Đang tải... (xem toàn văn)
dbndfbdsvafacacacasfw ajbaibcabjbjha bacbhabcjbajbcjwvqyvhc cavgyudgqvcibakcbjabjba qgdugqigcbqbcjvqugdiqbam huxquiwbrbgfaysxbajbv bcibqavbakbugufrygvibk a cavcibvwevyuvYUGAABCAKBVACABKHUIEBVB IGVIWGBS KBJBCSJHBCIABKJBUIAGUICVJ WEJHV
CHAPTER INTERNATIONAL PRICING VU THN ngocvth@uel.edu.vn CONTENTS 01 Fundamental export pricing objectives and strategies 02 Determinants of an export price 03 Relation of export to domestic price policies 04 Exchange rate changes & currency issues 05 The price quotation 06 Transfer pricing & Countertrade “Luxury goods makers need to balance image and desirability with affordability and their own strategic goals.” —Government of Canada, 2017 INTRODUCTION • • • • • • • • • Operate in multiple pricing environments Complex task, numerous markets Not determined is isolation Affects ability to be profitable A marketing tool Other related issues such as terms of sale, counter-trade, dumping, transfer pricing etc Digital impact Transparency “As digital eroded geographic borders, we consumers Dynamic pricing have become more used to seeing the way products are priced elsewhere.” (Smith, 2018) TRENDS • Increased transparency on a global basis • Multinationals as ‘corporate citizens’ • Pricing pressure from retailers • Consumers ability to shop around • Increasing level of value pricing • Focus on transfer pricing (inter-company) • Brexit effect? Russia-Ukraine War? 1.2 FUNDAMENTAL EXPORT PRICING OBJECTIVES & STRATEGIES Skimming the market getting the highest possible price out of a product’s distinctiveness • a high price is set until the small market at that price is exhausted • the price may then be lowered to tap a second successive market or income level • 1.2 FUNDAMENTAL EXPORT PRICING OBJECTIVES & STRATEGIES Penetration pricing establishing a price sufficiently low to rapidly create a mass market - emphasis is placed on value rather than cost in setting the price - 1.2 FUNDAMENTAL EXPORT PRICING OBJECTIVES & STRATEGIES Sliding down the demand curve - a variation of the skimming strategy company reduces prices faster and further than it would be forced to in view of potential competition 1.2 FUNDAMENTAL EXPORT PRICING OBJECTIVES & STRATEGIES Extinction pricing (Ðịnh giá hủy diệt) - to eliminate existing competitors from international markets it may be adopted by large, low-cost producers as a conscious means of driving weaker, marginal producers out of the industry 1.2 FUNDAMENTAL EXPORT PRICING OBJECTIVES & STRATEGIES Preemptive pricing (Định giá ngăn chặn) - setting prices so low as to discourage competition price will be close to total unit costs Preemptive and extinction pricing strategies are both closely associated with ‘dumping’ in international markets “Luxury brands that shy away from sensitive price adjustments for fear of diluting their brand image took a leap of faith by implementing price alignment strategies across key markets.” (Euromonitor, 2016) “ …beyond following a pricing strategy tailored to the characteristics of each market, Inditex is attentive to what consumers are willing to pay based on their income.” 4.1 CHANGES IN EXCHANGE RATES • often change significantly in the short run, and more greatly in the long run • exchange controls to maintain the rate (require exporters to turn all foreign currencies into the national bank, and all importers to purchase foreign exchange from that bank) 4.2 CURRENCY ISSUES • exporter may specify what currency should be used in a particular transaction • importer may require its own currency • or third party’ currency THE PRICE QUOTATION 1) 2) Ex (point of origin) the seller’s 3) Free alongside (FAS) the seller must responsibility & costs end at this point provide for delivery of the goods free in his home country alongside, but not on board, the Free on board (FOB) a transportation transportation carrier (usually an carrier at some named point The ocean vessel) at the port of shipment seller’s responsibility & cost end in and export most cases when the goods are loaded time and cost of loading are not on the appropriate carrier and a clean included bill of lading has been issued THE PRICE QUOTATION 4) 5) Cost and freight (C&F) delivery costs 6) Ex dock one step beyond CIF and are extended beyond the country of requires the seller to be responsible export, the seller’s responsible for for the cost of the goods and all providing and paying for transportation other costs necessary to place the to the overseas port of discharge goods on the dock at the named Cost, insurance, and freight (CIF) overseas port, with the appropriate This trade term is identical to C&F import duty paid except that the seller must also provide the necessary insurance 5.1 SELECTION OF TRADE TERMS • Whether shipment will be made on domestic or foreign carriers • Availability of insurance coverage • Availability of information on costs Exporter’s need for cash (reason against C&F and CFR/CPT) • Needs of importers to have quotes from several suppliers that can be readily compared (reason for CIF and CIP) • Currency convertibility problems • Requirements of the government of the importing nation 6.1 TRANSFER PRICING (or “intra-corporate pricing”) “The price at which goods are transferred between parent and subsidiaries or between subsidiary companies.” “Shifting profits across borders: ‘Transfer pricing’ is the biggest tax avoidance.” (The Guardian, 2009) “The transfer of intangible property may have a material effect on domestic taxes While estimating trademark royalty rates for intercompany transfer pricing is fraught with difficulty, it can be helpful to adopt a systematic approach” (World Trademark Review, 2017) 6.1.1 STAKEHOLDERS IN TRANSFER PRICING LOCAL COUNTRY MANAGER PARENT COMPANY TRANSFER PRICING DOMESTIC GOVERNMENT HOST GOVERNMENT JV PARTNER “The Italian authorities have been the latest to introduce transfer pricing regulations.” (Mazars, 2011) 6.2 COUNTERTRADE • Reciprocal trading • Umbrella term covering a variety of exchanges of goods for goods/cash • Forced sourcing, often used by developing countries • Price setting and financing tied together • Internet as a venue for countertrade activities 6.2.1 FORMS OF COUNTERTRADE ● Barter – goods for goods ● Counter-purchase – reciprocal buying over period of time, majority of purchase price paid in cash ● Offset – at government level ● Buyback – buying output of capital equipment exported ● Switch-trading – involving 3rd party The Malaysian government purchased 20 diesel electric locomotives from General Electric against the supply of about 200,000 metric tons of palm oil over a period of 30 months (Citeman) 6.2.2 WHY IMPORTERS USE COUNTERTRADE They lack foreign exchange They want multinational partners to sell their goods overseas Technology or know-how transfer Hope to increase domestic employment and therefore economic development 6.2.3 BENEFITS TO EXPORTER • Access to otherwise restricted • Gain a competitive edge market e.g blocked funds for • Build good customer trade debt • Combats devaluation in foreign relationship • Access to raw materials currency “Counter-trade is a creative marketing tool.” (West, 2000) SUMMARY • Complex pricing decisions in international markets • Often controlled at local level • Pricing more difficult to standardise • Transfer pricing important for multi-national/global companies, but increasing regulation • Countertrade may be an issue when dealing with developing countries ? Explain why export prices should or should not be established using the same methods and according to the same criteria as prices set in the domestic market