CALVIN KLEIN & EGYPT A GUIDE BOOK JESSICA SMITH & MANON AUDIBERT
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Savannah College of Art & Design WINTER 2015 2
420 Global Sourcing Professor Kline
TABLE OF CONTENTS TIMELINE .................................................................................. 5 - 6 PVH CORPORATION .................................................................... 7 COMPANY PROFILE ..................................................................... 8 CATEGORIES ................................................................................ 9 COUNTRY PROFILE ............................................................. 10 - 16 SWOT ANALYSIS ......................................................................... 17 CODE OF CONDUCT ......................................................... 18 - 21 COUNTRY’S BUSINESS ETIQUETTE ....................................... 22 - 27 TRADE AGREEMENTS, LAWS & POLICIES .......................... 28 - 35 HARMONIZED TARIFF SYSTEM ................................................... 34 COST SHEETS ....................................................................... 35 - 37 SHIPPING ROUTES ............................................................... 38 - 40 OFFICIAL DOCUMENTS ...................................................... 41 - 42 BIBLIOGRAPHY ................................................................... 53 - 55 3
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TIME LINE 1968
The Calvin Klein brand is launched.
1973
Calvin Klein wins his first Coty American Fashion Critics Award.
1979
Calvin Klein controls one-fifth of the designer jeans market.
1982
Underwear line is launched.
1985
A new perfume called Obsession is launched with a $17 million advertising campaign. 5
1989
Unilever Co. purchases the Calvin Klein cosmetics/fragrance line.
1994
cKone, the unisex perfume is introduced; the company’s underwear business is licensed to Warnaco Group Inc.
2003
Calvin Klein is acquired by Phillips-Van Heusen Corporation, (PVH).
2009
Calvin Klein home is introduced.
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PVH CORPORATION
Calvin Klein, Inc., a wholly owned subsidiary of PVH Corp., is one of the leading fashion design and marketing studios in the world. It designs and markets women’s and men’s designer collection apparel and a range of other products that are manufactured and marketed through an extensive network of licensing agreements and other arrangements worldwide. Product lines under the various Calvin Klein brands include women’s dresses and suits, men’s dress furnishings and tailored clothing, men’s and women’s sportswear and bridge and collection apparel, golf apparel, jeanswear, underwear, fragrances, eyewear, women’s performance apparel, hosiery, socks, footwear, swimwear, jewelry, watches, outerwear, handbags, small leather goods, and home furnishings (including furniture). PVH Corp., one of the world’s largest apparel companies, owns and markets the iconic Calvin Klein and Tommy Hilfiger brands worldwide. It is the world’s largest shirt and neckwear company and markets a variety of goods under its own brands, Van Heusen, Calvin Klein, Tommy Hilfiger, IZOD, ARROW, Warner’s and Olga, and its licensed brands, including Speedo, Geoffrey Beene, Kenneth Cole New York, Kenneth Cole Reaction, MICHAEL Michael Kors, Sean John, Chaps, Donald J. Trump Signature Collection, Joseph Abboud, DKNY, Ike Behar and John Varvatos. For more information, please visit calvinklein.com.
TOP 3 SUPPLIERS FOR CK: 1. American Phil Textiles – Hong Kong 2. P.H Garment Mfg. Co – Hong Kong 3. Delta Textiles Egypt Free Zone - Egypt
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COMPANY PROFILE Calvin Klein is one of the best-known designer names in the world, offering a modern design aesthetic. The Calvin Klein brands — Calvin Klein Collection, Calvin Klein (platinum label)1, Calvin Klein (white label), Calvin Klein Jeans and Calvin Klein Underwear — provide us with the opportunity to market products both domestically and internationally at various price points, distribution channels and to different consumer groups than most of our Heritage Brands business product offerings. Global retail sales of products sold under the Calvin Klein brands were approximately $7.8 billion in 2013. The consumer appeal for Calvin Klein remains high, as demonstrated by Calvin Klein’s #8 ranking on Media Radar’s “Most Talked About Fashion Brands of 2013” list. Innovative marketing and advertising campaigns continue to fuel the global growth of the Calvin Klein brands, highlighted by an expanded use of digital and social media marketing platforms. This has been recognized, as Calvin Klein received the #9 ranking on L2’s Digital IQ Index: Fashion in 2013. This year’s launch of our visually driven, interactive Instagram account, extends the brand’s point of view and has become the hub of the successful “show yours. #mycalvins” social media campaign, which has increased engagement of influencers and consumers, increasing awareness and brand appeal globally. A tiered-brand strategy was established for Calvin Klein to provide a focused, consistent approach to global brand growth and development. Each of the Calvin Klein brands occupies a distinct marketing identity and position that preserves the brand’s prestige and image.
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CATEGORIES I. Calvin Klein Collection – Our “halo” brand, under which men’s and women’s high-end designer apparel and accessories, as well as items for the home, are sold across the globe through the wholesale channel and through our own full price Calvin Klein Collection retail flagship store on Madison Avenue in New York City. II. Calvin Klein (platinum label) – Our “bridge” brand, formerly known as ck Calvin Klein, was rebranded in 2013 in order to unify the Calvin Kleinbrands under one umbrella. This line offers apparel and accessories, which are sold in the wholesale channel through specialty and department stores, as well as in free-standing stores in Asia and Europe. III. Calvin Klein (white label) – Our white label “better” brand, under which we sell men’s sportswear and dress furnishings and license various other lines (including men’s and women’s outerwear, fragrance, accessories and footwear, women’s sportswear, dresses and handbags and items for the home). Distribution is primarily in North America through department stores and free-standing store. IV. Calvin Klein Jeans – Offerings under this label include men’s and women’s jeans and related apparel, which are distributed worldwide, and denim accessories, which are distributed in Europe and Asia. V. Calvin Klein Underwear – Offerings under this label include men’s and women’s underwear, sleepwear and loungewear, which are distributed worldwide. The 2 chosen pieces for this book are:
TONAL ROSES PUSH-UP $39
INFINITE LACE MULTI-WAY PUSH-UP $44
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COUNTRY PROFILE
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FACTS & FIGURES Arab Republic of Egypt President: Abdel Fattah el-Sisi Population: 88,000,000 (2015) Most populated country in the Middle East, and 3rd more populous African country. Capital: Cairo Area: 1 million sq km (386,874 sq miles) Major Language: Arabic Major Religions: Islam, Christianity Life Expectancy: 72 years (men), 76 years (women) (UN) Monetary Unit: 1 US Dollar = 7.63 Egyptian Pound Main Exports: Petroleum, petroleum products and cotton GNI per Capita: US $2,600 (World Bank, 2011) Internet Domain: .eg International Dialing Code: +20
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A.
Social & Culture
The Egyptian society and culture is centered on the Islam religion. It governs their personal, political, economic, and legal lives every day. Among some the certain obligations for Muslims is they are to pray five times a day, at dawn, noon, afternoon, sunset, and evening. The exact times are listed in their local newspaper each day. Also, the Muslim holy day is Friday and everything is closed on this day. Some companies even close on Thursdays, making their weekend Thursday and Friday. Social class is very apparent and significant to the Egyptians. The class determines all of ones power and position. The class to which one is born dictates their every day life and all of the opportunities he or she will have. The three levels include, upper, middle, and lower. Status is defined more by the family background than by wealth alone. There is very little social mobility. Family is the most important unit in the Egyptian society, giving kinship a huge role in all social relations. The family consists of the immediate as well as the extended family. Egyptian honor is another important aspect of all relationships. Respect for people is not only a right it is an obligation. An individual’s honor is intertwined with the reputation and honor of every person in their family. Honor requires that Egyptians demonstrate good hospitality to friends and all guests. It also dictates that people dress according to their financial circumstances, and always shoe proper respect to elders and those in authority. A man’s word is considered his bond. Going back on you word brings dishonor to the family.
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B. Political Government type: Republic The Egyptian legal system is a mixed system based on Islamic and civil law (particularly Napoleonic codes); and judicial review by a Supreme Court. C. Economic Egypt’s economy depends mainly on agriculture, media, petroleum imports, natural gas, and tourism. There are more than three million Egyptians working abroad, primarily in Saudi Arabia, the Persian Gulf and Europe. Due to the population growing rapidly, limited arable land, and dependence on the Nile, there is a continued overtax on resources that stresses the economy. The government has invested in communications and physical infrastructure. Egypt has received United States foreign aid since 1979, with an average of $2.2 billion per year, and is the third-largest recipient of such funds from the United States since the Iraq war. Egypt’s economy mainly relies on tourism, payments from Egyptians working abroad and revenues from the Suez Canal, for their sources of income. One of the main obstacles still facing the Egyptian economy is the limited trickle down of wealth to the average population, many Egyptians criticize their government for higher prices of basic goods while their standards of living or purchasing power remains relatively stagnant. Egyptians often agree that corruption is the main barrier to any further economic growth.
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D. Geographic Egypt’s geographic location is in Northeastern Africa, bordering the Mediterranean Sea, between Libya and the Gaza Strip, and the Red Sea north of Sudan. Geographic coordinates: 27 00 N, 30 00 E The climate is desert with hot and dry summers followed by moderate winters. The natural recourses of the area include, petroleum, natural gas, iron ore, phosphates, manganese, limestone, gypsum, talc, asbestos, lead, rare earth elements, zinc. Natural hazards due to the desert climate are hot temperatures, periodic droughts, frequent earthquakes, flash floods, landslides, dust storms, sandstorms, and driving windstorms called khamsin occurring in the spring. Egypt’s current environmental issues are focused on their land and limited natural recourses. The agricultural land is being lost to urbanization and windblown sands. These sands lead to soil salination and desertification. Oil pollution is threatening coral reefs, beaches, and marine habitats. More water pollutions are accumulating from agricultural pesticides, raw sewage, and other industrial wastes. These pollutants are harming the Nile, which is the only water source. These pollutants combined with the rapid growth in the population continue to overload the Nile and all the countries natural resources.
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CONTRIBUTING FACTORS A. Labor Size- Labor force: 27.69 million (2013 est.) By occupation: (2011 est.) -Agriculture: 29% -Industry: 24% -Services: 47% Industries include, textiles, food processing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, and light manufactures. B. Products Exports: Exports- $24.81 billion (2013 est.) Commodities: crude oil and petroleum products, cotton, textiles, metal products, chemicals, and processed food. Agriculture products: cotton, rice, corn, wheat, beans, fruits, vegetables; cattle, water buffalo, sheep, and goats. Export partners: Italy 7.9%, India 6.9%, US 6.8%, Saudi Arabia 6.2%, Turkey 5.3%, Libya 4.9% (2012)
Imports: Imports- $59.22 billion (2013 est.) Import Commodities: machinery and equipment, food, chemicals, wood products, and fuels. Import partners: China 9.5%, US 7.6%, Germany 6.7%, Russia 5.3%, Ukraine 5.3%, Turkey 5.1%, Italy 5% (2012)
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C. Transportation The most significant method of transportation in Egypt is by water through the Nile River and the Suez Canal. The Suez Canal is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea and the Red Sea. It is considered the most important center of marine transport in the Middle East. After 10 years of construction it opened in November 1869 and allows ship transport between Europe, and Asia, and North America. Other means of transportation, other ports & terminals including major seaport(s): Mediterranean Sea - Alexandria, Damietta, El Dekheila, Port Said; Gulf of Suez – Suez Canal, railways, roadways, airports, merchant Marines, pipelines, and heliports.
D.
Business Climate
The Egyptian business climate is different than the US in many ways. Egypt operates on Islamic law rather than secular law and their focus is on building relationships .The social side of business is very important to the Egyptians. Personal relationships are not only important; they are necessary to conduct any long-term business. Business is extremely hierarchical; the highest-ranking person makes the final decision after obtaining a group consensus. Everything moves at a very slow pace and the society is exceedingly bureaucratic, it may take several meetings to accomplish any task. Punctuality and following up is important, however time is elastic. Patience is required. They also do a fair amount of haggling in their negotiations. The business attire is formal and conservative.
f. Effects of Quota Removal After extensive research, I was not able to find much information about the direct impact of the quota removal on Egypt. However, in late 2004 the US had Egypt sign a QIZ (Qualifying Industrial Zone) agreement. Under this agreement, the United States waives duties on imports from Egypt if the products include 10.5% Israeli content. The purpose of this agreement is to promote peace and stronger ties between the two countries. Also, a TIFA (Trade and Investment Framework Agreement) has been established, which creates freer trade and increases investment flows between the countries.
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SWOT Strengths: • Egyptian Honor • Focus on building respectful relationships • Suez Canal • Cotton & Oil • Tourism Weaknesses: • Islamic laws • Language & cultural barriers • Desert climate • Business moves slowly Opportunities: • Foreign Trade helps economic stability • Growing multilingual workforce • Advancing IT infrastructure • Competitive average wages • Smart Village (600 acre business park outside Cairo to become the Middle East center of information technology)
Threats: • Political turmoil • Rising labor costs • Enforcing US regulations • Potential natural disasters • Nile is the only water source • Overtax of resources stresses the economy • Corruption prevents economic growth
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CODE OF CONDUCT PVH Code of Business Conduct and Ethics Revised: April 27, 2006 Introduction PVH Corp. (the “Company”), through its officers and directors, recognizes that it has inherent responsibilities to its stockholders, employees and the general public. These responsibilities go beyond the mere reporting of performance and results and include high standards of corporate ethics and integrity. To ensure these standards, the Company’s Board of Directors has adopted this Code of Business Conduct, which is based on the following general principles of conduct: • Maintaining high moral and ethical standards that reflect honesty, integrity and reliability in every situation. • Respecting the dignity and rights of all persons, regardless of race, color, or creed, and conducting itself with decency and common courtesy in all its relationships. • Properly balancing the interests of all groups (stockholders, employees and the general public) in the conduct of its business. This Code of Business Conduct and Ethics covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide all employees of the Company. Many of these principles are further detailed in the Associate Handbook provided to all directors, officers and associates, in which the Company’s policies and procedures are set forth. All of our associates, officers and directors must conduct themselves accordingly and seek to avoid even the appearance of improper behavior. This Code should also be provided to and followed by the Company’s agents and representatives, including consultants. If a law conflicts with a policy in this Code, you must comply with the law. If you have any questions about these conflicts, you should ask your supervisor how to handle the situation. Those who violate the standards in this Code will be subject to disciplinary action, up to and including termination of employment. If you are in a situation which you believe may violate or lead to a violation of this Code, please follow the guidelines described in Section 14 of this Code. Compliance with Laws, Rules and Regulations Obeying the law, both in letter and in spirit, is the foundation on which this Company’s ethical standards are built. All associates must respect and obey the laws of the cities, states and countries in which we operate. Although not all employees are expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers or other appropriate personnel. 18
If requested, the Company will hold information and training sessions to promote compliance with laws, rules and regulations, including insider-trading laws. Conflicts of Interest A “conflict of interest” exists when a person’s private interest interferes in any way with the interests of the Company. A conflict situation can arise when an associate, officer or director takes actions or has interests (including an investment or other financial interest in a competitor, customer or supplier) that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest may also arise when an associate, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company. Loans to, or guarantees of obligations of, employees and their family members may create conflicts of interest. It is almost always a conflict of interest for a Company employee to work simultaneously for a competitor, customer or supplier. Exceptions to this rule would include where you work on an hourly basis for both entities and you are not reasonably likely to come into possession of or otherwise be exposed to confidential information of either the Company or the other party. You are not allowed to work for a competitor as a consultant or board member. The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except on our behalf. Conflicts of interest are prohibited as a matter of Company policy, except under guidelines provided for in the Company’s Conflicts of Interest Policy approved by the Board of Directors. Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with higher levels of management or the Company’s General Counsel. Any associate, officer or director who becomes aware of a conflict or potential conflict should bring it to the attention of a supervisor, manager or other appropriate personnel or consult the procedures described in Section 14 of this Code. Please see our Conflicts of Interest Policy for further information and detail. Insider Trading In order to assist with compliance with laws against insider trading, the Company has adopted a specific policy governing trading in securities of the Company by the Company’s directors, officers and associates. This policy has been distributed to every associate, officer and director and the Company’s directors, senior executives and associates in the corporate controllers office have certified to their receipt, reading, understanding and compliance of and with the policy.
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The policy provides that the Company’s directors, officers and associates are prohibited from purchasing or selling stock, bonds, options derivative instruments or other securities of the Company while in the possession of material nonpublic information. Additionally, they are prohibited from purchasing or selling stock, bonds, options derivative instruments or other securities of any other company while in the possession of material nonpublic information obtained in the course of their employment or other service to the Company. The Company’s directors, officers and associates are also prohibited from disclosing material nonpublic information to any other person where such information may be used by such person to profit by trading in the Company’s securities (or the securities of other companies to which the information may relate) or passed on to others who may use it to trade. Additionally, Company director, officer or associate may not make recommendations or express opinions on the basis of or while in possession of material nonpublic information as to trading in the Company’s securities (or the securities of other companies to which the information may relate). If you have any questions, please consult the Company’s General Counsel. Corporate Opportunities Associates, officers and directors are prohibited from taking for themselves personally opportunities that are discovered through the use of corporate property, information or position without the consent of the Board of Directors. No associate, officer or director may use corporate property, information, or position for improper personal gain, and no associate or officer may compete with the Company directly or indirectly. Employees, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. Competition and Fair Dealing We seek to outperform our competition fairly and honestly. Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited. Each associate should endeavor to respect the rights of and deal fairly with the Company’s customers, suppliers, competitors and employees. No associate should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice. The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers. No gift or entertainment should ever be offered, given, provided or accepted by any associate of the Company or any family member of an associate or agent unless it: (1) is not a cash gift, (2) is consistent with customary business practices, (3) is not excessive in value, (4) cannot be construed as a bribe or payoff and (5) does not violate any laws or regulations. Please refer to the Company’s Conflicts of Interest Policy for further detail regarding any gift you receive and discuss with your supervisor any proposed gifts which you are not certain are appropriate. 20
Discrimination and Harassment The diversity of the Company’s associates is a tremendous asset. We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances. Please refer to the Company’s Equal Employment Opportunity, Harassment and Sexual Harassment Policies for further detail. Health and Safety The Company strives to provide each associate with a safe and healthy work environment. Each associate has responsibility for maintaining a safe and healthy workplace for all associate by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions. Violence and threatening behavior are not permitted. Associates should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of illegal drugs in the workplace will not be tolerated. Please refer to the Company’s Drug and Alcohol-Free Workplace, Smoke-Free Workplace, Associate Safety, Domestic Violence and other related policies for further detail. Reporting any Illegal or Unethical Behavior Associates are encouraged to talk to supervisors, managers or other appropriate personnel about observed illegal or unethical behavior and when in doubt about the best course of action in a particular situation. It is the policy of the Company not to allow retaliation for reports of misconduct by others made in good faith by employees. Associates are expected to cooperate in internal investigations of misconduct. Employees must read the Company’s Complaint Procedures for Accounting and Auditing Matters, which describes the Company’s procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters. Any associate may submit a good faith concern regarding questionable accounting or auditing matters without fear of dismissal or retaliation of any kind. Other matters which should be brought to the attention of the non-management directors of the Board may be submitted in the same manner outlined in the Complaint Procedure for Accounting and Auditing Matters.
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COUNTRY’S BUSINESS ETIQUETTE
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A. Type of Culture Family is a huge component to the Egyptian culture and hold family values very highly. The family is the most important element of Egyptian society. Nepotism, which is the, “practice among those with power or influence of favoring relatives or friends, especially by giving them jobs”, per Merriam-Webster dictionary, is seen as a positive thing in Egypt and is widely used to show patronage to the family. B. Masculine/Feminine Egypt is considered a Masculine country. According to the Geert-Hofstede Centre, Egypt ranks roughly 45 for masculinity as an entire country. A high score, which Egypt indicates, determines that the society is driven more by competition, achievement and success – “a value system that starts in school and continues through out organizational behavior. Religion also plays a factor here where a Muslim lifestyle and belief system is more masculine-oriented. C. Negotiation Styles Business in Egypt is under a hierarchy, meaning the person with the most power will make executive decisions. It is important to be aware of the people in charge and no if the government is involved, final decisions may take longer, approved by ministers of several departments. Business decisions also move very slowly in general and may require multiple trips before anything is complete. Egyptians tend to negotiate and haggle a lot; they are tough negotiators. They also do not like confrontation and if there is no response, it usually means, “no.” Since Egyptians respect experience and power, it is advised you have people of high standing on your team.
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D. Type of Communication In many parts of the Arab world, people will stand fairly close of one another when discussing. This may seem as an invasion of privacy to some. Keep strong eye contact when in communication. According to World Business Culture, “Arabic conversation can be very hyperbolic with much use of flowery language and flattery.” This is not to be misinterpreted as a business tactic. Expressing in a similar fashion is expected, especially in business settings. Be prepared to have all presentation materials translated into Egyptian Arabic. E.
Social and Cultural Elements:
i. Appropriate Business Attire Egyptians dress to represent the income they make. Business people dress very cleanly and professionally and appreciate conservative dress. Both men and women should dress conservatively. Suit and tie are appropriate items to wear in meetings, but make sure that clothing is impeccable with no spots or stains. This is something Egyptians will make notice of. Facial hair is not so favored, and may be considered unprofessional. Do not wear native attire; this may be considered offensive and rude. Also, remember that Egypt is a hot climate. Pack light weight clothing and pack smart. ii. Introductions Relationships and trust are very important in Arab countries. It is vital to instill a sense of trust and loyalty when dealing with business people in Egypt. Honour is something many parts of the Arab world, particularly Egypt hold very high. Egyptian Honour is important when developing interpersonal relationships. It deals mostly with the way people represent themselves, through their families to their dress. According to the book entitles Family Honor and the Forces of Change in Arab Society by Peter C. Dodd, Honour is characterized as, “preoccupation with sexual purity and chastity, or as a cause of suspicion and jealousy between men and women.” This deals mostly with the Arab ideals, focusing mostly on “authority structure, the preference for marriage, and the seclusion of women.” In most Arab worlds, women are not seen as equals to their male counterparts. Learning some common Arabic expressions is also important. ‘In sha’allah’ means “god willing”, and ‘shukran’ means “thank you.” iii. Greetings In Egypt, greeting a primarily based on the economic class of a person, as well their religious views. If greeting for the first time, it is best to follow the lead of the Egyptian you are making acquaintance with. Handshakes are customary, and can be used when meeting both men and women. Direct eye contact and smiles are also important when giving handshakes to establish a more amicable atmosphere.
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Handshakes can also seem prolonged. When you have established a good relationship, it is permissible to kiss on one cheek while shaking hands, between men and men and women and women. Most importantly between the sexes, a woman must extend her hand first, before a man makes any sort of gesture. If she makes no gesture as to shake hands, men must bow their heads in greetings. Western women should also wait for Egyptian men to offer their hands for a shake. iv. Presentation of Business Cards There is no special ritual when presenting business cards; they are presented casually when in business meetings. It is important however to have cards translated into Egyptian Arabic. v. First Name or Title Most government officials with high statuses will have titles. It is important to learn these titles as Egyptians hold hierarchy and societal class very highly and are proud of their achievements. Do not address government officials colloquially unless told to do so. If one if is unsure when to use a title, Mr., Mrs., and Ms. may be used to address someone. vi. Gestures The “thumbs-up” sign is very offensive in Egypt. Use your right hand for everything; the left hand is considered “dirty”.
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vii. Colors, Numbers, and their Meanings Due to the vast history Egypt has, colors and numbers hold high regard in Egypt. Certain colors in Ancient Egypt had specific meanings. For example, the color blue was a symbolic representation for the Egyptian deities. Blue is also the color of sacred scarabs used to decorate tombs. While there was much use for numbers and colors in Ancient Egypt, the use in modern day is not as relevant. The Egyptian flag holds important colors to note. At the top a red band, white band in the middle with the national emblem, the gold eagle of Saladin, and a black band at the bottom. viii. Gift Giving When invited to an Egyptian’s home, it is customary to bring sweets as a gift for the family. Gifts are expected. Flowers tend to be reserved for the sick or for weddings. You are able to give small gifts to children in the family, which is admired. When presenting gifts, always give using the right hand or both hands only. Also, gifts will not be opened while the gift-giver is present. It is also important to be conscious of Arab sensitivities. For instance, it is not advisable to give gifts with alcohol, pork, knives, or perfumes with alcohol. ix. Time Punctuality is very important in Egypt. It is also important to make appointments in advance, then to follow up a week and then a day before. Business meetings will usually start very casually, asking about families, health, etc… Egyptians have an “open-door policy”, where meetings are not private unless they have to be. Other time issues that are important to know include time difference. The time difference between the US (EST) and Egypt is 7 hours. Egypt also uses military time. When in Cairo, be aware that traffic is a big problem. Making time to deal with traffic to arrive on time to meetings is something to be considered. x. Joke telling Egyptians like to joke around. Egyptian bureaucracy can be a comedic subject, but it is improper to ever joke at an Egyptian’s expense. Never joke about their government, culture or religion.
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F.
Business Entertaining:
i. Proper use of Utensils In Egypt, the proper use of utensils is not so different from that of the US. As mentioned before, it is important that most things are done using the right hand, as the left hand is seen as “dirty�. It is improper to eat food off your knife. ii. Table Manners When entering a restaurant, or invited to a home for dinner, wait for the host or hostess to bring you to your seat. It is polite to eat only with the right hand, and try not to salt your food, as it is considered rude. Taking second helpings is a sign of great enjoyment and compliment of the food. However, you will continue to be served unless you leave a small amount of food on your plate. When entering an Egyptian’s home, remove your shoes. As in business meetings, dress conservatively and polished. Once again, proper dress is important to Egyptians and shows a sign of wealth and power. iii. Alcoholic Beverages Devout Muslims do not drink alcohol, and as a sign of respect it is important not to have alcoholic beverages present unless you are positive the person drinks. If in doubt, ask. iv. Appropriate business conversations Appropriate business conversations include Egyptian achievements, for example successes in both the modern and ancient Egyptian world. Discuss Egyptian exports, like cotton or oil. Sports is also a good topic to bring up in conversation especially soccer or water-related sports. v. Topics to avoid As in most cultures, topics dealing with politics and religion are to avoid. Questions about family members, especially women are also to be avoided. Avoid bringing up issues dealing with Israel as well. This topic can be a sore subject for certain Egyptian individuals. The topic of women is also something that should not be discussed in business settings.
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TRADE AGREEMENTS, LAWS & POLICIES
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Egypt-U.S. Trade (Chamber of Commerce Egypt) Trade History Egypt’s trade and investment relationship with the United States deepened over the last thirty years after Egypt signed a peace agreement with Israel. Since that time the two countries have sought ways to increase their economic and trade ties, notably through the various partnership and agreements. At the beginning of the 1990’s, negotiations for a free trade agreement were a topic of discussion but no comprehensive conclusions could be reached. Egypt and the U.S. finalized a Trade and Investment Framework Agreement (TIFA) in 1999. After the failure to reach a FTA bilaterally, the U.S. shifted to giving regional trade agreements priority, such as the 2003 Middle East Free Trade Area initiative (MEFTA). It did, however, conclude free trade agreements with Israel, Jordan, Morocco, Bahrain, Oman is pending implementation, and negotiations are underway with the UAE. Discussion for a FTA between Egypt and the U.S. resumed later but to no avail, despite Egypt’s strength as a trade partner with the U.S. and in the region. Nevertheless, in the pursuit of a free trade framework, Egypt has made strides to open its economy through various reforms and, in essence, has laid the ground work for a free trade agreement in the future by focusing on each part of modernizing its economy. Furthermore, Egypt-U.S. trade operates within two initiatives designed to increase Egypt’s exports to the U.S. The first is the U.S. Generalized System of Preferences (GSP), a preferential treatment program where certain products areeligible for duty-free entry to the U.S. under specific qualifications. The second is the Qualifying Industrial Zones (QIZs), a one-way free trade agreement that combines Egyptian and Israeli components in manufactured goods from designated industrial zones that enter the U.S. duty-free. Regional Trade In the absence of greater trade liberalization measures between Egypt and the U.S., other trading partners have been sought. Currently, Egypt joined the Pan Arab Free Trade Area agreement (PAFTA) under the Arab League in 1997; it became a member of the Common Market for East and Southern Africa (COMESA) in 2001; it finalized the EU-Egypt Partnership Agreement, signed in 2002; it joined the Agadir Agreement, a FTA between Mediterranean countries (Egypt, Jordan, Morocco, and Tunisia), signed in 2004; it negotiated the Egypt-Turkey Free Trade Agreement in 2005; and Egypt concluded numerous bilateral trade and preferential treatment agreements with additional Arab countries. The above denotes that trade ties with the EU and MENA region have grown in the last ten years relative to Asia and the United States. Nevertheless, the U.S. remains a vital trade partner sharing a robust trade relationship with Egypt.
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Trade Values The United States is among Egypt’s largest trading partners with a volume of trade reaching USD 6 billion during January-September 2014, rising by 13.2% from the same period in 2013 and representing approximately 2.5% of Egypt’s GDP. In July 1999, Egypt and the United States signed the Trade and Investment Framework Agreement (TIFA) as a preliminary step towards a free trade agreement between the two countries. Proceeding in that same direction, the U.S. announced the formation of Qualified Industrial Zones (QIZs) in Egypt on December 10, 2004. Details of the major partnerships and agreements are as follows: Textile and Apparel Agreement (1973,1995) United States Agency for International Development (1975) U.S. Generalized System of Preferences Program (1976) Double Taxation Treaty (1981) Bilateral Investment Treaty (1982) Memorandum of Understanding with the US Department of Defense (1988) The U.S.-Egypt Partnership for Economic Growth and Development (1994) Science and Technology Agreement (1995) Trade and Investment Framework Agreement (1999) Investment Incentives Agreement (1999) Cooperation in Energy Technology Agreement (1999) Egypt-U.S. Electronic Commerce Joint Statement (1999) Qualified Industrial Zones Agreement (2004) 1. Textile and Apparel Agreement Egypt and the United States have had a bilateral textile agreement in effect since December 1973, known formerly as the Market Access Agreement for Textiles and Clothing, which has been renewed periodically for varying lengths of time. At the multinational level until the end of the Uruguay Round under World Trade Organization, governments bilaterally sought to negotiate textile and clothing trade according to the rules of the Multifibre Arrangement (MFA) between1974-1994. As part of the WTO Agreement on Textiles & Clothing (ATC), Egypt and the U.S. adhered to the Bilateral Textile and Apparel Agreement of 1995 until the phase out of quotas for WTO members on 1 January, 2005. In accordance with the ATC, the United States notified the Textiles Monitoring Body (TMB) of provisions from Egypt’s agreement that have remained in effect today well past the phase out period. The current provision on textiles and clothing can be found under the Egypt ATC 2.17 Notification. Textile products subject to the bilateral agreement are cotton textiles, man-made fiber textiles, wool textiles, and silk or non-cotton vegetable fiber textiles. 30
2. The U.S.-Egypt Partnership for Economic Growth and Development The U.S.-Egyptian Partnership for Economic Growth and Development was first announced in 1994 by U.S. Vice President Al Gore, on behalf of President Bill Clinton, and Egyptian President Hosni Mubarak with the goal of promoting economic stewardship and job creation in Egypt while strengthen the mutually beneficial commercial linkages between both countries. The objective of the partnership is threefold: 1) to enhance economic cooperation through trade, investment, science and technology; 2) to enhance Egyptian Government initiatives to further economic reform, economic growth, and job creation; and 3) to support the growth of the private sector. The partnership operates through the Presidents’ Council, the Joint Board on Science and Technology, and the Joint Committee for Economic Growth and Development, with its four subcommittees. For more information, see the State Department Fact Sheet released in May, 1996. 3. Qualified Industrial Zones Agreement On 10 December, 2004, the U.S. announced the formation of Qualifying Industrial Zones (QIZs) in Egypt, setting in motion a historic partnership between Egypt and Israel that seeks to foster economic cooperation between the two countries. Under the QIZ, goods manufactured in designated industrial areas in Egypt utilizing Israeli inputs will receive duty-free treatment when imported into the United States. Articles entering the U.S. under QIZ must be grown, produced, or manufactured in a QIZ and meet the rules of origin requirements. The products must also be substantially transformed in the manufacturing process and directly exported to the U.S. without passing through any other location before arrival at the U.S. border. Value added may be in the form of labor or material components. Upon entering the U.S., the material and processing costs incurred must total no less than 35%, with 11.7% originating in Israel and 23.3% in Egypt in the original agreement. Today, the percent has been renegotiated so that the component originating from Israel was lowered to 10.5% and Egypt makes up the difference at 24.5%. In addition, U.S. materials may account for up to 15% of the appraised value of the finished goods.
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QIZ Locations in Egypt Qualifying Industrial Zones in Egypt are located in the Greater Cairo Zone, the Alexandria Zone, the Suez Canal Zone, the Central Delta region and Upper Egypt. These five regions cover multiple districts and governorates including: 1. Greater Cairo: Giza, Shubra Al Kheima, Nasr City, Tenth of Ramadan City , Fifteenth of May City , Badr City , Sixth of October City, Obour City , Kalyoub City and the industrial area in Gesr El Suez. 2. Alexandria: including Amereya, New Amereya, Borg El Arab and Dekheila. 3. Suez Canal region: Port Said, Ismailya, Suez. 4. Central Delta region: Gharbiya, Dakahlya, Monofiya, and Damietta governorates. 5. Upper Egypt: Minya and Beni Suef
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US Laws and Policies Importing into the United States A guide for Commercial Importers *articles imported from the U.S. Consumer Product Safety Commission 1. ENTRY OF GOODS Entry Process When a shipment reaches the United States, the importer of record (i.e., the owner, purchaser, or licensed customs broker designated by the owner, purchaser, or consignee) will file entry documents for the goods with the port director at the goods’ port of entry. Imported goods are not legally entered until after the shipment has arrived within the port of entry, delivery of the merchandise has been authorized by CBP, and estimated duties have been paid. It is the importer of record’s responsibility to arrange for examination and release of the goods. Pursuant to 19 U.S.C. 1484, the importer of record must use reasonable care in making entry. 2. INFORMED COMPLIANCE Definition Informed compliance is a shared responsibility between CBP and the import community wherein CBP effectively communicates its requirements to the trade, and the people and businesses subject to those requirements conduct their regulated activities in accordance with U.S. laws and regulations. A key component of informed compliance is that the importer is expected to exercise reasonable care in his or her importing operations. Informed compliance benefits both parties: When voluntary compliance is achieved, CBP resources need not be expended on redundant examinations or entry reviews for the importer’s cargo found to be dependably compliant. From the trade perspective, when voluntary compliance is attained, compliant importers are less likely to have their shipments examined or their entries reviewed. CBP publishes a wealth of information to assist the import community in complying with CBP requirements. We issue rulings and informed compliance publications on a variety of technical subjects and processes. Most of these materials can be found on-line at www.cbp.gov. We urge importers to make sure they are using the latest versions of any printed materials. 3. INVOICES Commercial Invoice A commercial invoice, signed by the seller or shipper, or his agent, is acceptable for CBP purposes if it is prepared in accordance with Section 141.86 through 141.89 of the CBP Regulations, and in the manner customary for a commercial transaction involving goods of the kind covered by the invoice. Importers and brokers participating in the Automated Broker Interface may elect to transmit invoice data via the Automated Invoice Interface or EDIFACT and eliminate the paper document. The invoice must provide the following information, as required by the Tariff Act: 33
• The port of entry to which the merchandise is destined, • If merchandise is sold or agreed to be sold, the time, place, and names of buyer and seller; if consigned, the time and origin of shipment, and names of shipper and receiver, • A detailed description of the merchandise, including the name by which each item is known, the grade or quality, and the marks, numbers, and symbols under which it is sold by the seller or manufacturer to the trade in the country of exportation, together with the marks and numbers of the packages in which the merchandise is packed, • The quantities in weights and measures, • If sold or agreed to be sold, the purchase price of each item in the currency of the sale, • If the merchandise is shipped for consignment, the value of each item in the currency in which the transactions are usually made, or, in the absence of such value, the price in such currency that the manufacturer, seller, shipper, or owner would have received, or was willing to receive, for such merchandise if sold in the ordinary course of trade and in the usual wholesale quantities in the country of exportation, • The kind of currency, • All charges upon the merchandise, itemized by name and amount including freight, insurance, commission, cases, containers, coverings, and cost of packing; and, if not included above, all charges, costs, and expenses incurred in bringing the merchandise from alongside the carrier at the port of exportation in the country of exportation and placing it alongside the carrier at the first U.S. port of entry. The cost of packing, cases, containers, and inland freight to the port of exportation need not be itemized by amount if included in the invoice price and so identified. Where the required information does not appear on the invoice as originally prepared, it shall be shown on an attachment to the invoice, • All rebates, drawbacks, and bounties, separately itemized, allowed upon the exportation of the merchandise, • The country of origin, • All goods or services furnished for the production of the merchandise not included in the invoice price. 4.Other Invoices Pro Forma Invoice If the required commercial invoice is not filed at the time the merchandise is entered, a statement in the form of an invoice (a pro forma invoice) must be filed by the importer at the time of entry. A bond is given for production of the required invoice not later than 120 days from the date of the entry summary, or entry if there is no entry summary. If the invoice is needed for statistical purposes, it must generally be produced within 50 days from the date on which the entry summary is required to be filed. The exporter should bear in mind that unless he or she forwards the required invoice in time, the American importer will incur a liability under his bond for failure to file the invoice with the port director of CBP before the 120-day period expires. Although a pro forma invoice is not prepared by the exporter, it is of interest to exporters as it gives a general idea of the kind of information needed for entry purposes. 34
A pro forma invoice indicates what the importer may find necessary to furnish CBP officers at the time a formal entry is filed for a commercial shipment, if a properly prepared CBP or commercial invoice is not available at the time the goods are entered. An acceptable format for a pro forma invoice is reproduced in the appendix. Some of the additional information specified for the commodities under section 141.89 of the CBP Regulations may not be required when entry is made on a pro forma invoice. However, the pro forma invoice must contain sufficient data for examination, classification, and appraisement purposes. 5. Rules of Origin The origin of merchandise that is imported into the customs territory of the United States can affect the rate of duty, entitlement for special programs, admissibility, quota, anti-dumping or countervailing duties, procurement by government agencies and marking requirements. In order to determine a product’s country of origin, the importer should consult the applicable rules of origin. There are two basic types of rules of origin: non-preferential and preferential. Non-preferential rules generally apply in the absence of bilateral or multilateral trade agreements. Preferential rules are applied to merchandise to determine its eligibility for special treatment under various trade agreements or special legislation such as the Generalized System of Preferences (GSP), the North American Free Trade Agreement (NAFTA), or the African Growth and Opportunity Act (AGOA). There are also rules of origin for textile and apparel articles; these are provided for by statute. A more detailed discussion of these rules may be found in the publications What Every Member of the Trade Community Should Know About: Rules of Origin and What Every Member of the Trade Community Should Know About: Textile & Apparel Rules of Origin, which are available on the CBP Electronic Bulletin Board and the CBP Website, www.cbp.gov.
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HARMONIZED TARIFF SYSTEM Chapter: 62 Heading: 6212 Sub-Heading: 6212.10 Tariff Item: 6212.10.0000
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COST SHEETS
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PRODUCT: Infinite Lace Multi-Way Push-Up Bra RETAIL: $44 COLOR: White STYLE #: 52263797 67% Nylon, 33% Elastane COST SHEET
Item #:
COMPONENT COSTS: Fabrics: Shell
Yards/Qty 1/2 yard
Lining
1/2 yard
(Total Fabrics) Lace Trims:
Foam
$1.00 1/8 yards
(Total Trims)
$2.03
CMT COSTS: Grading: Marking: Cutting: Make Charges:
$0.10 $0.10 $0.20 $0.20
Wash/Type Press/Trim QE/Bag & Tag
$0.10 $0.20 $0.10
(Total Labor)
$1.00
PACKING MATERIALS : Tissue Polybag Inner Box Outer Box
$0.10 $0.20 $0.36 $0.36
(Total Packing) (Total Cost): Wholesale Price Wholesale Margin Retail Price Retual Margin
$0.93 $7.92 $13.20 40% $44 70%
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Unit Price $ Amt $5.40 $2.70 $2.52
$1.26
$6.32
$1.25
$0.13
$0.13
$10.00
$0.65
$3.96 1/4 yards
Metal Closure
SKETCH:
PRODUCT: Tonal Roses Push-Up Bra RETAIL: $39 COLOR: Black STYLE #: 52323306 76% Nylon, 24% Elastane - Lace Trim: 85% Nylon, 15% Elastane COST SHEET
Item #:
COMPONENT COSTS: Fabrics: Shell
Yards/Qty 1/2 yard
Lining
1/2 yard
(Total Fabrics) Lace Trims:
Foam
$1.00 1/8 yards
(Total Trims)
Unit Price $ Amt $5.40 $2.70 $2.52
$1.26
$6.32
$1.25
$0.13
$0.13
$10.00
$0.65
$3.96 1/4 yards
Metal Closure
SKETCH:
$2.03
CMT COSTS: Grading: Marking: Cutting: Make Charges:
$0.10 $0.10 $0.20 $0.20
Wash/Type Press/Trim QE/Bag & Tag
$0.10 $0.20 $0.10
(Total Labor)
$1.00
PACKING MATERIALS : Tissue Polybag Inner Box Outer Box
$0.10 $0.20 $0.36 $0.36
(Total Packing) (Total Cost): Wholesale Price Wholesale Margin Retail Price Retual Margin
$0.93 $7.92 $13.20 40% $44 70% 39
SHIPPING ROUTES
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PART 1: OCEAN FREIGHT A. Type of Box Used: 5-ply Carton 24x18x18 Corrugated Boxes, holds 4.5 cu feet each B. Number of Case Packs: 8 Cartons 4 dozen units per box - 48 total units C. Type of Container: 20 ft. standard Dry Container Maersk Shipping Line D. Space Needed in Container: 84 cbm Commodity Value - $15,360 E. Cost to Ship Merchandise: $3,431.27 - $3,792.46 Manufacturer: Delta - Textiles Galil Industries LTD. Free Zone NASR City Cairo, Egypt Tel: 20 2 272 9374 PART 2: AIR FREIGHT A. Type of Garment Carrier: N/A B. Number of Garment Carriers: N/A C. Space Needed in Air Frieght: N/A D. Cost: N/A PART 3: TIMELINES Ocean: A. Shipping: Port of Loading: Suez Canal Terminal, Egypt (SUEZ/EGSUZ) Port of Discharge: New York Terminal, United States (USNYC) B. Total Transit Time: 13 days (no stops) Delivery Time: 80 days Production Reservation: 7 days Production: 10 days Packing/Preparing for Shipping: 5 days Pick-Up: Roadway Truck Air: N/A
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PART 4: Shipping Map of Manufacturer to U.S.:
NY Port
Cairo Port
Airport Route from the Country to the U.S.: N/A 42
OFFICIAL DOCUMENTS
43
IMPORTER’S DOCUMENTS A. Power of Attorney
44
B. GSP
45
C. Detail Sheet
46
FREIGHT CARRIER DOCUMENTS A. Ocean Bill of Lading
47
B. Insurance Certificate
48
C. Arrival Notice
49
D. Intermodal Bill of Lading
50
MANUFACTURER’S DOCUMENTS A. Packing List
51
B. Commercial Invoice
52
C. Pro Forma Invoice
53
BANKING DOCUMENTS A. Letter of Credit
54
55
BIBLIOGRAPHY Egypt profile. (n.d.). Retrieved March 6, 2015, from http://www.bbc.com/news/world-africa-13313370 (n.d.). Retrieved March 6, 2015, from https://www.cia.gov/library/publications/the-world-factbook/ geos/eg.html Egypt - Language, Culture, Customs and Etiquette. (n.d.). Retrieved March 6, 2015, from http://www. kwintessential.co.uk/resources/global-etiquette/egypt-country-profile.html Egypt. (n.d.). Retrieved March 6, 2015, from http://www.indexmundi.com/egypt/#Economy Egypt. (n.d.). Retrieved March 6, 2015, from http://en.wikipedia.org/wiki/Egypt In this section: Business Culture in Egypt. (n.d.). Retrieved March 6, 2015, from http://www.worldbusinessculture.com/Egyptian-Business-Style.html Outsourcing to Egypt | Clutch.co. (n.d.). Retrieved March 6, 2015, from https://clutch.co/outsourcing-location/egypt U.S. Relations With Egypt. (2014, May 20). Retrieved March 6, 2015, from http://www.state.gov/r/pa/ ei/bgn/5309.htm Freight Calculator. (n.d.). Retrieved March 6, 2015, from http://worldfreightrates.com/en/freight (n.d.). Retrieved March 6, 2015, from https://www.pvh.com/investor_relations_corporate_governance.aspx THE HOFSTEDE CENTRE. (n.d.). Retrieved March 6, 2015, from http://geert-hofstede.com/egypt.html (n.d.). Retrieved March 6, 2015, from http://www.amcham-egypt.org/BSAC/EgyUSprof13.pdf AmCham Egypt - Trade Resources - Egypt-U.S. Relations. (n.d.). Retrieved March 6, 2015, from http:// www.amcham.org.eg/resources_publications/Trade_Resources/egypt_us_relations/usaid.asp (n.d.). Retrieved March 6, 2015, from http://www.jstor.org/discover/10.2307/162224?sid=211054336976 91&uid=2&uid=3739256&uid=4 Tour Egypt :: Egypt: Doing Business in Egypt. (n.d.). Retrieved March 6, 2015, from http://www.touregypt.net/egypt-info/magazine-mag09012000-magf3.htm Embassy of the United States. (n.d.). Retrieved March 6, 2015, from http://egypt.usembassy.gov/doing-business-egypt.html
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In this section: Business Culture in Egypt. (n.d.). Retrieved March 6, 2015, from http://www.worldbusinessculture.com/Business-Meetings-in-Egypt.html Doing Business in Egypt, Arab Rep. - World Bank Group. (n.d.). Retrieved March 6, 2015, from http:// www.doingbusiness.org/data/exploreeconomies/egypt Acceptable Public Behavior. (n.d.). Retrieved March 6, 2015, from http://business.uni.edu/buscomm/ InternationalBusComm/world/africa/egypt/egypt_printable.html The History of Calvin Klein - AMOG. (2012, April 16). Retrieved March 6, 2015, from http://www.amog. com/153154-history-calvin-klein/
Harmonized Tariff Schedule of the United States. (n.d.). Retrieved March 6, 2015, from http:// hts.usitc.gov/
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