Exporting

Product Classification

Product classification using 10-digit harmonized codes is a critical step for exporting and is useful for:

• market research
• determining import duties paid by your customer, and
• determining the Country of Origin for trade agreement compliance (e.g., NAFTA Certificate of Origin)

Export data are initially collected and compiled in terms of Schedule B classifications, which is accessible at the United States Census Bureau.

Import data are based on the Harmonized Tariff Schedule (HTS) of the US International Trade Commission.

Note: Both Schedule B and HTS numbers are the same for the first six digits. Chapter 30 covers many pharmacuetical products and Chapter 90 covers many medical devices.

An additional resource for assistance in classification is the Customs Rulings Online Search System (CROSS), which is maintained by the US Customs and Border Protection.

Market Research

• Market Research Reports are freely available from the US Commercial Services Market Research Library. On this site, choose 'Health Technologies' in the 'Industry' drop-down and then select your 'Sector'.

• The USDA Foreign Agricultural Service maintains a number of Market Development and Resources for Exporting US Products, both of which are applicable to life science companies.

• The globalEDGE Insights compiles data from a variety of sources into a single portal that can be viewed by geography or industry.

• Best Market Reports and Trade Information Database are provided by the California Centers for International Trade Development (CITD).

• The World Bank provides a comprehensive collection of World Development Indicators and Additional Databases that may be invaluable in assessing new and emerging markets.

• The International Finance Corporation of The World Bank summarizes a variety of metrics for Doing Business and Measuring Business Regulations in different economies and topics. On this site, choose from the 'Explore Economy Data' drop-downs on the right.

• The United Nations Data Retrieval System and the Commodity Trade Statistics Database of the UN Statistics Division provide numerous Databases and Country data services.

Tariff Data

Once you have determined your Schedule B or HTS number, tariff and import fees can be determined from a number of resources at Export.gov (scroll to bottom of this page).

The USITC Interactive Tariff and Trade DataWeb provides international trade statistics and U.S. tariff data to the public full-time and free of charge.

Brazil

Market Entry Strategy – It is essential to know that Brazil’s business culture is greatly based upon personal relationships. Therefore, companies should take all the time and resources necessary to develop such relationships with key local business players. It is highly encouraged that US companies interested in investing in Brazil, meet in person with potential local partners. To know who these partners could be and enter the Brazilian market, it is recommended to either attend a local trade show, and/or use the U.S Commercial Service’s Gold Key Service. Please note that it is extremely difficult for U.S. companies to do business in the public sector without having a local Brazilian partner.[1]

Business Hours – working day for commercial offices is usually from 8:30a.m. or 9:00a.m. to 5:30p.m. or 6:00p.m., with a lunch break of one or one-and-one-half hours. A few factories work on Saturday mornings. Generally, banks are open from 10:00a.m. to 4:00 p.m. and government offices are open from 9:00 a.m. to 5:00 p.m. Both are closed on Saturdays.[2]

Meeting Etiquette – Men shake hands when greeting one another; women generally kiss each other, starting with the left and alternating cheeks. Hugging only takes place among Brazilian friends.

Relationships and Communication – Brazilians prefer face-to-face communication as it allows them to know the person with whom they are doing business a lot better. Moreover, Brazilians have a group culture; therefore it is important that you do not do anything that could embarrass them.

Business Meetings - Business is most commonly conducted in a rather formal manner, especially in large cities like Sao Paulo. It is common to have business lunches and dinners, but none for breakfast. Business entertaining often involves social events. Brazilians consider time to be something out of their control and often do not adhere to a strict schedule. Nevertheless, in Sao Paulo and Brasilia it is important to arrive on time for meetings. In other areas such as Rio de Janerio, it is quite acceptable to arrive a few minutes late for a meeting. In addition, it is advisable that business appointments are arranged two to three weeks in advance from the preferred date.

Business Negotiation – Negotiation with Brazilians takes time and it is important not to rush them or appear impatient; Brazilians are very detailed-oriented. Moreover, most of often you will not be negotiating with the decision-makers. Brazilian business is hierarchical; therefore decisions are made by the highest-ranking person. It is highly recommended to use local lawyers and accountants for negotiations; Brazilians resent outside legal presence.

Gift Giving Etiquette for Social Events – If invited to a Brazilian’s house, it is a custom to bring the hostess flowers or a small gift. Avoid giving anything purple or black because these are considered to be mourning colors. Typically, gifts are opened when received. Gifts such as quality whiskey, wine, and brand pens are acceptable during social meetings.

Regulations - A detailed regulatory system combined with a relaxed attitude to time often results in lengthy business dealings. The process should not be rushed; instead time should be used to continue developing relationships for negations to be successful. Moreover, face to face communication is the preferred way to do business. Only limited business will be done via phone, fax or e-mail.

To make the registration process easier, foreign companies should hire a “despachante” (middleman) to help the company navigate through Brazilian red tape and finalize business dealings. A “despachante” will usually charge a nominal fee. In addition, a local accountant and a lawyer should be hired to help with any contract issues that might arise. Brazilians get easily offended if an outside legal representative is used.

An important matter to take into consideration, especially when getting the company and product(s) registered locally, is to avoid presenting gifts during a formal business meeting. Gifts are not important in establishing or strengthening a relationship. If a very expensive gift is given it can easily be considered a bribe.

Business Travel – Once a potential Brazilian importer has been contacted, foreign exporters are recommended to travel to Brazil to enter into direct contact with suppliers. Before the trip, the following steps should be taken:

• Prepare a list of competitive product prices for the Brazilian market, product samples and catalogues.
• Check if an entry visa will be needed. Visit the Ministry of Tourism’s Web site for more information: http://www.embratur.gov.br/site/br/dicas_turista_passaporte/materia.php.
• Vaccinations – the Brazilian government requires an international certificate of vaccination against yellow fever for travelers from countries in the Amazon Basin. For more information go to: http://www.anvisa.gov.br/paf/controle.htm#civ.
• Letter of Invitation – Typically, issuance of business visas to Brazil requires a certified letter from a Brazilian company addressed to the consular service clearly stating the objective of the visit.

[3]

China

Personal relationships (“guanxi” in Chinese) are critical to succeed in doing business in China. “Guanxi” is deeply rooted in Chinese culture and is basically a tool to get business and a way of getting things done. Chinese also respect “face-to-face” meetings and communication during meals and drinking, which are ways to demonstrate your commitment. Continued long-term relationships with relevant government agencies are keys to ensuring expedited governmental procedures and the smoother development of business in China. It is also important for U.S. exporters to establish and maintain strong personal relationships between their Chinese agents or distributors and the buyers and end-users. It is equally important for prospective exporters to note that China has many different regions and that each province has unique economic and social characteristics.

U.S. companies commonly rely on agents in China to initially create these relationships since localized agents possess the knowledge and contacts to better promote U.S. products and break down institutional, language, and cultural barriers. U.S. companies are strongly encouraged to carefully choose Chinese partners under complete understanding of their distributors, customers, suppliers, and advisors. To better find Chinese partners, U.S. exports can ask for assistance from the U.S. Commercial Service in China.

India

Despite the efficiency of India’s growing business community, the Indian government remains mired in layers of red tape that have existed since the British Raj. Governmental and bureaucratic structures remain infamous for their opacity, arbitrariness and corruption. It should be noted that baksheesh, the paying of bribes, is often necessary at all levels of Indian government, and will most likely be expected at multiple points throughout the certification process at the federal level, as well as to individual state and local governments. It will also be expected in return for selection of the product at least some of the hospitals. Although such payments are seen in India as a normal cost of business, this practice is not only frowned upon but is strictly prohibited for American firms under the Foreign Corrupt Practices Act of 1977 (FCPA) (15 U.S.C. §§ 78dd-1 et. seq.). Although the U.S. Department of Justice acknowledges that “strict compliance with anti-bribery laws may conflict with local customs and practices,” it nevertheless has levied millions of dollars in fines against well-known corporations such as GE, IBM, and Daimler (Hilzenrath 2011). However, it should be noted that the use of ‘expediting fees’ remains allowed and often accomplishes similar ends. It may be advisable to consult an attorney if you are faced with these issues (Campbell).

For more information, please visit:

• The USDOC’s Country Commercial Guide for India, Chapter 6 Investment Climate, Corruption [4].
• The U.S. Department of Justice, Foreign Corrupt Practices Act [5].

Legacies of the caste system mean that most Indian businesses are strongly hierarchical; many Indians find it difficult to work without a strongly reinforced management structure. Nevertheless, business culture is far more informal than in many other countries; the great deal of importance placed on personal relationships means that the obligatory small talk in meetings should not be neglected. Finally, it is important to note that, as in most areas of Indian culture, punctuality is not of critical importance; meetings will likely start and end late and be subject to numerous interruptions (“Doing Business in India” 2010).

Geert Hofstede’s cultural dimensions are one tool to measure the differences in the workplace between cultures. Five aspects are measured: power distance, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance, and long-term vs. short term orientation. Power distance measure a societies acceptance of hierarchy and the unequal distribution of power. India scores higher than the United States in power distance. This means that Indians respect hierarchy with little justification and do not share the United States’ high value for equal rights for all. In regards to individualism vs. collectivism, India scores moderately and the United States scores very high. This tells us that the India views society as a collective “we” whereas American culture causes us to view ourselves as individuals. This is significant when considering the manner in which business is conducted. In both categories of masculinity vs. femininity and uncertainty avoidance, the United States and India score very similarly (the U.S. is slightly higher in both areas). Both countries score high in masculinity vs. femininity, which signifies that they value, competitive behavior, success, and status. Additionally, because of their comparable moderately low scores in uncertainty avoidance, both countries can be described as “uncertainty accepting.” As a culture, both Americans and Indians are accepting of new ideas and are willing to try to things. Finally, India scores higher than the U.S. in long-term orientation. This indicates that Indians tend to consider the future when making decision whereas Americans are more focused on short-term consequences. This is important to consider in business because it may affect opinions on short-term vs. long-term profit/loss decisions, performance, and results (Hofstede). Please click here to view India's cultural dimensions scores [6] and the United States' cultural dimensions scores [7].

What is the opportunity?

Washington businesses have an opportunity to reach new markets around the world and diversify their client base. Washington’s global health organizations are working in more than 150 countries, including India, China, and Brazil, among others.

What do you need to know?

The global health business model is different. Lower-margin, high volume solutions produced and sold at an affordable price point have the greatest market potential. Immense opportunity to scale commodity products. The rates of return on commodity products may be low to begin with, but the opportunities to get to scale in growing markets like Brazil, China and India create the potential for attractive returns over the long-term. There may be global health opportunity next door. Washington is home to many global health organizations that are national leaders in attracting federal research funding and commercializing new technologies. Working with global health organizations can:

• Help mitigate risk through an understanding of the operating environment and key stakeholders.
• Open the door to new funding opportunities. Global health is supported by a host of public and private donors from around the world.

Who is the customer?

The people who benefit from your products may not be your customer. In fact, typical customers include ministries of health or international nongovernmental organizations. Washington global health organizations have the relationship, experience, and credibility with foreign governments—an asset that can be leveraged by business partners.

What is needed?

Global health solutions can encompass a spectrum of products, technologies, and devices. Typical products are affordable, rugged, easy to use, and portable. Why? These products, devices, and technologies are being used in a variety of environments, where basic infrastructure is not guaranteed. Also, in many cases, the end users are not healthcare professionals, so keeping it simple makes sense.

Check out case studies in the market opportunities folio.

The Global Entrepreneur by James Foley summarizes Risk Analysis across several scenarios.

Brazil

Labor[8]

Labor cost inflation in Brazil is among the highest in Latin America. A decrease in unemployment and the strengthening of the Real against the dollar increased salaries in dollar terms. Furthermore, even though Brazil has a large labor market, most of them are semiskilled or unskilled, meaning that there is a shortage of technical personnel and significant training will need to be given to any employee of the distributor company in charge of selling and delivering a sophisticated technological piece of equipment.

Corruption[9]

Despite a formally well-functioning business environment, several studies indicate that corruption and bribery are serious obstacles to doing business in Brazil. Corruption represents a serious threat, even when it comes to working on deals with the government.Specific risks of corruption:

• The likelihood of demands for bribes from public officials increases due to the wide range of regulatory agencies of the political system.
• Brazil’s tax system is complex and is known to be a cause of corruption. For example, tax collectors ask for bribes to be less strict on inspections.

China

Increasing production of counterfeit merchandise, coupled with growth in infringement of intellectual property rights in China, is particularly damaging issues for foreign firms. U.S. companies must secure relevant rights by registering their trademarks, design marks, the Chinese-calligraphy equivalent of the word marks, the pinyin transliteration, and the internet domain names. Any U.S. company encountering problems arising from IPR infringement in China should find assistance in the “IPR Toolkit[10]", hosted at the website of the U.S. Embassy in Beijing.

Exporting medical device is still facing challenges from the uncertain regulatory environment, extensive delays in registration and re-registration of products, price controls by the central government, and the centralized tendering and procurement process. Besides downward pricing pressure, we are also facing the threat of competition from well established rivals like Siemens, Philips and GE, as well as potential competition from domestic medical device companies. It is needed to develop contingency plans to address fast- moving environmental changes such as new technology and new competition.

Web Resources

Protecting Your Intellectual Property Rights (IPR) in China[11]

http://www.stopfakes.gov

India

As has previously been mentioned, the regulatory structure governing medical devices in India is apt to change in the near future; it is currently impossible to predict if, when, and how these changes would affect certification of product being imported to India. It is a potential risk that such changes could complicate or delay an in-progress certification process. Additionally, the number of counterfeit and bogus ultrasound (and other diagnostic equipment) available in India is staggering; this has the potential both to reduce consumer confidence in new technology overall as well as make it difficult to distinguish legitimate product as genuine. It will be of critical importance to be vigilant in ensuring that inferior products are not attempting to capitalize on new brands. Given the widespread corruption that is endemic in India, it may prove difficult to halt such counterfeiting, even if those responsible can be found. Furthermore, the use and sale of ultrasounds in India is complicated because of the prenatal Diagnostic Techniques (PNDT) Act, which prohibits the determination of gender before birth (Ministry of Health & Family Welfare, 1994). This act encourages, in part, the production and usage of fraudulent ultrasound equipment because of the demand created by those families wanting to find out the gender of their unborn child. On a related topic, action should be taken to protect intellectual property. Typically, it costs more to recover intellectual property than to protect it in the first place. Often, once the counterfeit versions of your product have become a problem, it is too late (Secrist). Because fraudulent ultrasound equipment is a problem in India, it is advisable to be familiar with India’s Intellectual Property Rights (IPR). IPR includes:

• Patents
• Copyrights
• Trademarks
• Registered (industrial) design
• Protection of IC layout design
• Geographical indications
• Protection of undisclosed information

Patents are governed under the Indian Patent Act 1970; trademarks are covered under the Indian Trademarks Act 1999. India is a member of several international treaties related to IPR: Trade Related Aspects of Intellectual Property (TRIPS), the Paris Convention, Patent Cooperation Treaty (PTC), the World Intellectual Property Organization (WIPO) and the Budapest Treaty (Saha and Gupta).

• For more information and assistance concerning intellectual property, visit www.stopfakes.gov [12] or call 1-866-999-HALT

Finally, corruption is a risk that should be considering when doing business in India. According to Transparency International’s 2010 Corruption Perceptions Index, India is ranked number 87 out of 178 countries with a score of 3.3; countries are scored on a scale from 1 to 10, 1 being the most corrupt. Other third-world countries, including China, Rwanda and Morocco, are considered less corrupt. In India in 2010, “54% of households paid a bribe in a 12-month period to receive basic services.” However, only 25% believe that the Indian government’s actions towards combating corruption are effective (Transparency International, 2010).

Brazil

Overview of Medical Device Regulatory Requirements [13]

In order to import and distribute any type of medical equipment in Brazil, the first step is to register the equipment with the Brazilian National Health Surveillance Agency (ANVISA); an agency in charge of regulating the importation of medical devices. Typically, it takes between three months and two years to complete the application and registration process to obtain approval from the government. The length of time varies depending on the product’s complexity and the quality and sufficiency of the information accompanying the application. Manufacturers must also obtain a Good Manufacturing Practice (GMP) certificate from ANVISA in order to register their product.

Regulatory Agency – Brazilian National Health Surveillance Agency (ANVISA)

The regulatory agency ANVISA is under the structure of the Federal Public Administration, and is independently administrated and financially autonomous agency associated with the Ministry of Health. All products must be registered with ANVISA before importation to Brazil.

Regulations

The law that governs medical devices is Law No. 6.360 of 1976, Decree 79.094/77, and several other regulations. Resolution RDC No. 185 of 22 October 2001 is the main regulation related to medical devices (outlines specific documents necessary to register medical devices with ANVISA).

All medical devices are classified into four categories: Class I, Class II, Class III, or Class IV based upon the risk to the human body. Class I represents the lowest risk and Class IV pose the highest. The classification rules are very similar to those of the U.S. FDA and the European Union’s Council Directive. All medical devices in Brazil must meet certain principles of safety and effectives (outlines in Resolution No. 56 (2001)).

Required Documents

For Class I and Class II devices, the importer or distributor must: 1.Pay an inspection fee to ANVISA 2.Complete a registration form available from ANVISA, as required by RDC-24/2009

For Class III and IV devices (and those not from Class I and II not covered by the RDC-24/2009) the importer or distributor must provide: 1.A copy of payment bank receipt provided by ANVISA; 2.Identification of the manufacturer or importer of medical device; 3.A copy of authorization of the manufacturer to import and market the device in the country; 4.A copy of registration or certificate of free trade or any other equivalent document issued by the competent authority where the product is manufactured and/or marketed; 5.A copy of the certificate of accomplishment of legal requirements determined by technical regulations, in the format of ANVISA’s legislation for medical products. 6.Documentation indicating that the device complies with the essential principles of safety and effectiveness established by the RDC No. 56 of 2001.

For all registrations, a Brazilian GMP certificate must be provided, issued by ANVISA under requirements established under RDC No. 59 of 2000.

Labeling Requirements

The Consumer Protection Code (CDC) requires that product labeling provide the consumer with correct, clear, precise, and easily readable information regarding the product’s contents, importer’s name, address, and telephone number. All information must be in Portuguese.

If a company does not comply with the above requirements, it faces fines and even confiscation of medical devices and equipment.

Product Registration

The local office or agent of the company must request product registration. The registration is valid for five years and can be renewed continuously for the same period of time. Additionally, the registration must be completed within 90 days after the registration is requested. To guarantee rights to registration, the foreign company should:

• Apply for registration of the trademark and patent with the National Industrial Property Institute (INPI), through a local law firm.
• Establish a detailed contract with the distributor through the local agent.
• Within the contract, there should be specific clauses about transferring the ownership of the registration from the agent to the manufacturer. This transference can only occur if the foreign company opens an office or plant in Brazil. Transfer to another agent is really difficult to obtain.
• Manufacturers have to disclose to local authorities, through their agents, the quantitative and qualitative formula of their products, which should be patented in Brazil, before the product is launched to the market, and at the time of registration.

The product registration process takes approximately more than one year. However, after three months have passed, the producer and importer have the option to start distributing their products in Brazil. The condition is that they assume the risk of product liability claims if their products are found to be unsafe by Brazilian authorities. Required information for registration of medical devices:

• Name of company
• Address
• Product name
• Product Description
• Legalized FDA Certificate of Foreign Government (CFG)
• Final Product Drawings
• List of Components/Materials
• Manufacturing Method
• Labels/Directions for Use
• Sterilization Parameters
• Quality Control Test Methods/Records
• Clinical Publications
• Product Brochure

Standards Brazil usually accepts U.S. product standards and certifications by U.S. testing laboratories.

Entities Affecting Imports

• Secretariat of Foreign Trade (SECEX), in the Ministry of Development, Industry and Foreign Trade (MDIC): responsible for formulating regulations to implement import measures.
• Secretariat of Federal Revenue of Brazil (RFB), in the Ministry of Finance: responsible for customs administration, including duty collection.

China

1) U.S. Regulatory

Food and Drug Administration (FDA) plays a significant role in the regulation of the import and export of foods, drugs, cosmetics, biologics, medical devices, and radiation emitting electronic products. The regulation is addressed by Chapter VIII of the Federal Food, Drug, and Cosmetic Act (FD&C Act). Device Registration and Listing[14] are required for U.S. manufactures that export medical devices outside the U.S. “Any medical device that is legally in the U.S. may be exported anywhere in the world without prior FDA notification or approval”. For a device to be legally in commercial distribution in the U.S., the device must additionally have a cleared Premarket Notification 510(k) or Premarket Approval (PMA); must meet the labeling requirements of 21 CFR Part 801and 21 CFR 809; must be manufactured in accordance with the Quality Systems (QS) Regulation of 21 CFR Part 820.

To obtain written certification that a firm or its devices are in compliance with U.S. law, which is required by the country export to, U.S. firms can apply for a Certificate for Foreign Government (CFG). You should submit your request for a CFG on form FDA-3613, Supplementary Information Certificate to Foreign Government Requests[www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Forms/UCM052378.pdf] (“Exporting Medical”, n.d.).

Procedures to export medical device that have not been authorized by FDA to be put into market can refer to export procedures for unapproved devices[15].

2) China Regulatory

There are three Chinese agencies that are in charge of regulating the importation of medical equipment. China’s State Food and Drug Administration (SFDA), is the primary responsible agency. Depending on the product being exported to China, a company may be required to receive approval from the Ministry of Health (MOH), or the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (AQSIQ).

SFDA

According to China’s Regulations for the Supervision and Administration of Medical Devices[16], all three classes imported medical devices must register with the State Food and Drug Administration. Application form for the Registration of Oversea Medical Devices[17] can be found on SFDA’s website, so does regulatory guide for the initial registration of import products[18] and re-registration[19]. China’s Regulation for Medical Device Classification[20] defines the three classifications for medical devices[21] (Class I – III).

Upon the application for registration, the following materials shall be submitted:

• The legal production qualification certificate of the Manufacturer.
• The qualification certificate of the Applicant.
• The certificate authorizing the products as medical devices to enter into the market of the country of origin, like 510 K or PMA of the U.S. FDA.

If the products of Class II or Class III have not been authorized by the government of country of origin to be put into market, product technology report, full-performance test report, risk analysis report shall be submitted.

• Technical Standards of Products
• Operation manual of Products.
• Type test Reports issued by the Medical Devices Quality Detection Agency authorized by the SFDA (applicable to products of Class II and Class III). Medical devices type testing must be based upon the Chinese national standard.
• Medical device clinical trials report.
• The Product Quality Guaranty presented by the Manufacturer.
• Letter of Authorization for the After-Sale Service Agency designated in China.
• The Self-Declaration on the authenticity of the materials submitted (“Application form”, 2010).

It takes 90 working days for SFDA to complete regulatory review of each product, which are reported to have increased from 4-6 months, up to a year. In addition to the 90 day review period, it may take 60 – 90 working days to complete all testing. License renewal applications must be done every 4 years (Biggs, 2004).

SFDA also issued requirements for labeling titled as “Provisions for the Instructions, Labels and Package of Medical Devices”. Medical devices imported into China must be labeled in Chinese, and must include the registration certificate number, product features, the scope of usage for the product, and things to be aware of. These labels should be attached to all products before going through customs (Biggs, 2004).

AQSIQ

AQSIQ is in charge of inspection, quarantine, and establishing the technical standards of goods for import and export. AQSIQ approved the regulations referred to as "China Compulsory Certification” (CCC)[22]. The regulations cover a variety of electro-medical devices, so these products can be imported, marketed and used in China with CCC marks. The CCC Mark application is processed by the China Quality Certification Center (CQC[23]). The application process for the CCC mark requires submission of numerous technical documents, including user guides, CB reports, EMC reports, regulatory labels and other information. Manufacturers must submit product sample to an accredited laboratory in China, which can charge several thousand dollars. In addition, CCC mark certification requires a factory inspection as well as follow-up inspections. The application can take sixty to ninety days or longer (Biggs, 2004).

Reimbursement

The Ministry of Health (MOH) is responsible for regulations, and policies related to public health, and administering China’s health insurance system. Based on the socio-economic development of nation and different regions and demand for health services, MOH develops the country’s overall planning and regional distribution plan for the first level large medical equipments. And MOH is also responsible for the management and approval of first level large medical equipments, while second level large medical equipments are managed by the provincial health bureaus. Medical institutions can acquire the large medical equipment only after obtaining the permit which is issued by MOH. And large medical equipments were regulated to be centralized procured through open tender. MOH and provincial health bureaus are responsible for the procurement of medical equipment includes overseeing the bidding and tendering process (“Arrangement and Management”, 2004).

India

The Indian government permits government-owned and private hospitals to issue global tender for purchasing medical devices. Generally, the tenders fall into two categories: technical bid or commercial bid. Because of the bureaucratic structure of public hospitals in India, the government tender process is slow. Typically, the government favors the lowest bidder. In most cases, the decision-making process moves more quickly in private hospitals; private hospitals evaluate medical devices on technological quality and cost (Mukherji). U.S. companies entering India should consider hiring at least one Indian distributor or agent. An agent can offer service support for medical devices, which is considered an essential element in purchase decision-making. An agent can provide information about the local market, negotiate sales, manage trade activities, and facilitate contact with the government and private hospital purchase decision-makers (Mukherji).

Prior to 2005, India did not regulate medical equipment at all; any attempts at regulation fell under the Drugs and Cosmetics Act of 1940. In 2005, the country created the Central Drugs Standard Control Organization (CDSCO), which was charged with regulating both medical devices and drugs. The CDSCO primarily created regulation for sterile devices, i.e., those that will be implanted or have direct skin contact. As a diagnostic device, portable ultrasound units did not fall under this category and were therefore exempt from most regulatory requirements.

In response to the perceived failures of the CDSCO, both the Department of Science and Technology and the Ministry of Health proposed completely restructuring medical device regulations under their respective departments. To date, neither of these attempts has been successful, and it remains to be seen which of the three regulatory schemes will ultimately prevail.

The most recent development is the release of the newest iteration of the CDSCO’s regulatory scheme, known as Schedule M-III, released in 2009. It creates a four-tiered medical device risk classification scheme aimed at providing clearer and safer guidelines for the importation of medical devices. Additionally, the term “medical devices” was for the first time defined; the new definition includes any instrument intended to be used for the “diagnosis, prevention, monitoring, treatment, or alleviation of disease” and the “ investigation, replacement, modification or support of the anatomy or of a physiological process” (Schedule M-III §3(b)(iv)(a)(i)). However, despite what appear to be significant strides in the legal aspects of regulation, the M-III guidelines are largely ignored and most devices remain completely unregulated (Gross 2010).

Despite the M-III regime’s shortcomings, an understanding of the M-III requirements can provide a resource for future laws, which would likely be similar in nature. Should diagnostic equipment begin to be regulated by the CDSCO scheme, it would require a medical device registration certificate. Such certificates are good for three years, and require submission of fifteen components:

• Covering Letter
• Authorization Letter (for proof of a local agent)
• Form 40 (a general medical device registration application form)
• TR6 Challan
• Power of Attorney (for proof of authorization from manufacturer to agent in India)
• Schedule DI and Plant Master File (requires information on the manufacturer/ manufacturing premises, details on the medical device, and more)
• Schedule DII and Device Master File (requires information on the medical device intended use, indication for use, classification, novel features, sterilization, similar devices in India, domestic price of the device in country of origin, marketing history of the device, regulatory approvals/marketing clearances, labeling, risk analysis and control, biocompatibility, biological safety, clinical evidence, post marketing surveillance data, and more)
• Wholesale License
• Free Sale Certificate
• Manufacturing License/Plant Registration Certificate
• ISO 13485:2003 Certificate
• Full Quality Assurance Certificate
• CE Design Examination Certificate
• Declaration of Conformity
• Inspection/Audit Report

For more information on the regulatory process, please visit Emergogroup.com. [24] Because of their high quality, FDA and CE approved products are preferred. However, because the Indian market is sensitive to price, low priced products remain highly competitive in the medical device field. For information on the CE marking process for medical devices, please visit Emergogroup.com. [25]

A customs duty is charged on all imported medical devices in India; product classification and end-user determine the value of the duty. However, if your product is classified by the Ministry of Health as “life saving medical equipment” reduced rates may apply; government-run hospitals may also import at a lower duty if the medical device is imported straight from the manufacturer (Mukherji).

It is required that the manufacturer and the importer register with the CDSCO. The Indian importing company must obtain a “no objection” certificate for approval to import and sell within the country. Generally, FDA/CE approved products obtain approval without difficulty. For new medical devices, or those that are not FDA/CE approved, you must submit an application to the regulatory authority. This includes regulatory status of the device in other countries, restrictions of use in those countries where the device is already approved, and a free sale certificate from the country of origin.

• You can find the current CDSCO application forms here [26] (Mukherji).

As the exporter, you should expect to provide a pro forma invoice, which states the offer price--inclusive of insurance and freight costs. Once an agreement is reached on method of payment, the importer will place the order. Methods of payment are discussed under Financial Management. At the port of entry, the goods must be cleared after payment of duties; this is done either by the importer or its customs clearing agent. Four copies of the bill of entry must be submitted. The original copy and one duplicate go to customs; one copy is for the importer; and the last copy is for the bank for making remittances. The bill of entry is a description of the contents of the shipment. All imports are required to be reviewed to verify accuracy of the description. In addition to the bill of entry, the following documents may be required (Mukherji):

• Signed invoice
• Packing List
• Bill of Lading or Delivery/Airway Bill
• GATT declaration form duly filled in
• Importers/Clearing House declaration
• License
• Letter of Credit/ Bank Draft
• Insurance documents
• Import license
• Test report (in case of chemicals)
• Industrial License
• Catalogues, technical write-up, literature (in case of machineries, spares or chemicals)
• Separately split up value of spares, components machineries
• Certificate of Origin

The shipment is then sent to for assessment and payment of duty in the Customs House. The assessment includes verification of proper product classification; the officer notes the invoice and other documents which support the valuation claim. The officer will either deem the value acceptable or indicate its need to be recalculated. The calculated duty is then deposited with the treasury or nominated banks. Finally, delivery can be sought (Mukherji).

United States export documents that may be required include an Airway Bill, Bill of Lading, Commercial Invoice, Export Packing List, the Electronic Export Information Form (Shippers Export Declaration), and a Generic Certificate of Origin.

• For more information on and definitions of these documents, please visit Export.gov’s Common Export Documents [27] (U.S. Commercial Services).
• For more exporting assistance and information, you may call Export.gov’s Trade Information Center at 1-800-USA-TRAD(E).
• You may also consider the U.S. Department of Commerce’s step-by-step exporting guide book, A Basic Guide to Exporting: The Official Government Resources for Small and Medium-Sized Businesses. This book is available at the U.S. Government Bookstore [28] (U.S. Commercial Services).

Potential foreign trade barriers include tariffs and customs; service barriers; standards, testing labeling, or certification; rules of origin; government procurement contracting; intellectual property protection problems; excessive government requirements; excessive testing or licensing fees; bribery; and investment barriers (U.S. Commercial Services).

The SBA aims to assist small businesses develop their export activities by providing a variety of loans.

• Visit Export.gov to learn more about the SBA’s Export Loan Programs [29] including the Export Express Program [30], Export Working Capital Program (EWCP) [31], and International Trade Loan Program [32].
• For information on Export.gov’s Export Finance Seminars, please click here [33].

• The Export Finance Assistance Center of Washington (EFACW) was created by the Washington State legislature in 1983 to provide export finance counseling assistance to small- and medium-sized exporters or prospective Washington-based exporters. EFACW provides ongoing consulting services on every aspect of Export Finance for Washington State exporters including helping to negotiate the contract with your Buyer, payment terms, structuring the transaction and dealing with foreign exchange issues.

• With Export Trade Finance Officers in Washington State, the Small Business Administration (SBA) Office of International Trade aims to enhance the ability of small businesses to compete in the global marketplace; facilitate access to capital to support international trade; ensure that the interests of small business are considered and reflected in trade negotiations; and support and contribute to the U.S. Government's international agenda.

Brazil

There are three primary strategies a Brazilian company can use to finance the purchasing of imported medical devices:

1.Direct Loan by Local Development Bank to Buyer

Local companies can fund their purchasing of American goods by arranging an at-market or even below-market direct loans with the Brazilian National Economic Development Bank (BNDES). However, the loan approval process is bureaucratic and slow.[34]

2.Financing by a Latin American Bank

A Latin American bank can pay for a U.S. exporter’s goods in advance, which is then shipped to a Latin American buyer. Essentially, the Latin American bank is providing the buyer a loan which the buyer will have to repay. Usually, the buyer will have six months before they are required to start paying back the loan. This option is extremely expensive for Latin American buyers, but is commonly the only option for them, particularly when one is ordering expensive capital equipment. To receive payment, imports in Brazil are mainly handled using traditional letters of credit (L/C) or collections through reputable banks with correspondent banking agreements internationally. U.S. exporters can also elect to operate on an open account or cash in advance basis if their relationship with Brazilian buyers is trustworthy.[35]

3.Providing Buyer Financing Directly

U.S. exporters can offer financing to the Brazilian buyer themselves, by selling on open account with long repayment terms (generally 180 days). This gives the Brazilian buyer 6 months to repay (for some products, terms can be up to 1 year), and does not require them to obtain a local loan at higher interest rates. To determine an appropriate credit period, exporters can look at past commercial terms for similar internationally traded products. An important reason to control the credit period are because of the incurring costs through use of working capital or interest and fees; if the buyer is not already responsible for paying these costs, then the exporter should factor them into the selling price. Customers are frequently charged interest on credit periods of a year or longer but less frequently on short-term credit (up to 180 days). Most exporters absorb interest charges for short-term credit unless the customer is late on payment.[36]

China

1）Getting Paid

The most common methods of payment from Chinese importers are letters of credit and documentary collections. No matter what method used for the trade transaction, it is required by State Administration of Foreign Exchange (SAFE) that Chinese buys need to apply for the foreign exchange amount.

2）Insurance

The U.S. Government provides U.S. companies insurance for both export transactions and for the political risk. Export transactions insurance from the Export-Import Bank includes: export credit insurance policies[37], Express Insurance[38], Small Business Export Credit Insurance Policy[39], Multi-Buyer Export Credit Insurance Policy[40], Short-Term Single-Buyer Export Credit Insurance Policy[41], Finance Lease Guarantees[42] for U.S. leasers[43]. Overseas Private Investment Corporation (OPIC) programs[44] are available to U.S. exporters with political risk insurance, covering currency inconvertibility and political violence. Some foreign commercial insurance companies also offer political risk insurance, like the People's Insurance Company of China.

3）Financing

U.S. government export development and working capital financing programs enable U.S. businesses to obtain loans that facilitate the export of goods or services, and therefore operate more effectively in export transactions and grow international sales. These programs involve Export Working Capital Program[45] and Export Express Program[46] by Small Business Administration, and Working Capital Guarantee Program[47] by Export-Import Bank.

U.S. government also offer financing programs for your international buyers, which enable U.S. businesses to assist their international buyers in locating financing to purchase U.S. goods and services with economically viable interest rates on terms over one-to-two years. These programs involve Loan Guarantee Program[48], Direct Loan Program[49] and Finance Lease Guarantee Program[50] provided by Export-Import Bank.

Chinese buyers can apply for financing from multilateral agencies as well. The World Bank is the one maintaining a large loan program in China. The International Finance Corporation (IFC) has also become increasingly active in China, which assists joint venture and share holding companies with anticipated cash flows, but takes equity positions in these companies. The Asian Development Bank (ADB) is another agency, extending loans and providing technical assistance to its developing member countries for a broad range of development projects and programs.

Web Resources

Export-Import Bank of the United States[51]

Country Limitation Schedule[52]

OPIC[53]

Trade and Development Agency[54]

SBA's Office of International Trade[55]

USDA Commodity Credit Corporation[56]

China Banking Regulatory Commission[57]

Contact your local Commercial Service Trade Specialists[58]

India

The primary costs will be the equipment itself, operations, marketing, and possible hidden costs generated by corruption and bribery (Although bribery may considered a general practice, it is forbidden for U.S. companies to pay bribes; see Business Culture & Customs section below). Additional costs to consider include additional costs for specialized staff, required product certification(s), international shipping, storage and supply chain fees, and taxes, tariffs and non-tariff trade barriers (Secrist).

There are four different payment method options, all of which have varying levels of payment risk. They include open account, document collections, letters of credit, and cash in advance. In India, letters of credit are the most popular option and businesses conducting business there may be expected to use them for payment (Campbell).

To mitigate some of the risk associated with doing business abroad, it is advisable to invest in credit insurance (insured at 95%). Also, although you should be familiar with the India currency, Indian National Rupee (INR), complete all transactions ins USD$. Finally, avoid using and accepting international checks; wire transfers and credit cards are preferable alternatives. Additionally, qualify all buyers and export before going into business with them. If you need assistance with this, organizations such as the Export Finance Assistance Center of Washington and the United States Department of Commerce can help (Campbell).

Concerning India tariffs, according to the Indian Custom Tariffs 2011-2012, Chapter 90, Section XVIII, Tariff Item 9018 12 10 (Linear Ultrasound Scanner) the standard rate of duty is 7.5% of the wholesale price for each piece of equipment (Central Board of Excise and Customs, 2011). Additionally, there are also fees associated with opening a business in the State of Washington. To become a business in Washington, there is a USD$15 application fee and USD$5 to register a trade name (Washington State Department of Revenue, 2011). WA business and occupation retailing tax is .471% (Washington State Department of Revenue, 2010).

• If you would like more information, attending one of Export.gov’s Export Finance Seminars [59] may be helpful to you.

Refer to these websites for current Indian economic conditions and updates:

• The Economist, India [60]
• Ministry of Finance, Government of India [61]

Overview

Brazil

Brazil’s Market Profile

In the health products industry, Brazil’s sales in 2009 were estimated to be US$2,606 million, accounting for 12.1% of the industry within emerging countries such as, China, Mexico, and India. Specifically, from 2003 to 2010 the sector’s revenues increased almost 200%, reaching US$4,791 billion in 2010 .

The Brazilian health products industry is divided into four segments: dentistry (equipment, supplies and instrumental), laboratory (equipment, reagents, and consumables), radiology (appliances, accessories and consumables), medical and hospital equipment (non-electric, electric medical furniture, surgical instruments, physiotherapy equipment and hotels), implants (orthopedics, neurological, cardiac, etc.) and consumables (hypodermic, textiles, etc). Portable ultrasound equipment would fall under the radiology market segment.[62]

In 2010, imports of radiology equipments and consumables were US$656,177,764 more than exports. There are few high-quality Brazilian manufacturers of advanced medical products, so Brazil’s dependability on imports should continue for a significant period of time. Approximately 80% of all products used in hospitals are imported. The United States specifically accounts for 30% of these imports, with sales mainly going through local agents, distributors and importers who sell to hospitals and clinics.[63]

In South America, Brazil is the largest medical equipment market. As such, in addition to the attractive size of the Brazilian medical market, the fact that the country is part of Mercosul (Free Trade Agreement) means that companies can use Brazil as a facilitator to ease the process of potential future business in Argentina, Uruguay, and Paraguay.[64]

Brazil’s healthcare structure is divided into a public and private system; however, 75% of the population is covered solely by the public system.[65] Overall, the total number of hospitals is 7,155, with 4,428 private hospitals and 2,727 public.[66] Medical posts or clinics are known as “Pronto Socorro” in Brazil and are a good alternative if a hospital is too far away. They treat walk-in patients, offer a full range of services and are a good alternative to visiting a hospital for those who only have a minor ailment. Services and treatment are free. Because of the country’s healthcare system, location and proximity to many Latin American countries, it is the main medical destination in South America for various health care services. Moreover, the United Nations has recognized Sao Paulo, Brazil as one of the 47 world centers for technological innovation.[67] Sao Paolo, located within the southeast region, is also one of the cities were most of the country’s radiology equipment can be found.

Finally, in view of the fact that the portable ultrasound equipment will work using a smartphone, it is very optimistic to learn that at the moment there are 19 million smartphone users, with a 165% increase in sales year-on-year. Additionally, at least 10% of the Brazilian smartphone market belongs to Apple’s iPhone.[68]

Sales Strategy [69]

Using an Agent or Distributor – It is recommended to find local representation before importing goods. An agent or distributor will be needed if imports will be distributed in different regions of the country. In addition, before signing any agreement, a Brazilian law firm should be contacted to avoid potential legal problems.

Joint Ventures/Licensing – Most foreign firms interested in doing business with the government or in heavily regulated industry sectors, such as telecommunications and energy, enter the Brazilian market by a joint venture. Usually, joint ventures are known as “sociedades anônimas" or “limitadas.” All licensing and technical assistance agreements, including trademark licenses, must be registered with the Brazilian Industrial Property Institute (INPI); for more information on this agency go to: www.inpo.gov.br[www.inpo.gov.br].

Selling to the Government – Brazil’s government is the biggest buyer of goods and services. Without significant in-country presence, U.S. exporters will be at a competitive disadvantage. For the government, price is the overriding factor in selecting suppliers. Although bids are open for international players, for many of the larger bids single source procurements are possible if they meet the national interest or unique technical requirements. In general, nationally owned companies are preferred over foreign competitors. In fact, last year Brazil published a new decree (“Buy Brazil Act”) that provides preferential treatment for domestic suppliers over foreign firms, even if the local supplier’s prices are 25% higher than those of foreign firms. This preference therefore becomes a challenge for U.S. companies wanting to participate in Brazil’s public sector, unless they are associated with a local firm. To be considered a local firm, the company must have a majority of Brazilian capital participation, decision-making authority, and operational control. The new decree does not apply to foreign telecommunications and information technology equipment. If a U.S. firm manages to supply goods and/or services to the government, then the firm is required to have local legal representation.

Advertising and Marketing – Numerous advertising, trade promotion, and marketing channels are available to foreign exporters. Specific information on the companies specializing in advertising can be obtained from Brazilian Embassies and Consulates. Moreover, it is important to strongly consider direct marketing as a way to inform costumers about the product, since Brazil leads this type of marketing in the Latin America region.

If a U.S. company is considering using print media as a way to advertise the company and its products, then keep in mind that the most circulated newspaper is Folha de São Paulo, published by the Folha Group. More information on this newspaper can be found at: www.uol.com.br/fsp.

Trade fairs are another marketing tool that can be quite useful for medical products. In general, every year in São Paulo there are almost 300 trade fairs.

• The Hospitalar Trade Fair – this trade fair is specifically for hospital officials, health sector professionals and businessmen from the medical, hospital, and dental care. In 2011, organizers were expecting to generate $6 billion in sales of products, equipment and technology for hospitals, laboratories, clinics and offices. Visitors come from all over Brazil and other 62 countries. For more information on the trade fair go to: www.hospitalar.com [www.hospitalar.com]

Selling Techniques – The two most important sales factors in Brazil are price and payment terms. For the most part, U.S. goods are perceived to be of high quality. Therefore, emphasis should be placed in promoting the quality of the goods or services being sold. In addition, customer service and warranty terms should also be used as key distinguishing factors for U.S. products.

China

In recent years, U.S. firms obtain full trading and distribution rights for in most industry sectors in China, and available sales channels include trading companies, distributors, and local agents. Given the complexities of the Chinese market, foreign companies should consider relying on a local Chinese agent for both importing into China and marketing within China. In addition, due to China's size and diversity, it may helpful to engage several agents to widely reach different regions. China could be viewed as five major regions: the South (Guangzhou), the East (Shanghai), the Central/North (Beijing-Tianjin), West (Chengdu) and the Northeast (Harbin). Representative offices are the easiest type of offices for foreign firms to establish in China, and perform business activities in the name of their parent companies. A locally-incorporated equity or cooperative joint venture with Chinese partners, or a wholly-owned foreign enterprise, may be the final step in developing market in China.

The newly released Chinese government’s healthcare system reform scheme is aimed at providing basic healthcare access and coverage for all population in China. Currently, the government is investing RMB850 billion (US $ 127.82 billion) in basic hospital infrastructure to guarantee the implementation of the scheme (“Doing business”, 2011). Given the healthcare reform’s focus on rural healthcare, U.S. companies shall make strategies to take advantage of the less developed market. At the same time, domestic medical device companies with upgrading quality are beginning to compete in medium-level technologies against international suppliers. Therefore, foreign suppliers with a good strategy and reasonable price will more likely to succeed in China. We are targeting specific segments of markets in less developed area, taking advantage of opportunities indicated by higher demand for affordable radiological devices with expanded functionality. During the fist five years, specific segments being targeted are cities in the middle and north of China, where our products are affordable and required. For the following five years, our products can expand to west of China and towns in the developed areas.

In relation to the product launch, our major issue is the ability to establish a well - regarded brand name linked to a meaningful positioning. Advertising is an effective way to create product awareness among potential consumers in China. To get market shares, we have to build a well-regarded brand name recognized by bid evaluation experts since large medical equipments were regulated to be centralized procured through open tender. We will invest heavily in marketing to create a memorable and distinctive brand image projecting innovation, quality, and value. One way is inviting representatives from hospitals, media and experts to our product promotion. In general, trade fairs, exhibitions, promotion event and conference, can be excellent venues to gauge market interest, develop leads and make sales. Upcoming information about these trade events can be found at: http://export.gov/eac/trade_events.asp. Another strategy is to use selective distribution through well - known medical device agents.

India

The Indian population is second the largest in the world and still growing; this creates a potentially profitable market to enter. Only 30% of the population lives in urban areas. Furthermore, urban needs differ from rural needs; thus, target market, distribution and company goals must be considered before entering the country. The biggest market challenges when entering the Indian med-tech field are changing regulations, fraudulent medical equipment, disparity between rich and poor, and limited year-round access to rural areas. Although there are a large number of airports, railways, and roadways, not all rural areas (our target market) have year-round road access due to extreme weather conditions. A major competitor and threat to success in India is the illegal use of non-registered, refurbished ultrasound equipment (Raman 2011). This issue must be addressed through a sales strategy. A strategy should be implemented to either remove the illegal equipment from the market, compete with the illegal equipment on price, and/or convince doctors, hospital, and unlicensed “quacks” of the superior benefits of the new equipment. Finally, language is significant when doing business in India. The official languages are Hindi and English; although English is considered the official language of business in India, there are also 30 different languages and 2,000 different dialects spoken.

Because ultrasound equipment is not a personal purchase, doctors and hospitals should be the target of marketing campaigns. Guidelines that must be followed are outlined by the Advertising Standards Council of India for all marketing, advertising, and sales campaigns. Laws that are most applicable to med-tech products are Emblem of Names - Prevention of Improper Use Act and Indecent Representation of Women Act (Advertising Standards Council of India, 2011). For example, the use “sex appeal” must be carefully handled because of the differences concerning this standard. In the United States, prenatal and post-natal products are often advertised showing a pregnant woman’s bare belly. This image needs to carefully evaluated before including this, or anything comparable, is introduced in India by means of ads, product display, or any related imagery.

Events: Medical Fair India is an event that will be held in New Delhi, India March 2-4, 2012. The goal of this event is to advance the goals of India Commercial Engagement Strategy (ICES) and better inform foreign companies considering doing business in India of practices and opportunities. In 2011, 261 exhibitors and 5,910 visitors from 14 countries attended Medical Fair India (Messe Düsseldorf).

• For more information on Medical Fair India, please click here [70].
• For more information on starting and operating a small business, please visit the U.S. Small Business Administration (SBA) [71].

Brazil

Export from the United States

The Export License[72]

A small percentage of total U.S. exports require an export license from the Bureau of Industry and Security (BIS). To determine whether a company will need a license the following requirements apply: the item’s technical characteristics, the destination, the end-user, and the end-use.

Item to be Exported

The Export Control Classification Number (ECCN) and the Commerce Control List The company needs to be aware on whether the item intended to be exported has a specific Export Control Classification Number (ECCN). This number is an alpha-numeric code, such as, 3A001, that describes the item and indicates the licensing requirements. The list of all ECCN numbers can be found here: Commerce Control List (CCL), http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=c5cc9a1c749a6f225283bdfa124431d0&rgn=div9&view=text&node=15:2.1.3.4.45.0.1.3.87&idno=15.

Classifying the Product

The company can classify the company by itself, check with the manufacturer, or submit a classification request to have BIS determine the ECCN for the company.

Please note, if a product is not on the CCL, it is designated as EAR99. These items usually consist of low-technology consumer goods and do not require a license in most situations. Nevertheless, if the company is planning to export an EAR99 product to an embargoed country, to an end-user of concern or in support of a prohibited end-use, a license could be required.

The Export Destination

Exports to embargoed countries and those that have been identified to support terrorist activities are most often restricted. Examples of these countries are: Cuba, Iran, North Korea, Northern Sudan, and Syria.

Who will Receive the Product?

Specific individuals and organizations are prohibited from receiving exports from the U.S.; others may only receive goods if they have been licensed, even products that usually do not require a license based on the ECCN and Commerce Country Chart. Keep in mind the following lists:

• Entity List – (EAR Part 744, Supplement 4) A list of parties whose presence in a transaction can generate the need of a license requirement under the Export Administration Regulations (EAR). These license requirements are different to any license requirements imposed on the transaction by other conditions of the EAR.
• Treasury Department Specially Designated Nationals and Blocked Persons List – A list of the Department of Treasury’s Office of Foreign Assets Control; it administers and enforces economic and trade sanctions against certain countries, terrorism sponsoring organizations, and international drug traffickers.
• The Unverified List – Firms under this list raise a “red flag” and as such, exporters should inquire about them before starting the export process.
• Denied Persons – A list of companies and individuals whose export privileges have been denied. A company is not allowed to export any of them.

Purpose and Use of the Product

Certain uses are prohibited; others may require a license before exporting. For example, exports to parties involved in the propagation of weapons of mass destruction are not allowed.

How to Apply for an Export License?

If a company needs an export license, the Simplified Network Application Process Redesign (SNAP-R) can be submitted online at: https://snapr.bis.doc.gov/snapr/.

Import Duties and Taxes in Brazil

There are three main import duties and taxes: 1.Mercosul’s Common External Tariff (CET): an agreement amongst the Mercosul countries for imports from non-Mercosul countries. Usually, the CET is 14% with a low of 0% and a high of 20%, depending on the type of merchandise.

2.Industrial Products Tax (IPI): a Brazilian tax on foreign and domestic manufactured goods. The rate varies between 0% and 15% depending on how essential the Brazilian government believes a good is to its people. Typically, the higher the CET rate, the higher the IPI rate.

3. Merchandise and Service Circulation Tax (ICMS): a state government value-added tax (VAT) applicable to imports and domestic products payable at all stages of sale from manufacturer to consumer. The ICMS rate changes for every state, the lowest is 7% and highest is 25%.

Additional Miscellaneous Taxes and Fees:

• Warehouse Tax: 0.65% of CIF for a 15 day period
• Typical Terminal Handling Charges at Santos' port: US$100 per container
• Merchant Marine Tax: 25% of ocean freight charges (does not apply to air freight)
• Mandatory Contribution to Custom Broker's union: 2.2% of CIF with a
• Minimum contribution of US$71 and a ceiling set at US$160
• SISCOMEX usage fee: US$30
• Typical Cargo Transportation Fee: US$35

Foreign Trade Integrated System (SISCOMEX): a computerized information system used to monitor imports and facilitate customs clearance. Brazilian importers must be registered in the Foreign Trade Secretariat – SECEX’s Export and Import Registry and receive a password given by Customs to operate the SISCOMEX.

Import Licenses

• Automatic License

As a general rule, Brazilian imports are subject to the “automatic import license” process. For this procedure, the Brazilian importer must submit information concerning each import, including description of the product, tariff classification number, quantity, value of the shipment, shipping costs, etc. Later, this information is used to prepare the “Import Declaration” (DI). Next, all information is entered into SISCOMEX.

The Brazilian Foreign Trade Secretariat (SECEX) is the government agency responsible for granting import licenses.

• Non-Automatic License (LI)

If imports are subject to the LI regime, the importer must provide information concerning each shipment to the Brazilian customs authority either before the shipment or customs clearance. Required information includes: a description of the product and tariff classification number, quantity, value of the shipment, shipping costs, etc.

• Prior to Customs Clearance: applicable to products imported under the “drawback regime,” as well as imports intended to the free trade zones and the National Council for Scientific and Technological Development.
• Prior to Shipment Clearance: applicable to products subject to special controls from SECEX or which require approvals from other government agencies. Examples of products:
  • products subject to import quotas (tariff and non-tariff);
  • used products;
  • products that enjoy import tariff reductions;
  • skins and leathers as well as finished products;
  • weapons

Import/Export Documentation

Any product that comes in contact with the human body is controlled by the Ministry of Health (MOH). Such products can only be imported and sold in Brazil if:

• The foreign company establishes a local Brazilian manufacturing unit or office;

Or

• The foreign company works with a Brazilian distributor who is authorized by the Brazilian authorities to import and distribute medical products. Still, the products must be registered with the MOH.

If the foreign company decides to work with a local distributor, the following documents will be needed for Product Registration, Importation and Sales in Brazil: a)“Alvará de Funcionamento” - a trading permit given by the state sanitary authorities. This allows the company to import, distribute, store and sell the product registered with the National Sanitary Surveillance System (SNVS). b)“Autorização de Funcionamento” – similar permit as the one above, but it is granted by the Federal Government. c)Signed contract with a qualified technician (Terms of Technical Responsibility) – e.g. with a chemist, pharmacist, engineer, etc, according to the different types of industry. d)Contract with local Brazilian laboratory to carry out a quality control examination and provide the certificate for each product to be registered. The laboratory must be registered with the Brazilian Ministry of Health.

Overall, the company has one year to provide this information.[73]

Import Logistics

Maritime Shipments – this is the most common method for importing goods into Brazil, including those coming from neighboring South American countries. One of the reasons why this is a preferred shipping method is because of its cost advantages, especially for large product volumes.

Brazilian maritime shipping companies are represented by a network of maritime agencies located in some of the country’s largest cities. These firms can negotiate freight costs with exporters and importers and to issue bills of cargo documents.

Air Shipments – Some exporters prefer air shipping because of its speed, even though costs are significantly higher than those for maritime shipments. Besides air cargo services

Ground Shipments – Since almost every South American country borders Brazil, ground shipments are a feasible option for regional trade. Moreover, the expansion of Mercosul’s customs union facilitates transportation between its member countries (Brazil, Argentina, Uruguay, and Paraguay). Companies within the trade bloc are able to move goods with an International Cargo Manifest – ICM, which authorizes cargo shipments on all member state roads and highways. It is important to keep in mind that all transportation companies that ship goods on South American roads must be authorized and comply with the regional International Ground Transport Agreement – IGTA. In Brazil, the agency in charge of enforcing ground transportation regulations is the National Agency for Ground Transportation (Agência Nacional de Transportes Terrestres – ANTT); for more information on this agency go to: (www.antt.gov.br).

[74]

China

When shipping a product overseas as part of a commercial transaction, the exporter must be aware of product packaging[75], labeling[76], documentation, and insurance[77] requirements. When designing an export shipping crate, exporters should keep potential problems in mind: breakage, moisture, pilferage and excess weight. Insurance is essential to be protected cargo from damaging weather conditions and rough handling by carriers. There are many common export documents[78] that have to accompany export shipments including the Shipper’s Export Declaration, invoices, packing lists, certificates of origin and the list goes on.

The first step in determining duty and tax information is to identify the Harmonized System or Schedule B number[79] for your product(s). Once you know your product’s Schedule B or HS number, you will be able to determine the applicable tariff by Market Access and Compliance Tariff Schedule[80]. To export to China, consumption tax of 2 – 3 percent (varies according to provincial) applied; there is also a value added tax (VAT) of 17 percent for most items (“International logistics”, 2011).

Handling and determining method of shipping

To ship a product overseas, exporters have at least four options: freight forwarder[81], Shippers’ Associations[82], express delivery or mail services, and arranging your own shipping. Exporters should evaluate each option to determine which one works best for your unique situation. Exporters may find it convenient to rely on a freight forwarder, who can responsibly move cargo from “dock-to-door”, as well as providing several significant services including advising on appropriate shipping mode, preparing required export documentation and reserving space on the carrier. The National Customs Brokers and Forwarders Association of America[83], Customs Brokers and International Freight Forwarders Association of Washington State[84], Directory of Freight Forwarding Services, can help to identify a local forwarder[85].

Medical Device and Equipment Shipping

Medical Equipment Shipping requires years experience and resource moving sensitive, high-value medical devices around the world, and a team of specialists experienced in handling, wrapping, cushioning and packaging involved with moving all types of medical devices. In addition, it is highly recommended to have longstanding partnerships with airlines, warehousing services storing medical devices in a secure, quality controlled environment, combined with a vast network of specialists trained in the protocols of medical facilities and therefore even know smoothly facilitate installation and set-up. Several outstanding international freight forwarders are: Quick International Courier[86], Craters&Freighters[87], Navis Pack and Ship[88] China Elec-trans Int’l Service[89].

India

Air Freight: Products with relatively small size and high value, such as portable ultrasound equipment, will likely benefit from the use of air freight. The largest cargo airport in India is Mumbai’s Chhatrapati Shivaji International Airport (BOM). In addition to being the largest cargo airport in India, it is also conveniently located to both the northern and southern regions and is well connected by all forms of transport in the country. The second busiest cargo airport is Chennai International Airport (MAA), which provides access to southern India. Additional important air cargo hubs are Indira Gandhi International Airport (DEL), servicing Delhi and the National Capital Region, and Bengaluru International Airport (BLR) in Bangalore (Airports Authority of India).

Sea Freight: The vast majority of Indian imports arrive by sea; a full 95% of foreign trade by quantity and 70% by value takes place through the country’s seaports. Of this trade, a full 70% is handled by the two ports in the Mumbai area, Mumbai Port and the Jawaharlal Nehru Port in Navi (New) Mumbai. As the largest city in India, Mumbai is well connected to the country’s rail and road networks; additionally, it provides easy access both to northern and southern parts of the country (“Seaports of India” 2010). To view a map of the Indian seaports, click here [90].

Domestic: Domestic transportation in India can be accomplished by either rail or road, each of which offers its own advantages and disadvantages. Roads currently carry 65% of Indian freight, a number that is expected to rise as new routes on India’s new National Highway System (NHS) come online. However, almost all routes are hampered by congestion and are plagued by poor quality; furthermore, a full 40% of Indian villages do not yet have year-round road access, a significant drawback for a product intended especially for rural areas. For sensitive medical equipment, inadequate shock absorption on cargo trucks combined with poor quality roads could potentially cause damage. Truckers average only 250km/day, significantly less than the 600km/day average in developed countries (Vijayaraghavan 2007).

Indian Railways (IR), the state-owned rail system, provides access to even far reaches of the country; it carries more than 2.8 million tons of freight daily. However, it suffers from extreme congestion and unreliability. Furthermore, freight tariffs on IR are much higher than international standards, as freight traffic is used to subsidize passenger operations, which move more than 30 million passengers daily.

It is therefore necessary to utilize a variety of transportation and logistics options in delivering the product to various rural areas. Distribution in northern India, a poorer region that has lower quality roads, will need to entail different strategies than will southern India, which has higher quality and capacity roads but faces annual monsoons (Vijayaraghavan 2007).

A good freight forwarder can help navigate these options as well as the customs process (Secrist). Ocean freight forwarders must be licensed by the Federal Maritime Commission as Ocean Transportation Intermediaries; similarly, air freight forwarders must possess an Indirect Air Carrier certification from the Department of Homeland Security and are frequently also accredited by the International Air Transport Association (IATA). These bodies can provide a good deal of useful information on selecting the appropriate freight forwarder as well as databases of approved shippers.

Useful Resources:

• Federal Maritime Commission: Ocean Transport Intermediaries [91]
• TSA: Indirect Air Carriers [92]

Product Classification

Product classification using 10-digit harmonized codes is a critical step for exporting and is useful for:

• market research
• determining import duties paid by your customer, and
• determining the Country of Origin for trade agreement compliance (e.g., NAFTA Certificate of Origin)

Export data are initially collected and compiled in terms of Schedule B classifications, which is accessible at the United States Census Bureau.

Import data are based on the Harmonized Tariff Schedule (HTS) of the US International Trade Commission.

Note: Both Schedule B and HTS numbers are the same for the first six digits. Chapter 30 covers many pharmacuetical products and Chapter 90 covers many medical devices.

An additional resource for assistance in classification is the Customs Rulings Online Search System (CROSS), which is maintained by the US Customs and Border Protection.

Market Research

• Market Research Reports are freely available from the US Commercial Services Market Research Library. On this site, choose 'Health Technologies' in the 'Industry' drop-down and then select your 'Sector'.

• The USDA Foreign Agricultural Service maintains a number of Market Development and Resources for Exporting US Products, both of which are applicable to life science companies.

• The globalEDGE Insights compiles data from a variety of sources into a single portal that can be viewed by geography or industry.

• Best Market Reports and Trade Information Database are provided by the California Centers for International Trade Development (CITD).

• The World Bank provides a comprehensive collection of World Development Indicators and Additional Databases that may be invaluable in assessing new and emerging markets.

• The International Finance Corporation of The World Bank summarizes a variety of metrics for Doing Business and Measuring Business Regulations in different economies and topics. On this site, choose from the 'Explore Economy Data' drop-downs on the right.

• The United Nations Data Retrieval System and the Commodity Trade Statistics Database of the UN Statistics Division provide numerous Databases and Country data services.

Tariff Data

Once you have determined your Schedule B or HTS number, tariff and import fees can be determined from a number of resources at Export.gov (scroll to bottom of this page).

The USITC Interactive Tariff and Trade DataWeb provides international trade statistics and U.S. tariff data to the public full-time and free of charge.

Overview

The Federal Republic of Brazil is Latin America’s biggest economy and is the fifth largest country in the world, with a population of approximately 193 million people; expected to grow to 207 million by 2020. Brazil is composed of the Union, 26 states, the Federal District, in addition to nearly 5,560 municipalities. The country is divided into five major regions: North, Northeast, South, Southeast, and Center-West[93].

Brazil has a largely diversified middle income economy with wide variations in development levels. Most large industries are located in the South and Southeast regions; the Northeast is known to be the poorest region in Brazil. In the past, Brazil has been known to undergo periods of economic booms and busts, where high inflation and foreign debt have hampered its development. However, the economic reforms created in the 1990s helped bring stability to the country’s financial situation. Within these reforms there was the launch of the new currency (the Real) to help deal with inflation, the adoption of inflation targeting, privatization and fiscal discipline.[94]

Brazil has a solid balance of payments; in 2010, exports reached US$201.9 billion, while imports were $181.7 billion, both figures representing growth from 2009. Within the Latin America region, Brazil is currently the top recipient of Foreign Direct Investment (FDI). Government policies promote government participation in the economy, while respecting the contractual rights of the private sector’s investors.Brazil’s foreign policy is best recognized by an emphasis on multilateralism and search for integration with different countries. Brazil has been active in representing developing countries in trade negotiations within the World Trade Organization (WTO). Brazil specifically played the leadership role in the creation of the Southern Common Market (Mercado Común do Sul – Mercosul), is a co-chair within the United States of the Free Trade Area of the Americas (FTAA) negotiations, and was a founding member of the Group of 20 (G-20) coalition.[95]

During the global economic downturn Brazil managed to grow 7.5% in 2010, compared to an estimated 2.3% growth in the G7 countries.[96]

Healthcare/Medical Market in Brazil

In the next decade Brazil is expected to be the fifth largest economy in the world.[97] In 2011, the Brazilian medical market is valued at R$6.7 billion (US$3.6 billion) equivalent to around US$18 per capita; it has the eighth largest medical market in the world.[98] Expenditure is far higher in developed urban areas. In fact, Brazil’s Southeast and South regions are the wealthiest and most developed, with the most diversified consumption patterns. This is one of the reasons why these are highly attractive markets, primarily for high value added products. A 2009 report by ABIMO (Brazilian Association of Manufacturers of Medical Devices and Materials) identifies 448 manufacturers of dental, medical and diagnostic equipment and materials.[99]

Regulatory Environment

Overview of Medical Device Regulatory Requirements [100]

In order to import and distribute any type of medical equipment in Brazil, the first step is to register the equipment with the Brazilian National Health Surveillance Agency (ANVISA); an agency in charge of regulating the importation of medical devices. Typically, it takes between three months and two years to complete the application and registration process to obtain approval from the government. The length of time varies depending on the product’s complexity and the quality and sufficiency of the information accompanying the application. Manufacturers must also obtain a Good Manufacturing Practice (GMP) certificate from ANVISA in order to register their product.

Regulatory Agency – Brazilian National Health Surveillance Agency (ANVISA)

The regulatory agency ANVISA is under the structure of the Federal Public Administration, and is independently administrated and financially autonomous agency associated with the Ministry of Health. All products must be registered with ANVISA before importation to Brazil.

Regulations

The law that governs medical devices is Law No. 6.360 of 1976, Decree 79.094/77, and several other regulations. Resolution RDC No. 185 of 22 October 2001 is the main regulation related to medical devices (outlines specific documents necessary to register medical devices with ANVISA).

All medical devices are classified into four categories: Class I, Class II, Class III, or Class IV based upon the risk to the human body. Class I represents the lowest risk and Class IV pose the highest. The classification rules are very similar to those of the U.S. FDA and the European Union’s Council Directive. All medical devices in Brazil must meet certain principles of safety and effectives (outlines in Resolution No. 56 (2001)).

Required Documents

For Class I and Class II devices, the importer or distributor must: 1.Pay an inspection fee to ANVISA 2.Complete a registration form available from ANVISA, as required by RDC-24/2009

For Class III and IV devices (and those not from Class I and II not covered by the RDC-24/2009) the importer or distributor must provide: 1.A copy of payment bank receipt provided by ANVISA; 2.Identification of the manufacturer or importer of medical device; 3.A copy of authorization of the manufacturer to import and market the device in the country; 4.A copy of registration or certificate of free trade or any other equivalent document issued by the competent authority where the product is manufactured and/or marketed; 5.A copy of the certificate of accomplishment of legal requirements determined by technical regulations, in the format of ANVISA’s legislation for medical products. 6.Documentation indicating that the device complies with the essential principles of safety and effectiveness established by the RDC No. 56 of 2001.

For all registrations, a Brazilian GMP certificate must be provided, issued by ANVISA under requirements established under RDC No. 59 of 2000.

Labeling Requirements

The Consumer Protection Code (CDC) requires that product labeling provide the consumer with correct, clear, precise, and easily readable information regarding the product’s contents, importer’s name, address, and telephone number. All information must be in Portuguese.

If a company does not comply with the above requirements, it faces fines and even confiscation of medical devices and equipment.

Product Registration

The local office or agent of the company must request product registration. The registration is valid for five years and can be renewed continuously for the same period of time. Additionally, the registration must be completed within 90 days after the registration is requested. To guarantee rights to registration, the foreign company should:

• Apply for registration of the trademark and patent with the National Industrial Property Institute (INPI), through a local law firm.
• Establish a detailed contract with the distributor through the local agent.
• Within the contract, there should be specific clauses about transferring the ownership of the registration from the agent to the manufacturer. This transference can only occur if the foreign company opens an office or plant in Brazil. Transfer to another agent is really difficult to obtain.
• Manufacturers have to disclose to local authorities, through their agents, the quantitative and qualitative formula of their products, which should be patented in Brazil, before the product is launched to the market, and at the time of registration.

The product registration process takes approximately more than one year. However, after three months have passed, the producer and importer have the option to start distributing their products in Brazil. The condition is that they assume the risk of product liability claims if their products are found to be unsafe by Brazilian authorities. Required information for registration of medical devices:

• Name of company
• Address
• Product name
• Product Description
• Legalized FDA Certificate of Foreign Government (CFG)
• Final Product Drawings
• List of Components/Materials
• Manufacturing Method
• Labels/Directions for Use
• Sterilization Parameters
• Quality Control Test Methods/Records
• Clinical Publications
• Product Brochure

Standards Brazil usually accepts U.S. product standards and certifications by U.S. testing laboratories.

Entities Affecting Imports

• Secretariat of Foreign Trade (SECEX), in the Ministry of Development, Industry and Foreign Trade (MDIC): responsible for formulating regulations to implement import measures.
• Secretariat of Federal Revenue of Brazil (RFB), in the Ministry of Finance: responsible for customs administration, including duty collection.

Shipping, Distribution, and Logistics

Export from the United States

The Export License[101]

A small percentage of total U.S. exports require an export license from the Bureau of Industry and Security (BIS). To determine whether a company will need a license the following requirements apply: the item’s technical characteristics, the destination, the end-user, and the end-use.

Item to be Exported

The Export Control Classification Number (ECCN) and the Commerce Control List The company needs to be aware on whether the item intended to be exported has a specific Export Control Classification Number (ECCN). This number is an alpha-numeric code, such as, 3A001, that describes the item and indicates the licensing requirements. The list of all ECCN numbers can be found here: Commerce Control List (CCL), http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=c5cc9a1c749a6f225283bdfa124431d0&rgn=div9&view=text&node=15:2.1.3.4.45.0.1.3.87&idno=15.

Classifying the Product

The company can classify the company by itself, check with the manufacturer, or submit a classification request to have BIS determine the ECCN for the company.

Please note, if a product is not on the CCL, it is designated as EAR99. These items usually consist of low-technology consumer goods and do not require a license in most situations. Nevertheless, if the company is planning to export an EAR99 product to an embargoed country, to an end-user of concern or in support of a prohibited end-use, a license could be required.

The Export Destination

Exports to embargoed countries and those that have been identified to support terrorist activities are most often restricted. Examples of these countries are: Cuba, Iran, North Korea, Northern Sudan, and Syria.

Who will Receive the Product?

Specific individuals and organizations are prohibited from receiving exports from the U.S.; others may only receive goods if they have been licensed, even products that usually do not require a license based on the ECCN and Commerce Country Chart. Keep in mind the following lists:

• Entity List – (EAR Part 744, Supplement 4) A list of parties whose presence in a transaction can generate the need of a license requirement under the Export Administration Regulations (EAR). These license requirements are different to any license requirements imposed on the transaction by other conditions of the EAR.
• Treasury Department Specially Designated Nationals and Blocked Persons List – A list of the Department of Treasury’s Office of Foreign Assets Control; it administers and enforces economic and trade sanctions against certain countries, terrorism sponsoring organizations, and international drug traffickers.
• The Unverified List – Firms under this list raise a “red flag” and as such, exporters should inquire about them before starting the export process.
• Denied Persons – A list of companies and individuals whose export privileges have been denied. A company is not allowed to export any of them.

Purpose and Use of the Product

Certain uses are prohibited; others may require a license before exporting. For example, exports to parties involved in the propagation of weapons of mass destruction are not allowed.

How to Apply for an Export License?

If a company needs an export license, the Simplified Network Application Process Redesign (SNAP-R) can be submitted online at: https://snapr.bis.doc.gov/snapr/.

Import Duties and Taxes in Brazil

There are three main import duties and taxes: 1.Mercosul’s Common External Tariff (CET): an agreement amongst the Mercosul countries for imports from non-Mercosul countries. Usually, the CET is 14% with a low of 0% and a high of 20%, depending on the type of merchandise.

2.Industrial Products Tax (IPI): a Brazilian tax on foreign and domestic manufactured goods. The rate varies between 0% and 15% depending on how essential the Brazilian government believes a good is to its people. Typically, the higher the CET rate, the higher the IPI rate.

3. Merchandise and Service Circulation Tax (ICMS): a state government value-added tax (VAT) applicable to imports and domestic products payable at all stages of sale from manufacturer to consumer. The ICMS rate changes for every state, the lowest is 7% and highest is 25%.

Additional Miscellaneous Taxes and Fees:

• Warehouse Tax: 0.65% of CIF for a 15 day period
• Typical Terminal Handling Charges at Santos' port: US$100 per container
• Merchant Marine Tax: 25% of ocean freight charges (does not apply to air freight)
• Mandatory Contribution to Custom Broker's union: 2.2% of CIF with a
• Minimum contribution of US$71 and a ceiling set at US$160
• SISCOMEX usage fee: US$30
• Typical Cargo Transportation Fee: US$35

Foreign Trade Integrated System (SISCOMEX): a computerized information system used to monitor imports and facilitate customs clearance. Brazilian importers must be registered in the Foreign Trade Secretariat – SECEX’s Export and Import Registry and receive a password given by Customs to operate the SISCOMEX.

Import Licenses

• Automatic License

As a general rule, Brazilian imports are subject to the “automatic import license” process. For this procedure, the Brazilian importer must submit information concerning each import, including description of the product, tariff classification number, quantity, value of the shipment, shipping costs, etc. Later, this information is used to prepare the “Import Declaration” (DI). Next, all information is entered into SISCOMEX.

The Brazilian Foreign Trade Secretariat (SECEX) is the government agency responsible for granting import licenses.

• Non-Automatic License (LI)

If imports are subject to the LI regime, the importer must provide information concerning each shipment to the Brazilian customs authority either before the shipment or customs clearance. Required information includes: a description of the product and tariff classification number, quantity, value of the shipment, shipping costs, etc.

• Prior to Customs Clearance: applicable to products imported under the “drawback regime,” as well as imports intended to the free trade zones and the National Council for Scientific and Technological Development.
• Prior to Shipment Clearance: applicable to products subject to special controls from SECEX or which require approvals from other government agencies. Examples of products:
  • products subject to import quotas (tariff and non-tariff);
  • used products;
  • products that enjoy import tariff reductions;
  • skins and leathers as well as finished products;
  • weapons

Import/Export Documentation

Any product that comes in contact with the human body is controlled by the Ministry of Health (MOH). Such products can only be imported and sold in Brazil if:

• The foreign company establishes a local Brazilian manufacturing unit or office;

Or

• The foreign company works with a Brazilian distributor who is authorized by the Brazilian authorities to import and distribute medical products. Still, the products must be registered with the MOH.

If the foreign company decides to work with a local distributor, the following documents will be needed for Product Registration, Importation and Sales in Brazil: a)“Alvará de Funcionamento” - a trading permit given by the state sanitary authorities. This allows the company to import, distribute, store and sell the product registered with the National Sanitary Surveillance System (SNVS). b)“Autorização de Funcionamento” – similar permit as the one above, but it is granted by the Federal Government. c)Signed contract with a qualified technician (Terms of Technical Responsibility) – e.g. with a chemist, pharmacist, engineer, etc, according to the different types of industry. d)Contract with local Brazilian laboratory to carry out a quality control examination and provide the certificate for each product to be registered. The laboratory must be registered with the Brazilian Ministry of Health.

Overall, the company has one year to provide this information.[102]

Import Logistics

Maritime Shipments – this is the most common method for importing goods into Brazil, including those coming from neighboring South American countries. One of the reasons why this is a preferred shipping method is because of its cost advantages, especially for large product volumes.

Brazilian maritime shipping companies are represented by a network of maritime agencies located in some of the country’s largest cities. These firms can negotiate freight costs with exporters and importers and to issue bills of cargo documents.

Air Shipments – Some exporters prefer air shipping because of its speed, even though costs are significantly higher than those for maritime shipments. Besides air cargo services

Ground Shipments – Since almost every South American country borders Brazil, ground shipments are a feasible option for regional trade. Moreover, the expansion of Mercosul’s customs union facilitates transportation between its member countries (Brazil, Argentina, Uruguay, and Paraguay). Companies within the trade bloc are able to move goods with an International Cargo Manifest – ICM, which authorizes cargo shipments on all member state roads and highways. It is important to keep in mind that all transportation companies that ship goods on South American roads must be authorized and comply with the regional International Ground Transport Agreement – IGTA. In Brazil, the agency in charge of enforcing ground transportation regulations is the National Agency for Ground Transportation (Agência Nacional de Transportes Terrestres – ANTT); for more information on this agency go to: (www.antt.gov.br).

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Marketing and Sales

Brazil’s Market Profile

In the health products industry, Brazil’s sales in 2009 were estimated to be US$2,606 million, accounting for 12.1% of the industry within emerging countries such as, China, Mexico, and India. Specifically, from 2003 to 2010 the sector’s revenues increased almost 200%, reaching US$4,791 billion in 2010 .

The Brazilian health products industry is divided into four segments: dentistry (equipment, supplies and instrumental), laboratory (equipment, reagents, and consumables), radiology (appliances, accessories and consumables), medical and hospital equipment (non-electric, electric medical furniture, surgical instruments, physiotherapy equipment and hotels), implants (orthopedics, neurological, cardiac, etc.) and consumables (hypodermic, textiles, etc). Portable ultrasound equipment would fall under the radiology market segment.[104]

In 2010, imports of radiology equipments and consumables were US$656,177,764 more than exports. There are few high-quality Brazilian manufacturers of advanced medical products, so Brazil’s dependability on imports should continue for a significant period of time. Approximately 80% of all products used in hospitals are imported. The United States specifically accounts for 30% of these imports, with sales mainly going through local agents, distributors and importers who sell to hospitals and clinics.[105]

In South America, Brazil is the largest medical equipment market. As such, in addition to the attractive size of the Brazilian medical market, the fact that the country is part of Mercosul (Free Trade Agreement) means that companies can use Brazil as a facilitator to ease the process of potential future business in Argentina, Uruguay, and Paraguay.[106]

Brazil’s healthcare structure is divided into a public and private system; however, 75% of the population is covered solely by the public system.[107] Overall, the total number of hospitals is 7,155, with 4,428 private hospitals and 2,727 public.[108] Medical posts or clinics are known as “Pronto Socorro” in Brazil and are a good alternative if a hospital is too far away. They treat walk-in patients, offer a full range of services and are a good alternative to visiting a hospital for those who only have a minor ailment. Services and treatment are free. Because of the country’s healthcare system, location and proximity to many Latin American countries, it is the main medical destination in South America for various health care services. Moreover, the United Nations has recognized Sao Paulo, Brazil as one of the 47 world centers for technological innovation.[109] Sao Paolo, located within the southeast region, is also one of the cities were most of the country’s radiology equipment can be found.

Finally, in view of the fact that the portable ultrasound equipment will work using a smartphone, it is very optimistic to learn that at the moment there are 19 million smartphone users, with a 165% increase in sales year-on-year. Additionally, at least 10% of the Brazilian smartphone market belongs to Apple’s iPhone.[110]

Sales Strategy [111]

Using an Agent or Distributor – It is recommended to find local representation before importing goods. An agent or distributor will be needed if imports will be distributed in different regions of the country. In addition, before signing any agreement, a Brazilian law firm should be contacted to avoid potential legal problems.

Joint Ventures/Licensing – Most foreign firms interested in doing business with the government or in heavily regulated industry sectors, such as telecommunications and energy, enter the Brazilian market by a joint venture. Usually, joint ventures are known as “sociedades anônimas" or “limitadas.” All licensing and technical assistance agreements, including trademark licenses, must be registered with the Brazilian Industrial Property Institute (INPI); for more information on this agency go to: www.inpo.gov.br[www.inpo.gov.br].

Selling to the Government – Brazil’s government is the biggest buyer of goods and services. Without significant in-country presence, U.S. exporters will be at a competitive disadvantage. For the government, price is the overriding factor in selecting suppliers. Although bids are open for international players, for many of the larger bids single source procurements are possible if they meet the national interest or unique technical requirements. In general, nationally owned companies are preferred over foreign competitors. In fact, last year Brazil published a new decree (“Buy Brazil Act”) that provides preferential treatment for domestic suppliers over foreign firms, even if the local supplier’s prices are 25% higher than those of foreign firms. This preference therefore becomes a challenge for U.S. companies wanting to participate in Brazil’s public sector, unless they are associated with a local firm. To be considered a local firm, the company must have a majority of Brazilian capital participation, decision-making authority, and operational control. The new decree does not apply to foreign telecommunications and information technology equipment. If a U.S. firm manages to supply goods and/or services to the government, then the firm is required to have local legal representation.

Advertising and Marketing – Numerous advertising, trade promotion, and marketing channels are available to foreign exporters. Specific information on the companies specializing in advertising can be obtained from Brazilian Embassies and Consulates. Moreover, it is important to strongly consider direct marketing as a way to inform costumers about the product, since Brazil leads this type of marketing in the Latin America region.

If a U.S. company is considering using print media as a way to advertise the company and its products, then keep in mind that the most circulated newspaper is Folha de São Paulo, published by the Folha Group. More information on this newspaper can be found at: www.uol.com.br/fsp.

Trade fairs are another marketing tool that can be quite useful for medical products. In general, every year in São Paulo there are almost 300 trade fairs.

• The Hospitalar Trade Fair – this trade fair is specifically for hospital officials, health sector professionals and businessmen from the medical, hospital, and dental care. In 2011, organizers were expecting to generate $6 billion in sales of products, equipment and technology for hospitals, laboratories, clinics and offices. Visitors come from all over Brazil and other 62 countries. For more information on the trade fair go to: www.hospitalar.com [www.hospitalar.com]

Selling Techniques – The two most important sales factors in Brazil are price and payment terms. For the most part, U.S. goods are perceived to be of high quality. Therefore, emphasis should be placed in promoting the quality of the goods or services being sold. In addition, customer service and warranty terms should also be used as key distinguishing factors for U.S. products.

Financial Management

There are three primary strategies a Brazilian company can use to finance the purchasing of imported medical devices:

1.Direct Loan by Local Development Bank to Buyer

Local companies can fund their purchasing of American goods by arranging an at-market or even below-market direct loans with the Brazilian National Economic Development Bank (BNDES). However, the loan approval process is bureaucratic and slow.[112]

2.Financing by a Latin American Bank

A Latin American bank can pay for a U.S. exporter’s goods in advance, which is then shipped to a Latin American buyer. Essentially, the Latin American bank is providing the buyer a loan which the buyer will have to repay. Usually, the buyer will have six months before they are required to start paying back the loan. This option is extremely expensive for Latin American buyers, but is commonly the only option for them, particularly when one is ordering expensive capital equipment. To receive payment, imports in Brazil are mainly handled using traditional letters of credit (L/C) or collections through reputable banks with correspondent banking agreements internationally. U.S. exporters can also elect to operate on an open account or cash in advance basis if their relationship with Brazilian buyers is trustworthy.[113]

3.Providing Buyer Financing Directly

U.S. exporters can offer financing to the Brazilian buyer themselves, by selling on open account with long repayment terms (generally 180 days). This gives the Brazilian buyer 6 months to repay (for some products, terms can be up to 1 year), and does not require them to obtain a local loan at higher interest rates. To determine an appropriate credit period, exporters can look at past commercial terms for similar internationally traded products. An important reason to control the credit period are because of the incurring costs through use of working capital or interest and fees; if the buyer is not already responsible for paying these costs, then the exporter should factor them into the selling price. Customers are frequently charged interest on credit periods of a year or longer but less frequently on short-term credit (up to 180 days). Most exporters absorb interest charges for short-term credit unless the customer is late on payment.[114]

Risk Analysis

Labor[115]

Labor cost inflation in Brazil is among the highest in Latin America. A decrease in unemployment and the strengthening of the Real against the dollar increased salaries in dollar terms. Furthermore, even though Brazil has a large labor market, most of them are semiskilled or unskilled, meaning that there is a shortage of technical personnel and significant training will need to be given to any employee of the distributor company in charge of selling and delivering a sophisticated technological piece of equipment.

Corruption[116]

Despite a formally well-functioning business environment, several studies indicate that corruption and bribery are serious obstacles to doing business in Brazil. Corruption represents a serious threat, even when it comes to working on deals with the government.Specific risks of corruption:

• The likelihood of demands for bribes from public officials increases due to the wide range of regulatory agencies of the political system.
• Brazil’s tax system is complex and is known to be a cause of corruption. For example, tax collectors ask for bribes to be less strict on inspections.

Culture and Impact

Market Entry Strategy – It is essential to know that Brazil’s business culture is greatly based upon personal relationships. Therefore, companies should take all the time and resources necessary to develop such relationships with key local business players. It is highly encouraged that US companies interested in investing in Brazil, meet in person with potential local partners. To know who these partners could be and enter the Brazilian market, it is recommended to either attend a local trade show, and/or use the U.S Commercial Service’s Gold Key Service. Please note that it is extremely difficult for U.S. companies to do business in the public sector without having a local Brazilian partner.[117]

Business Hours – working day for commercial offices is usually from 8:30a.m. or 9:00a.m. to 5:30p.m. or 6:00p.m., with a lunch break of one or one-and-one-half hours. A few factories work on Saturday mornings. Generally, banks are open from 10:00a.m. to 4:00 p.m. and government offices are open from 9:00 a.m. to 5:00 p.m. Both are closed on Saturdays.[118]

Meeting Etiquette – Men shake hands when greeting one another; women generally kiss each other, starting with the left and alternating cheeks. Hugging only takes place among Brazilian friends.

Relationships and Communication – Brazilians prefer face-to-face communication as it allows them to know the person with whom they are doing business a lot better. Moreover, Brazilians have a group culture; therefore it is important that you do not do anything that could embarrass them.

Business Meetings - Business is most commonly conducted in a rather formal manner, especially in large cities like Sao Paulo. It is common to have business lunches and dinners, but none for breakfast. Business entertaining often involves social events. Brazilians consider time to be something out of their control and often do not adhere to a strict schedule. Nevertheless, in Sao Paulo and Brasilia it is important to arrive on time for meetings. In other areas such as Rio de Janerio, it is quite acceptable to arrive a few minutes late for a meeting. In addition, it is advisable that business appointments are arranged two to three weeks in advance from the preferred date.

Business Negotiation – Negotiation with Brazilians takes time and it is important not to rush them or appear impatient; Brazilians are very detailed-oriented. Moreover, most of often you will not be negotiating with the decision-makers. Brazilian business is hierarchical; therefore decisions are made by the highest-ranking person. It is highly recommended to use local lawyers and accountants for negotiations; Brazilians resent outside legal presence.

Gift Giving Etiquette for Social Events – If invited to a Brazilian’s house, it is a custom to bring the hostess flowers or a small gift. Avoid giving anything purple or black because these are considered to be mourning colors. Typically, gifts are opened when received. Gifts such as quality whiskey, wine, and brand pens are acceptable during social meetings.

Regulations - A detailed regulatory system combined with a relaxed attitude to time often results in lengthy business dealings. The process should not be rushed; instead time should be used to continue developing relationships for negations to be successful. Moreover, face to face communication is the preferred way to do business. Only limited business will be done via phone, fax or e-mail.

To make the registration process easier, foreign companies should hire a “despachante” (middleman) to help the company navigate through Brazilian red tape and finalize business dealings. A “despachante” will usually charge a nominal fee. In addition, a local accountant and a lawyer should be hired to help with any contract issues that might arise. Brazilians get easily offended if an outside legal representative is used.

An important matter to take into consideration, especially when getting the company and product(s) registered locally, is to avoid presenting gifts during a formal business meeting. Gifts are not important in establishing or strengthening a relationship. If a very expensive gift is given it can easily be considered a bribe.

Business Travel – Once a potential Brazilian importer has been contacted, foreign exporters are recommended to travel to Brazil to enter into direct contact with suppliers. Before the trip, the following steps should be taken:

• Prepare a list of competitive product prices for the Brazilian market, product samples and catalogues.
• Check if an entry visa will be needed. Visit the Ministry of Tourism’s Web site for more information: http://www.embratur.gov.br/site/br/dicas_turista_passaporte/materia.php.
• Vaccinations – the Brazilian government requires an international certificate of vaccination against yellow fever for travelers from countries in the Amazon Basin. For more information go to: http://www.anvisa.gov.br/paf/controle.htm#civ.
• Letter of Invitation – Typically, issuance of business visas to Brazil requires a certified letter from a Brazilian company addressed to the consular service clearly stating the objective of the visit.

[119]

Overview

China, officially the People’s Republic of China, was established on October 1, 1949, with Beijing as its capital city. China is the world's most populous country with over 1.3 billion citizens. Located in East Asia, the country is also the world’s third largest in total area, covering approximately 9.6 million square kilometers (“China Statistical”, 2011). Although China is a single-party state governed by the Communist Party of China, it is undergoing profound economic and social changes since the introduction of market-based economic reforms in 1978. The country's urbanization rate increased from 17.92% to 46.59% between 1978 and 2009 (“China Statistical”, 2011). As of 2010, China has the world's second-largest nominal GDP at US$5.88 trillion, although its GDP per capita is US$4,382 (International Monetary Fund). However, the China's growth has been uneven, with eastern coastal regions growing faster than the remainder of the country, and an obvious urban-rural income gap. To resolve this issue, the government has promoted development in the western, northeastern, and central regions of China. And the government has also placed a heavy emphasis on the development of science and technology to catch up with that of developed countries.

The Ministry of Health, together with its provincial health bureaus, oversees the healthcare needs and manages the healthcare resources. After economic reforms, the health of the Chinese public improved rapidly with the rise of national life expectancy from about 35 years in 1949 to 73.18 years in 2008 (“China Statistical”, 2011). As declared by the Health Care Reform, all Chinese people should have access to affordable essential health services. The initial three-year implementation plan for 2009-2011 emphasizes on strengthening primary-level health care facilities and reducing disparities in public health care between regions. Total health expenditures were up to 5.15% of GDP with 62.5% contributed from government , and were US$ 194.7 per person in 2009 (“China Statistical”, 2011).

Regulatory Environment

1) U.S. Regulatory

Food and Drug Administration (FDA) plays a significant role in the regulation of the import and export of foods, drugs, cosmetics, biologics, medical devices, and radiation emitting electronic products. The regulation is addressed by Chapter VIII of the Federal Food, Drug, and Cosmetic Act (FD&C Act). Device Registration and Listing[120] are required for U.S. manufactures that export medical devices outside the U.S. “Any medical device that is legally in the U.S. may be exported anywhere in the world without prior FDA notification or approval”. For a device to be legally in commercial distribution in the U.S., the device must additionally have a cleared Premarket Notification 510(k) or Premarket Approval (PMA); must meet the labeling requirements of 21 CFR Part 801and 21 CFR 809; must be manufactured in accordance with the Quality Systems (QS) Regulation of 21 CFR Part 820.

To obtain written certification that a firm or its devices are in compliance with U.S. law, which is required by the country export to, U.S. firms can apply for a Certificate for Foreign Government (CFG). You should submit your request for a CFG on form FDA-3613, Supplementary Information Certificate to Foreign Government Requests[www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Forms/UCM052378.pdf] (“Exporting Medical”, n.d.).

Procedures to export medical device that have not been authorized by FDA to be put into market can refer to export procedures for unapproved devices[121].

2) China Regulatory

There are three Chinese agencies that are in charge of regulating the importation of medical equipment. China’s State Food and Drug Administration (SFDA), is the primary responsible agency. Depending on the product being exported to China, a company may be required to receive approval from the Ministry of Health (MOH), or the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (AQSIQ).

SFDA

According to China’s Regulations for the Supervision and Administration of Medical Devices[122], all three classes imported medical devices must register with the State Food and Drug Administration. Application form for the Registration of Oversea Medical Devices[123] can be found on SFDA’s website, so does regulatory guide for the initial registration of import products[124] and re-registration[125]. China’s Regulation for Medical Device Classification[126] defines the three classifications for medical devices[127] (Class I – III).

Upon the application for registration, the following materials shall be submitted:

• The legal production qualification certificate of the Manufacturer.
• The qualification certificate of the Applicant.
• The certificate authorizing the products as medical devices to enter into the market of the country of origin, like 510 K or PMA of the U.S. FDA.

If the products of Class II or Class III have not been authorized by the government of country of origin to be put into market, product technology report, full-performance test report, risk analysis report shall be submitted.

• Technical Standards of Products
• Operation manual of Products.
• Type test Reports issued by the Medical Devices Quality Detection Agency authorized by the SFDA (applicable to products of Class II and Class III). Medical devices type testing must be based upon the Chinese national standard.
• Medical device clinical trials report.
• The Product Quality Guaranty presented by the Manufacturer.
• Letter of Authorization for the After-Sale Service Agency designated in China.
• The Self-Declaration on the authenticity of the materials submitted (“Application form”, 2010).

It takes 90 working days for SFDA to complete regulatory review of each product, which are reported to have increased from 4-6 months, up to a year. In addition to the 90 day review period, it may take 60 – 90 working days to complete all testing. License renewal applications must be done every 4 years (Biggs, 2004).

SFDA also issued requirements for labeling titled as “Provisions for the Instructions, Labels and Package of Medical Devices”. Medical devices imported into China must be labeled in Chinese, and must include the registration certificate number, product features, the scope of usage for the product, and things to be aware of. These labels should be attached to all products before going through customs (Biggs, 2004).

AQSIQ

AQSIQ is in charge of inspection, quarantine, and establishing the technical standards of goods for import and export. AQSIQ approved the regulations referred to as "China Compulsory Certification” (CCC)[128]. The regulations cover a variety of electro-medical devices, so these products can be imported, marketed and used in China with CCC marks. The CCC Mark application is processed by the China Quality Certification Center (CQC[129]). The application process for the CCC mark requires submission of numerous technical documents, including user guides, CB reports, EMC reports, regulatory labels and other information. Manufacturers must submit product sample to an accredited laboratory in China, which can charge several thousand dollars. In addition, CCC mark certification requires a factory inspection as well as follow-up inspections. The application can take sixty to ninety days or longer (Biggs, 2004).

Reimbursement

The Ministry of Health (MOH) is responsible for regulations, and policies related to public health, and administering China’s health insurance system. Based on the socio-economic development of nation and different regions and demand for health services, MOH develops the country’s overall planning and regional distribution plan for the first level large medical equipments. And MOH is also responsible for the management and approval of first level large medical equipments, while second level large medical equipments are managed by the provincial health bureaus. Medical institutions can acquire the large medical equipment only after obtaining the permit which is issued by MOH. And large medical equipments were regulated to be centralized procured through open tender. MOH and provincial health bureaus are responsible for the procurement of medical equipment includes overseeing the bidding and tendering process (“Arrangement and Management”, 2004).

Shipping, Distribution, and Logistics

When shipping a product overseas as part of a commercial transaction, the exporter must be aware of product packaging[130], labeling[131], documentation, and insurance[132] requirements. When designing an export shipping crate, exporters should keep potential problems in mind: breakage, moisture, pilferage and excess weight. Insurance is essential to be protected cargo from damaging weather conditions and rough handling by carriers. There are many common export documents[133] that have to accompany export shipments including the Shipper’s Export Declaration, invoices, packing lists, certificates of origin and the list goes on.

The first step in determining duty and tax information is to identify the Harmonized System or Schedule B number[134] for your product(s). Once you know your product’s Schedule B or HS number, you will be able to determine the applicable tariff by Market Access and Compliance Tariff Schedule[135]. To export to China, consumption tax of 2 – 3 percent (varies according to provincial) applied; there is also a value added tax (VAT) of 17 percent for most items (“International logistics”, 2011).

Handling and determining method of shipping

To ship a product overseas, exporters have at least four options: freight forwarder[136], Shippers’ Associations[137], express delivery or mail services, and arranging your own shipping. Exporters should evaluate each option to determine which one works best for your unique situation. Exporters may find it convenient to rely on a freight forwarder, who can responsibly move cargo from “dock-to-door”, as well as providing several significant services including advising on appropriate shipping mode, preparing required export documentation and reserving space on the carrier. The National Customs Brokers and Forwarders Association of America[138], Customs Brokers and International Freight Forwarders Association of Washington State[139], Directory of Freight Forwarding Services, can help to identify a local forwarder[140].

Medical Device and Equipment Shipping

Medical Equipment Shipping requires years experience and resource moving sensitive, high-value medical devices around the world, and a team of specialists experienced in handling, wrapping, cushioning and packaging involved with moving all types of medical devices. In addition, it is highly recommended to have longstanding partnerships with airlines, warehousing services storing medical devices in a secure, quality controlled environment, combined with a vast network of specialists trained in the protocols of medical facilities and therefore even know smoothly facilitate installation and set-up. Several outstanding international freight forwarders are: Quick International Courier[141], Craters&Freighters[142], Navis Pack and Ship[143] China Elec-trans Int’l Service[144].

Marketing and Sales

In recent years, U.S. firms obtain full trading and distribution rights for in most industry sectors in China, and available sales channels include trading companies, distributors, and local agents. Given the complexities of the Chinese market, foreign companies should consider relying on a local Chinese agent for both importing into China and marketing within China. In addition, due to China's size and diversity, it may helpful to engage several agents to widely reach different regions. China could be viewed as five major regions: the South (Guangzhou), the East (Shanghai), the Central/North (Beijing-Tianjin), West (Chengdu) and the Northeast (Harbin). Representative offices are the easiest type of offices for foreign firms to establish in China, and perform business activities in the name of their parent companies. A locally-incorporated equity or cooperative joint venture with Chinese partners, or a wholly-owned foreign enterprise, may be the final step in developing market in China.

The newly released Chinese government’s healthcare system reform scheme is aimed at providing basic healthcare access and coverage for all population in China. Currently, the government is investing RMB850 billion (US $ 127.82 billion) in basic hospital infrastructure to guarantee the implementation of the scheme (“Doing business”, 2011). Given the healthcare reform’s focus on rural healthcare, U.S. companies shall make strategies to take advantage of the less developed market. At the same time, domestic medical device companies with upgrading quality are beginning to compete in medium-level technologies against international suppliers. Therefore, foreign suppliers with a good strategy and reasonable price will more likely to succeed in China. We are targeting specific segments of markets in less developed area, taking advantage of opportunities indicated by higher demand for affordable radiological devices with expanded functionality. During the fist five years, specific segments being targeted are cities in the middle and north of China, where our products are affordable and required. For the following five years, our products can expand to west of China and towns in the developed areas.

In relation to the product launch, our major issue is the ability to establish a well - regarded brand name linked to a meaningful positioning. Advertising is an effective way to create product awareness among potential consumers in China. To get market shares, we have to build a well-regarded brand name recognized by bid evaluation experts since large medical equipments were regulated to be centralized procured through open tender. We will invest heavily in marketing to create a memorable and distinctive brand image projecting innovation, quality, and value. One way is inviting representatives from hospitals, media and experts to our product promotion. In general, trade fairs, exhibitions, promotion event and conference, can be excellent venues to gauge market interest, develop leads and make sales. Upcoming information about these trade events can be found at: http://export.gov/eac/trade_events.asp. Another strategy is to use selective distribution through well - known medical device agents.

Financial Management

1）Getting Paid

The most common methods of payment from Chinese importers are letters of credit and documentary collections. No matter what method used for the trade transaction, it is required by State Administration of Foreign Exchange (SAFE) that Chinese buys need to apply for the foreign exchange amount.

2）Insurance

The U.S. Government provides U.S. companies insurance for both export transactions and for the political risk. Export transactions insurance from the Export-Import Bank includes: export credit insurance policies[145], Express Insurance[146], Small Business Export Credit Insurance Policy[147], Multi-Buyer Export Credit Insurance Policy[148], Short-Term Single-Buyer Export Credit Insurance Policy[149], Finance Lease Guarantees[150] for U.S. leasers[151]. Overseas Private Investment Corporation (OPIC) programs[152] are available to U.S. exporters with political risk insurance, covering currency inconvertibility and political violence. Some foreign commercial insurance companies also offer political risk insurance, like the People's Insurance Company of China.

3）Financing

U.S. government export development and working capital financing programs enable U.S. businesses to obtain loans that facilitate the export of goods or services, and therefore operate more effectively in export transactions and grow international sales. These programs involve Export Working Capital Program[153] and Export Express Program[154] by Small Business Administration, and Working Capital Guarantee Program[155] by Export-Import Bank.

U.S. government also offer financing programs for your international buyers, which enable U.S. businesses to assist their international buyers in locating financing to purchase U.S. goods and services with economically viable interest rates on terms over one-to-two years. These programs involve Loan Guarantee Program[156], Direct Loan Program[157] and Finance Lease Guarantee Program[158] provided by Export-Import Bank.

Chinese buyers can apply for financing from multilateral agencies as well. The World Bank is the one maintaining a large loan program in China. The International Finance Corporation (IFC) has also become increasingly active in China, which assists joint venture and share holding companies with anticipated cash flows, but takes equity positions in these companies. The Asian Development Bank (ADB) is another agency, extending loans and providing technical assistance to its developing member countries for a broad range of development projects and programs.

Web Resources

Export-Import Bank of the United States[159]

Country Limitation Schedule[160]

OPIC[161]

Trade and Development Agency[162]

SBA's Office of International Trade[163]

USDA Commodity Credit Corporation[164]

China Banking Regulatory Commission[165]

Contact your local Commercial Service Trade Specialists[166]

Risk Analysis

Increasing production of counterfeit merchandise, coupled with growth in infringement of intellectual property rights in China, is particularly damaging issues for foreign firms. U.S. companies must secure relevant rights by registering their trademarks, design marks, the Chinese-calligraphy equivalent of the word marks, the pinyin transliteration, and the internet domain names. Any U.S. company encountering problems arising from IPR infringement in China should find assistance in the “IPR Toolkit[167]", hosted at the website of the U.S. Embassy in Beijing.

Exporting medical device is still facing challenges from the uncertain regulatory environment, extensive delays in registration and re-registration of products, price controls by the central government, and the centralized tendering and procurement process. Besides downward pricing pressure, we are also facing the threat of competition from well established rivals like Siemens, Philips and GE, as well as potential competition from domestic medical device companies. It is needed to develop contingency plans to address fast- moving environmental changes such as new technology and new competition.

Web Resources

Protecting Your Intellectual Property Rights (IPR) in China[168]

http://www.stopfakes.gov

Culture and Impact

Personal relationships (“guanxi” in Chinese) are critical to succeed in doing business in China. “Guanxi” is deeply rooted in Chinese culture and is basically a tool to get business and a way of getting things done. Chinese also respect “face-to-face” meetings and communication during meals and drinking, which are ways to demonstrate your commitment. Continued long-term relationships with relevant government agencies are keys to ensuring expedited governmental procedures and the smoother development of business in China. It is also important for U.S. exporters to establish and maintain strong personal relationships between their Chinese agents or distributors and the buyers and end-users. It is equally important for prospective exporters to note that China has many different regions and that each province has unique economic and social characteristics.

U.S. companies commonly rely on agents in China to initially create these relationships since localized agents possess the knowledge and contacts to better promote U.S. products and break down institutional, language, and cultural barriers. U.S. companies are strongly encouraged to carefully choose Chinese partners under complete understanding of their distributors, customers, suppliers, and advisors. To better find Chinese partners, U.S. exports can ask for assistance from the U.S. Commercial Service in China.

Overview

In 2011, the Indian population reached 1.21 billion and its GDP was US$3.339 billion. The Indian economy grew at a rate of 8% between 2009 and 2010, and it was projected to have a growth rate of 8.6% by the end of 2011. By the year 2025, India is projected to be the most populous country in the world. This rapidly expanding economy has become attractive to U.S. companies both as a place to conduct business and as a target market. In 2010, U.S. exports to India totaled US$19.2 billion, imports from India to the U.S. increased to US$29.5 billion, and total bilateral trade reached US$48.8 billion—an 18.4% increase from 2009 (U.S. Commercial Services).

India’s increasingly powerful middle class—already numbering 300 million—represents significant business opportunity and many Indians have seen a dramatic boost in their standard of living (Deutsche Bank Research 2010). However, this rapid economic expansion has largely ignored rural India, much of which is still lacking in even basic healthcare facilities and equipment. Given India’s low urbanization rate—only 30%, compared to a global average of 50.5%—this has left the vast majority of Indians to suffer from diseases and maladies that are now almost unheard of in the West (Central Intelligence Agency 2011).

The Indian healthcare industry was an estimated US$35 billion in the year 2011, and was forecasted to approach US$75 billion by 2012. In 2011, India spent approximately 5.2% of its GDP on healthcare; this figure was predicted to reach 6.1% by 2012. The World Health Organization (WHO) forecasts that by 2016, India will need a minimum of 80,000 hospital beds every year per year to meet the increasing demand. The expanding demand results in a flourishing medical equipment market, which is growing at rate of 15%, and greater need for high-end medical equipment (U.S. Commercial Services).

India nominally provides a universal healthcare system that is administered by the country’s 28 states and 7 union territories. This system is officially divided into rural and urban components. The rural healthcare system is comprised of three tiers—Tier I, Sub-Centres, of which there are 137,311, or one per every 5,000 people; Tier II, Primary Health Centres, numbering 22,842, and serving every 30,000 people; and Community Health Centres, with 3,043 and serving every 100,000 people. However, all levels of this system are critically understaffed and underfunded, with very little of even the most basic equipment and drugs available. As a result, many Indians turn to private clinics and hospitals, which are almost completely unregulated. However, with 42% of the population subsisting on less than USD $1.25/day (and 24% on less than USD $0.40/day), private healthcare is, for many, not a financially viable option (Central Intelligence Agency 2011).

Useful resources:

• U.S. Department of Commerce (USDOC), Healthcare Technologies Resource Guide [169]
• The Directorate of Foreign Trade, Ministry of Commerce and Industry [170]
• The USDOC’s Country Commercial Guide for India [171]
• The U.S. Embassy in India [172]
• Drugs Controller General (India), Central Drugs Standard Control Organization, Ministry of Health and Family Welfare [173]
  • Nirman Bhawan, New Delhi 110001
  • Phone: 91-11-23061806, Fax: 91-11-23062648, Email: dci@nb.nic.in

Regulatory Environment

The Indian government permits government-owned and private hospitals to issue global tender for purchasing medical devices. Generally, the tenders fall into two categories: technical bid or commercial bid. Because of the bureaucratic structure of public hospitals in India, the government tender process is slow. Typically, the government favors the lowest bidder. In most cases, the decision-making process moves more quickly in private hospitals; private hospitals evaluate medical devices on technological quality and cost (Mukherji). U.S. companies entering India should consider hiring at least one Indian distributor or agent. An agent can offer service support for medical devices, which is considered an essential element in purchase decision-making. An agent can provide information about the local market, negotiate sales, manage trade activities, and facilitate contact with the government and private hospital purchase decision-makers (Mukherji).

Prior to 2005, India did not regulate medical equipment at all; any attempts at regulation fell under the Drugs and Cosmetics Act of 1940. In 2005, the country created the Central Drugs Standard Control Organization (CDSCO), which was charged with regulating both medical devices and drugs. The CDSCO primarily created regulation for sterile devices, i.e., those that will be implanted or have direct skin contact. As a diagnostic device, portable ultrasound units did not fall under this category and were therefore exempt from most regulatory requirements.

In response to the perceived failures of the CDSCO, both the Department of Science and Technology and the Ministry of Health proposed completely restructuring medical device regulations under their respective departments. To date, neither of these attempts has been successful, and it remains to be seen which of the three regulatory schemes will ultimately prevail.

The most recent development is the release of the newest iteration of the CDSCO’s regulatory scheme, known as Schedule M-III, released in 2009. It creates a four-tiered medical device risk classification scheme aimed at providing clearer and safer guidelines for the importation of medical devices. Additionally, the term “medical devices” was for the first time defined; the new definition includes any instrument intended to be used for the “diagnosis, prevention, monitoring, treatment, or alleviation of disease” and the “ investigation, replacement, modification or support of the anatomy or of a physiological process” (Schedule M-III §3(b)(iv)(a)(i)). However, despite what appear to be significant strides in the legal aspects of regulation, the M-III guidelines are largely ignored and most devices remain completely unregulated (Gross 2010).

Despite the M-III regime’s shortcomings, an understanding of the M-III requirements can provide a resource for future laws, which would likely be similar in nature. Should diagnostic equipment begin to be regulated by the CDSCO scheme, it would require a medical device registration certificate. Such certificates are good for three years, and require submission of fifteen components:

• Covering Letter
• Authorization Letter (for proof of a local agent)
• Form 40 (a general medical device registration application form)
• TR6 Challan
• Power of Attorney (for proof of authorization from manufacturer to agent in India)
• Schedule DI and Plant Master File (requires information on the manufacturer/ manufacturing premises, details on the medical device, and more)
• Schedule DII and Device Master File (requires information on the medical device intended use, indication for use, classification, novel features, sterilization, similar devices in India, domestic price of the device in country of origin, marketing history of the device, regulatory approvals/marketing clearances, labeling, risk analysis and control, biocompatibility, biological safety, clinical evidence, post marketing surveillance data, and more)
• Wholesale License
• Free Sale Certificate
• Manufacturing License/Plant Registration Certificate
• ISO 13485:2003 Certificate
• Full Quality Assurance Certificate
• CE Design Examination Certificate
• Declaration of Conformity
• Inspection/Audit Report

For more information on the regulatory process, please visit Emergogroup.com. [174] Because of their high quality, FDA and CE approved products are preferred. However, because the Indian market is sensitive to price, low priced products remain highly competitive in the medical device field. For information on the CE marking process for medical devices, please visit Emergogroup.com. [175]

A customs duty is charged on all imported medical devices in India; product classification and end-user determine the value of the duty. However, if your product is classified by the Ministry of Health as “life saving medical equipment” reduced rates may apply; government-run hospitals may also import at a lower duty if the medical device is imported straight from the manufacturer (Mukherji).

It is required that the manufacturer and the importer register with the CDSCO. The Indian importing company must obtain a “no objection” certificate for approval to import and sell within the country. Generally, FDA/CE approved products obtain approval without difficulty. For new medical devices, or those that are not FDA/CE approved, you must submit an application to the regulatory authority. This includes regulatory status of the device in other countries, restrictions of use in those countries where the device is already approved, and a free sale certificate from the country of origin.

• You can find the current CDSCO application forms here [176] (Mukherji).

As the exporter, you should expect to provide a pro forma invoice, which states the offer price--inclusive of insurance and freight costs. Once an agreement is reached on method of payment, the importer will place the order. Methods of payment are discussed under Financial Management. At the port of entry, the goods must be cleared after payment of duties; this is done either by the importer or its customs clearing agent. Four copies of the bill of entry must be submitted. The original copy and one duplicate go to customs; one copy is for the importer; and the last copy is for the bank for making remittances. The bill of entry is a description of the contents of the shipment. All imports are required to be reviewed to verify accuracy of the description. In addition to the bill of entry, the following documents may be required (Mukherji):

• Signed invoice
• Packing List
• Bill of Lading or Delivery/Airway Bill
• GATT declaration form duly filled in
• Importers/Clearing House declaration
• License
• Letter of Credit/ Bank Draft
• Insurance documents
• Import license
• Test report (in case of chemicals)
• Industrial License
• Catalogues, technical write-up, literature (in case of machineries, spares or chemicals)
• Separately split up value of spares, components machineries
• Certificate of Origin

The shipment is then sent to for assessment and payment of duty in the Customs House. The assessment includes verification of proper product classification; the officer notes the invoice and other documents which support the valuation claim. The officer will either deem the value acceptable or indicate its need to be recalculated. The calculated duty is then deposited with the treasury or nominated banks. Finally, delivery can be sought (Mukherji).

United States export documents that may be required include an Airway Bill, Bill of Lading, Commercial Invoice, Export Packing List, the Electronic Export Information Form (Shippers Export Declaration), and a Generic Certificate of Origin.

• For more information on and definitions of these documents, please visit Export.gov’s Common Export Documents [177] (U.S. Commercial Services).
• For more exporting assistance and information, you may call Export.gov’s Trade Information Center at 1-800-USA-TRAD(E).
• You may also consider the U.S. Department of Commerce’s step-by-step exporting guide book, A Basic Guide to Exporting: The Official Government Resources for Small and Medium-Sized Businesses. This book is available at the U.S. Government Bookstore [178] (U.S. Commercial Services).

Potential foreign trade barriers include tariffs and customs; service barriers; standards, testing labeling, or certification; rules of origin; government procurement contracting; intellectual property protection problems; excessive government requirements; excessive testing or licensing fees; bribery; and investment barriers (U.S. Commercial Services).

The SBA aims to assist small businesses develop their export activities by providing a variety of loans.

• Visit Export.gov to learn more about the SBA’s Export Loan Programs [179] including the Export Express Program [180], Export Working Capital Program (EWCP) [181], and International Trade Loan Program [182].
• For information on Export.gov’s Export Finance Seminars, please click here [183].

Shipping, Distribution, and Logistics

Air Freight: Products with relatively small size and high value, such as portable ultrasound equipment, will likely benefit from the use of air freight. The largest cargo airport in India is Mumbai’s Chhatrapati Shivaji International Airport (BOM). In addition to being the largest cargo airport in India, it is also conveniently located to both the northern and southern regions and is well connected by all forms of transport in the country. The second busiest cargo airport is Chennai International Airport (MAA), which provides access to southern India. Additional important air cargo hubs are Indira Gandhi International Airport (DEL), servicing Delhi and the National Capital Region, and Bengaluru International Airport (BLR) in Bangalore (Airports Authority of India).

Sea Freight: The vast majority of Indian imports arrive by sea; a full 95% of foreign trade by quantity and 70% by value takes place through the country’s seaports. Of this trade, a full 70% is handled by the two ports in the Mumbai area, Mumbai Port and the Jawaharlal Nehru Port in Navi (New) Mumbai. As the largest city in India, Mumbai is well connected to the country’s rail and road networks; additionally, it provides easy access both to northern and southern parts of the country (“Seaports of India” 2010). To view a map of the Indian seaports, click here [184].

Domestic: Domestic transportation in India can be accomplished by either rail or road, each of which offers its own advantages and disadvantages. Roads currently carry 65% of Indian freight, a number that is expected to rise as new routes on India’s new National Highway System (NHS) come online. However, almost all routes are hampered by congestion and are plagued by poor quality; furthermore, a full 40% of Indian villages do not yet have year-round road access, a significant drawback for a product intended especially for rural areas. For sensitive medical equipment, inadequate shock absorption on cargo trucks combined with poor quality roads could potentially cause damage. Truckers average only 250km/day, significantly less than the 600km/day average in developed countries (Vijayaraghavan 2007).

Indian Railways (IR), the state-owned rail system, provides access to even far reaches of the country; it carries more than 2.8 million tons of freight daily. However, it suffers from extreme congestion and unreliability. Furthermore, freight tariffs on IR are much higher than international standards, as freight traffic is used to subsidize passenger operations, which move more than 30 million passengers daily.

It is therefore necessary to utilize a variety of transportation and logistics options in delivering the product to various rural areas. Distribution in northern India, a poorer region that has lower quality roads, will need to entail different strategies than will southern India, which has higher quality and capacity roads but faces annual monsoons (Vijayaraghavan 2007).

A good freight forwarder can help navigate these options as well as the customs process (Secrist). Ocean freight forwarders must be licensed by the Federal Maritime Commission as Ocean Transportation Intermediaries; similarly, air freight forwarders must possess an Indirect Air Carrier certification from the Department of Homeland Security and are frequently also accredited by the International Air Transport Association (IATA). These bodies can provide a good deal of useful information on selecting the appropriate freight forwarder as well as databases of approved shippers.

Useful Resources:

• Federal Maritime Commission: Ocean Transport Intermediaries [185]
• TSA: Indirect Air Carriers [186]

Marketing and Sales

The Indian population is second the largest in the world and still growing; this creates a potentially profitable market to enter. Only 30% of the population lives in urban areas. Furthermore, urban needs differ from rural needs; thus, target market, distribution and company goals must be considered before entering the country. The biggest market challenges when entering the Indian med-tech field are changing regulations, fraudulent medical equipment, disparity between rich and poor, and limited year-round access to rural areas. Although there are a large number of airports, railways, and roadways, not all rural areas (our target market) have year-round road access due to extreme weather conditions. A major competitor and threat to success in India is the illegal use of non-registered, refurbished ultrasound equipment (Raman 2011). This issue must be addressed through a sales strategy. A strategy should be implemented to either remove the illegal equipment from the market, compete with the illegal equipment on price, and/or convince doctors, hospital, and unlicensed “quacks” of the superior benefits of the new equipment. Finally, language is significant when doing business in India. The official languages are Hindi and English; although English is considered the official language of business in India, there are also 30 different languages and 2,000 different dialects spoken.

Because ultrasound equipment is not a personal purchase, doctors and hospitals should be the target of marketing campaigns. Guidelines that must be followed are outlined by the Advertising Standards Council of India for all marketing, advertising, and sales campaigns. Laws that are most applicable to med-tech products are Emblem of Names - Prevention of Improper Use Act and Indecent Representation of Women Act (Advertising Standards Council of India, 2011). For example, the use “sex appeal” must be carefully handled because of the differences concerning this standard. In the United States, prenatal and post-natal products are often advertised showing a pregnant woman’s bare belly. This image needs to carefully evaluated before including this, or anything comparable, is introduced in India by means of ads, product display, or any related imagery.

Events: Medical Fair India is an event that will be held in New Delhi, India March 2-4, 2012. The goal of this event is to advance the goals of India Commercial Engagement Strategy (ICES) and better inform foreign companies considering doing business in India of practices and opportunities. In 2011, 261 exhibitors and 5,910 visitors from 14 countries attended Medical Fair India (Messe Düsseldorf).

• For more information on Medical Fair India, please click here [187].
• For more information on starting and operating a small business, please visit the U.S. Small Business Administration (SBA) [188].

Financial Management

The primary costs will be the equipment itself, operations, marketing, and possible hidden costs generated by corruption and bribery (Although bribery may considered a general practice, it is forbidden for U.S. companies to pay bribes; see Business Culture & Customs section below). Additional costs to consider include additional costs for specialized staff, required product certification(s), international shipping, storage and supply chain fees, and taxes, tariffs and non-tariff trade barriers (Secrist).

There are four different payment method options, all of which have varying levels of payment risk. They include open account, document collections, letters of credit, and cash in advance. In India, letters of credit are the most popular option and businesses conducting business there may be expected to use them for payment (Campbell).

To mitigate some of the risk associated with doing business abroad, it is advisable to invest in credit insurance (insured at 95%). Also, although you should be familiar with the India currency, Indian National Rupee (INR), complete all transactions ins USD$. Finally, avoid using and accepting international checks; wire transfers and credit cards are preferable alternatives. Additionally, qualify all buyers and export before going into business with them. If you need assistance with this, organizations such as the Export Finance Assistance Center of Washington and the United States Department of Commerce can help (Campbell).

Concerning India tariffs, according to the Indian Custom Tariffs 2011-2012, Chapter 90, Section XVIII, Tariff Item 9018 12 10 (Linear Ultrasound Scanner) the standard rate of duty is 7.5% of the wholesale price for each piece of equipment (Central Board of Excise and Customs, 2011). Additionally, there are also fees associated with opening a business in the State of Washington. To become a business in Washington, there is a USD$15 application fee and USD$5 to register a trade name (Washington State Department of Revenue, 2011). WA business and occupation retailing tax is .471% (Washington State Department of Revenue, 2010).

• If you would like more information, attending one of Export.gov’s Export Finance Seminars [189] may be helpful to you.

Refer to these websites for current Indian economic conditions and updates:

• The Economist, India [190]
• Ministry of Finance, Government of India [191]

Risk Analysis

As has previously been mentioned, the regulatory structure governing medical devices in India is apt to change in the near future; it is currently impossible to predict if, when, and how these changes would affect certification of product being imported to India. It is a potential risk that such changes could complicate or delay an in-progress certification process. Additionally, the number of counterfeit and bogus ultrasound (and other diagnostic equipment) available in India is staggering; this has the potential both to reduce consumer confidence in new technology overall as well as make it difficult to distinguish legitimate product as genuine. It will be of critical importance to be vigilant in ensuring that inferior products are not attempting to capitalize on new brands. Given the widespread corruption that is endemic in India, it may prove difficult to halt such counterfeiting, even if those responsible can be found. Furthermore, the use and sale of ultrasounds in India is complicated because of the prenatal Diagnostic Techniques (PNDT) Act, which prohibits the determination of gender before birth (Ministry of Health & Family Welfare, 1994). This act encourages, in part, the production and usage of fraudulent ultrasound equipment because of the demand created by those families wanting to find out the gender of their unborn child. On a related topic, action should be taken to protect intellectual property. Typically, it costs more to recover intellectual property than to protect it in the first place. Often, once the counterfeit versions of your product have become a problem, it is too late (Secrist). Because fraudulent ultrasound equipment is a problem in India, it is advisable to be familiar with India’s Intellectual Property Rights (IPR). IPR includes:

• Patents
• Copyrights
• Trademarks
• Registered (industrial) design
• Protection of IC layout design
• Geographical indications
• Protection of undisclosed information

Patents are governed under the Indian Patent Act 1970; trademarks are covered under the Indian Trademarks Act 1999. India is a member of several international treaties related to IPR: Trade Related Aspects of Intellectual Property (TRIPS), the Paris Convention, Patent Cooperation Treaty (PTC), the World Intellectual Property Organization (WIPO) and the Budapest Treaty (Saha and Gupta).

• For more information and assistance concerning intellectual property, visit www.stopfakes.gov [192] or call 1-866-999-HALT

Finally, corruption is a risk that should be considering when doing business in India. According to Transparency International’s 2010 Corruption Perceptions Index, India is ranked number 87 out of 178 countries with a score of 3.3; countries are scored on a scale from 1 to 10, 1 being the most corrupt. Other third-world countries, including China, Rwanda and Morocco, are considered less corrupt. In India in 2010, “54% of households paid a bribe in a 12-month period to receive basic services.” However, only 25% believe that the Indian government’s actions towards combating corruption are effective (Transparency International, 2010).

Culture and Impact

Despite the efficiency of India’s growing business community, the Indian government remains mired in layers of red tape that have existed since the British Raj. Governmental and bureaucratic structures remain infamous for their opacity, arbitrariness and corruption. It should be noted that baksheesh, the paying of bribes, is often necessary at all levels of Indian government, and will most likely be expected at multiple points throughout the certification process at the federal level, as well as to individual state and local governments. It will also be expected in return for selection of the product at least some of the hospitals. Although such payments are seen in India as a normal cost of business, this practice is not only frowned upon but is strictly prohibited for American firms under the Foreign Corrupt Practices Act of 1977 (FCPA) (15 U.S.C. §§ 78dd-1 et. seq.). Although the U.S. Department of Justice acknowledges that “strict compliance with anti-bribery laws may conflict with local customs and practices,” it nevertheless has levied millions of dollars in fines against well-known corporations such as GE, IBM, and Daimler (Hilzenrath 2011). However, it should be noted that the use of ‘expediting fees’ remains allowed and often accomplishes similar ends. It may be advisable to consult an attorney if you are faced with these issues (Campbell).

For more information, please visit:

• The USDOC’s Country Commercial Guide for India, Chapter 6 Investment Climate, Corruption [193].
• The U.S. Department of Justice, Foreign Corrupt Practices Act [194].

Legacies of the caste system mean that most Indian businesses are strongly hierarchical; many Indians find it difficult to work without a strongly reinforced management structure. Nevertheless, business culture is far more informal than in many other countries; the great deal of importance placed on personal relationships means that the obligatory small talk in meetings should not be neglected. Finally, it is important to note that, as in most areas of Indian culture, punctuality is not of critical importance; meetings will likely start and end late and be subject to numerous interruptions (“Doing Business in India” 2010).

Geert Hofstede’s cultural dimensions are one tool to measure the differences in the workplace between cultures. Five aspects are measured: power distance, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance, and long-term vs. short term orientation. Power distance measure a societies acceptance of hierarchy and the unequal distribution of power. India scores higher than the United States in power distance. This means that Indians respect hierarchy with little justification and do not share the United States’ high value for equal rights for all. In regards to individualism vs. collectivism, India scores moderately and the United States scores very high. This tells us that the India views society as a collective “we” whereas American culture causes us to view ourselves as individuals. This is significant when considering the manner in which business is conducted. In both categories of masculinity vs. femininity and uncertainty avoidance, the United States and India score very similarly (the U.S. is slightly higher in both areas). Both countries score high in masculinity vs. femininity, which signifies that they value, competitive behavior, success, and status. Additionally, because of their comparable moderately low scores in uncertainty avoidance, both countries can be described as “uncertainty accepting.” As a culture, both Americans and Indians are accepting of new ideas and are willing to try to things. Finally, India scores higher than the U.S. in long-term orientation. This indicates that Indians tend to consider the future when making decision whereas Americans are more focused on short-term consequences. This is important to consider in business because it may affect opinions on short-term vs. long-term profit/loss decisions, performance, and results (Hofstede). Please click here to view India's cultural dimensions scores [195] and the United States' cultural dimensions scores [196].