More Banker’s Insights on International Trade
Student Edition
Selections Taken from 101 Lessons Based on Practical Experience
Published by Roy Becker Seminars, www.roybeckerseminars.com
17505 E. Prentice Circle, Centennial, CO 80015
Copyright 2010 by Roy Becker Rev 2010
All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the author, except for the inclusion of brief quotations in a review.
Unattributed quotations are by Roy Becker.
International Standard Book Numbers
eBook: "More Banker's Insights on International Trade: 101 Lessons Based on Practical Experience": ISBN 0-9679927-2-9
eBook: "More Banker's Insights on International Trade: Student Edition":
ISBN 0-9679927-3-7
eBook: "More Banker's Insights on International Trade: Importers' Edition":
ISBN 0-9679927-4-5
eBook: "More Banker's Insights on International Trade: Exporters' Edition":
ISBN 0-9679927-5-3
Printed in the United States of America
About the Author
Roy Becker is considered one of the leading experts in International Trade and Banking. He has spent the majority of his corporate career working in international departments of several major banks. During that time he worked directly with importers and exporters consulting on intricate banking needs associated with international trade. After 34 years in the corporate world, Roy made the decision to give up the safety net to become a corporate trainer, consultant, speaker and publisher. Companies both large and small hire Roy to help them reduce risk and improve cash flow for their international transactions.
Roy serves as adjunct faculty in the International MBA programs at the University of Denver and the University of Colorado Denver. He is a frequent speaker and facilitator at workshops and seminars at the World Trade Center Denver. He has earned the Advanced Toastmaster Gold Award.
Foreword
Roy Becker was my professor for International Trade, Finance, and Management at the University of Colorado at Denver. The concepts taught in his class were often complex, yet I was able to retain the information because Roy used stories to illustrate his lessons, stories like the ones found in this book.
Now as a professor of Export Procedures and Practices at Johnson & Wales University, I use Roy’s book to teach my own students. The feedback that I have received demonstrates that my students also learn difficult exporting concepts, such as Incoterms® and Letters of Credit, by recalling the stories they read in Roy’s book. Additionally, Mr. Becker is often a guest speaker in my classes and is consistently regarded as the best guest presenter of the term…because he has the best stories to share.
Roy Becker’s stories are interesting and illustrate their point very quickly. I’ve had the benefit of hearing Roy deliver stories in person during his lectures in the classroom as well as in his classes at the Rocky Mountain World Trade Center. No matter who Roy is teaching, everyone leaves his lessons not only entertained, but also with additional knowledge in international trade.
If you have ever been confused by the difference in shipping goods “FOB” domestically versus internationally, this book is for you. If you have ever thought that Nigeria was a good place to invest in, you may want to read “The Nigerian Cement Story.” And if you are positive that your selected Incoterm® correctly matches your Method of Payment, you may want to compare your situation to the stories found in this book.
I highly recommend this book to be read for personal enjoyment and to increase your understanding of international trade. Whether a student or a global professional, Roy’s stories will enhance your knowledge and seriously entertain you!
Kelly Kasic, MSIB
President of GLOBAL ID LLC
Instructor of International Business at Johnson & Wales University
Testimonials
"The only thing better than a collection of Roy Becker stories is a newer, larger one. Don't let his folksy style fool you. Roy delivers extremely useful and sometimes complex international trade information in an easy to follow entertaining manner. Serious stuff that's fun to read."
Frank Reynolds, author, "Incoterms® for Americans®"
***
"Simple international business experiences comprise Roy’s must-read manual for those who want to pursue international business. I learned basic business concepts including how to present myself and my company in a dynamic and diverse international business world."
Mohammad Holil
University of Colorado – Denver
MA in Global Finance, Trade, and Economic Integration (GFTEI) 2008)
Position: International Production Planner, Strategic Partner, Inc., Los Angeles, CA
***
"On the first day of class, Roy said it was his goal for us (the students) to wake up on Thursday morning with the first thought, 'Oh good, I get to go to Becker's class tonight.' I believe we achieved that every Thursday. I am from Saudi Arabia and my father has sent me to many countries to learn about international business. Roy has a wealth of experience in this field and his book has helped me learn in a way that has been practical yet easy."
Ghassan Alhaidari
University of Colorado – Denver
MBA student
Riyadh, Saudi Arabia
***
"Roy Becker’s book, 'A Banker’s Insight on International Trade: Tips, Techniques and Tales from Practical Experience,' illustrates that truth is often stranger than fiction in the world of international trade. The price of ignorance when it comes to compliance and political risk can be very expensive for corporations. Roy does a fantastic job of presenting real life examples of what can and will go wrong in the world of trade. The cases are presented in a manner that is tangible, not to mention amusing, for both the trade novice and expert alike. I’m very lucky to have been Roy's student during my tenure as an MBA student, as he helped open my eyes to opportunities in international trade."
Tom Valand
University of Denver - Daniels College of Business
MBA 2009
***
"Roy Becker's 'blue' book illustrates the most prescient and relevant topics in export logistics with a personal and anecdotal style. The cases greatly supplemented my MBA education and were axiomatic to my understanding the fundamentals of the global flow of goods."
C. William Carspecken
University of Denver
MBA 2008
MD Candidate, Harvard Medical School 2012
***
"Roy's 'blue' book is the most practical and useful textbook I have had in my MBA program."
Cindy Mayer
University of Colorado – Denver
MBA 2009
***
"Can INCOTERMS® , methods of payment, and international trade regulations be fun and interesting? Absolutely! Roy Becker has put together a collection of witty and entertaining stories that illuminate the potential missteps companies may take when engaging in international trade. I've had the pleasure of being in one of Roy's classes in my MBA program. It's evident his unique teaching style and passion for this topic shine as brightly in this book as they did when he was in front of our class."
Gary Hummel
University of Denver
MBA Supply Chain 2009
Director of OZEM Sales and Services, TEAM A T E
***
"Developing solar projects for BP often involves managing international supply agreements. Roy's lessons have proved very helpful in successfully negotiating deals that protect and deliver value to both my company and my customer."
Noah Eckert
University of Denver
IMBA/MSF 2007
Project Developer, BP Solar
***
"Roy Becker's 'blue' book is very useful and contains real world experience that I can't find in other textbooks. My family's business is importing raw material from China which is used as fuel for the steel industry. We have been doing business with Chinese agents for more than 20 years. Normally, we use letters of credit as a standard term for our transactions.
This semester, Spring 09, many of my friends are taking his class. I hope they will enjoy it and gain as much knowledge about international trade from him, his book, and his guest speakers as I have."
Anuson Kissanawonghong
University of Colorado – Denver
MBA candidate
***
"Roy’s book offers more than basic facts. The lessons provide examples of actual experiences that can easily and practically be applied to international business dealings. Roy encourages networking and practices what he preaches. I have developed multiple business and personal relationships as a direct result of Roy’s example and his class."
William "Lucas" Quintana
University of Denver - Daniels College of Business
BSBA 2003
IMBA 2010
***
"If you want to increase your understanding and boost your success in international trade, this book is for you. Through humorous real-world anecdotes and highly memorable stories, Roy Becker has crafted a valuable gem for all international trade professionals."
Jessica Abegg
University of Colorado Denver
MBA 2008, MS International Business
Author, Business Consultant
***
"Roy Becker’s ability to match international trade instruction with real life examples is an incredible strength that is missing in most other international business resources. He uses real products, companies, and countries to put names and faces to the issues that arise from international transactions, making them much less daunting and the goal of operating in an international environment much more attainable."
Lacey Barron
University of Denver
M.A. Global Finance, Trade, and Economic Integration 2008
Manager of Aviation Research & Statistics, Public Relations & Marketing
Denver International Airport (DEN)
***
"MGMT 4141 was by far one of the best courses I have taken at Daniel’s. The knowledge and experience that I gained from the class and Roy's 'blue' book have given me a competitive edge in the job market, and the export strategy plan that my team designed for a local company has always been the highlight of every job interview. I was surprised by the number of companies in Colorado that have worked with Roy Becker’s students and been impressed with the confidence they have developed in Daniel’s degree holders because of it. I am convinced the job offer that I received shortly before graduation had much to do with the real-life business experience I gained from this class."
Kate Hayes
University of Denver
MBA 2008
***
"The real-life anecdotes provided in this book give great insight into the unique nature of international business – demonstrating both the importance of doing your homework and communicating effectively across borders!"
Tracy Nicholas
University of Colorado – Denver
MBA 2008
MS International Business 2009
***
"Roy Becker's knowledge and expertise in international trade is unsurpassed. His book offers wits of wisdom and lessons learned for any aspiring or experienced importer and exporter. Roy's language is clear, concise, relevant, and infused with splashes of humor and playfulness. A great read and a great resource for all things 'international trade'."
Erika V. Lapsys
University of Denver - Daniels College of Business
IMBA candidate
***
"Real life examples of real life problems in the global business environment!"
Jenna Overgaard
University of Colorado - Denver
INTB 2010
Global Project Manager
***
"International business is one of the most confusing topics in business since it encompasses regulations from many countries that a businessperson may need when deciding to go global. Moreover, I am thankful that Mr. Becker has shared his wealth of experience through personal stories that illustrate situations businesses should avoid in international trade.
Simply, Mr. Becker presents these stories in very simple formula everyone can read, enjoy, and benefit from even people who have no business experience or who have just started their own business and are considering global trade."
Ahmed Aljughaiman
University of Colorado - Denver
MBA MS 2010
***
Order information
To order copies of this book, or the companion books, "More Banker's Insights on International Trade: 101 Lessons Based on Practical Experience," "More Banker's Insights on International Trade: Importers' Edition," and "More Banker's Insights on International Trade: Exporters' Edition," go to www.RoyBeckerSeminars.com.
***
Acknowledgements
I have always enjoyed training one-on-one or groups. I became aware of the importance of story-telling as a teaching tool when participants would call me many months after a seminar. They would say, “You don’t remember me, but I was in one of your seminars. Our company needs your help with a particular situation. Can you help?”
When I asked, “Why did you think to call me?” the answer frequently was, “Because our situation reminds us of one of the stories you told in class.” They never said, “It reminds us of point three on your outline.”
I appreciate the years I had in Toastmasters where I learned the art of story-telling and recognized that telling stories is an effective teaching tool.
I am grateful for years of experience working for several banks, most of which no longer exist due to the merger frenzy in the banking industry. I was fortunate to work with many professionals who taught me how to take my job seriously without taking myself seriously. More recently I have been training and consulting companies whose stories provided me with learning experiences and lessons for this book.
The individuals who need particular recognition are many, and I’ll likely miss a few. Frank Reynolds, author of “Incoterms® for Americans®,” provided the encouragement I needed to publish my first book. Dr. Dave Hopkins, University of Denver, read my first manuscript and provided valuable advice.
Thanks to Janet Randall, of J. Randall Ventures, who edited the material and provided hundreds of valuable suggestions for correct wording and ease of reading.
Patrick Gallagher, of Gallagher Transport Int'l, Inc. has graciously contributed several insightful, entertaining and educational stories based on his years of experience working as a U.S. Customs Broker.
Special recognition is due to two international banking gurus of years gone by. First is Jim Harrington who was a V.P. with Bankers Trust Company. He wrote several instructional books that helped me learn and understand letters of credit. I also had the privilege to attend a workshop where he told numerous stories, and I have used some of them in this book and have given him credit.
The other is Frank Sauter who was a V.P with First National City Bank. He wrote three companion booklets, "Random Notes on Letters of Credit," for in-house use at the bank, which I was fortunate to have obtained. I have attributed some stories to Mr. Sauter as well.
The stories told by Mr. Harrington and Mr. Sauter prove the timelessness of the principles of letters of credit.
Thanks to the many students who have told me that these stories provide them with real-world illustrations.
Finally, quotations from "Uniform Customs and Practice for Documentary Credits, (UCP 600) 2007 Revision" are used with permission from the International Chamber of Commerce.
***
Dedication
To my wife, Jean, for her unwavering love and support.
***
Table of Contents
Lesson #1: International Payment Terms 101
Lesson #2: The Nigerian Cement Story
Lesson #3: How a Sneeze Led to a Career in International Banking
Lesson #4: Training during the West Coast Dock Strike
Lesson #5: Who Writes the Letter of Credit Rules?
Lesson #6: How to Avoid the Most Common Error of Letters of Credit
Lesson #7: The Infamous Monday in Brazil
Lesson #8: Two Tips to Avoid Getting Burned on a Canadian Check: When Cash in Advance Isn’t
Lesson #9: How Do They Say “Hello” in France at 4 A.M.?
Lesson #10: Where Does Risk Pass?
Lesson #11: Seven Factors for Determining the Right Method of Payment
Lesson #12: You Can Export the Whole Pig - Except the Squeal!