major acts that have a direct impact on foreign trade policy, or are related to foreign trade policies, include acts like the Foreign Trade Acts that exist in different nations.

For example, in India, it is called the Foreign Trade (Development and Regulation) Act of 1992.

Such acts have a very direct relationship with foreign trade policies. Generally, they define the main architecture of the rules and regulations that are incorporated in any local foreign trade policy. So, they play a very important role.

Another major act related to any foreign trade policy concerns foreign exchange management.

Foreign exchange management acts in different nations play a very important role in this particular aspect. One example is FEMA 1999 in India, which plays a very important role in the formulation of foreign trade policy.

Another very important act, which is often forgotten when we talk about foreign trade policy, is the Foreign Contribution Act that exists in different countries.

For example, in India, it is called the FCRA – Foreign Contribution Regulation Act of 2010.

This particular act relates to money coming into the country not for trade, but mainly as contributions—maybe in the form of support for a good cause in the country, for a societal cause, or for a cause related to the environment.

So, money coming to NGOs (non-government organizations) or charitable organizations in the country falls under this act.

Foreign contributions that come in the form of foreign exchange generally require, in most countries, a separate act different from the Foreign Exchange Management Act. Normally, this is called the Foreign Contribution Act. In India, it is called the FCRA.

In addition, many other acts and regulations may have a direct or indirect impact or relationship with foreign trade policies.

So, it is important to know about these acts that generally exist in each country. The names may be different, but the purpose and nature would be very similar to what I have discussed in this lecture.

Now, friends, finally, it is important to understand what is the impact of the typical foreign trade policies that are framed by the local governments on trade.

This impact may be direct or indirect, which means exactly what it means to trade.

Depending on the nature of the foreign trade policies, they can be open policies, very open-minded policies, or they can be narrow policies, or narrow-minded policies.

It depends on the strategies of the local governments and the type of business environment or political environment that exists in that country, or the pressing needs of that country.

What are the important pressing needs?

What are the national issues that are there?

So, depending on that, the foreign trade policy can be open in nature, or it can be narrow in nature.

If it is open in nature, it will have a different type of impact on trade, both exports as well as imports of the country.

If it is narrow in nature, it will have a different type of impact on the local exporters, importers, or manufacturers.

So, the exact nature of the foreign trade policy will define the type of impact that it there on the local industries.

Secondly, foreign trade policies define and prescribe the adoption of higher or lower levels of international trade barriers for the goods that are coming into the country.

Although there is strong monitoring by the World Trade Organization, and there is a strong influence of the rules and regulations of the WTO if the country is a member of the WTO, still, countries resort to high, medium, or low levels of international trade barriers.

And as I mentioned to you earlier, many countries also resort to non-tariff barriers.

So, certain provisions provided in the foreign trade policies tend to impose certain kinds of non-tariff barriers on certain goods and commodities.

It is a question of choice—what the local government thinks about external trade and what its approach is.

For example, before the 1990s in India, the approach was very different regarding foreign trade policies.

It was under the Export-Import Control Act.

So the approach was towards controlling external trade.

But post-1990, India adopted and changed the act from the Export-Import Control Act to the Foreign Trade (Development and Regulation) Act.

The approach totally changed—from control to the development of both exports as well as imports.

So, more and more governments throughout the world are realizing that while exports are very important for the local economic development of the country, imports are equally important.

And it has been seen that for higher levels of exports, a good level of imports is very important.

Without imports in today’s world, in the type of global value chains we are living in, it is very difficult to export without imports.

These relations have made it very important for governments to frame foreign trade policies with lower international trade barriers.

Some countries are doing it, some countries are in the process of doing it, and some countries are still not doing it.

So, it depends on the choices of different local governments.

Another area that has a strong impact of foreign trade policy on trade is the approach towards investment barriers.

Depending on the local environment, business environment, political environment, and the perception of the local culture and national pressing issues, governments may choose different types of investment barriers.

To give you an example, in India, investment in multi-brand retailing is still restricted.

Foreign retailers with a single brand can invest up to 100%.

But multi-brand retailers like Walmart or Carrefour are not allowed to invest in direct selling through their retail stores.

So, it is still not allowed; it is restricted.

Similarly, different countries may have different types of investment barriers.

Again, that is the choice of the local governments, and it may relate to local situations, local requirements, and the political environment in those countries.

What are the national issues?

What are the pressing issues that dictate these kinds of choices for different types of investment barriers?

Finally, the impact of foreign trade policy on trade will be realized depending on the quality of implementation of the provisions of the foreign trade policies, and this also varies from country to country.

In some countries, the implementation is very good.

In some countries, the implementation may not be as good or as satisfactory.

So, depending on the quality of implementation and the zeal to bring the benefits of foreign trade policy to resolve local issues for the benefit of society, the results may vary from country to country.

Similarly, depending on the quality of implementation, the impact on trade will be different.

To give you an example, it has been said that in recent times, in spite of the overall development of Bangladesh, the political scenario has failed to make the structural reforms that were required, along with the correct foreign trade policies that they had made.

So, in the recent decade, while the country benefited from foreign trade policy, because of the failure of the structural reforms—structural corrections that were required—the country is now facing dire economic consequences.

The benefits that came due to the foreign trade policies of the last decade are no longer helping the country, especially after the pandemic.

So, the quality of implementation was weak in this country because they failed to make the structural reforms required for the type of foreign trade policies that were made.

While it looked very good, due to sudden changes in the international business environment post-COVID, what we are seeing is that the quality of implementation was not good in this country, and the results are not very satisfactory.

So, in different countries, these problems can erupt if the implementation of the foreign trade policy is not good.

Country to country, these things will vary, and they will have a different impact on the local trade.

Indian Trade Portal offers the most organized resources to update yourself on India's foreign trade policy. It has several sections on the policy including policy provisions, policy statements, policy highlights, schemes, incentives, tariffs, etc. As an example of the ways of accessing the FTP related information online, the next lecture will serve as a template for exporters from across the world.

Okay, now, friends, I will show you an example of how you can get hold of all the text documents and the notifications, and the changes, by taking an example of the initiative by the Government of India, which is in the form of the India Trade Portal.

We are here at the website of the India Trade Portal.

On this website, we have very interesting information that can be obtained from this particular portal, and that is with respect to the foreign trade policy of India.

So I will take this as an example.

Most countries have such kinds of online portals where the exporting and importing communities of those countries can go and download and see the different provisions, amendments, notifications, addenda, annexures to those policies, and the export promotion schemes.

This information is available on the India Trade Portal on the sidebar, and there is a button called Foreign Trade Policy – Export Promotion Schemes.

If we look at this particular section of the website, which is called the India Trade Portal, and we click here, we will see that the various policy documents, highlights, and descriptions of different types of export promotion schemes are available on this website.

So it has the policy document, the procedure documents, the amendments and appendices of foreign trade policies, the policy statement, and the highlights of the foreign trade policy, which is the current policy.

Whatever is the current policy of the Government of India with regard to foreign trade, the highlights are also there.

So anybody can just go here, click the button, and get hold of all the documents and all the information that is available on India’s foreign trade policy.

This portal is very useful.

The information available on this portal is absolutely free.

And if you are a member of the Federation of Indian Export Organisations (FIEO), you have better access to this website.

You can go to certain privileged portions of this website where you can get privileged information with respect to the foreign trade policy of India.

But the majority of the important policy documents, procedure documents, schemes, and appendices are available free of cost for download on this website.

So, friends, the idea of this section was to discuss the role of foreign trade policy in your pursuit to become a successful exporter.

The idea of this section was to take up issues related to foreign trade policies, which you should know to become a truly successful global business person.

Knowledge of these different aspects related to foreign trade policy is very important for you.

Like in the earlier section, we had discussed many other aspects. This aspect of foreign trade policy is also very important.

In this section, my objective was to make you understand the different issues related to foreign trade policies and typical foreign trade policies that are made by different local governments.

So, at the very least, as a successful exporter, you should thoroughly know the foreign trade policy of your local government (that is, the home country government) as well as the foreign trade policies of the destination countries. That is very important.

If you have understood the different aspects that we discussed in this section, it will become very easy for you to collect all the information about foreign trade policies.

In this section, I also gave you an example of how to find all the publications and documents you need to understand the complete foreign trade policy by showing you the example of India’s foreign trade policy, and how you can download all kinds of documents from the India Trade Portal.

That was just an example. In your destination countries, or if you are coming from a different country, wherever you are on this planet, you will have similar online resources from which you can download all the documents, amendments, and addenda related to foreign trade policies.

So, by this discussion we had in this section, it will become very simple and easy for you to understand these documents.

Keep watching.

Welcome back to the course.

As I promised you, in this section I will be talking about the international environment for business.

What is the significance of understanding the international business environment, and what are the different issues, dimensions, and aspects that are related to the international business environment?

It is very important for you to become a successful exporter in today's world.

So I am going to discuss in this section all about the international business environment, its components, the tools to analyze the international business environment, the benefits of the international business environment, the foundations of the international business environment, and the recent trends—new trends in the world business environment for doing international trade.

All those things I am going to cover in this section are for your complete knowledge about the international business environment.

Although this course is not totally focused on the international business environment, for which I will have a separate course that will go a little deeper into the subject of the international business environment, in this section, I will discuss all the highlights of understanding the subject of the international business environment and how it impacts your fortunes in international trade.

These are the things I am going to discuss so that you will have a fairly good idea about the purpose of understanding the international business environment.

Let's see here in this section.

The basic elements of the international business environment include:

1. Political environment:

2. Economic environment:

3. Cultural environment:

4. Legal environment:

5. Technological environment:

6. Competitive environment:

7. Natural environment:

These elements of the international business environment can interact and influence one another.

Let us first start with the understanding of the foundations of the international business environment.

What are the foundations of the international business environment?

What are the factors that have a direct impact on the international business environment for a business entity, from the perspective of the business?

So when I say business, I mean every business, depending on what their internal strengths are, what the origins and nationalities of the owners of the organization are, and the main area where they operate.

I am talking about that.

So the international business environment may be different from the perspective of one business entity to another.

That understanding is very important before I go further.

So I hope you understand this—that when we talk about the international business environment, we are talking from the perspective of an individual business entity.

They may have a unique business environment for themselves because of their position, their status, and their nationality.

So that has to be understood.

When I say foundations of the international business environment, for example, when I talk about the political and legal factors that are encountered by a business entity, that particular business entity will encounter those political and legal factors depending on the origins of that business entity.

For example, if an organization originates from the United States, the kind of political and legal factors it encounters are different from another organization that originates from, for example, Japan, South Korea, or maybe China.

So every organization, every business entity, may have a different perspective and a different set of encounters with respect to certain factors like political and legal factors.

Those factors may be different for different entities depending on their status and their position.

When I say the foundations for a business entity, and when we talk about the political and legal factors, they may be favorable or they may not be favorable.

And even if they are not favorable, political and legal factors—whether the companies or the business entities can face those factors and derive benefit from the situation, whether favorable or not—depend on whether they can derive a better position for themselves to do international trade.

That is the skill the company has to develop: how to do it.

The other set of foundational factors that a business entity can encounter in the international business environment, from its own perspective, refers to the cultural and social factors that it encounters.

Now, these cultural and social factors will vary from market to market, from destination to destination.

And what are the core areas of operations of that organization?

It can be the result of the customer side—that is, the front-end side.

It can also be from the back end side, and it can also be from the internal side as well.

That means the employees of the organization can be in different countries, having different social and cultural values and features.

So those differences can be encountered by the organization from all fronts: back end, front end, and internal sides.

Similarly, the economic conditions faced by the organization—whether the organization has internally strong economic conditions, whether the countries where they originate from provide the right financial help, what the economic conditions of that particular home country are, and the countries where the organization operates—are all part of those conditions.

I am talking about all those economic conditions.

So the international business environment is forming a composite environment under which a business entity works in an international context: from political and legal factors, cultural and social factors, economic conditions, and also from the point of view of geography.

What is the meaning of geography?

Geography especially means the strengths that the business entity has in terms of the physical infrastructure it encounters.

So, whether it is operating in those areas where logistics infrastructure is very good, where the logistical movement of goods is more efficient, less costly, and affordable—that is the geography I am talking about, where geographical advantages are there for the organization, where they are operating.

What kind of geographical advantages the business entity finds, whether favorable or not favorable that geographical environment, those geographical factors, play a very important role.

So, in the further lectures in this section, I will tell you about the geopolitical factors that will give you a better idea of how politics and geography play a very important role in forming a new type of business environment that is called the geopolitical environment.

I will be talking about it in this section in the later lectures.

Now, let us understand what the benefits of the international business environment are.

It is very important to know the benefits of having an understanding of the international business environment.

The first thing it does is help in business growth and expansion.

The international playground is quite big.

Understanding the international business environment helps the company expand in the international market, select the areas where to operate, and identify the favorable and conducive areas where companies can easily expand.

So it really helps in making it possible for organizations and business entities to realize their international dreams.

That is one major benefit of understanding the international business environment.

Then, the exposure for the business entity in international trade is fantastic and very wide.

The scope of doing business is very broad.

The customers of different cultures, hues, colors, and nationalities are faced by the organization, and this may give a lot of business advantages to the organization.

So understanding these cultural differences and the different types of customers the organization deals with provides a lot of competitive edge to the organization.

This exposure really helps the organization improve its position in the existing markets, as well as the core markets or the captive markets the organization already has, and sometimes even the home country market.

Generally, the home country market remains the core marketing area for organizations, and they are able to improve their position in those markets.

So these are two major benefits.

The third benefit of understanding the international business environment refers to the fact that it assists in the proper management of the product life cycle.

You may remember, in my earlier sections, I discussed the international product life cycle—how the theory of the international product life cycle attracts international companies and multinational companies to expand into the international market, to elongate the product life cycle of their innovations and new products.

So that part I had already discussed.

Proper management of the product life cycle is possible in international trade if the understanding of the international business environment is complete, holistic, and useful for the business.

So, useful knowledge of the international business environment helps in the proper management of the product life cycle.

And finally, understanding the international business environment helps in obtaining mutual growth.

When we say mutual growth, we are talking about mutual growth between the business entity and its partners abroad, or the local governments abroad, which are stakeholders in any business activity carried out by the business entity in different parts of the world.

So, different stakeholders, internal as well as external, front-end and back-end stakeholders, all benefit from mutual growth.

So many different entities benefit from the international business environment, a conducive international business environment.

And that can only be conducive to a better understanding of the international business environment by the key managers who are carrying out international trade for the organization.

Let us now talk about the elements of the international business environment.

What are the elements?

What are the components of the international business environment?

The purpose of understanding the elements of the international business environment is to understand that in this environment, when a trader enters, what are the things he encounters?

What are the things that are being done?

What kinds of different plays are being played in this environment?

That is what we are trying to understand.

When we are talking about the elements of international business, we are trying to understand what kinds of different types of activities are being done in international business.

So when an international trader enters this playground, what does he see? What kinds of plays are being played in this playground?

The most visible activity in this playground relates to trade—exports as well as imports.

So that is the most visible thing someone in international trade encounters in this playground.

This becomes the most important element of the international business environment.

Sometimes it is referred to as a type of international business environment.

So exactly, it is not the type of international business environment; it is mainly the main activity that is being encountered.

You see different types of trading going on internationally, and that has been increasing with the increase of globalization.

Goods are moving—all kinds of goods that were unthinkable ten or fifteen years back are now being moved internationally.

The second element of the international business environment refers to investments.

So money is flowing.

Capital is flowing from one country to another in the form of investments.

That could be in terms of foreign direct investment, it could be in terms of foreign institutional investments, or different types of investments.

Even governments, the local governments, are investing money in overseas markets.

For example, if you take the example of the infrastructure development that is happening in the area of transportation in India, a lot of money is coming from Japan to India.

So there are many examples of the flow of capital from one country to another in the form of investment.

That can take many shapes.

And these are all the different types of investment activities that are happening in this landscape of the international business environment.

The third very visible activity that is taking place in the international business environment, and that makes the third most important element of IBE, is the activities that refer to collaborations and strategic partnerships among business entities located in different countries on different continents.

That could be in the form of joint ventures, some kind of franchising, or some kind of partnership that is mutually beneficial.

As I told you, one of the benefits of understanding the international business environment is mutual growth.

So international business in the form of collaborations brings mutual growth to the entities, the companies, multinational organizations, and even local governments.

These collaborations in the form of different activities, like joint ventures and franchising, are very visible.

So, in all, there are many different activities that are happening in the playground of this planet, in this world, where you see varying types of activities being held in the international business environment.

These are the components of the environment.

This is how the environment looks.

These are the things that are done in this environment.

So that was the purpose of understanding the elements of the international business environment.

Let us now talk about the tools for analyzing the international business environment.

Now we know what the foundations of the international business environment are.

We know what activities are done in the international business environment.

Then the question arises: for different business entities, what are the tools available to these entities to analyze the IBE with regard to their products and with regard to their business activity?

How do they analyze whether the international business environment is conducive or not conducive?

And what can be controlled?

What cannot be controlled?

What are the controllable factors of IBE?

What are the uncontrollable factors of IBE?

What tweaking can be done by the business entities?

For that, they have to first analyze the international business environment.

And the most common tools that are available to business organizations in their pursuit to analyze the international business environment are Porter’s Five Forces Model, the most popular PEST analysis or PESTEL model (which I will explain a little bit more about in later slides), and the SWOT analysis—strengths, weaknesses, opportunities, and threats analysis.

So these are some of the most popular tools that business entities use to analyze the international business environment vis-à-vis their market position, their future, their potential, their direction of operations, and also to understand the potential and profitability of the business operations they plan to do or for their expansion in the international markets.

In the next few lectures, Dr. Jain will discuss some of the most popular tools used for analyzing the international business environment.

Let us now understand, in summary, what these different tools are.

One of the very popular tools for analyzing the international business environment is Porter's Five Forces Model, or Porter's Five Forces principles.

So the five principles in Porter's Five Forces Model are:

The first force is the threat of new entrants, which means what is the level of threat of the entry of new competitors in the core business of the organization that is analyzing the international business environment. What is this level of threat? How easy or difficult is it for new entrants to enter this market and become competitors for the business entity? This is one very important dimension of Porter's Five Forces Model.

The second very important force refers to gauging the bargaining power of customers. How much bargaining power do customers enjoy for the product line or for the business activity in which this particular business organization is engaged in international trade?

Similarly, the third important force is the bargaining power of suppliers. How much bargaining power do the suppliers of the inputs for the product line, which is being supplied by this business entity to the world market, actually enjoy? These inputs, back-end support, suppliers, and vendors all affect the analysis. Gauging this is the third most important force of Porter's Five Forces Model.

The fourth very important force in this model refers to the threat of substitutes. What is the level of possibility or potential of the existence of a better product, or a substitute for the main core product being supplied by the business entity to the world markets? What are the possibilities and challenges? How easy is it to bring some kinds of substitutes or alternatives to the solutions of customer demand? That analysis is part of this fourth force in the model.

The fifth force refers to domestic competition. What kind of internal competition exists? Internal here means domestic competition for the organization. When domestic competition is high, the entry of these competitors into international markets also becomes high. And if domestic competition is very high, the engagement of the organization in analyzing the international business environment becomes even more critical.

So these five forces, when analyzed in tandem, provide a very holistic view of the possibilities—for example, determining the profitability of the organization in that activity when they are expanding into the international market. What could be the profitability? What is the potential for profitability? And what strategic position is this organization likely to enjoy in the international playground?

Secondly, this analysis helps the organization to formulate a competitive strategy vis-à-vis the potential customers in the international market, because most international markets are hyper-competitive. So this competitive strategy formulation becomes very important, and this particular tool can really help in this regard.

Thirdly, this model helps in analyzing the overall industry environment for that particular industry. For example, if an automobile manufacturer in the entry-level cars segment is analyzing the international market for small cars, with the help of this model, it is possible to understand the international market, its potential, and its profitability in the domain of small cars or entry-level cars.

So this model is very specific to the analysis of the industry at the international level, and that is one of the major benefits of this particular model.

Then the second tool, the most popular and commonly used for analyzing the international business environment,
The PEST analysis, which mostly comprises the external factors.

So what are the factors that are included in the PEST analysis that are to be analyzed?

There are four categories of factors: political factors, economic factors, social factors, and technological factors.

This particular analysis is more of an external analysis on a macro level.
So it is a macro analysis that helps to understand the market trends: whether the particular business line that the organization is envisaging to expand into the international market is in the growth stage or the decline stage. Is the business growing or is the business declining? That is the main aim of this particular tool.

It can also help in comparing the business position of the entity.
By this analysis, in a very broad sense, based on the external factors, it is possible to gauge what kind of business position the organization can have, and for the operations that the entity is envisaging for the international market, what the potential and direction of those operations are.

So it is possible to get a feel about these main purposes that can be served by this second very important tool, which is very popularly used in international business environment analysis.

A similar analysis, which goes a little deeper than the PEST analysis, is called the PESTEL analysis.
Factors included in this analysis are more comprehensive than PEST and include both external and internal factors for the business entity.

So it includes the factors of the PEST analysis (political, economic, social, and technological factors), and also adds environmental and legal factors.

Depending on the product line, what kind of production techniques are used, how the products are produced, whether they have any impact on the environment, or whether the internal processes of the organization or the product itself can lead to some legal consequences in the international markets, all these aspects are analyzed under this tool.

So those internal factors are included in this tool for gauging and analyzing the international business environment.

The purpose of this tool is, again, to understand the market trends—whether the market is growing or declining—compare the business position (like in PEST analysis), and understand the status, potential, and direction of the operations.

And, as I just mentioned, this includes internal factors also.
Due to these internal factors, what challenges is the business entity likely to face in the given international business environment? In the current international business environment being analyzed, there can be possible legal challenges, backlash, or barriers created by interest groups.

Interest groups may refer to environmental concerns, wildlife concerns, or different types of advocacy groups that may emerge due to the processes or the nature of the product being produced by the entity.

Not to forget sustainability—sustainability of the planet, of the climate, and of the organization itself.
Because if these kinds of legal and environmental issues arise, depending on the level of concern with respect to legal or environmental barriers, the sustainability of the organization itself can come into question.

So, PESTEL analysis is required in specialized cases where the product lines or the internal processes of the organization are of such a nature. Generally, this PESTEL analysis is used in those cases.

Then the fourth important tool that I shared with you refers to the SWOT analysis.
That is the analysis of the strengths and weaknesses vis-à-vis the opportunities and threats encountered by the organization.

So both external and internal factors are compared. The strengths and weaknesses of the organization, which are internal, are compared with the external factors like opportunities and threats that exist.

This SWOT analysis plays a very important role in identifying immediate opportunities, near-future opportunities, and immediate challenges for the organization while expanding into international markets and analyzing the international business environment.

The current international business environment, depending on what is happening, is very dynamic in nature.
This environment keeps changing. At a given point in time, when strategies have to be created, profitability analyzed, and gauged, the organization needs to know its position in the international market.

These four tools are very commonly used for the analysis of the international business environment.

What is the news on the current international business environment? What new ideas are disrupting the international business environment? Learn more in the next lecture.

Hi.

Welcome back to the course.

So in this lecture, I want to discuss the recent trends of the international business environment.

What are the things that have emerged?

I have discussed with you very basic things in the last few lectures about the international business environment.

What is IBE? What are the components of IBE?

What activities are there in IBE?

It is now very important to understand what new things are happening in the international business environment.

If you understand that, you will know the current status of IBE and what kind of landscape you see nowadays.

Some of the things that have come into IBE in recent times include things like crowdfunding, wherein business entities can get funding online through the crowd, and that crowd’s scope is quite big.

It is across the planet.

Wherever the internet is, some crowdfunding participants are ready to invest small amounts.

These small amounts add up to big amounts for the needs of business entities through crowdfunding.

That is a very interesting development.

And later on, in the near future, it will lead to even easier and smoother methods of getting funding.

Something similar to crowdfunding, maybe the next version of crowdfunding, will come in the future.

It is already visible in things like the metaverse, wherein your ideas or goods to be sold through things like NFTs can be pledged and financed as well.

So many new things are happening using blockchain technology, the internet, Industry 4.0, and Web 3.0.

All these new technologies are giving way to increased capabilities for business entities to crowdfund their projects.

So it is a concept that is new to the IBE, the international business environment, and for international trading.

That has happened in recent times.

Similarly, the technologies that I have discussed with you, especially internet technology, have made it possible for remote employment.

It is now possible to work for companies through the internet.

You may be located in one country and your employer in another country.

Your office could be in another country or a far-off location.

It is possible to carry out your duties and activities as an employee of the company remotely.

That is a very interesting development, and it is leading to many benefits for organizations, for society, and for the environment.

So, remote employment is a very interesting development that has happened in recent times in IBE.

Similarly, the concepts of virtual or augmented marketing take advantage of these new capabilities and developments.

3D virtual reality is now possible through social media and digital marketing.

It is possible to use virtual and augmented reality-based marketing that can bring a totally different type of exposure to customers.

The communication of your marketing message through VR and augmented reality can really create wonderful experiences for customers.

That is also a very interesting development of recent times.

Similarly, the concept of live advertising has also emerged.

I would give you one example of live advertising—giving your marketing message about your company or product through live videos on different platforms, very big platforms.

These platforms are digital communities the size of very large countries, and with very well-segmented audiences you can target.

So through live videos, you can communicate about your company, your concept, and your products on platforms like YouTube, Instagram, and many others. Even on Facebook, you can do that.

So these few examples of the recent trends in IBE have changed the business landscape.

The potential for the near future is very interesting.

So crowdfunding, remote employment, virtual augmented marketing, and live advertising are some very good examples of recent, very interesting developments that have happened.

This is what I wanted to discuss with you in this lecture about the changing contours of IBE.

In this changing world, things are moving fast. The power shift is unprecedented. Earlier underdogs are the global kings of today. Learn to observe these changes.

As far as the international business environment is concerned,

The basic things I have discussed with you, my idea was to help you understand the landscape of this playground where this international trading game has to be played, to make it simple and easy for you to understand the rules of the game, and to understand the playground.

One more thing that remains in this understanding of IBE is the concept of geopolitics.

So if you remember, in one of my earlier lectures, I had discussed with you the play between political factors and geographic factors.

So this play of politics and geography brings forth one very interesting concept of geopolitics. Why is it so important? Because it is very dynamic in nature. And business and the world are drastically affected by the changing geopolitics.

So most of the news that you see on international news platforms—what you see every hour, every day—new news keeps coming that gives way to the changing perception of the world about the countries, about the different communities, cultures, and about the different things that are happening in the international arena about politics and geography.

So this concept of geopolitics is very important for you to understand when you want to understand the international business environment.

The classical definition of geopolitics is that it is the analysis of the geographic influences on power relationships in international relations.

So the impact of these influences is very strong, and we see things changing every few days, every few weeks, when you look at it from the geopolitical point of view.

This concept of geopolitics was first coined by Rudolf Jelen in the early 19th century.

That is where the idea of this phenomenon, which is very typical of the international business environment, emerged in the early 19th century.

So many social and political thinkers associated, in fact, under the umbrella of geopolitics, the geographic factors that were influencing the dominating power of nations in line with the new advancements of their times.

So what were those advancements?

Things like the advancement in sea transportation. For example, what happened in the Middle Ages when many European countries explored the world through the high seas with the help of their technological advancements in the area of sea transportation? They really dominated the world.

And, you know, from the history of those times, the world saw the phenomenon of imperialism.

In one of the main lectures, I had discussed something about it when I talked about the classical theories, starting with the theory of mercantilism.

So things like sea transportation and later on, the railroad developments—so many hinterlands, the areas that were away from the sea, like, for example, on the Russian continent—many of the countries, because of railroad advancements, found new capabilities and new possibilities of dominating the world.

They were safe from the attacks at sea because they were away from the seashores.

At the same time, they had the benefit of railroad developments that were fully in their control, so the railroads could be used for their benefit.

And at the same time, they could enjoy the benefits of being away from the seashores and being safer.

So that was a different era that resulted in the dominating influences of those countries that were the beneficiaries of these developments, like railroad development and, later on, the development of air transport.

That totally changed.

It actually made the sea transportation of people, at least from the political point of view, obsolete.

So sea transportation remained the critical factor for goods transportation or trade.

But as far as politics and military power were concerned, air power, air transportation, and advancement in air movement dominated the world.

So these new developments, whenever they happened, created new shifts in geopolitical power, whether hard power or soft power.

Those were the days of the play between politics and geography.

And when we say geography, we mean the locations of those countries that dictated who would get the benefits of these advancements.

So whatever happened in different countries, whatever innovations happened in those countries, the power equations changed from time to time, and it resulted in the domination of some of the countries.

Later on, the enhanced military capabilities and modern weapons actually reduced the importance of all earlier developments.

So that was the time that really changed the whole equation and even the meaning of geopolitics.

So geopolitics did not remain just the play between politics and geography.

It became a tri-factor term that included military powers also.

So when we talk of geopolitics today, we talk about the play between politics, geography, and military capabilities.

For example, if you look at recent times, we see that some of the countries with nuclear capability or very strong military capabilities are trying to break international rules, rules on which humans had seen a very long period of peace time, now being disturbed by some countries.

So you can see this play between geography and politics, as well as military capabilities, that is dictating the aggression of some countries.

So the whole meaning of geopolitics is changing, and that is having a very strong impact on business and international trade.

That’s why it is very important to take up this topic in this particular course, to make you understand how the meaning of geopolitics is changing.

So these new factors are now becoming part of the new meaning of geopolitics and its theories.

If we talk about the geopolitical theories, some of the theories are changing.

So with the meaning, the foundations of geopolitics or the understanding of geopolitics are also changing.

With the example I have just shared with you, we see today that some nations are taking advantage of newly found military capabilities.

If we take recent examples, we can talk about the Russian-Ukrainian war. I will not go too much into detail about this because this event is still ongoing, and events in the Russian-Ukraine war are being debated worldwide.

What is happening? Who is at fault?

But we can easily see the new changes in the geopolitical equations in the world that were not visible, say, five or six years ago.

So after the Covid-19 pandemic, the whole geopolitical landscape of the world is changing, and events like the Russian-Ukrainian war and China’s policy on Taiwan, which is now much more aggressive and much clearer, are making the geopolitical equations in the world move in very different directions than were not thought of earlier.

So many geopolitical pundits are realizing how wrong they were in the truths they were trying to profess with their theories.

These things are making the geopolitical landscape very complicated.

For example, a country like Singapore, which is a small country having the benefit of its geography, being located on the international sea highways, and being neutral to the changing geopolitical equations, is taking the benefit of these situations.

So many countries that are trying to keep their businesses unaffected by these recent developments are really looking at a great future.

These examples I wanted to share with you to make the concept of geopolitics clearer to you, as it is a very special area of understanding in the international business environment.

If we talk of the impact on business of these changing geopolitical scenarios,

The recent geopolitical events that I had just mentioned, which are having a major impact on the world business, include the Covid-19 pandemic that is still going on, and the world has learned to live with the virus.

But the impact of these events on business is very much visible.

The world is also facing, in general, a big recession. Some of the countries are still not affected too much by this recession because of their better position in the present geopolitical situation.

Events like the Russian-Ukraine war, which I just discussed with you, and the changing stance and attitude of China towards Taiwan are giving way to a changing landscape of the global value chains and global supply chains.

So the investments are moving away from the traditional supply lines or the global value chains. This is also very visible.

What we are seeing in the democratic world is also political instability.

What has happened in the US in recent times has really jolted the confidence of the world democracies in the leadership of the US.

So these different events—unexpected and unprecedented events—are having a major impact on business, and that is very easy to see.

These are some of the examples to make you understand the concept of geopolitics and what role it plays in the international business environment.

Talking about some of the basic understanding of the geopolitical landscape and geopolitical understanding, there are four dimensions.

So, based on whatever I have just discussed, let me share with you the basics of geopolitical understanding.

This is different from the recent theories of geopolitics that have only identified the geopolitical dimensions of the world.

To understand the impact on business, the dimensions include:

• Place – that includes your geography and strategic location. I gave you one example of this.

• Time – that includes the play of history and the past decisions of different nations of the world, and what impact they are having.

For example, if we take the example of countries being compared like India and Singapore—although this comparison may not be very apparent, India being a large country and Singapore being a smaller country—but if we look at the decisions of these two political systems, what we see today is that India is a large democracy but still could not take off in business to the extent like Singapore. Even being a small country without any resources, Singapore, by right decision-making, could make its position in the world.

So that was totally based on the political decisions that were taken by the administrators of these countries.

These kinds of comparisons can give you an idea of how time, history, and past decisions play a very important role in shaping the economies of the world.

• Demography – that includes things like education, economic development, and politics. The nature of politics, the level of education, and the approaches to economic development form the third, very important dimension of geopolitics.

So these three dimensions, which are very traditional in nature and form the traditional theories, are now giving way to modern ideas.

• The modern dimension – that is, the fourth dimension, which I just discussed in this lecture, is military capabilities.

So capabilities like nuclear capability or military manufacturing—the countries that are producing their own defense equipment, and the countries that are dependent on others for military hardware and software—these comparisons and differences are becoming very important.

Even if countries are manufacturing defense equipment, how much they are on other countries for microchips or for other inputs required for manufacturing defense equipment also plays a very important role in the dimension of military capabilities.

So these four dimensions provide a very accurate picture of the geopolitical changes that are happening in the world.

So when you read international news on different platforms, if you look at those news items from the point of view of these four dimensions, you will have a better and better understanding of the changing contours of geopolitics.

That was the idea.

In this lecture, I tried to explain to you the importance of the concept of geopolitics—why it is so important for an international trader to know about, to learn about, and to read about it.

These things are going to make strategy-making and decision-making for an international trader very profitable and very conducive to their business growth.

So that was the idea.

Hello friends,

I’m very happy that you have completed this section.

That was really very important for you to become a successful exporter.

In this section, I aimed to make you understand all the aspects of the international business environment, because this environment, if understood well, can help you to do things yourself.

So you are not dependent on others.

Although you should be talking to others and getting a lot of information from other people, based on the information that is so easily available across the world—in just a fraction of time—you can do much on your own.

All this information, all the events, all the news that comes—if you can understand what I have taught you in this section, you will be able to make inferences out of these events.

What is happening, how the shift is happening, geopolitical shifts, international business environment activities that are happening, why they are happening, and what can be the influences or the consequences of those activities on your strategies, your future strategies to become a truly prolific global person.

This kind of knowledge is very, very important.

That is what I wanted to provide you in this section, and I hope you are feeling confident about understanding this world—this playground—where international business trade has to be played.

So in the next section, I will aim to make you understand all the avenues and sources that are available to get trade information or business information, or any information that is useful to you in order to become a successful exporter to a particular destination where you want to export your goods.

So what are the different sources?

How to get business intelligence?

Where to get business intelligence?

What are the tools?

What are the avenues?

All those things I will be discussing with you based on my long experience in this area, and also from my own practical experience, I’ll be sharing this information with you.

I will also try to take up a case study in the next section that will illustrate to you how to go about starting your business, selecting the markets, and finding the buyers.

So this information I will be discussing in the next section.

Hi friends,

Welcome back to the course.

In this section, my objective is to share with you and discuss the different avenues that are available to receive business intelligence.

Because this business intelligence will make your work more secure, more certain, and the chances of success will be very, very high.

The more time you spend at this stage in finding business intelligence—complete business intelligence, smart business intelligence—you have to find, the better it will be.

This business intelligence, when derived from these sources, is going to help you in understanding the destinations where you can sell your products.

And it will even give you some ideas about how to extract knowledge about the buyers, potential buyers, and how to find them.

So these ideas I will be discussing with you.

Some of the ideas may be suitable for your product. Certain ideas may not be directly related to your product—it depends.

I will try to discuss many different ideas, many avenues where you can go, where you can get the information online or offline.

All those things I will be discussing, and in the subsequent section, I will also take up one case study of exporters from India.

If they want to find out this kind of information, how will they find it?

From that case study, these similar ideas can be used by exporters from other countries to find similar sources in their own country, too.

So this section, as well as the subsequent section, will make you confident and will give you infinite ideas for finding business intelligence sources and avenues.

So that's the idea of this section.

In the next few lectures, I will discuss where a would-be exporter can go to gather market intelligence like what to export? where to export?, Latest import inquiries, policies, and procedures that are related to certain import markets.

Let's talk about how to deal with export market research, how to conduct export market research.

What are the typical steps?

What are the different sources of information?

What all has to be done in finding the markets and the buyers?

How do you go about it?

What are the methods of making decisions with respect to business intelligence?

So all these things we will be discussing. The typical steps involved in export market research include mainly five steps.

The first step is secondary research.

So instead of primary research, you start with secondary research because this is much cheaper, although it is very general in nature.

But it will give you an idea of how to go about it, and it can be done much faster.

So it is always better to start with secondary research followed by primary research.

What happens in primary research?

You are more specific about your product, some of the products that you have zeroed in on for exports.

So, primary research is more focused.

It tries to get data and information, and market potential, export market potential specific to your product line.

However, it is more costly and time-consuming.

So it is always better that before you do the primary research, you do the secondary research.

And the third step is choosing the right export entry route or export method that you use, maybe the direct method or the indirect method.

What are the different ways of entering the market?

So what is that route?

So in this third step, what you do is make an initial export plan.

What is your strategic plan?

What is your export plan?

What is the complete strategy?

Whether you are exporting your goods purely based on the strength of the products, or you want to understand more about the market, understand the requirements of the customers, and based on that, you provide the good product—which may not be the best product—which is a better strategy in present times.

In this strategy, you focus on the market and understand the requirements of the market, and provide the product that provides the best solution to the customer's needs.

So that is the way it is done in present times.

And that is supposed to be a better route.

But you can definitely choose your own strategy.

How do you want to enter the market?

What is the export plan?

So this is the third step.

In the fourth step, what you do, especially if you decide to focus on the market, you want to understand the market threadbare.

In such a case, what you do is tend to create a professional international marketing plan.

This is an initial marketing plan.

You build a marketing plan and a country note.

So the country note is part of this export marketing plan.

You try to get as much information as you can about the market, that is, the potential market that you have already understood from the earlier steps; these are the main markets.

It may be one or two, not many markets, and you make this export marketing plan specific to that market.

You try to go deeper into the market.

You understand the trends—what are the trends of the goods or similar goods that you want to export—and make a country note.

These are all initial documents that have to be well protected, and these should be confidential documents not to be shared with outsiders.

So these documents have to be updated from time to time.

As you go forward in your export efforts, you have to keep updating these documents.

They become your roadmap for being successful in that market.

This plan is very, very critical to your success.

And finally, in step number five, the last step, you create trade leads on the strength of whatever work you have done in steps one, two, three, and four.

Based on that strength, you actually start learning the ways and means of getting the trade leads, creating the trade leads.

Depending on what your export plan is, you find out the different sources and methods and avenues, and platforms to create those trade leads.

So in the subsequent lecture, I will be talking more about this step.

How do you create trade leads?

What are the different options available for creating trade leads?

Definitely, these options will depend on your earlier four steps.

So it is on the strength of those four steps only that you start creating trade leads.

What are the different ways of exporting? Before moving forward you need to choose the path that most appeals to you. Learn more in the next lecture.

If we talk about the common export routes that we discussed in the earlier slide or the export methods, we can generally have two types of routes.

One is the digital route, that is, the e-commerce route.

And the second category of the routes is offline routes, that is, the physical routes.

So in e-commerce, you can go through online marketplaces. Well-established, very popular, and big communities are already there.

These platforms are very popular internationally.

Marketplaces like Amazon Global Selling, Etsy.com, or Rakuten.

So many platforms are there.

You can use these platforms to enter into international markets.

Every platform has its own rules and guidelines, and methods of conducting business.

So you have to learn those methods.

One of the courses I have in this VJ Global MBA Courses Series on Udemy, the title of which is Successfully Set up Your Export Digital Business Online.

In that, I have explained how to use these online marketplaces, how to become successful through online marketplaces.

So you can take this route.

The other route is to create your own shopping portals, international shopping portals, wherein the international buyers can come and place orders directly through your websites.

So you can create your own shopping portal, which is captive to your organization, especially customized to your requirements through outside agencies, web portal development agencies, or government agencies.

You can do that also, but you can also use some of the free services. For example, if you are an exporter from India, there is one website that is sponsored by FIEO, that is the Federation of Indian Export Organizations, in association with Global Linkers.

So if you go to globallinkers.com, you will find that if you create your account, you can set up your own portal free of cost.

As an Indian exporter, that is an e-commerce portal complete with a payment gateway and many features.

So you can create your own shopping portal also.

So these are generally two methods that are used in the e-commerce route of exporting.

This is one way.

The second category of routes, that is, the offline routes, includes two methods of exporting.

One is the direct method, which is direct exports, and the second is the indirect exports.

So obviously, in direct exports, you have better profits.

Your growth is more.

In direct exports, you are in touch with the foreign buyers.

But this method is more costly in nature and involves more risk.

In the indirect method, you go through already established exporters, merchant exporters, to sell your goods overseas, and your business risks are less in indirect export.

But profitability is low, and growth may also be low in this category of offline routes.

So I will talk more about direct exports and indirect exports in subsequent slides.

So you will have an idea of what all options you have in direct exporting and indirect exports.

Talking about the direct export methods, direct export routes, you can go for direct shipments to the importers.

So, well-established importers, you have to discover the potential export markets. The whole process is involved.

As I had discussed with you, different steps are there in making your export plan and making your initial export marketing plan, country-specific plan, country plan, and country note.

So, using those steps, you discover different importers, direct importers, who are importing in bulk quantities in wholesale quantities.

So these importers may be the big wholesalers in those markets.

They may be the buying arms of big supermarkets or hypermarket chains, or retail chains.

So different types of importers you will be encountering.

And you have to understand their requirements and feed them with the shipments, direct shipments to these importers with different terms and conditions.

So you sign contracts with them and export those goods.

The second way, a very common way of direct export, is appointing an overseas commission agent who does all the running around for you.

And generally, he or she sells your goods to the wholesalers, overseas wholesalers, and generates medium to large orders on your behalf.

So the role of the agent is just to act as the bridge between you and the potential buyers in those markets.

And it takes some commission.

So this can be another method of exporting.

The third method, which may suit you depending on what goods you are exporting in the international market, is to set up your own company abroad.

So this company becomes the local company in that country, or maybe a branch office of your company.

Your home country company branch office can also be there.

And you set up this company abroad, and you have your own staff and your marketing team who will be marketing your goods under your own brand.

So when you do that, you are in direct touch with the distribution chains.

So, depending on the country that you have chosen as the destination, different markets have different distribution channels.

So you need to understand those distribution channels with the help of your initial marketing plan, country marketing plan, country note that I discussed with you.

And using that, you go deeper into the market.

You sell your goods through your own company, through your own marketing team.

The fourth very common method of direct export is having a strategic partnership or joint venture in the destination market.

So by having those joint ventures or strategic partnerships, you add some extra value.

If there are complementary strengths in the overseas partners, it may speed up your market entry.

It may speed up your export volumes.

It may reduce some of your costs in the overseas market because you are sharing your business with a partner.

But it will mean that you share your profits also with the joint venture partner or the strategic partner.

Whatever you have in the international market, you will have to share your profits with them.

So these are different methods that are available, very common methods of direct exports, although there can be more ways of doing direct exports.

So we have only covered very popular methods in this particular lecture.

So in direct exports, as I had mentioned earlier, you have better potential for profits, you have more growth, and you have a better learning curve because you are directly in touch with the customers, the market, and the distribution channels.

And since you are in direct touch with the distribution channels, you have better learning about the market, and you keep on updating your country note, initial marketing plan.

It becomes more and more refined.

You have complete data, added data, updated data as you go forward, and that adds to your learning about the market, about the requirements of the customers there.

So your knowledge about the market becomes very good.

For example, if you start exporting your goods to the Japanese market, which is a very unique market with a unique culture and unique needs of the customers.

So when you go forward in the Japanese market, you learn a lot, you learn from the market, and with time, if you become an expert in this market, the Japanese market, the returns can be very, very high because it is a very sophisticated and rich market.

So these are the things that happen when you do direct exports.

There are many other benefits of direct exports also.

These learnings that you make in the overseas markets, you can replicate some of this knowledge in your own home country market to improve your home country market situation also.

Some companies also do that.

But in direct exports, you have more risks and more initial costs that are involved.

And generally, it takes time to start your business and to break even and reach the point when your business is doing well.

It takes time.

In the indirect export methods, very common methods are exporting your goods through merchant exporters in your own home country, or exporting through buying houses, or exporting through government trading companies.

Some marketing companies may be run by the local governments.

So you can export through those agencies or government departments.

There can also be some canalized agencies.

In many countries, the government has canalized agencies. For example, in India, we have organizations like STC, which is the State Trading Corporation, or MMTC: Metals and Minerals Trading Corporation.

So such organizations do canalized exports.

So some of the items are reserved for exports through those government agencies.

So in such a case, if there are some agencies, if you want to export those goods, you can only export through the canalized agencies of the local governments.

So those avenues are also available.

The items don't need to be canalized. Only some of the government trading companies have very strong customer bases overseas.

And on the strength of that, they can provide you with big orders for your products.

So that possibility is also there.

So if you are looking for quick business and quick profits, this option may also be useful to you.

It depends on what your area of export is, your area of expertise, and what product you want to export.

So it will depend on that.

Then the fourth very common method of exporting is called deemed export.

So generally, this word deemed export is specific to some countries. For example, it is very common in India, where there are two types of zones where the exporting communities are based.

One zone is called DTA, which is the Domestic Tariff Area, which means the area that is very normal, wherein production happens for the local markets also and for export also.

But some special economic zones exist in those countries, like, for example, in India or in China.

In these special economic zones, the companies are there that produce goods for export only.

That is the 100% export-oriented units.

So these units have special privileges and special facilities. These zones have controlled access by the DTA players, and they are protected by customs.

They are customs-bonded areas.

So, custom facilities are available in the zone itself.

And any goods that are imported for exports attract zero rate of import duties.

And the value addition can happen in these special economic zones.

And the goods can be exported much faster and more efficiently.

So, the companies that are based in DTA, that is, the Domestic Tariff Area, if they sell any goods to the companies in the special economic zones as inputs for exports, it is called deemed exports.

And in some countries, some export benefits are also available to the deemed exporters.

For example, in India, there are certain facilities and benefits that are available for DTA units selling goods to SEZs or 100% export-oriented units.

That is called deemed export.

So this is another method of indirect export.

So what happens in such indirect exports?

The profits are less, definitely.

And growth is also less because you are not in direct touch with the overseas market and the customers.

You have a lower learning curve because again, you are not in direct touch with the end users or the importers overseas.

So you're learning about the overseas market is much less.

However, in deemed export or in any other route of indirect export, your risks are less because you are dealing with a buyer that is located in the same country, under the umbrella of the same laws and regulations, and it is easy to enforce any legal action in case of any dispute.

Arbitration can be done in the same country, so the risks involved are much less.

These are some of the pros and cons of the different methods of exporting.

And these are some of the common routes.

Common export routes.

Friends, let us now discuss the common research methods that are commonly used.

Two methods that are most commonly used for carrying out the research for business intelligence, market research, or product research are primary research and secondary research.

So the difference between primary research and secondary research is that primary research requires the physical collection of data from the overseas markets, such as conducting market surveys or some kind of research in the markets.

It can be a selected market.

It can be a wide range of markets depending on how much budget you have for the research.

So primary research differs from secondary research in this way.

In secondary research, you mostly do desk research.

So, using online resources, using published data, and visiting some of the trade bodies or information-providing organizations that have archives of different types of reports, some kind of data, and databases with them.

You visit them and try to extract information from these sources and make inferences out of it.

So that is secondary research. In secondary research, mostly the published databases and the statistics that are available are used.

It is more of desk research, wherein you try to draw inferences from the statistics and data.

So you find some trends, you find potential markets.

You do secondary research generally on a wide range of markets and product lines.

And you zero in on the most potential markets and the most potential products.

So this is how it is done.

But while secondary research is much more affordable because it does not entail physical visits to the overseas markets, the information that is available in secondary research is more general in nature.

So most of the time, it is not very specific to the product lines and the potential markets that are already there in your mind.

So that is the difference between secondary research and primary research.

The better strategy is that, if the budgets are available, the exporter should first do extensive secondary research, followed by some kind of primary research that will focus on very specific products and selected markets.

So this is a better method of carrying out export research.

As I just mentioned to you, primary research mostly entails visits abroad, participation in trade fairs, exhibitions, or carrying out customized market surveys either on a self-basis or by hiring third parties, the research firms.

So, outsourcing that work if the budgets are available, or personalized face-to-face interviews with the people who have the data, who have the information about specific products or specific markets. You may have to spend money on most of these methods that are used in primary research.

While primary research is more specific to certain product lines that are already in the mind of the exporter or the potential markets, primary research is generally time-consuming.

It is very costly in comparison to secondary research, and it generally cannot cover a very wide range of potential markets.

So generally, the coverage is for selected markets. And most of the data that is collected in primary research is through offline sources.

So these are the features and characteristics of primary research.

On the other hand, secondary research entails online resources research.

In present times, online resources are very useful, and if done properly, they can really give you very good insights into the potential markets and product lines for exports.

It also entails social media research, social media platforms that are available, and digital communities that are very, very big.

Some of these digital communities are the size of large countries, and the users on these platforms are much more targeted.

And also, it is based mostly on the published data.

So, research of published data, statistics, and information that is available is used, and trends are observed in this data.

Potential markets are filtered out from these published data.

So it requires some desk research of a very intense kind.

And it may also entail some face-to-face meetings, not in the primary markets but in the secondary markets, or with some trade development bodies.

You visit those bodies, you talk to the people who are knowledgeable about those markets and product lines, and who are willing to help you.

So such face-to-face meetings can be part of the secondary research.

It is less time-consuming, it is more cost-effective, and it uses both offline and online sources for the data and the statistics.

And it can cover a very wide range of markets.

Many countries can be covered to find out which are the top markets for exports and which are the markets that are growing faster than others.

So that kind of information is generally sought through secondary research.

So both secondary research and primary research have their advantages and disadvantages.

The right sequence I have already mentioned in the earlier lecture, where I discussed the typical steps that are involved in export market research.

Those steps, if carried out properly, can give you very good insights into the things that are to come in the journey to become a successful exporter in international markets.

So if we look at the typical steps that are involved in secondary research, it starts with the mining of trade statistics and figures.

So, how do you mine these trade statistics and figures?

You use things like the ITC HS code.

You look at the market categories, different regions of the world.

You try to find out what is going from where to which markets.

That data is available using the International Trade Classification Harmonized System (ITC HS code) based classification of the product lines.

There are many websites available where the trade statistics and figures are available on both a paid basis as well as free of cost.

So this kind of data analysis of statistics and figures is the first step in secondary research.

Then, for example, you filter out the top ten potential markets or products depending on the situation.

So that becomes your second step.

This second step involves filtering out the data from step one.

In the third step, you evaluate the potential markets based on the information that you derive from trade statistics and figures.

Looking at the top ten potential markets or products, you filter out further to find which markets have better potential than the others.

So that kind of evaluation has to be done.

And in the fourth step, you generally have to analyze the customers and the trends.

So product trends, customer habits, fashion trends, the needs of the customers, and how they are moving in the most potential markets.

So that analysis has to be done.

And this analysis is again based on statistics and figures.

In the last step, that is the fifth step in secondary research, you also mine the data about comparable products and competition.

So what kind of competition exists for the product lines that you are envisaging for your export operations?

So for those comparable products, what are the prices?

What are the price trends?

What are the sales volumes of those products, and what kind of competition—whether direct competition or indirect competition—exists with respect to those comparable products?

So that information can give you very good insights into your pursuit to find out the final most potential markets and product lines.

Now, let us talk about the typical steps that are involved in primary research.

Why have I discussed secondary research first? Because, as I had mentioned in one of my lectures, the typical and the right sequence of carrying out export market research is to start with secondary research first, and then go for primary research.

So that's why I am taking this after the secondary research.

In the typical steps for primary research, the first step entails product research and sample collection.

In case you already have some product ideas—which you will definitely have from the secondary research—based on that information you derive from the secondary research, you do the product research.

You try to find out everything about the product: how it is made, what the composition is, what inputs are required for the product, which inputs need to be imported, and which inputs are available locally.

All this information has to be collected so that you are prepared to talk with the foreign buyers.

All information, photographs, specifications, and related reports about the product lines—global information about the product—is required at this stage.

So it is a little tedious and time-consuming process, but it is a very important process.

You also carry some samples. You also collect some samples, photographs, and videos—sometimes even of the production processes. All this information and these resources have to be with you in step number one.

In the second step, before carrying out the physical visits to the foreign markets or other physical activities that are involved in primary research, it is very important to do another desk research and correspondence with overseas agencies, buyers, market players, wholesalers, and importers to build some contacts whom you can go and meet and collect data from.

Or, if you want to participate in some trade fairs or in some buyer-seller meets, what events are available? What are their dates? You have to schedule that.

So you need to do correspondence with the organizing companies of those events. You have to book space. You have to book stalls. All those things have to be done in this step.

So this research and correspondence will be required in this step.

In the subsequent steps, you either carry out market surveys, participate in trade fairs or buyer-seller meets, or visit the potential buyers overseas. Or you do a combination of these activities.

The desk research of the secondary research will give you very good ideas on how to go about it, and to finalize the exact steps that you will be carrying out in the primary research.

That will also be based on your primary research budgets, because that is very critical.

In primary research, the financial involvement is very important.

In the next few lectures, Dr. Jain will discuss different global sources of export market information and how to use these sources.

Now, if we talk about the common sources of information for carrying out export market research, some of the most important sources of information across the world, in any country you may be exporting from, include places like industry associations, local industry associations, or foreign trade development bodies.

They may be sponsored by the local governments, quasi-government organizations, or private organizations.

So foreign trade development bodies are there. Generally, they are sponsored by the local governments. And foreign trade institutes also provide a lot of information. They carry and keep archives of a lot of information.

So these are some of the common sources of information, including online sources.

On the internet, a lot of paid and free services are available that provide very important and very useful online information regarding primary research as well as secondary research.

In addition, the trade consultants of the potential markets in your home country can be very useful places to visit to get certain types of information. Or the embassies of your home country in different countries—potential markets—if you correspond with them, they also provide very useful and firsthand information and data.

Then, many of the capital cities across the world have American Trade Centers. The network of these centers is very comprehensive, and they have some very hard-to-find databases and sources of information that are mostly available free of cost.

So, friends, if we talk about the examples of the top five sources of business intelligence, market information, product information, and international trade information, if we look at these top five sources:

Some of the most important sources include, starting with the United Nations Statistical Yearbook.

So what is this United Nations Statistical Yearbook?

It is a repository of the data of almost 220 countries.

So it covers such a large range of countries and provides statistical data, international trade information, and international trade data. And the information, which is the international trade information, is both on the products as well as the nations.

So these 220 nations are covered in the United Nations Statistical Yearbook.

This is the special feature, and it is one of the most authentic sources of information.

Then the second very, very important tool or resource that is available online for getting the international trade statistics and figures is the ITC Trade Map.

ITC is the International Trade Centre. International Trade Centre Trade Map.

If you type "Trade Map" on Google, you will reach this website.

And to certain categories of the ITC code, around six digits, you get free information and free statistics. Beyond that, going for eight-digit or ten-digit data, which is more specific to the products you are looking for, you have to go for the paid service.

And the trade statistics for international business development are available. Product-wise, country-wise trade volumes are available monthly, quarterly, and yearly. Trade data is there for both import and export values, volumes, growth rates, and market shares.

All this information is available on the ITC Trade Map.

Then the third very authentic and top source of international trade information is the OECD Survey Series.

This series is a collection of annual surveys based on original research and interviews. So original work has been done in this.

But it covers only 24 member countries. However, the data is available for the entire world.

So the information, because it is original in nature, is very, very useful for all countries. Although the 24 member countries are there, the data is more focused on those 24 member countries.

But this is a very, very useful and important source. Very detailed information is available in both qualitative terms as well as quantitative terms.

Then, the fourth very important source of information in the world today, available on international trade, is the data provided by WITS, which is an arm of the World Bank.

Now, this World Bank arm provides access to information on external trade from United Nations Comtrade data and United Nations Conference on Trade and Development (UNCTAD TRAINS) data, as well as the WTO, IDB, and CTS databases.

All these databases are very complicated in nature.

So WITS provides you, in a very comprehensive and user-friendly manner, all the access to information on external trade from all these three very, very important international sources of data.

It is very useful.

Then, finally, the ORU Library, which is a digital library of many, many areas and topics.

It also has the global business information pages, where links to several authentic web sources focusing on country profiles, cultural information, and international data and statistics are available.

So if you go to this particular link, you will find a very good set of source links where you can collect very authentic and up-to-date data.

So this ORU Library you should visit.

If we look at some more sources of information, popular ones may not be among the top five.

That includes the World Bank Atlas, which is very similar to the United Nations Statistical Yearbook, and the information that is available in the World Bank Atlas differs from the United Nations Statistical Yearbook in the sense that the information in the World Bank Atlas is more general in nature.

It's not very specific.

Then another very good source of information is called the Exporter's Encyclopedia.

Now, this Exporter's Encyclopedia is an extensive handbook that is updated on an annual basis and covers more than 220 countries.

The areas that are covered in this extensive handbook relate to international communication, international trade regulations that are in many countries covered by this publication, international trade documentation, international transport, and international travel.

So these are the types of information that are available in the Exporter's Encyclopedia.

Another very good source of information can be the local state departments.

As I have mentioned earlier, these are the departments that serve as the trade development bodies and may include ministries like the Ministry of Commerce in India or the Department of Commerce, which also has a wing in India called DGFT, that is the Directorate General of Foreign Trade.

So these are the state departments that maintain the archives of information, which is generally very updated and real-life information.

These trade development organizations are mostly sponsored by the local governments.

Also, the departments can be specialized in maintaining and keeping records of the trade statistics of that country, such as the goods that are being exported from that country all over the world.

So those kinds of departments can provide a lot of valuable data at very affordable prices.

If we take the examples in India, India has some of these trade organizations, like EPCs, that is the Export Promotion Councils.

So many EPCs in India provide a lot of support and information for certain product groups.

For different product groups, there are different EPCs in India.

Another organization, for example, in India, is called ITPO (Indian Trade Promotion Organization).

The objective of this organization is to promote India’s trade by providing information and data to the exporters, as well as helping the exporters display their products all over the world through international exhibitions and trade shows at subsidized prices.

In India, there are also departments called the Coffee Board or Tea Board.

They are product-specific, commodity-specific export promotion bodies for commodities like coffee or tea.

In India, they also have the Rubber Board, which promotes the export of rubber-based items.

And DGFT, which I just mentioned to you (Directorate General of Foreign Trade, under the Ministry of Commerce), also provides a lot of support and information.

Then there can be independent trade organizations that are mostly local industry bodies, such as Chambers of Commerce.

They exist in most countries.

Many times, these Chambers of Commerce may be joint ventures between the local government and the overseas government.

For example, in India, such local bodies or industry bodies include FIEO (Federation of Indian Export Organizations), FICCI (Federation of Indian Chambers of Commerce and Industries), and CII (Confederation of Indian Industries).

These are some of the organizations that also work as a bridge between the exporters and the policy-making bodies in India, and they also provide a lot of information and support.

Then, as I had mentioned in my earlier slide, there are foreign trade institutes that are available in most countries, which maintain a lot of valuable archives of information that they can provide you.

These are generally specialized institutions funded by the local governments.

For example, in India, we have the institute called the Indian Institute of Foreign Trade (IIFT), which is funded by the Ministry of Commerce. It is among the top institutes providing training in the areas of foreign trade.

They also provide a lot of information through their market surveys, reports, and library resources.

There can also be many private institutes of a similar type in different countries.

In the next video, I will take you on a guided tour to India Trade Portal, a really commendable service by GOI, to provide hard-to-find market intelligence on export markets. Similar trade portals are provided by local governments across the world for boosting exports from their countries.

If we talk about the other sources of information.

We talked about the World Bank Atlas.

We talked about the Exporter's Encyclopedia, local state departments, the initiatives of the local governments, independent trade organizations, and foreign trade institutes.

In addition to that, most of the local governments in the world today are also providing online data to boost exports from their countries.

So every local government will have a local trade portal where you can get very useful data for international trade.

I will take one example of the Indian Trade Portal.

I will show you what information is available on the Indian Trade Portal.

Similar information you will find in most of the trading nations in the world.

So this I am taking this just as an example to show you what kind of information is available in such portals and what these trade portals can actually do.

So this I will share this with you.

This is the Indian Trade Portal, one example of a local government-sponsored trade portal.

This trade portal, for example, in India, is sponsored by the Indian government in association with FIEO, that is, the Federation of Indian Export Organisations, a very active organization.

And the portal provides very useful data.

So things like details about the top 25 countries that are trading partners of India and what is exported, what is imported—this data is available.

It also provides a platform for foreign buyers to list their requirements.

So foreign buyers from all over the world are listing their requirements and also getting knowledge about Indian trade, knowledge about Indian documentation and procedures, Indian trade policy—all those things that a foreign buyer looks for in a country.

This information is provided in this link.

Then many other resources are available.

In addition, the portal also provides the possibility of getting information on tariffs, preferential tariffs, SPS/TBT matters, GST, and the local export incentive schemes.

Like in India, we have the RoDTEP scheme, RoSCTL scheme, TMA, duty drawback scheme, interest subvention rates, export-import policy, and conditions.

All this information can be obtained from this link by typing either the description of the product you are looking for or the ITC HS code.

So, in case you do not know the ITC HS code, you can also find that also by writing down the product description.

And when you do that, you obtain the ITC HS code, and using that ITC HS code, if you want to export something, you will get the export-related data and information, which I just mentioned to you.

And if you want to import something, you will get the import-related information and data.

This data, in this case, is available, for example, on this portal for the top 87 countries that are trading partners of India.

So in most other countries, you will find very similar kinds of trade portals where you can get all this information.

In addition, these portals also provide information on how to export, how to register with different export promotion bodies, and how to interact with key officials to know more about the facilities that are available at the various state departments and trade bodies.

So you can interact with them.

You can also have access, for example, in this case, to the Indian Business Portal.

Or you can get alerts related to SPS/TBT measures that are amended by different destination countries.

So those alerts are possible.

You can also get information on trade and tender queries not only from the Indian government but from all over the world.

You can also get access to the ease of logistics portal.

For example, in this case, this is the Indian Trade Portal, so it will talk about the logistics-related matters that are concerned with Indian exporters—how to make it easier to move your goods from your factory to the international destinations.

So that portal will provide you with all that support.

Frequently asked questions, Indian suppliers’ databases, and information about the regulatory instruments for the formulation and implementation of an effective trade policy and deployment strategy are available.

So trade policy matters—your participation and knowledge about the regulatory instruments that are used for the formulation and implementation of foreign trade policy, for example.

And trade statistics links are there, where you can get import-export data in a broad sense, in broader figures, from this link.

And details of the different foreign trade policy provisions that are in the foreign trade policy of India, and the export promotion schemes by the Government of India.

So these things you can get.

And finally, you can get information on the banking regulations that govern exports from India.

So this is one example that I have given about this portal.

This portal also has information on the latest news that is concerned with Indian exporters, as well as the upcoming events that provide either training or participation of the Indian trade development bodies in international events.

What are those events and any delegations that are being sponsored by different trade development bodies or government departments? All those upcoming events are shared on this particular Indian Trade Portal.

So this is a complete portal for Indian exporters.

Very similar portals are available in most nations.

The local governments provide such portals, and that has become the norm.

So you have to find out in your country which is the respective local trade portal where you can get all this data.

I will tell you a little more about this particular trade portal by taking a case study in the next session, where we will talk about how a particular exporter used this Indian Trade Portal to get very good international trade information.

So that is what I will be sharing with you in the next section.

What are the different ways of practically gathering trade leads? Learn more in the next few lectures.

Now, let us talk about the process of generating trade.

It's a very typical, common process that is used for generating trade leads.

One category is the digital methods, and the second category is the offline methods.

In the category of digital methods, we have different approaches that are used for generating trade leads, typically in general terms.

One of the very useful methods of generating trade leads on digital platforms is called marketplaces data mining.

As I mentioned earlier, I discussed the various international marketplaces that have evolved into large digital communities for selling goods.

Things like Amazon Global Selling, Etsy.com, Rakuten, eBay, and many such marketplaces exist.

The big data generated by these international marketplaces can be accessed through various data mining software and online platforms.

For example, if we talk about a similar website that provides this kind of access to data that is properly mined by the website itself, the website works as the data mining software and provides you with inferences from such data. One such website is JungleScout.com, which provides and sells the data generated by Amazon Global Selling—the world's largest online marketplace for exporters.

This is a very good example. You can go to JungleScout.com. There is a free trial period available. You can use that period, but before you start your free trial, it is recommended that you go to YouTube and see how Jungle Scout is used.

Once you have done your homework and understand how to obtain and extract information from JungleScout.com, you can start your free trial. During that period, try to obtain a lot of information that you can get free of cost from the Amazon Global Selling big data, including the list of big suppliers and the list of big buyers of different items.

In this case, you do not use the ITC HS code. Rather, you use the Amazon code that is called the ASIN number, which is the Amazon Selling Identification Number.

The ASIN number has to be used on this particular website to pinpoint which products you are looking for and what product trade data you require.

That is how it is done. Research tools for both products and markets are available on these websites and software.

The second method of generating trade leads on digital platforms is called the export sales funnel.

The export sales funnel is a combination of social media advertising and collecting trade leads on your own website.

How do you link the social media efforts that you make and bring people to your website? There, you can collect trade leads and contact information.

A proper process exists by which you can create this export sales funnel. A lot of information is available online about how to create an export sales funnel. Many free videos are available on YouTube, where you can find the step-by-step method of creating an export sales funnel.

In one of my other courses in the VJ Global MBA Courses series on Udemy, there is a course titled Successfully Set Up Your Online Export Business. You can join this course and understand how this export sales funnel is created, what the different methods of creating an export sales funnel are, and how to create a list of interested parties, including medium to very large importers.

You can collect data and even create and collect original trade leads—not only contact information, but actual requirements. You can do that by using the export sales funnel. How to do that is explained in that particular course. You can join that course.

In this, you also have business-to-business sales funnel software and platforms like the LinkedIn sales funnel program.

So what is this LinkedIn sales funnel program? You can go to the LinkedIn sales funnel website and find out what the process involves.

In the course I just referred to, available in the Global MBA Courses series, you can enroll and understand what the LinkedIn sales funnel program is.

The third method of generating trade leads digitally is called email marketing. A very effective tool, email marketing aims to collect targeted email addresses and use them to send your message by using email marketing software.

Different email marketing software is available, and you can use it to send offers about your company and products on a global level. It is a very, very effective and strong marketing tool in digital methods.

Live advertising is also becoming very popular nowadays on digital platforms. Using live advertising, for example, you can use live videos on social media platforms to talk about the special features of your product, your production process, and the value your company can give to international importers and buyers.

With live videos, you can generate people’s interest. Coupled with some kind of training about your product or the social message you want to convey through those videos, a lot of interested people, companies, and groups can join.

This is becoming very important. One of the best platforms to do this is Instagram. By having live advertising on Instagram through live videos, a lot of trade leads can be generated.

Finally, a very common way of generating trade leads on digital platforms is called social advertising.

In social advertising, you prepare social messages to spread across social media. By offering some freebies related to those social messages or something that your company can afford to give on the website—for example, a training program or a great article visitors can download—you can ask them to register, and thereby you collect many contacts online on your website.

There are different methods of doing it. You can go to several resources available online, as well as videos on YouTube, to learn how to carry out social advertising.

In one of my courses titled How to Successfully Set Up Your Export Digital Business Online on Udemy, in the VJ Global MBA Courses series, you can get full details and step-by-step methods of conducting social advertising. All this training is available in this series.

So, friends, now let us understand how to generate trade leads in the real world, in the physical world, through offline methods. About the digital world, the digital methods we have already discussed.

The first very common method of generating trade leads or getting the trade leads is by subscribing to the publications that give weekly or fortnightly trade leads that are received by various local trade bodies in your country.

So whether you are in India or in any other country, the local trade development bodies are there that help you to do exports.

For example, EPCs in India or Chambers of Commerce in India, like FICCI, FIEO (Federation of Indian Export Organisations), PHD Chamber, or industry bodies like CII.

Every country has these kinds of chambers of commerce, industry bodies, and export promotion councils (EPCs).

These EPCs receive inquiries for certain product categories. These EPCs specialize in certain product categories that are based on the HS codes, Harmonized System codes, and HS chapters.

Generally, they have online services, which means you can download these trade leads every week whenever they are ready. You receive an email from these subscription administrators. They will send you an email when the updated list of new trade leads is ready, and you can download it online.

Or you can receive these trade leads by email or even through normal post. You can receive them in the form of a booklet.

Some Chambers of Commerce, like in India, FICCI (Federation of Indian Chambers of Commerce and Industry), have a business intelligence unit that publishes these trade leads weekly and sends these booklets by normal post or through online methods like emails.

So these kinds of subscriptions can be obtained. They are very, very useful, very updated, very new, and very much alive. This is one very popular way of receiving trade leads.

The second method is to look at the market survey reports that are available at different organizations, different agencies, and different commerce industry representatives.

For example, you can look at the market survey reports of different overseas business development delegations that are sponsored by local bodies in your country.

Local bodies mean local trade development bodies. For example, in India, CII (Confederation of Indian Industry) arranges such multiproduct delegations regularly to very important and strong trading partners of India, those countries that are the major trading partners and top export markets for India.

They send these delegations to regions where the focus is on diversifying exports from India. If those are the targets in those regions, delegations are sent there as well.

These delegations, when they go, because they are multiproduct, get inquiries for their own product line as well as inquiries for other products.

So they list down the contact details of the companies that have given these inquiries. Their contact details are in these delegation reports.

So these market survey delegation reports, for example, and various other types of market survey reports are available with similar agencies, not only in India but all over the world.

I gave you the example of India, but that is true for all nations. You have these kinds of local bodies and delegations everywhere.

There are many ways of doing these market surveys. If you remember, I talked to you in my earlier lecture about the market surveys done by OECD. Something similar is done here on a local level. What the OECD does on a global scale for its annual reports, these delegations do on a smaller scale.

These kinds of market survey reports are available, and they are in the public domain. Generally, these reports are available free of cost for study. You can visit these places, and some of these market survey reports may also be available online. You need to check that.

The third source of getting trade leads in the real world is from the embassies and trade consulates in your country.

Whether you are from India or from any other country, whichever country you belong to, the embassies and consulates of different countries have proper, trained staff—staff who understand trade, especially those working in trade consulates.

They are there to be the bridge between your country and the country they represent. They are interested in both exports and imports, so they maintain very good information.

For example, if you have some product and you have done your homework or desk research, and you know a little bit about your product and where it is exported, you can visit the embassies and consulates of those target markets.

Since you already have a fairly good idea about your product, its ITC HS code, and the quantities being exported, it is possible that some of the importers who are regular importers from your country will have their details maintained in trade consulates.

You can visit them two or three times and maybe request an appointment by telephone. You can also request the list of such kinds of importers. They will guide you on how to obtain this information.

Generally, this information is available at least for the country they represent. They also maintain the latest product inquiries from their own countries—the countries these embassies and consulates represent.

Since it is their job, importers in those countries look to the staff of these embassies and trade consulates to help them locate suppliers. In such a case, they will also be looking for suppliers like you and will want you to be in touch with those importers who have sent the inquiries.

Generally, this happens, and you have to keep visiting these places.

There are very good examples of consulates like the American Trade Consulate or the Russian Trade Consulate. These big consulates, American and Russian, are quite large with many people working in them to develop international trade between your country and the country they represent.

Generally, all countries have their trade consulates in the capital cities of other countries. This information can be really up-to-date, live, and useful. Generally, these kinds of inquiries get converted into real business. This is from my own experience.

The fourth very important source of generating trade leads is overseas chambers of commerce.

Chambers of Commerce are not only local. For example, in India, FICCI or PHD Chamber of Commerce are local chambers of commerce. But there are chambers of commerce that work as bridges between certain countries. These are called Overseas Chambers of Commerce.

One example of such an overseas chamber of commerce in India is the Indo-German Chamber of Commerce (IGCC). IGCC has offices in India, and its purpose and objectives are to develop trade between India and Germany, both exports and imports.

If you visit this Chamber of Commerce as an Indian exporter, you will find very useful information. Many trade leads can be obtained. You can even subscribe to the regular trade leads received by IGCC, for example.

So similar chambers of commerce will be there if you are targeting other countries. For example, if Germany is your target market, this organization can be really useful.

For a very nominal amount, you can become a member of IGCC and avail many services, including participation in buyer-seller meets with visiting buyers from Germany.

This is one example, but there can be many such chambers of commerce between your country and the possible target market you are looking for. This is another avenue for exporters to obtain real trade leads in the real world.

Another source of generating trade leads can be local state-funded trading corporations and export promotion councils.

I have already mentioned EPCs and subscribing to them or becoming a member of them. But apart from EPCs, you can also get trade leads from trading corporations—big trading corporations that have certain mandates for certain product lines from local governments.

Since they are in international markets, they also receive inquiries for other items—items they may not have a mandate to handle. They maintain those inquiries and pass them on to anyone interested from that country.

For example, in India, we have state-funded trading corporations like STC (State Trading Corporation) and MMTC (Minerals and Metals Trading Corporation).

These two organizations are very big. They have a limited set of products for which they have the mandate to do international trading. But apart from that, they receive a lot of inquiries from prospective buyers because of their reputation.

These inquiries relate to certain product lines in which these companies are not interested or do not deal. Since they are state-funded organizations, they have the mandate and obligation to pass on these inquiries to local companies and exporters who are represented by chambers of commerce or EPCs.

Generally, most exporters are members of their respective EPCs. With that recognition, being a member of an EPC, you can approach these organizations.

If you can give authentication about the bona fide nature of your company with some performance record, you may approach these trading companies, and they will not shy away from sharing these live trade leads.

Sometimes these trade leads can be for very large quantities of import interest. That is another very interesting area where you can generate leads.

Now, a very traditional method for exporters all over the world is to generate trade leads through correspondence, international correspondence.

Whoever has been in this trade will know that email marketing, or so-called sending many, many inquiries through emails to the importers all over the world, is a norm and a very strong tradition in international trade.

It involves sending detailed notes to prospective buyers by email, extracted from different sources. The list of these emails is extracted from different sources, either through digital methods, databases, or by visiting different database archives in trade department bodies or institutes, foreign trade institutes I mentioned before. You visit them, and you get a lot of email addresses and contact details.

You keep on adding those emails to your email marketing software. So you basically use this email marketing software to do this kind of marketing.

These efforts can be coupled with cold visits to overseas markets to prospective buyers who have shown some response. Through this email marketing, you get certain responses and some interest in certain items. You then do further correspondence to try to understand their requirements.

Sometimes, before making cold visits, you try to get some online conversation, video conferencing conversations with the concerned persons in overseas markets, in those companies, in the import departments.

If you can talk to them and judge the genuine interest of the company in your product and their genuine requirements, you may ask them that, since you are visiting that country for a certain purpose, you would like to visit them. Generally, they will entertain you.

This is how this kind of work is done. It is a very traditional method. Most companies do it like this. Especially the new ones who are new in the trade do it this way.

Even established exporters have an email marketing department that is involved in these kinds of activities: sending emails, collecting emails, building up databases of email addresses, maintaining the emails, managing marketing software, and continuous correspondence and engagement through email or video conferencing calls.

The purpose of these email marketing teams is to engage foreign buyers and give them chances to interact with them, either online or offline, through cold visits.

This is how it is done. It is a very useful way of doing it, a very strong method, and it generally gives very good results.

Another very important source of generating trade leads is participation in buyer-seller meets. I have mentioned buyer-seller meets several times in my earlier lectures.

These buyer-seller meets can emerge from several organizations, different types of trade bodies, industry associations, industry groups, and network groups. Many groups exist where the interest of the buyer is to buy the goods, and the interest of the seller is to sell the goods, and matchmaking happens. Both parties have their own interests, and they would like to meet.

Such events are organized. Sometimes these events are free, and sometimes they are paid. So you have to become an expert in understanding, for your product line, which organizations, export promotion bodies, export promotion councils, trade bodies, industry associations, or chambers of commerce can give you the opportunity to participate in these buyer-seller meets.

For example, Indian organizations that regularly organize buyer-seller meets include CII (Confederation of Indian Industry), FIEO (Federation of Indian Export Organisations), FICCI (Federation of Indian Chambers of Commerce and Industry), and product-specific EPCs (Export Promotion Councils). They regularly arrange these kinds of events.

This is very interesting.

Another very important method of generating trade leads in the real world—very glamorous, very exciting, but requiring a lot of hard work, homework, and research—is participation in international trade fairs and exhibitions.

When you participate in international trade fairs and exhibitions, that is the time when you have done everything I have taught you in this course. I have already given you a lot of information about secondary research.

When we talk of primary research, initial participation is also there in international trade fairs and exhibitions. When you want to test the waters and understand those markets, that can be the aim of participation in international trade exhibitions at that time.

But even after you have done it, once you have started your work and already taken off in your business, in order to generate trade leads, you can go for participation in international trade fairs, where the automatic interest of buyers will be seen.

The potential is very high. Buyers come to these exhibitions and trade fairs to develop and grow their own businesses. They are interested in goods—that’s why they come there—because at trade fairs and exhibitions, there are so many suppliers and so many varieties of products.

Even if you are an established company, you would require regular participation in international trade fairs and exhibitions to generate trade leads. It is supposed to be the most effective and traditional route to obtain serious new inquiries and new clients.

There is no denying the fact that it is a very effective tool.

The most popular trade shows are held in Germany. Germany is the trade capital of the world as far as international trade exhibitions are concerned. There is an organization called Frankfurt Messe, which is the largest organizer of international trade fairs in the world.

These trade fairs, held throughout the year in different months, cover almost all major product categories traded in the world.

Generally, these trade shows held internationally—whether in Germany, Hong Kong, China, Singapore, or even Dubai—are product-specific. Generally, specialized trade fairs are organized. Consumer goods trade fairs are held, or sometimes festival-related trade fairs are organized, for example, trade fairs related to Christmas items.

So there are many different categories on which these trade shows are based.

This is a very interesting area to learn about, talk about, know about, and experience.

The cost involved is quite high. So decisions to participate in international trade fairs and exhibitions require a lot of homework and desk research.

Another way of generating trade leads is sample marketing.

So what is this sample marketing?

Sample marketing is nothing but generating interest in international buyers through samples. It is not suitable for every category of product exported or traded. For certain items, where the sample cost may not be very high, sample marketing works and becomes very effective. It is suitable for certain categories of product items.

In sample marketing, you make a strategy to market your samples either on a paid basis or free of cost. Sample marketing can generate a lot of interest in the international buying community, and you can generate trade leads.

Another way of generating trade leads is sponsoring related events. Very smartly, you have to identify overseas events of different types and sponsor them so that your brand and company name are visible in those events.

The people visiting those events are your target audience, which means you are expecting that many prospective buyers will be coming.

Examples of such events can be industry-related conferences, industry meets, trade shows, or even buyer-seller meets. Sometimes you can sponsor events in your home country as well as in overseas markets.

You need to be very smart to identify such events and see how much financial involvement is required in sponsoring them, what kind of return you can get, how many trade leads you can generate, and how serious those trade leads can be through such sponsorships.

Other methods that are generally used for generating trade leads include private demo events.

Overseas private demo events are generally held for invited buyers. So you need to advertise the events. You display your products in overseas markets, in certain hotels, or in some business centers. You fix a venue and the time slots, and you invite buyers.

Make it convenient for the buyers so that they can easily participate in such demo events or display events.

This is becoming very, very common, especially for exporters of jewelry items or some kinds of expensive items that are exported.

Maybe there is a new range of fashion items, high-value dresses, wedding dresses, wedding jewelry, or costly cosmetics.

So you display the range. You send people who can explain the product and make the experience better for the buyers.

Generally, these events are held in the same cities where you are expecting a larger number of buyers.

Product information kits can also be used to increase awareness, branding, and to generate serious inquiries.

So this method is suitable for certain product categories, but may not be for all product categories.

Another method of generating leads is by joining business network groups.

What are these business network groups? They are international business network creation groups that can be joined.

Local chapters of such groups are available in many countries.

Many international business network groups exist, and they have local chapters.

To give you one example, there is a business network group called Business Network International (BNI), which is a transnational network very active in the Indian market.

There are many chapters in different cities of India, and you can join such business networks to get interaction opportunities with prospective buyers internationally.

Annual charges are there for such network groups, and it is possible to join them.

Local advertising is another way of creating trade leads.

By placing ads in local publications and newspapers about certain events or visits of the marketing people from your company, you can generate leads and the interest of buyers.

New buyers can also be attracted because these are public advertisements in local publications and newspapers. Generally, you get new clients also.

This tool is very common in countries that have a poor communication infrastructure or in very small countries.

One example where such a strategy works for generating trade leads is Bangladesh, a very small country.

Very commonly, people advertise in local newspapers, visit these countries, and invite the interested parties who respond through those advertisements.

In certain hotels or business centers, you organize some events or meetings and invite those prospective buyers who have responded through such ads.

This is another very interesting method.

Then you have the possibility of getting trade leads through commission agents.

Commission agents can be very helpful because they are local people in the overseas market. They understand the market, they know the prospective buyers, and they can share the contact details of the buyers, with the condition that if business is generated, a commission has to be paid to them.

This is how they work. That is their business. That is how they make money.

So these possibilities are very potential and very real opportunities that are available through commission agents.

Finally, you have the method of generating leads through overseas trade bodies.

This means the trade bodies are located in the overseas target markets. They are also interested in helping you out, depending on the interests of the local industries, exporters, and importers, what their interests are, what you have to offer, and what value proposition you have.

By contacting overseas trade associations and chambers of commerce in those countries, you can get leads.

You may have to visit them, or maybe contact them through online methods or video conferencing, whichever way.

If you can get in touch with them and create interest, they will help you out with trade leads.

So these are some of the very practical methods of generating trade leads through offline methods.

Earlier, I also discussed with you the different methods of generating trade leads through digital methods.

I want to share with you certain tips for effectively generating trade leads.

One of the tips I want to give you is that you should definitely find the value proposition in your product.

So what is this value proposition?

You need to study your product. You have to do your research, and you have to do competitor analysis or product analysis, comparing your product with competitors.

What unique value does it provide in terms of quality, in terms of functionality, in terms of price, in terms of associated related services for international clients?

What is the value proposition that you can offer and that is capable of attracting international customers?

What happens is that this kind of value proposition, if you are confident and if it is effective and logical, is going to work in your favor in effectively generating trade leads.

Secondly, you should focus on landed cost for overseas buyers.

Instead of focusing on your price, remember that your price is only one component of the landed cost.

Landed cost for overseas buyers includes your price, sundry expenses, logistics expenses, transportation, insurance, and freight charges, as well as import duties or taxes and local taxes to the buyer.

Ultimately, the buyer is concerned with the landed cost, not your cost. Your cost is just one component. So you need to focus on landed cost in order to eliminate options of different markets that probably have more taxes and border controls for your products.

Tariffs and non-tariff barriers are there. So you need to focus on those markets where the border controls are less, taxes are lower, and import duties are lower.

This way, the landed cost of your product to the buyer is less if they buy from you. So the focus on landed cost is very, very important.

Then you should be able to optimize the cost of generating leads.

Indiscriminately spending money to generate leads by giving free samples that may be very expensive, participating in international trade fairs, or setting up a very expensive social media or digital marketing presence can be a barrier to success in the export business. So you should be able to make the right strategies to optimize the cost of generating such kinds of leads.

This is very important.

Then you must find ways to simplify the complexities involved in the transaction to increase the value proposition for international buyers.

Depending on what industry you are in and what services you have on offer, there can be different types of complexities.

Maybe the commodity is very low-cost, and the transportation cost is higher than the cost of the product itself.

These kinds of complexities are very common. And shipping the goods, for example, in some cases by air, may be prohibitively expensive.

So for such kinds of complexities, you need to find ways of simplifying those transactions.

And if you can do that, if you can simplify such complexities, you can definitely increase the value proposition of your offer vis-à-vis your competitors.

That becomes a very important factor in the very fast generation of international trade leads.

Then you should try to learn and use artificial intelligence and IT tools to initiate your marketing campaigns and to make very compelling messages and your propositions and offers using these tools.

This is becoming very, very important. You can accelerate your marketing efforts using these artificial intelligence and IT tools.

So you need to learn these things.

Now, let me share with you some examples of online platforms and databases that are very commonly used by exporters around the world to generate leads.

First of all, I will talk about this portal called Alibaba.com.

One of the largest online marketplaces connecting manufacturers and suppliers with buyers worldwide is this particular trade portal, Alibaba.com, which covers a wide range of industries and products.

You must study this portal completely. You should look at the features that are available, the facilities that are available, and if the portal provides buying and selling online, you have to look into those methods, processes, deliverables, and how it works.

You need to go in-depth into this portal to be able to generate leads, and also try to find out whether there are some associated websites that maintain data of different transactions that are happening on Alibaba.

For example, there is a website called JungleScout.com, which maintains data for Amazon transactions. So, global selling or Amazon worldwide, whatever transactions take place, business-to-business or business-to-consumers, those are maintained and collated by this website called JungleScout.com.

Similarly, there are certain resources and websites that may offer insights into the different transactions that are happening on Alibaba.com.

Then there is another website called Global Sources or Globalsources.com.

This is an online B2B marketplace that connects buyers worldwide with suppliers, especially from Asia, and its focus is on electronics, fashion, and gifts. So if you are in these kinds of industries, this particular portal will be very, very important for you.

Another portal I would like to mention is called Trade Key.

Trade Key is a global trade platform that connects buyers and sellers worldwide. It covers various industries, including agriculture, machinery, and textiles. So if you are looking into these areas, this portal will be very, very useful to you.

Another portal, which is an India-based portal, is called IndiaMART.

This portal, IndiaMART, focuses on connecting Indian suppliers and manufacturers with global buyers. It offers a wide range of products across different industries, but its focus is very much on Asia and, more specifically, suppliers and exporters from India.

Another portal and website that is available as an online resource is called Kompass.

It is a very reputable and very old resource, which is also available offline. You can find Kompass directories that provide profiles of international buyers and large importing countries, such as the US and European countries.

These offline directories, as well as online directories, can be found through subscription or by visiting any American center. In many cities, some centers provide commercial information and free access to Kompass also.

So this is a global business directory that provides company information, allowing businesses to find partners, suppliers, and customers across various industries. But the information is very selective in this.

Another online resource that is available for this purpose is called ExportHub.

What is ExportHub? It is an international B2B marketplace connecting exporters and importers worldwide. It covers industries such as agriculture, electronics, and textiles. So if you are looking into any products or services that fall into these industries, you must look at this portal. It can be very, very useful to you.

Another online resource that I would like to recommend is called go4WorldBusiness.

go4WorldBusiness is an online platform connecting global traders, importers, and exporters. It offers a wide range of products and industries. You must look into this particular portal. You may find some trade leads and some support for getting business.

Another very important resource is called TradeIndia.

TradeIndia connects Indian manufacturers, suppliers, exporters, and overseas buyers from different countries. It covers various industries, including machinery, engineering, textiles, and chemicals.

A few other resources include Panjiva, which specializes in providing data for global suppliers and manufacturers, assisting businesses in finding potential partners based on their import-export activities.

Another recommendation I would like to give is about eWorldTrade. eWorldTrade is an online B2B marketplace connecting global traders, manufacturers, and suppliers across various industries.

So these are some of the examples of online platforms and databases that are available.

These are very exhaustive databases, and if you go a little deeper into these resources, you can find overseas trade leads and businesses. You can identify partners, customers, and markets very cost-effectively.

These platforms, which I just discussed, offer databases, directories, and sometimes also tools to search for potential leads, suppliers, buyers, and partners in specific industries or regions.

You will find it very useful and essential to assess their features, membership plans, and user reviews to choose the most suitable platform for your business needs.

What suits you is very important. Each platform will have some characteristics that will suit you, so you need to find that.

Here, I would also like to talk about some other online communities to find buyers and suppliers that can be used very cost-effectively, very useful, and very well-tested.

One such online community portal is Facebook, which has many trade groups.

Now, if you use common tags like export-import, global trade, textile exports, textile business, commodities trade, European trade, US trade, or UK trade, and you press groups in the Facebook sidebar, you will find these trade groups on Facebook.

So you join these trade groups and interact with the other members.

These trade groups have, at times, thousands and thousands of members. They comprise buyers, sellers, business partners, and overseas customers.

So these are very useful trade groups where you can generate leads.

Another model is LinkedIn, which has many trade groups.

You can find these trade groups using common tags like China export-import, fruit exports, European trade groups, or export manager. When you use these tags, you will find all these trade groups on LinkedIn.

This can be really very useful to generate leads.

So friends, generating leads internationally can be a very daunting task, a difficult task, and an expensive task. But it remains very crucial.

This is a positive sign that if you can generate trade leads for your business while competitors cannot, it becomes an entry barrier for others.

That is the reason why, if you can effectively generate leads and convert those trade inquiries into business, your chances of making profits—very huge profits because of the volume involved in international trade—are very, very high.

So with this note, I wish you good luck in your endeavor to generate international trade leads effectively and efficiently.

All the best.

In this section, my idea was to help you understand all the methods that are there, all the venues that are there, and all the opportunities that are there to carry out export market research and gather business intelligence internationally. All the ways and all the venues I have discussed in this section.

If you have not understood any particular aspect of what I have discussed, you can revisit that lecture. Maybe you can revisit it two or three times, and you will understand the significance of the ideas that I have given in this section.

Many of the things you will not find anywhere published or in written form. The information that I have given you in this section is purely based on my research, my training experience, and, very importantly, my practical experience in the corporate world in international trade.

So I’m sure this section was very helpful to you.

In the next section, I will use some of the tools that I’ve taught you in this section to explain to you, through a case study, how one of the companies we will take up used the different tools that I’ve discussed to get business intelligence and the initial information to be able to take off in the export business they wanted to start.

In this case study, I will explain how they went about getting the initial information, very similar to the things that I’ve discussed in this section. I’ve used that to explain how they went about it and what kind of information they were able to generate.

So you will get a practical, hands-on experience through this case study.

I will also give you an assignment based on that case study, which will help you to understand this section and the ideas that are given here, and to become more conversant with these ideas.

Here is an interesting case study of a small-town Indian exporter, wishing to enter the international markets with a modest background. The most challenging part of such export projects is getting an initial understanding of the export markets and finding the sources of information. An even bigger challenge is to ascertain where to start.

Hi friends,

Welcome to this new section.

This section is devoted to having hands-on knowledge, practical knowledge of the last section.

What we learned in the last section about desk research, the initial research, and what all has to be done.

How do you go about creating trade leads?

All those things, I will try to explain in a practical manner.

So, in this section, the main tool of training will be a case study that I will share with you.

I will give you some introduction about this case study, and I will explain to you how, in this case study, a particular entrepreneur set up his new export business.

So that is my idea in this section.

This case study that I want to take up is about one company.

The name of the company is Sahi Samay Carpets Industries, which is based in a place called Hathras.

It's a very small town near the city of Agra, the famous historical city of India, Agra.

So, a very small town.

The company is into the manufacturing of cotton carpets and cotton rugs.

In the local language, these are called cotton dhurries.

They have been manufacturing these very artistic cotton dhurries for the last 1500 years.

Mostly, these dhurries are sold in the international market, but they do not sell them directly to overseas buyers.

Mostly, all the products are supplied to various exporters—merchant exporters based in India, in Mumbai, Delhi, or Bangalore.

The son of the owner is Mr. Nirav.

He is the new generation and represents the second generation of the family in this business.

He has some knowledge about exporting.

He also received training on how to export.

So, he wants to apply that training and explore the possibility of exporting the products that they have been manufacturing and successfully selling in the Indian market for so many years.

He wants to explore and gain initial knowledge about the products they are manufacturing—how these are to be exported, what information is required initially, what kind of desk research is required, and how to create trade leads for getting international orders.

So, Mr. Nirav wants to explore all these things.

He is ready to do some initial work for 2 or 3 months and wants to find out all about exporting cotton dhurries.

The particular type of cotton dhurries that this company is manufacturing is called chenille cotton rugs.

Chenille is a special variety of cotton rugs that is made by hand.

Artisans create these kinds of dhurries.

They specialize in this particular variety of cotton rug.

They have different possibilities of manufacturing these cotton rugs, either printed, jacquard, or shuttle.

Different varieties are available in chenille rugs that this company is capable of manufacturing.

They also have a fairly good idea about the ways of making different types of designs that are very popular in the international market.

Now, they want to understand the front-end part—the marketing part.

For that, Mr. Nirav wants to start with the initial desk research in this regard.

So, in the next lecture, I will explain how Mr. Nirav went about finding the initial information about the ITC HS code, or the different international markets that have more potential than many others.

And what is the position of India in the international scenario?

What is the position of India in exporting this particular variety of cotton rugs, and how should it be placed in the international market?

All this information he wants to find out.

In the next lecture, I will explain how he did that.

Keep watching.

So, Mr. Nirav is now interested in understanding Chenille dhurries, Chenille rugs, or Chenille carpets—whatever you call them.

He wants to know what the initial understanding is.

What are the initial ideas about understanding the position of the export scenario of Chenille dhurries in the international market?

So where does he start?

His main agenda is to first understand where to start. That is his first question.

The second question is, as an Indian exporter, which is the website to start with, and where can he begin getting the data? That is the second question.

The third question is, from the customs point of view, how does he classify his product?

He already knows that the best classification to start with is the ITC HS classification, that is, the International Trade Classification Harmonized System. That is the HS code.

In India, this ITC is called the Indian Trade Classification. But it is similar to the International Trade Classification.

The important agenda is to understand what exactly the HS code is—at least the eight-digit code.

So, about the ten-digit code or twelve-digit code—that is very, very specific. He is not too concerned about that right now. At the moment, he is focused on the eight-digit code.

He understands the value of this eight-digit HS code. He probably wants to start here and wants to know the Indian website that can help him begin.

What are the Indian government policies—whether export is allowed, what benefits are available for exporting rugs from India, what support can he get from the Indian government, and what exactly the foreign trade policy is with respect to Chenille rugs?

These are the questions coming to his mind.

Also, he wants to know which are the main top ten or five countries where Chenille dhurries are exported.

So, he is also trying to understand that. Mr. Nirav starts with the Indian Trade Portal.

From his training—whatever export training he has received—he knows that to start the process, he should begin with the Indian Trade Portal as an Indian exporter.

So he starts with the Indian Trade Portal. He goes to the Indian Trade Portal.

World over the customs and border control stand with the aligned and harmonized products and goods classification system popularly known as ITC HS classification. Each product category is classified in several chapters denoted by 2-digit numbers. Subentries are further classified into 4-digit, 6-digit, 8-digit, 10-digit, and 12 digits numerical numbers.

And here, his first objective is to obtain the ITC HS Code because that is the starting point to know the profile of this item for exports.

So he writes here – Chenille Carpets.

He can get this number to start with.

Here, you can see that cotton Chenille dhurries are mentioned in this particular classification, ITC HS code.

This is a six-digit code, which is 570500.

So one thing is very clear: the product classification chapter in the ITC HS code is 57 because this number starts with 57.

The first two digits denote the chapter.

There are many different chapters for different types of items—plastic items, petroleum items, jewelry items, or engineering items.

Every different category of product has a chapter.

The first two digits denote that chapter.

So, in this case, he has understood that the chapter number is 57 and the six-digit code is 570500.

But he wants to know, to start with, what the eight-digit code is.

So what he does is, since he wants to export, he presses "Export" here.

And when he does that on the Indian Trade Portal, he starts getting the eight-digit code also.

He finds that in these eight digits, there is one eight-digit code, which is 57050024, where Chenille dhurries are mentioned.

Chenille dhurries are mentioned here.

So now he has been able to obtain the ITC HS code (eight-digit), which is 57050024.

So now he has the starting point at this website.

So what he does is, he goes to the homepage of the Indian Trade Portal and tries to see the trade statistics of India.

What does India export to which markets? Which are the top markets for India?

What he finds in this trade statistics space is that it lists the import statistics of 116 countries.

It also mentions India’s contribution to its imports.

What is the contribution of India in its imports?

Here, he finds that there are the top 25 export markets that are importing goods from India very actively, starting with the USA, second is the UAE, third is China, fourth is Bangladesh, and then the Netherlands.

What he sees is that this is the set of countries among which his destination country will be.

So he has understood that somewhere, these are the countries he has to focus on because they are the top 25 export markets for India and Indian products.

So what he does is, he starts with the US.

He just pressed the US button.

What he finds here is that there are HS code chapters given.

Those are the products that the destination country, i.e., the USA, is importing the most from all over the world.

So these are the categories of products most imported by the USA from all over the world.

And it also shows the contribution of India.

What he finds here is that nowhere in this list for the USA is Chapter 57 present.

Chapters 84, 85, 87, 27, and 30 are there, but chapter 57, which refers mainly to home textiles (where chenille carpets are the subheading), is not listed.

So he finds that the top import items do not include chapter 57, and he is unable to get the data for chapter 57.

So this particular data is not useful to Mr. Nirav.

What he does then is, he tries to see in other potential markets whether he can get chapter 57.

What he finds, for example, in the case of the UK, is that in the top 25 commodities imported by the United Kingdom, there is also no mention of chapter 57.

So chapter 57 is not mentioned.

This means that this is not a very major commodity for the importation of these countries, at least not in the top category.

There are many other items, including ready-made garments, organic chemicals, and pharmaceutical products, that are in the top category.

So he tries to find out, in any country of interest that he generally knows, whether they have chapter 57 items in their top commodities.

He finds that it is not there.

So, nowhere is he able to find chapter 57 as a major top commodity among the top 25 commodities imported by these countries.

So, at least this data is not useful to Mr. Nirav.

Probably, if this data showed the top 50 commodities being imported, it would have helped.

But this data is mainly for the top 25 commodities, where Chapter 57 is not included.

So he is unable to get information about this.

Since he is not really able to use these trade statistics here, what he does is, he simply goes to Google and types out the 57050024 HS code and tries to find export data for this HS code from India.

He tries like this, and he can get some kind of information, but it is paid.

Since this information is paid, he is not able to get the exact details.

At present, he is not in a position to spend too much money because he is on a tight budget.

So he tries to see if there are any other websites where he can get some more data.

On most of the sites, he finds that they are paid sites.

Now he starts getting some information, some data, about the export of HS code 57050024.

Some data is available.

It is slightly older data from November 2016, but he is still getting some idea about the prices being offered for different sizes, like 120 x 180 cm and 160 x 230 cm.

Cotton dhurries (handloom)—the price is given here.

So he is able to get some information now.

He is getting some idea of the shipments he can see here: price, the port of loading, and the port of discharge.

So he starts writing down some information.

This is how he gets some more data.

Nhava Sheva port is the port of loading.

It is being exported in the size of 70 x 180 cm.

The price is 5.55 US dollars per square meter.

So he can get some ideas about the pricing.

Some information he is getting because now he knows the HS code.

Here, apart from the information he got in the above slide, he is also getting the names of the countries where the goods are being exported.

He finds that the maximum quantity is being exported to the USA, then Germany, and also to Russia and South Africa.

So he is getting this information, and he also sees that the goods are being exported from Agra, Tughlakabad, or Dadri, and even by air from Delhi Air Cargo.

This is how he is able to get some information.

December 2015 data, January 2016 data—he can see how much quantity is being exported every month.

So he has started getting some data.

On another website, he can get the sizes—very common sizes being exported: 100% cotton handloom floor coverings, dhurries, yarn-dyed.

So he can narrow down much information about sizes—what are the common sizes and what are the special designs.

Pedal stripe rug size—he understands the meaning of this rib-striped rug, or the Chindi rug size, or the multi-rug size.

So he is able to understand the different sizes and varieties of cotton rugs being exported.

This kind of information he can get now.

On another website, using the HS code 57050024, he is also getting some rare information.

What he sees here is that the number of shipments is mentioned: exported by 56 Indian exporters to 81 buyers.

This information is available here.

It also states that India exports most of its cotton tufted rugs (HSN code 57050024) to the United States, France, and Germany.

This is very important information.

What he finds is that the three markets—the US, France, and Germany—are very important.

The different sizes he has already noted down, the different varieties, and different designs are being exported mainly to these countries: the United States, France, and Germany.

That matches well with the shipment data he saw on the other site.

So he can confirm this information.

So he finds very interesting data from different websites, and he keeps noting it down.

Now, with this kind of exercise, he knows that the major markets seem to be the US, Germany, and France.

These are the three major markets.

Equipped with this information, he again goes back to the Indian Trade Portal.

Now, with this kind of exercise, he knows that the major markets seem to be the US, Germany, and France.

These are the three major markets. Equipped with this information, he again goes back to the Indian Trade Portal.

What he does here is, where he had found the 8-digit code and had already mentioned his interest in exports, he checks this particular entry and presses “Next” on the Indian Trade Portal.

Now, what he finds is that for this particular HS code, 57050024, the top 25 countries that are importing this item are now visible.

So you can see here, it mentions that you have selected one product, 570500, and specifically targeted the 8-digit HS code.

These are the top 25 countries for India.

So the Indian Trade Portal will be useful to him because he is interested in shipments from India.

He is trying to understand the Indian government policy as well as the import tariffs and any advantage he may have in the target markets.

Now, he already has some idea of which are the target markets—namely, the USA, Germany, and France.

So he is now focusing on these three markets.

What he does here, now that he has this data and information about the top 25 countries, is he presses the target countries, i.e., the USA and Germany.

Since France is not in the top 25 countries here, but he knows that his particular variety of cotton rug is being exported in a big way to France, he also goes down to the European region and checks the France option.

So he checks France as well.

What he sees here is that three agreements—very common agreements—are there.

There are no special agreements in these three countries.

In the US, there are only two agreements, which are multilateral.

In Germany, again, there are GSP, MFN, and other standard agreements.

So there are no special agreements.

He finds that for this particular item, he may not have any special advantages for exports from India.

Like from any other country, he will be getting the same treatment as far as import duties are concerned.

So that he has understood.

But he goes further.

He has checked these entries—France, Germany, and the USA—here.

And he presses “Next.”

What he sees is that the 10-digit codes recognized by the customs of these three countries, the US, Germany, and France, are now visible.

He has to explore all these 10-digit numbers to see under which one the chenille rugs he wants to export will fit.

So what he does is, he just rolls over his cursor on these 10-digit HS codes and sees the description of each, as defined by that country.

Here, what he sees is: other carpets and other textile floor coverings, whether or not made of manmade textile material.

Since he is using cotton textile, this code will not work for him.

So this is how he goes through all the others.

What he finds is that different codes give descriptions of the items that should fit his requirement.

What he finds here is 570508091, defined by Germany as “other carpets and other textile floor coverings, whether or not made of other textile material, that is cotton handmade.”

So what he does is, he checks this particular code.

That is the exact code, and he notes it down.

This will be useful to him later on when he deals with buyers.

He knows that in the buyers’ countries, the border control or customs will be using this code, and he can find out all the policies, import policies, import duties, and taxes.

He can calculate everything by using this 10-digit code because it is much more specific.

The 10-digit code is there.

He already has the 8-digit code of Indian customs.

Now he has the 10-digit HS code of the German government.

Similarly, in the US case, he tries to find out which 10-digit code suits his product.

What he finds is that the code 5705002020, from the 200 series of the US code, is suitable for cotton chenille rugs.

And similarly, in France, he tries to find out from the descriptions which one matches chenille dhurries made of cotton.

He can get this number for France: 5705008091.

So, for all three countries, he has been able to get the 10-digit HS code of the respective countries.

Then he presses “Next.”

When he does that, he reaches the results for Germany, the USA, and France.

What he sees here is that the import duty under MFN (Most Favored Nation tariff) is 8%.

There are no special preferences for any country.

Similarly, in the USA, the import duty is 3.3%.

And in the case of France, it is 8% again.

So he finds that the duties are favorable.

He is not getting any special benefit for being an exporter from India.

There are no special bilateral agreements between these countries and India.

As far as import duties are concerned, he will get the same treatment as any competitor from Pakistan, Bangladesh, or Sri Lanka.

Whatever treatment other countries exporting cotton rugs get, he will be getting the same.

So now he has a fairly good idea of a lot of information that he has been able to note down from this exercise.

He now presses the Government of India policies for this particular product.

So what is the export policy?

For example, he finds out from this particular button that is there in the results for ITC code 57050024 (8-digit code and description).

He again checks that it matches his product, and it is handmade woolen or cotton carpets.

So whatever the carpets may be, cotton is mentioned here.

And the policy for export is “free,” as you can see here.

What he finds is that there is one restriction by the Government of India for this particular product: he cannot export chenille carpets to any country in the world on a DA basis, that is, Documents Against Acceptance.

So, if you remember, in one of my earlier lectures, I talked to you about different methods of receiving international payments, and DA was one of the methods.

In the case of this particular product, generally, he is not allowed to export on DA terms.

So he will have to go for LC terms only—Letter of Credit—and that too, payable at sight.

Unless he has a special Indian government guarantee cover, like ECGC cover.

If he can obtain the ECGC cover—that is, the Export Credit Guarantee Corporation cover, which is a cover for commercial risk by ECGC (a Government of India organization)—then he can export on DA terms as well.

All countries have these kinds of commercial risk guaranteeing corporations.

Mostly, they are called Export Credit Guarantee Corporations in most countries, and they are organizations sponsored by their respective local governments.

Like in India, we have ECGC.

If he can secure a guarantee from ECGC, then he can go for DA terms also. So there is no problem with that.

So now he has noted down all this information about the Government of India policy as well.

Now he also wants to know what the different incentives are that the Government of India provides for this particular HS code.

So he notes the HS code; the description is the same.

The duty drawback code is also the same, description is also the same—made up of cotton—and the unit for any benefit is in square meters.

The drawback rate he notes down is 5.3%, and there is a cap of Indian rupees 44 per unit, that is, per square meter.

So he notes down all these details from here.

So now he has the information on the government policy with respect to incentives, that is, duty drawback.

Another incentive provided by the Indian government for the Indian exporter is the Interest Equalisation Scheme on pre- and post-shipment rupee export credit.

So this interest subvention scheme is there.

Under this scheme, what he finds is that, as an MSME (Micro, Small and Medium Enterprise), which Sahi Samay Carpet Industries already is, the company is recognized as part of the MSME sector.

So he will be getting a 3% interest rate benefit, which is much below the normal market rate.

That benefit he can avail by getting the loan from the commercial bank at just 3%.

So this is available.

This is another benefit available to him.

Then the other incentive available is RoDTEP—that is, the Remission of Duties and Taxes on Exported Products.

This is nothing but the remission of duties paid directly or indirectly on the inputs.

And the rate for this item, that is 57050024 (cotton dhurries), is 3.5% of the FOB value, and the cap is also there—that is, ₹17.20 per square meter.

So he notes down all this information.

These benefits are available, and he can claim them after the exports.

He is very happy that he is able to get all this information.

He also checks what the GST rates are.

Although GST is not to be paid for export purposes (as it can be refunded), he still wants to note down the GST rate just for knowledge.

So, for cotton rugs, handloom rugs, it is 12% GST in India for sales within India.

So, all this information he can get from this exercise.

He is very happy.

He now has a fairly good idea that India is the top exporter of the item that he is interested in exporting.

He has been able to obtain this information from various websites and various data archives online, and now he plans to visit different organizations like the Indo-German Chamber of Commerce, because Germany is one of the target markets.

He will be visiting the Indo-German Chamber of Commerce, located in New Delhi, and he will also be visiting the American Centre Library to find out the list of importers in the USA, Germany, and France.

He is also planning to visit the French Consulate Trade Office in New Delhi, India, which is not very far from Hathras, his place.

So he will be visiting these places.

He will be collecting more data on this particular product item from these organizations and from IGCC, that is, the Indo-German Chamber of Commerce.

He will also be listing out and collecting information on the international trade fairs that are held in Germany, where he would like to display his samples.

So, another two to three months of homework will be required to prepare samples and to prepare the designs that he has already obtained information about from the different shipment data and details.

Through some paid services, he will also confirm all this information by subscribing to some data providers to make sure that these three countries are indeed the main importers of Chenille Dhurries.

Now he is very comfortable.

He is more knowledgeable about how this item has to be exported, where to export, what the HS code of the Indian government and Indian customs is, what the HS code of the target markets is, and what the target markets.

He also knows what are the common sizes that are being exported from India and demanded by the international buyers.

What are those sizes, what are the colors, what are the different varieties—stripes and many other types—that he noted down from this exercise?

So this is how he really collected a lot of information through this exercise.

First published in 1936, INCOTERMS® has since then been revised to adapt to ever-changing new developments and advancements in transportation and document delivery systems in international trade. The current version in use is INCOTERMS 2020. INCOTERMS provide a sort of contractual binding in short and simple language. These contractual delivery conditions are to be incorporated in contracts among various parties of an international trade transaction.

INCOTERMS 2020 facilitate the contracting parties:

1. To complete a sale of goods to the entire satisfaction of each party in accordance with a contract.

2. To establish the basic terms of transportation and delivery of goods, in a short and simple format

3. To indicate each contracting party's costs, risks, and obligations regarding the delivery of goods mentioned in the contract as follows:

a) At what stage does the seller complete the delivery of the said goods?

b) How does one party ensure that the opposite party has met that standard of conduct, which was desired at the time of signing the contract?

c) At what stage of the transaction process is the risk of loss or damage to the goods transferred from one party to another, if applicable?

d) What documents/notices each party is required to give to the other with respect to the transportation and transfer of the title of the goods?

e) How will transport costs be distributed among the contracting parties?

f) Which of the parties to the contract need to take care of the required licenses and permissions and government-imposed formalities to complete the deliveries of the goods?

g) What are the ‘delivery terms’ and what is required as proof of delivery is completed?

h) What are the modes and terms of carriage?

Friends, now let us move forward in this course.

So already you have a fairly good idea about many things that are required for you to learn in this area.

Now, as I had mentioned in my last lecture, you are in a position where you know how to generate trade leads, and you bargain, negotiate, engage, solicit orders, and create interest in the overseas buyers to buy your products.

So once the buyer is interested in buying your product, the stage comes when you have to finalize the order.

For that, you make a quotation, you give a proforma invoice (so-called). I will talk about the proforma invoice in my later lectures also.

So what happens is, based on that quotation, the buyer is interested in dealing with you.

He is ready to make a deal with you, and for that, you will be signing some contract, or maybe getting the signature of the buyer on the proforma invoice itself, depending on the complexity of the situation, the product you are selling, and the overall complexity of the deal.

Depending on what kind of deal it is, you may have to go for an elaborate contract.

So what is the meaning of this?

The meaning of this is that you still need some skills, some knowledge of, for example, things like delivery terms.

So when we say delivery terms, in other words, we are talking about the commercial terms.

So what is the meaning of that?

International business is from one country to another country that is geographically quite distant.

Legally, they are also distant because the buyer is in a different country, the seller is in a different country, and both are in different legal and regulatory frameworks.

So legally, there is a distance, culturally, there is a distance, and geographically, there is a distance.

So many differences are there.

So what happens is that from the point of origin to the point of destination, there is a big gap.

And there are many intermediaries involved in between, and many processes are involved.

Several legs are involved.

Even in transportation, there are different legs.

So what happens is, it becomes very important to understand this journey of goods from the origin to the destination, and at what point the obligation of the seller transfers to the buyer.

That is the point of delivery.

So until that point of obligation, the costs are obviously borne by the seller.

And once the obligation transfers from the seller to the buyer, the cost is borne by the buyer.

But here, the point of risk may be different.

At different points from the origin to the destination, the obligation may change, the delivery may take place, but the point where the risk transfers from the seller to the buyer may be different.

So that is the complexity in this trade.

To resolve this dichotomy, to resolve this complication in international trade, there is something called a charter published by the International Chamber of Commerce based in Paris, France, and it is called Incoterms.

This is the short form of International Commercial Terms.

So I am talking about the commercial terms that are recognized internationally.

What are these different terms? There are 11 terms.

So I will be discussing with you in this section these 11 terms—what are these 11 terms, what is the meaning of these 11 terms, and what they denote with respect to the transfer of goods from the seller to the buyer.

That means the obligation and transfer of risk.

What are those points, based on these different 11 terms?

So the understanding of Incoterms is very important.

The latest version of this document is Incoterms 2020.

I will be talking about the latest version.

So let us now understand the different points in the journey from the origin of the goods to the destination.

Now this destination is an agreed place between the buyer and the seller, and that is normally the point in the country of the buyer.

Ultimately, whatever may be the agreed place, the goods have to reach the buyer or the consignee, if the consignee is different from the buyer.

So, for simplification, we are talking about the goods moving to the warehouse of the buyer.

So, from the warehouse of the seller to the warehouse of the buyer, these are the extreme points we are talking about in this journey.

INCOTERMS 2020 are traditionally grouped into four different categories.

The introduction for each clause contains indications for possible options of the trade terms to operate differently, as per the wishes and negotiation of each contracting party. The four groups are as below:

Group E:

In these terms, the seller makes the goods available to the buyer at its own premises only. The ‘E’ terms include EXW (Ex Works).

Group F:

In these terms, the seller is supposed to make available and deliver the goods to a so-called first carrier, which is normally appointed by the buyer.

The ‘F’ terms include – FAS, FOB, FCA

Group C:

In these terms, the seller has to enter into a contract at their costs for the main carriage.

The ‘C’ terms include– CFR, CIF, CPT, CIP

Group D:

In these terms, the seller has to bear both the costs as well as the risks needed to bring the goods to the place of destination. The ‘D’ Terms include – DDU, DAP, and DDP

So, as you can see in this diagram, this diagram explains the movement of the goods from the exporter to the importer.

From the exporter, goods are loaded on the first carrier.

That may be a truck, or it may be some other kind of carrier.

Generally, it is a truck or a lorry.

Then it is brought to the port of loading, where the goods are loaded on the ship.

The ship carries the goods to the port of discharge, and at the port of discharge, the goods are unloaded and loaded on the truck or the lorry to reach the agreed place or the importer’s warehouse, the buyer’s warehouse.

So this is a very typical understanding that you already have from the earlier lectures in this course.

You already know how the goods move from the exporter to the importer.

Now, if you see at the bottom of this particular diagram, you will find different zones that are there, starting with the exporter’s warehouse to the agreed place in the exporter’s country—that is, the seller’s country, supplier’s country—then the port of loading, which also is in the supplier’s country, and then the high seas.

When the goods are loaded on the ship, the ship sails in the international seas.

These are the high seas, and it crosses the border of the exporter’s country to reach the high seas, and then finally reaches the port of discharge.

At the port of discharge, after that, the zone is the place where the goods are to be delivered—the agreed place.

So it is not exactly necessary that the goods will be delivered at the agreed place.

The goods may also be delivered at the importer’s warehouse.

So you have to notice all these different zones that are there in this whole process.

These zones signify areas where the possibility of the shift of the obligation from the seller to the buyer should happen, and the risk also transfers.

So, for example, if you look at this zone, the first zone is the exporter’s warehouse.

Here, if at the gate itself the exporter delivers the goods to the buyer—both the obligation as well as the risk—it is called EXW: Ex Works.

So these are the E terms actually in this zone.

The next zone, the very obvious zone, is the agreed place in the exporter’s country, that is, the supplier’s country.

It is shown in green color.

This agreed place may be near the factory or the warehouse of the exporter, or it may be near the port of loading, somewhere in between that is convenient to both parties.

This is the agreed place where the first carrier comes in.

So what is the first carrier?

Normally, it is the lorry, the truck, or the trailer.

It picks up the goods.

So when the goods are loaded on the first carrier at the agreed place shown in the green zone, the moment this loading is complete, at this point, the obligation and risk can transfer to the importer from the supplier.

So that particular point is called FCA, Incoterms 2020. FCA means Free Carrier.

And at this point, if the obligation of paying cost up to the agreed place in the buyer’s country—if that complete entire cost of the freight is to be paid (I am just talking about the cost, not the risk)—if this cost has to be paid at the very start itself in the green zone of the exporter’s country, it is called CPT. That means Cost Paid To.

But the risk, like FCA, is already transferred to the buyer.

It is just that the obligation, which means the cost, has to be paid by the seller.

So this entire cost at this point has to be paid, and that is called CPT.

And if, along with the cost until the agreed place in the importer’s country, the insurance of the cargo—that is, cargo insurance—also has to be paid by the seller (that is, the supplier) at the agreed place itself, that is in the exporter’s country itself, then this particular Incoterm 2020 is called CIP. That is Carriage and Insurance Paid To.

But again, in these agreed place terms in the exporter’s country, the risk in all these three terms—FCA, CPT, and CIP—is already transferred the moment the goods are loaded on the first carrier.

So obligation may be there, but the risk is already transferred.

And then we have the other zone, which is called the port of loading.

So what is the port of loading?

This is the port where the ship is taking berth, and goods have been brought by the seller to this point, to the wet port.

So here we have four sea terms, the so-called sea terms.

In this zone, in the exporter’s country, when goods are brought near the ship or to the ship, we have these four sea terms that are part of Incoterms 2020, starting with Free On Board, that is, FOB.

It means goods have been brought to the port in this zone and are also loaded on the ship.

So the meaning of this is that the goods are already on board—Free On Board—and it is called FOB.

At this point, both the obligation and the risk transfer from the seller to the buyer, which means to the importer.

It is also possible that the responsibility of loading the goods near the ship or at the container yard is not of the seller but of the importer.

So, in different situations, in different commodities, and in different types of business, the overall cost can be reduced if the responsibility of loading the goods near the ship is not of the seller but of the buyer.

For example, if the buyer is buying the goods in very large bulk from several suppliers in the supplier’s country, then all those sellers will be bringing those goods to the ship at the designated time, because the ship has a very short time to take berth at the port.

So all these suppliers will be bringing their goods there only.

And if the buyer hires the loading company, hires the loading people in one go for all the shipments, it is possible to reduce the cost.

So in such situations, for example, FAS, that is Free Alongside Ship, another Incoterm 2020 sea term, is used.

FAS: Free Alongside means the obligation of the seller is just to bring the goods until the container yard where the loading will take place, and that is not the responsibility of the seller but of the buyer.

The cost, even the risk, is of the buyer.

So at this point, both the obligation and the risk transfer from the seller to the buyer alongside the ship.

And then you have another two sea terms, which means sea shipment terms.

These are the C terms: CFR and CIF.

So what is CFR?

CFR is very similar to FOB.

It is just that it is the responsibility of the seller to get the goods loaded on the ship and also pay for the onward freight, that is, the main carriage, the goods that will be carried by the ship until the port of discharge.

That freight also has to be paid by the seller.

So it is just the obligation that is of the seller, not the risk.

So the risk is already transferred in this zone, the port of loading itself.

Just that he has to pay the freight, so it is called CFR.

This is also a sea shipment term and is a C term.

The second C term in this zone is CIF, that is, Cost, Insurance, and Freight.

The meaning of this is again very similar to CFR.

The goods have to be loaded on board by the seller on the ship, and he also has to pay for the freight as well as the insurance.

Insurance of the main carriage from the port of loading until the port of discharge is also the obligation of the seller.

So all these different terms you are seeing here are interchangeably used in different contracts, in different situations, and in different commodities and goods, merchandise that are being sent from the supplier to the importer.

So these terms are required at different points, with different obligations and risks.

Thereby, now we have already covered eight Incoterms 2020 out of 11.

So three more Incoterms 2020 are remaining that I will just explain to you. Those three remaining Incoterms 2020 are D terms.

As you can see here, the D terms refer to the green zone in the importer’s country, to start with, where there are two terms: DPU and DAP.

So what are these two terms?

These are delivery terms where not only the obligation is on the seller—that means the cost until the agreed place in the importer’s country—but also the risk has to be carried by the seller until that point, that green zone in the importer’s country.

So DAP means Delivered At Place, that is, delivered at the agreed place in this green zone, but still loaded on the lorry or truck.

The truck has already picked up the goods from the ship at the port of discharge.

So the unloading obligation is not on the seller, and the risk is also not with the seller.

Any charges for unloading, as well as any damages that happen during unloading, are the responsibility of the buyer.

That is DAP.

And DPU is very similar—same thing, except that unloading also has to be done by the seller, both obligation as well as risk.

So this is the DPU term, Delivered At Place Unloaded.

This is the 10th Incoterm 2020, and it falls in this green zone, the agreed place in the importer’s country.

And finally, the last Incoterm 2020 that is remaining is called DDP, that is, Delivered Duty Paid, and this is in the last zone—the last possible zone in the importer’s country.

In the importer’s warehouse, the goods are to be delivered to that point, not only delivered but also unloaded, and the entire responsibility, obligation, and risk until the warehouse of the importer is on the seller.

In addition, the obligation to get the goods cleared from the importer’s border control, i.e., Customs Department, is also on the seller.

That means not only does he have to get the goods cleared at customs in the importer’s country, but also pay any import taxes, local taxes, import duties, clearance charges, or any incidentals.

All of it has to be paid by the seller.

So it is a warehouse-to-warehouse deal—from the warehouse of the exporter, that is, the supplier, until the warehouse of the importer. All the efforts have to be made by the seller.

So these are the 11 different International Commercial Terms that are very useful for you to understand when you negotiate an international purchase contract and finalize the contract.

So, to make your understanding a little better, you can also look at the next slide, where I will show you all these 11 terms.

And I will show you who is responsible for what portion of the journey. I will explain that, and maybe that slide will give you an even better idea.

Probably, after you have understood this particular slide, it will become easy for you to understand the next slide on the Incoterms 2020, the 11 terms that I am discussing.

So here you can see Incoterms 2020 point of delivery and transfer of risk.

So you can see here: the seller, the first carrier, alongside the ship, port of loading, carrier, destination port, alongside the ship, agreed place, and the buyer’s warehouse.

So you can see this whole range of points.

Different points exist at which the possibility of the transfer of the obligation or risk can happen.

In this particular diagram, you can see in the left column all the 11 terms starting from EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DPU, DAP, and DDP.

So all these 11 terms I have already discussed with you, and here in this diagram, the very important thing to understand is that the seller’s obligation is shown by the blue bar. It indicates up to what point the obligation of seller is there.

So obligation also means the cost is of the seller.

And this red-colored star, which is shown in this particular diagram, refers to the transfer of risk from the seller to the importer.

And finally, in the pink shade, you can see here it is the buyer’s obligation.

So blue color indicates the seller’s obligation, pink color indicates the buyer’s obligation, and the red star indicates the transfer of risk.

In this particular diagram, you can copy this diagram. One copy of this image I have placed in the resource section of this lecture.

You can download this image and keep it for your record and for your future reference.

It will always be handy for you, and you will be able to understand, in the different 11 terms that you agree upon, what the points are where the transfer of obligation changes from the seller to the buyer, that is, the importer.

And what are the points at which risk gets transferred?

So this particular image will always be very helpful for you until the next version of Incoterms comes, which would be in 2030.

So till that time, you will find this diagram applicable.