RALPH LAUREN
LINH DUONG LXFM 720 2016
C ONTENTS BRAND ANALYSIS COUNTRY PROFILE COUNTRY ANALYSIS BUSINESS ETIQUETTE IMPORTING TRADE AGREEMENTS COST SHEET PACKAGING & TRANSPORTATION IMPORT & EXPORT DOCUMENTS
BRAND ANALYSIS
I NTRODUCTION
Ralph Lauren Corporation is a publicly traded company. Ralph Lauren's world ranges from apparel, fragrances, accessories to home décor and design that is emblematic of balance and life style dressing and living. Ralph Lauren Corporation fashion lines are extensive including Polo Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection, Lauren Ralph Lauren, Double RL, Baby Ralph Lauren, Ralph Lauren Childrenswear. The brand sells its products to department stores, specialty stores, and golf and pro shops in the United States and Europe; full-price and factory retail stores located in the United States, Canada, Europe, South America, and Asia; and online through ralphlauren.com. In addition, the company licenses its products, such as apparel, eyewear, and fragrances to third parties. Ralph Lauren sells its products via 466 retail stores, 536 concession-based shop-within-shops, and 10 e-commerce sites. The brand works with over 700 foreign manufacturers. As of March 28, 2015, the brand had approximately 25,000 employees. The brand’s net revenue for 2015 was $7.62 billion. In FY 2016, Polo Ralph Lauren Corp. had 7.4 billion in revenue.
T IMELINE & BACKGROUND
1967 1971
1981
The Polo - Women’s Collection - 1st Store in Beverly Hills
- Entered International Market - 1st Sore in London
1982
Home Collection
1993
The Polo Sport
1994
1997
Headquarter, NYC
- Purple Label - Goldman Sachs purchased 28% of Polo Ralph Lauren Publicly Traded on NYSE
Ralph Lauren, Chairman
Stefan Larsson, CEO
BRAND’S L INES A tiered-brand strategy was established for Ralph Lauren to provide a focused, consistent approach to global brand growth and development. Each of Ralph Lauren lines occupy a distinct marketing identity and position that preserves the brand’s prestige and image. Ralph Lauren portfolio includes: POLO/RALPH LAUREN (PRL) POLO BY RALPH LAUREN (MENSWEAR) Arguably the epitome of Classic American gentry & preppy fashion back in the day coupled with a new spin on updated traditional styling for menswear, (PRL) quickly developed as a stable in many closets in the US & globally. RALPH LAUREN PURPLE LABEL (MENSWEAR) Ralph Lauren Collection referred to as 'Purple Label' is the signature luxury menswear fashion label for the Ralph Lauren product line. RLPL is dedicated to luxury hence pricing at retail of RLPL is commensurate with design, styling, craftsmanship and fabrication. Manufactured in Italy and England, and it is designed by and with the oversight of Ralph Lauren with superior attention to details. RLPL can be found at retail in the RL Boutiques, NM, Saks Fifth, and many more in local high end menswear shops.
RALPH LAUREN COLLECTION (PURPLE) LABEL (WOMENSWEAR) Ralph Lauren 'Collection' (Purple label) design is the stylish signature division in women's fine apparel, shoes, handbags and accessories. It is considered to be the 'Couture' line offered by the quintessential expert of luxury American lifestyle furnishings and iconic fashion. Collection and/or Purple label has evolved with time. RALPH LAUREN BLACK LABEL (WOMENSWEAR) Ralph Lauren Black Label line is an extension of the fashionable couture line both are found in high end boutiques as well as the Ralph Lauren stores in addition to the website.
I MPORTING P RODUCTS
WOMEN / MEN Ready-to-wear (Tops, Sweaters, Jackets & Vests, Coasts & Trenches, Pants, Jumpsuits & Shorts, Jeans, Skirts etc.) Swimwear Activewear Sleepwear & Loungewear Shoes Accessories (Handbags, Belts, Wallets & Small Leather Goods, Hats, Scarves & Gloves, Socks, Tights & Leggings, Jewelry, Sunglasses & Eyewear) Â BABY Baby Boy (0-24 Months) Baby Girl (0-24Months) Accessories HOME FRAGRANCES
Ralph Lauren has many supplying sources globally. According to Ralph Lauren Corporation, over 97% of the brand’s products (by dollar value) were produced outside the U.S., primarily in Asia, Europe, and Latin America. In its 2015 Citizenship Report, the brand states that 83% of its products were manufactured in the Asia Pacific region, 9% were manufactured in Europe, the Middle East and Africa, and 8% were manufactured in the Americas. Polo Ralph Lauren and the items in that label are made all over the place - Hong Kong (Esquel Group), Indonesia (Katexindo Citra Mandiri), Philippines, Bolivia, China, Sri Lanka, Bangladesh etc. Goods under Ralph Lauren Purple Line produced in Italy and England, and usually hand made from top quality materials.
REVENUE
T he statistic shows the global revenue from 2002 to 2016. The company’s revenue amounted to 7.45 billion U.S. dollars in 2014.
Asia 12% Europe 21.4% Americas 66.6%
By Geography (FY2015)
COUNTRY PROFILE
INTRODUCTION COUNTRY ESTIMATES SOCIAL | CULTURAL | ECONOMIC | POLITICAL CLIMATES
ITALY
LABOR | LAWS EXPORT | IMPORT TEXTILE & APPAREL INDUSTRY OVERVIEW LEATHER MARKET BUSINESS ETIQUETS
I NTRODUCTION Before starting business with Italy Ralph Lauren has to weighted various aspects of the country such as social, economic, infrastructural and political climates. Also it is significant to be acknowledge about local business etiquettes in order to lead effective negotiation. QUICK FACTS Location: Europe – the European Union Climate: Mediterranean climate Population: 60,674,003 (3rd most populous EU member state) Density: 201.3/km2 Capital: Rome Official language: Italian Government: Unitary parliamentary constitutional republic Currency: Euro (₏) (EUR) Religion: Roman Catholic
C OUNTRY ESTIMATES o
Area 301,340 sq km Land: 294,140 sq km, Water: 7,200 sq km o Population 61,680,122 (July 2014 est.) o Economy GDP: $2.066 trillion (2014 est.) GDP growth rate: -1.8% GDP (PPP): $1.805 trillion (2013 est.) GDP - per capita (PPP): $29,600 (2013 est.)
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Investment 18.2% of GDP (2012 est.) Urbanization 68.4% of total population (2011) Labor force 25.74 million Agriculture: 3.9% Industry: 28.3% Services: 67.8% Electricity Installed generating capacity: 124.2 million kW (2012 est.) Textile Industry contribution to GDP more than 3% (2013)
SOCIAL | C ULTURAL | ECONOMIC | POLITICAL C LIMATES
GOVERNMENT Italy has a parliamentary democratic republic form of government with a multiparty system. There are three branches of power: the executive, the legislative and the judiciary branch. Italy is headed by a president who appoints a prime minister, the elected head of government. The seat of government is Rome, where the President resides in the Palazzo del Quirinale, the chamber of deputies sits in the Palazzo Montecitorio and the senate occupies the Palazzo Madama.
L EGAL SYSTEM The law in Italy (especially the civil law) has been based on the Roman law model as well as the French Napoleonic law. The legal system encompasses a series of courts (tribunali) as well as a body of judges. There are separate Civil Courts, Criminal Courts and Administrative Courts all across the country. The whole structure is integrated with each court being a part of the national network and all judges being civil servants.
C LIMATE AND NATURAL DISASTERS Most of Italy has a Mediterranean climate with hot, dry summer and cool, wet winter. However, the climate can vary considerably from the north to the south of the country. Recently central Italy has struggled with devastating earthquakes since August 2016. Experts forecast continuing tremors in nearly future.
RAW MATERIALS AVAILABILITY Italy has to import almost all its raw materials and energy. Italy's economic strength is in the processing and manufacturing of goods, primarily in small and medium size family-owned firms.
ENERGY AND POWER Italy's proven oil and natural gas reserves are each the fourth-largest in the European Union (EU). The country has completely stopped the production of coal. Still, Italy must rely heavily on foreign sources to meet its energy needs. Installed generating capacity:Â 124.2 million kW (2012 est.)
ENVIRONMENT Currently Italy faces some serious environmental issues. Air pollution from industrial emissions such as sulfur dioxide; coastal and inland rivers polluted from industrial and agricultural effluents and Its lakes contaminated by acid rain; inadequate industrial waste treatment and disposal facilities. The long-term threat posed by flooding, pollution, erosion.
ECONOMY & P OLITIC I taly is the world’s ninth biggest economy. Its economic structure relies mainly on services and manufacturing. The services sector accounts for almost three quarters of total GDP and employs around 65% of the country’s total employed people. Within the service sector, the most important contributors are the wholesale, retail sales and transportation sectors. Industry accounts for a quarter of Italy’s total production and employs around 30% of the total workforce. Manufacturing is the most important sub-sector within the industry sector. The country’s manufacturing is specialized in high-quality goods and is mainly run by small- and medium-sized enterprises. Most of them are familyowned enterprises. Agriculture contributes the remaining share of total GDP and it employs around 4.0% of the total workforce. Italy suffers from political instability, economic stagnation and lack of structural reforms. Prior to the 2008 financial crisis, the country was already
idling in low gear. In fact, Italy grew an average of 1.2% between 2001 and 2007. The global crisis had a deteriorating effect on the already fragile Italian economy. In 2009, the economy suffered a hefty 5.5% contraction—the strongest GDP drop in decades. Since then, Italy has shown no clear trend of recovery. In fact, in 2012 and 2013 the economy recorded contractions of 2.4% and 1.8% respectively. The Italian economy faces a number of important challenges, one of which is unemployment. The unemployment rate has increased constantly in the last seven years. In 2013, it reached 12.5%, which is the highest level on record. The stubbornly high unemployment rate highlights the weaknesses of the Italian labor market and growing global competition. Another challenge is presented by the difficult status of the country’s public finances. In 2013, Italy was the second biggest debtor in the Eurozone.
L ABOR & WORKFORCE
P OPULATION The current population of Italy is 60,674,003 70.5 % of the population is urban Age structure: 15-24 years: 9.74% 25-54 years: 42.46% 55-64 years: 12.73% 65 years and over: 21.37% WORKFORCE 25.74 million Agriculture: 3.9% Industry: 28.3% Services: 67.8%
T RANSPORTATION & T ELECOMMUNICATION
T RANSPORTATION Italy’s highway system is one of the word’s best, included extensive expressways. Genoa and Savona on the northwest coast and Venice on the Adriatic handle the major share of traffic to and from the northern industrial centers. Naples, second only to Genoa, is the principal port for central and southern Italy, while Livorno is the natural outlet for Florence, Bologna, and Perugia. Messina, Palermo, and Catania are the chief Sicilian ports, and Cagliari handles most Sardinian exports. The port of Gioia Tauro in Reggio Calabria is the biggest container port in Italy that connect the international and regional networks.
A new government plan launched in July 2015 aims to strengthen ports and logistics competitiveness at a European and global level. This will result in a series of new investment and innovative projects offering potential business opportunities. T ELECOMMUNICATION Italy telephone system is inadequate for a developed country. It is well-developed, fast and fully automated.
T RANSPORTATION M APS
Ports
Railways
I MPORT & EXPORT I MPORT
Italian imports amounted to US$409.1 billion in 2015, down by -26.8% since 2011 and down by -13.7% from 2014 to 2015. Italy’s top 10 imports accounted for nearly two-thirds (60.9%) of the overall value of its product purchases from other countries. From a continental perspective, 67% of Italy’s total imports by value in 2015 were purchased from other European countries. Asian trade partners supplied 20.3% of import sales to Italy while 5.2% worth originated from African exporters. At 4.6%, a smaller percentage originated from North America. Among the top imports in Italy are the machines and engines (9.5% of total Italian import), transports (8.9%) and energy products, chemicals, but also textiles, clothing and food and beverages. The reason for which Italy imports products from the energy sector, such as oil (12.8%), is that it has very few oil deposits.
EXPORT Since the country’s manufacturing sector is specialized in high-quality goods, Italy plays an important role in the global market of luxury goods. The country’s main exports are mechanical machinery and equipment, which account for around 24% of total exports, as well as motor vehicles and luxury vehicles (7.2%). Home to some of world’s most famous fashion brands, Italy occupies a special niche in the global market of fashion and clothing. In fact, exports of clothing and footwear account for around 11.0% of the country’s total exports. Other important exports include electronic equipment (5.6%) and pharmaceutical products (4.6%).
EXPORT & I MPORT
T urnover of the manufacture of leather and related products industry in Italy from 2008 to 2014 (in million euros)
Agricultural raw materials comprise (crude materials except fuels) 2.3% in 2015
T EXTILE & APPAREL INDUSTRY
I talian textiles and fabrics are famous all over the world for their high quality obtained through innovative machinery, techniques and processes that lead to the introduction of always-new fashion fabrics and textiles. Fabric producers in Italy supply the worldwide market of fashion, home textiles and accessories with their refined materials.
The made-in-Italy label is a guarantee of quality recognized by everyone all over the globe, and we would like to present to you a list of Italian textile producers that are estimated to be the leaders in their sector. The Italian Textile Industry has a global market share of seven percent and is the second major producer behind China. Italy is also a pioneer in the premium market segment.
T EXTILE & APPAREL INDUSTRY o
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T his sector has attracted a great deal of attention because it is rare for a wealthy and developed country to specialize heavily in fashionoriented as well as semi-customized industrial products and base its production system on small and very small companies. I taly's renowned textile industry is changing dramatically. Thousands of main lands Chinese are swarming over to an Italian town near Florence called Prato. They have been able to buy premises cheaply from Italian businesses that are going bust. Approximately 4,000 Chinese-run clothing factories in Prato are turning out one million garments a day. The demand for cheaply made, mass-produced clothing or "fast fashion" forces workers in the crowded factories to keep pace. Despite increasing competition from newly industrializing countries, Italy’s textile industry has continued to be an important contributor to the domestic economy. Many observers attribute this resilience to the industry’s focus on quality. I talian textiles in the first half of 2014 posted an overall production growth generally outperforming the textile industry. Textiles, excluding knitted fabrics, registered a 7.6% increase on average in the January-June
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period, while the overall textile industry grew by 4.8%. Exports of Italian textiles performed positively, rising 4.2% in the first four months of this year, while imports grew further posting 7.5% increase. I n the January-April period, the trade balance of Italian textiles generated revenues of 577 million euros (746 million U.S. dollars), slightly up against the value registered in the same months last year. Exports of textiles destined to 28 EU member countries in the January-April period grew by 8.2%, accounting for 55.3% of total exports, while exports to other countries decreased except only for the positive performance of the U.S. market. Regarding the foreign textiles sourcing market, in the first four months of this year China confirmed its leadership as key supplier for Italian businesses with a 26.3% increase on total textile imports. I nvestments in technology, product, quality, service improvement, delivery time and reliability, as well as a focus on new professional profiles were among the necessary ingredients for success.
L EATHER MARKET
What makes ‘Made in Italy’ leather goods so aspirational that buyers are willing to pay truly hefty premiums for them? Is it all perception, or is there substance behind it too?
T he three factors that make ‘Made in Italy’ leather goods by far the best in the world are their simply superb leather quality, outstanding designs and exquisite craftsmanship. Let’s take a brief look at all these three factors one by one.
L EATHER MARKET
I TALIAN LEATHER IS THE BEST The real Italian leather or Cuoio italiano, as they call it in Italy, is sourced, tanned, dyed and made into products totally in Italy. Being high-end and super premium, the focus is not on mass production. The focus is totally on quality and exclusivity. Italian leather manufacturers use the best quality natural tanning agents, dyes and finishing techniques to produce the very best leather. As tanning, dyeing and finishing work together to give leather not just durability and longevity, but personality and charm as well, this becomes a key factor in production of best quality leather. Leather companies here are mostly family-owned businesses handed down generations where traditional leather tanning recipes are guarded as jealously as state secrets. The industry may be small and tightly held by a select few but it supplies tanned leather to 120 countries. 20% of world’s leather is produced in Italy. Do remember that combined with Italian leather’s exclusiveness, 20% market share overall is quite fantastic. Have a genuine Italian leather bag with ‘Made in Italy’ tag? You have invested in a quality product that will never crack, or discolor or peel. On the contrary, it will acquire added sheen as time passes.
I TALIAN DESIGN IS THE C LASSIEST Italian craftsmanship, it is the most exquisite your money can buy. Italian leather may be outstanding but it is still a raw material that needs design and production before it can command top dollars on shop shelves. That’s where Italy’s formidable design reputation gets to work. Fashions made in Italy are huge favorites of those who are willing to spend astronomical sums to join the ‘best dressed and the best accessorized’ lists. As Milan is one of the undisputed fashion capitals of the world and Italian high fashion brands are the among the crème de la crème of haute couture, Italian leather too has absorbed many of attributes associated with them such as fashionable, high quality and good taste. Not just for Italian brands, for most luxury brands and designers worldwide, Italian leather is the best leather to recreate their onpaper designs into products that fetch a hefty premium in the market. And when these fashion houses use Italian leather to give shape to their designer clothes, jackets, bags, shoes, wallets, belts and other products, the result is breathtaking design boosted by exclusive quality that makes them objects of desire.
L EATHER MARKET
L EATHER MARKET T op quality raw material and superb design require one more input – EXQUISITE CRAFTSMANSHIP - to wow the end user. That’s the third field where the ‘Made in Italy’ tag carries much weight. Italy’s reputation as world’s fashion hub is not new. Instead it has been gained over centuries of supplying premium handmade articles to other nations.
I talian leather craftsmen used to create bespoke leather goods and accessories for royalty and aristocracy worldwide. That illustrious heritage still lives on in the near-perfect craftsmanship that employs modern technology at many steps but ensures that each and every cut, stitch and accessorization is precision redefined. Italian leather is an outstanding confluence of best leather, best design and best workmanship. Unsurprising then that it is much sought after by those who wish to buy the very best and are willing to pay a premium for it.
L EATHER MARKET
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Leather production in the first quarter of 2014 increased by 5.4% thanks to the driving force of export (+10%). The footwear sector proved to be the main consumer with a share of 43% of the total, followed by accessories (whose quota rose from 20% to 24%), furnishing (16%) and auto vehicles (9%). Italian tanners are rewarded above all by luxury firms that now acquire 43% of Italy’s output.
COUNTRY ANALYSIS THE SOURCING DECISION
OPERATING GUIDELINES
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LEGAL AND ETHICAL STANDARDS - Our business relationship is built on a mutual respect for and adherence to all legal requirements and the highest ethical standards. We expect our business partners to observe all international standards, and national and local laws and regulations while operating their business.
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WAGES, BENEFITS, WORKING HOURS AND TRANSPARENT RECORD KEEPING - Our business partners must comply with all laws regulating local wages, overtime compensation, and legally mandated benefits. Wage and benefit policies must be consistent with prevailing national standards. Under ordinary business circumstances, employees must not be required to work excessive working hours per week including overtime and have the option of at least one day off in seven. We expect that all record keeping will be accurate and transparent at all times.
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HEALTH AND SAFETY - Our business partners must ensure that their employees are provided a safe and healthy work environment, and are not subject to unsanitary or hazardous conditions.
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ENVIRONMENTAL SUSTAINABILITY - Our business partners must embrace a fundamental concern for environmental protection and conduct their operations consistent with local and internationally recognized environmental laws and best practices. They must also operate and source in such a manner that respects the environment and local communities, with particular concern to avoid deforestation, pollution, habitat loss, and rising greenhouse gas emissions.
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CHILD LABOR - Our business partners must not use child labor, defined as employees under the age of 16.
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FORCED OR BONDED LABOR - Our business partners will not work with or arrange for purchase of any materials or services that supports or utilizes forced or bonded labor.
OPERATING GUIDELINES o
DISCIPLINARY PRACTICES - Our business partners will not employ or conduct any business activity with partners who employ any form of physical or mental coercion, or punishment or monetary fines against employees.
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DISCRIMINATION AND HARASSMENT - Our business partners will not practice any form of discrimination or harassment in hiring and employment, based on race, color, religion, sex, gender, sexual orientation, age, marital status, disability, and ethnic or national origin.
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FREEDOM OF ASSOCIATION - Our business partners should respect the legal rights of employees to freely, and without harassment, participate in organizations of their choice.
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SUBCONTRACTING - Our business partners may only subcontract to previously approved suppliers for manufacturing or services according to our corporate requirements. All subcontracted suppliers must meet the same criteria as our direct contracted product and service suppliers.
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ANIMAL SOURCING PRINCIPLES - Our business partners must share our commitment to principles, practices, and regulations that require animals in our supply chain to be treated with care and respect.
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CUSTOMS COMPLIANCE AND PRODUCT SAFETY - Our business partners must comply with applicable international customs’ laws and regulations, including but not limited to, participation in US based Customs-Trade Partnership Against Terrorism Programs (C-TPAT) for all products and services as well as other international security regulations. In addition, all products must specifically meet all Consumer Product Safety Commission regulations and requirements and all international regulations and restrictions for product safety and hazardous substances.
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CONFLICTS OF INTEREST/ANTI-BRIBERY - Offering compensation of any value (gifts, discounts, services, loans, payments) to any Ralph Lauren Corporation or affiliate employee, service provider or government/ political official to influence any act or decision to secure a business advantage is strictly prohibited.
SWOT
SWOT refers to S – Strengths, W – Weaknesses, O – Opportunities and T –Threats. The SWOT framework provide for analysis of the internal and external environment and can be used in conjunction with a scab of external environment, in order to evaluate the information gathered. Based on the SWOT analysis of the sourcing country; it is evident that Ralph Lauren’s sourcing and manufacturing leather goods have many strengths and opportunities, which is why the brand is a fierce competitor in the fashion industry. Ralph Lauren’s ‘Made in Italy’ handbags are highly competitive among other luxury brands due to the first-rate leather used in production and outstanding skills of Italians masters. L ocation is another significant advantage of sourcing in Italy. The country is surrounded by sea and has a big numbers of deep sea ports, which make it more convenient and less expensive to ship to the U.S.A. The current unstable economy situation in Italy is not only a weakness, but also a threat to the brand sales; however, this is a factor that is affecting the entire luxury industry and is not unique to Ralph Lauren.
ITALY SWOT
WEAKNESSES •
STRENGHTS • Modern infrastructure • High level of internationalization and entrepreneurship with fully integrated supply chains • Strong manufacturing and innovation capability in several areas • Gateway to Mediterranean and Middle East markets, hosts many trade exhibitions with global appeal
OPPORTUNITIE • Investment in global fashion apparel industry • Importing energy for processing and manufacturing • Blend of technology in the fashion world • Transportation of goods are easy and affordable
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A long payment terms. In 2014, it took about 80 days on average for business-to-business payments.. Complex bureaucracy and regulations Slow judicial system Unfair competition due to cases of bribery, corruption and tax evasion Expensive labor Lack of raw materials – not enough manpower and resources to explore them High crime rate Apparel production doesn’t match its demand
T REATS • • • • •
Uncertainty in the retail sector Highly unpredictable market conditions Low production rate of apparels Economic division between the northern and southern Italy Unstable environment
BUSINESS ETIQUETTES
When doing business in Italy having cross-cultural skills should improve the potential of your business trip. In order to prepare yourself and also to ensure that your business proposal is well tailored to the target audience, leading to a successful meeting with your Italian counterpart, you should demonstrate and understand Italian culture and etiquette. C ourtesy is a quality that is very much appreciated in Italy, so ensure your conduct is always polished. There are specific etiquettes and protocols for individual social and business situations, however you should remember that Italian codes of behavior are less important than consideration.
A MASCULINE C ULTURE perceives competition, equity, and performance as important, as opposed to a feminine culture who thinks equality, solidarity, nurturance, and compassion are most important. Italy is one of the ten countries with the highest masculinity index scores. Italy is a fairly masculine society and ranks slightly higher on this index than the United States. At 70% Italy is a Masculine society – highly success oriented and driven. Children are taught from an early age that competition is good and to be a winner is important in one’s life. Italians show their success by acquiring status symbols such as a beautiful car, a big house, a yacht and travels to exotic countries. As the working environment is the place where every Italian can reach his/her success, competition among colleagues for making a career can be very strong. Many Italian men still treat women with gallantry and value machismo. Although women have entered the workforce, their numbers are still small and few are in upper echelon positions. Italian household are the sole domain of women; Italian women for the most part cook, clean and care for the children. In Northern Italy, business negotiations a direct, down to business, and leave very little time for social discussion. Being on time is seen as an asset, and a person’s demeanor is a very important factor, as Italians make crucial first impressions based on dress and non-verbal actions. In Southern Italy business negotiations are a little more relaxed, but still adhere to the masculine culture. Italy’s modern business world has been greatly influenced by Italy’s rich history, and many events which have marked Italian culture. However, like a more feminine culture, Italians also know how to take time to appreciate the good things in life. Italians work in order to live rather than living to work.
T YPE OF C ULTURE
BUSINESS ETIQUETTES I MPORTANCE OF BUSINESS MEETING Italians, like most South European people, are relationship-oriented. They usually prefer to establish direct relationships, even superficially, before “getting down” to business. The establishment of a reciprocal climate of trust and respect is as important as the exchange of information and details about a specific business proposal. Meetings are a way to get a deeper and common understanding of an issue rather than forming the conclusive part of a decision making process, so in this sense, they are more exploratory and analysisoriented than decision-oriented. The goal of early contact and particularly of the first meeting is to provide all the information needed regarding a proposal and, in particular, to establish a reciprocal climate of trust and respect. MEETING PROTOCOL Handshaking is common on all business and social occasions. The handshake is firm but not too long. Upon introductions and departures, people shake hands individually with all members of a group. In the case of a very friendly or family relationship, people may embrace and/or “kiss” on either cheek. In this case, “kissing” is done by simply pressing the sides of the face together. When being introduced you can simply say “piacere” (i.e. it is a pleasure) and pronounce your name clearly while shaking hands. If no one is giving a formal introduction, it is proper to shake hands and introduce yourself. A daily greeting such as “buongiorno” or “buonasera” (i.e. good morning, good evening) is generally expected upon arrival and when entering an office, shop, restaurant, etc. Before leaving you can say “arrivederci” (“see you”) or “a presto” (“see you soon”).
DRESS – C ODE Dress and presentation plays an important role in Italian culture. Fashionable style is considered a sign of wealthy social status and success. Milan is one of the World’s four main centers of fashion and Italian design and craftsmanship is valued, respected and coveted the world over. Anything that is ‘made in Italy’ has a tremendous cachet and respect. In general, the characteristics of elegance are quality fabric dresses, such as lightweight wools and silk. Quite often, great attention is given to fashionable brand clothing and accessories. Formal attire is generally expected for business meetings, for the most part dark colors for businessmen. Businesswomen tend to wear elegant and modest pant or skirt suits, matched with simple jewelry and makeup. While a conservative style is always accepted, more informal clothing is also common, especially outside of large companies and financial circles. To be on the safe side it is recommended to adopt tasteful coordinated clothes and to refrain from “competing” on fashion details if you are not particularly interested in such things. Keep in mind that Italy is a major center of European fashion design and production. Even casual clothes are smart and chic.
BUSINESS ETIQUETTES
P UNCTUALITY Punctuality is not a priority for Italians. Be patient and be prepared for some delay when you start working with a new Italian partner. In particular, do not take a small delay as a sign of lack of respect. As a general guideline, work plans are often not taken too strictly, so that some flexibility can be built into a deadline. Where a deadline must be firmly met, be sure to make it very clear to your Italian partner. Italians tend to �multitask�, since they like to do many things at once, shifting their priorities as new demands arise but being unruffled by interruptions. As a consequence, you might experience differing reaction times from your Italian contact as he/she is probably following several other projects at once.
BUSINESS ETIQUETTES MOBILE ETIQUETTE. Mobile phones are widely used by Italians of all ages, cultures and social status to communicate and socialize. Generally, “mobile etiquette” is based on concepts of courtesy and respect, but it is not unusual, in public conferences or during business meetings, to hear mobiles ringing.
GESTURES. Sign language is rich in “expressions”. Two of the most popular signs you may see are: o grouping all fingers’ tips together against the thumb and waving the hand back and forth is to say “what do you want?” or “what is it?”. o pointing the index and little fingers downwards to shape two “horns” is a sign to protect against bad luck, whereas the “horns” pointed upwards are a sign of offence.
SMOKING ETIQUETTE. In Italy, smoking in restaurants, bars, offices, factories and any public place without special non-smoking areas, is illegal. The law is applied quite extensively in public places and in most offices.
BUSINESS ETIQUETTES
WOMEN. The presence of women in technical and business positions is increasing, although it is still relatively unusual to find them in the highest position of an organization. SENSE OF HUMOR. Italians are generally not easily offended and you can criticize them and joke with them indeed, your sense of humor might be appreciated by Italians.
R EGIONALISM. There are many tradition-related differences that exist between Northern and Southern regions. Some of them make Northern people appear more reserved and Southern people more open and relationship oriented. From a linguistic point of view, Italy has a large number of dialects and linguistic inflections that characterize all regions, towns, and even small villages. SENSITIVE T OPICS: politics, the mafia, private family issues, private income.
TRADE AGREEMENTS | LAWS
T RADE ORGANIZATIONS & A GREEMENTS
I taly and the United States belong to a number of the same international organizations, including the United Nations, North Atlantic Treaty Organization, Euro-Atlantic Partnership Council, Organization for Security and Cooperation in Europe, Organization for Economic Cooperation and Development, G-20, G-8, International Monetary Fund, World Bank, and World Trade Organization. Italy also is an observer to the Organization of American States. T he United States and Italy cooperate closely on major economic issues, including within the G-8. The United States is one of Italy's most important trade partners, with two-way trade in 2015 totaling over $60 billion. As a member of the European Union (EU), Italy is bound by EU treaties and laws, including those directly governing or indirectly impacting business investments. Under both the EU treaty’s Right of Establishment and the Friendship, Commerce and Navigation Treaty with the United States, Italy is generally obliged to
provide national treatment to U.S. investors established in Italy or in another EU member state. The two countries have enacted an income tax agreement to prevent double taxation. As a member of the European Union, Italy and the United States are partners in the ongoing Transatlantic Trade and Investment Partnership (T-TIP) negotiations. T-TIP is an ambitious, comprehensive, and high-standard trade and investment agreement that aims to bolster the strong U.S.-EU relationship, add to the more than 13 million American and EU jobs supported by transatlantic trade and investment, and help unlock opportunity for American families, workers, businesses, farmers and ranchers through increased access to European markets for Made-in-America goods and services.
T here are no restrictions on the Importation of Leather Handbags under Import Classification 4202.21.0030.
CLASSIFYING THE IMPORT
C LASSIFYING T HE I MPORT T HE HARMONIZED TARIFF SCHEDULE (HTS) of the United States was enacted by Congress and made effective on January 1, 1989, replacing the former Tariff Schedules of the United States. The HTS is a list of imported goods and the duty rates that apply to them, published by the United States International Trade Commission. The Harmonized Tariff Schedule is used by United States Customs and Border Protection agents to classify goods being imported. This structure is based upon the international Harmonized Commodity Description and Coding System (HS), administered by the World Customs Organization in Brussels ; the 4- and 6-digit HS product categories are subdivided into 8-digit unique U.S. rate lines and 10-digit non-legal statistical reporting categories. Classification of goods in this system must be done in accordance with the General and Additional U.S. Rules of Interpretation, starting at the 4-digit heading level to find the most specific provision and then moving to the subordinate categories.
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T he HTS Code for Ralph Lauren imported women’s leather handbags is - 4202.21.0030. The following is a breakdown of the product’s code: Chapter: 42 - Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut) • Heading: 4202 – Travel goods, jewelry cases, handbags, shopping bags, wallets, purses • Subheading: 4202.21- With outer surface of leather or of composition leather • Tariff item: 4202.21.0030 – Women’s
COST SHEET
C OST SHEET C ost sheet is a statement on which is collected the detailed cost of various items and services are required for manufacturing a particular product - including expenses on raw materials, labor, packaging and other expenses can be directly attributed to cost. This report is used for setting the basic prices on products in the future.
I MPORTANCE OF COST SHEET
 COST ASCERTAINMENT The main objective of the cost sheet is to ascertain the cost of a product. Cost sheet helps in ascertainment of cost for the purpose of determining cost after they are incurred. It is also helps to ascertain the actual cost or estimated cost of a job. FIXATION OF SELLING PRICE To fix selling price of a product or service, it is essential to prepare the cost sheet. It helps in fixing selling price of a product or service by providing detailed information of the cost. HELP IN COST CONTROL For controlling the cost of a product it is necessary for every manufacturing unit to prepare a cost sheet. Estimated cost sheet helps in the control of material cost, labor cost and overheads cost at every point of production.  FACILITATES MANAGERIAL DECISIONS It helps in taking important decisions by the management such as: whether to produce or buy a component, what prices of goods are to be quoted in the tender, whether to retain or replace an existing machine etc.
T HE R ICKY
Dusty Lavender Matte Alligator Soft Ricky Bag is made in Italy from handstitched alligator that have been tumbled and treated to become soft and silky. It takes up to 18 hours to construct and features a contrasting Smoke bonded-calfskin lining.
T HE R ICKY
T HE T IFFIN
I talian-made calfskin satchel strikes the perfect balance between structured silhouette and modern details. It is embellished with polished gold-toned hardware, including “RL67�-engraved padlock, and is outfitted with a removable shoulder strap.
T HE T IFFIN
PACKAGING & TRANSPORTATION
PACKAGING & T RANSPORTATION
THE RICKY (R) bag will be packaged in two boxes because it is a high-value handbag. We will be using 11 x 13 x 8” inner boxes in 11 x 13 x 20” outer boxes. 2 inner boxes will fit inside 1 outer box.
THE TIFFIN (T) bag will also be packaged in two boxes. 12 x 15 x 7” inner boxes in 12 x 15 x 18” outer boxes. 2 inner boxes will fit inside 1 outer box.
C ONTAINER & PACKAGING
The Ricky and The Tiffin bags will be packaged in corrugated card box carton and will be sharing one 20’ dv container. 250 packages (outer boxes) of The Ricky Handbag and 302 packages of The Tiffin Handbag.
PACKAGING & T RANSPORTATION
OCEAN FREIGHT
CUSTOMS
Voyage number: APLU123456 Carrier: American President Lines LTD. Number of carrier: 1 Cost: ~ $2700
Port of loading: Genoa, Italy Port of unloading: New York and New Jersey, USA Port of entry: New York and New Jersey, USA Ocean travel time: 12-20 days Genoa, Italy to port of New York and New Jersey, USA: 12days
SHIPPING TIMELINE: OCEAN FREIGHT Distance: 4037.71mi Delivery Time: ~ 77days minimum Order placed with factory: 5days Production reservation: 7days Production: 20days Preparing/Packing for shipment: 7days Pick up packed units: • Transported by truck • Consolidation provides transportation Shipment taken to Port: within 7 days Shipment loaded into container: 7days
New York, NY Shipment unloaded and transferred onto trucks: 7days U.S. customs: 5-7days New York, NY to New Jersey, NY By roadway truck: 1day Shipment arrives at warehouse in New Jersey, New York.
PACKAGING & T RANSPORTATION A fter Ralph Lauren’s leather handbags are manufactured in Italy, they will be transported into the USA and sent to the warehouse in order to be efficiently distributed. Ralph Lauren has partnered with American Presidents Line in Italy for its transportation needs.
AMERICAN PRESIDENT L INES LTD. (now simply referred to as APL), along with its parent company CMA CGM, is the world's third-largest container transportation and shipping company, providing more than 80 weekly services. APL operates a container-ship fleet, including 153 container vessels. Formerly a subsidiary of Neptune Orient Lines (NOL), it is now a wholly owned subsidiary of CMA CGM, a global transportation and logistics company engaged in shipping and related businesses based in France.
PACKAGING & T RANSPORTATION
GENOA, ITALY. The Port is the major Italian seaport on the Mediterranean Sea. With a trade volume of 51.6 million tones, it is the busiest port of Italy by cargo tonnage. The Port of Genoa covers an area of about 700 hectares of land and 500 hectares on water, stretching for over 22 kilometers along the coastline, with 47Â km of maritime ways and 30Â km of operative quays.
PORT OF NEW YORK AND NEW JERSEY, NY, USA is the port district of the New YorkNewark metropolitan area. Considered one of the largest natural harbors in the world, the port is by tonnage the third largest in the U.S. and the busiest on the East coast. The port is the nation's top gateway for international flights and its busiest center for overall passenger and air freight flights. There are two foreign-trade zones within the port. The port handled $208 billion in shipping cargo in 2011, and 3,342,286 containers and 393,931 automobiles in 2014.
PACKAGING & T RANSPORTATION SHIPPING ROUTE
IMPORT & EXPORT DOCUMENTS
Every company that import or export goods from/to the U.S.A is required to provide a package of mandatory documents for operations of custom entries. Documentation lies at the heart of all international trade transactions. It provides exporters and importers with an accounting record; shipping and logistics companies with instructions of what to do with freight information; and banks with instructions and accounting tools for collecting payments. Export and import documents are more complex than those used for domestic sales due to the special characteristics of international trade: geographical distance, different customs laws, different means of transport, greater risks, etc. The documents required for each shipment will depend on the conditions of sale agreed between seller and buyer.
IMPORTER’S DOCUMENTS POWER OF ATTORNEY is used to give the authorized agent authority to act in all matters related to the import and export of goods and customs. ENTRY SUMMARY needed by importers certifying that the products are legal imports. This documentation is necessary to enable US Customs to collect duties, collect statistics, and determine whether other requirements of law or regulations are met upon importation. In the US, the importer must classify the goods, determine their customs value, and calculate duties, taxes and fees. THE GENERALIZED SYSTEM OF PREFERENCES (GSP) form is a preferential Certificate of Origin signed on the basis of a kind of tariff preference systems. To make sure the products made in benefit countries get preferences of GSP, the products must be originated from benefit countries (Principle of Origin), delivered directly from benefit countries to favoring countries (Principle of Direct Delivery) and provide the FORM A certificate when clearing customs in favoring countries. DETAIL SHEET is a document that summarizes the performance and other technical characteristics of a product.
FREIGHT CARRIER DOCUMENTS BILL OF LADING is a document issued by a carrier, or its agent, to the shipper as a contract of carriage of goods. It is also a receipt for cargo accepted for transportation, and must be presented for taking delivery at the destination. Among other items of information, a bill of lading contains consignor's and consignee's name, names of the ports of departure and destination, name of the vessel, dates of departure and arrival, itemized list of goods being transported with number of packages and kind of packaging, marks and numbers on the packages, weight and/or volume of the cargo, freight rate and amount. A bill of lading is required in all claims for compensation for any damage, delay, or loss; and for the resolution of disputes regarding ownership of the cargo. The rights, responsibilities, and liabilities of the carrier and the shipper under a bill of lading (often printed on its back) are governed generally either by the older Hague-Visby rules. • Ocean- B/L for only the ocean leg of a journey in which several modes of transportation (air, land, or sea) are used. Also called marine bill of lading. • Inland- B/L for transports over land and/or inland waterways, on way to the point where the goods will be put aboard a ship and a normal (carrier's) B/L will be issued. INSURANCE CERTIFICATE is a document used so that coverage is provided to cover loss or damage to cargo while in transit when insurance is placed against an open marine cargo policy. In some cases a shipper may issue a document that certifies that a shipment has been insured under a given open policy, and that the certificate represents and takes the place of such open policy, the provisions of which are controlling. Because of the objections that an instrument of this kind did not constitute a “policy” within the requirements of letters of credit, it has become the practice to use an insurance certificate. Also called cargo insurance certificate and special cargo policy.
ARRIVAL NOTICE is an international shipping document issued by a freight carrier or freight's agent to consignee/recipient of internationally shipped goods (and to the notify party, if any) to inform about the arrival of international sea freight shipment. Arrival Notice provides shipment details and charges and documents required to enable the consignee to make customs clearance and arrange pickup and delivery of his/her international shipment. INTERMODAL BILL OF LADING. Intermodal – is the movement of cargo from origin to destination by several modes of transport where each of these modes have a different transport provider or entity responsible, each with its own independent contract. Intermodal bill of lading is issued when a single shipment travels to its destination by more than one mode of transportation or by more than one ship, truck, railcar or aircraft.
MANUFACTURERS DOCUMENTS PACKING LIST is a more detailed version of the commercial invoice but without price information, it shows details about the content of a shipping package such as weight, description, dimensions and quantity of all pieces. The main purpose of this document is to inform transport agencies, government authorities, and customers about the articles of the package. A copy of the Packing List is often attached to the shipment itself and another copy is sent directly to the consignee to assist in checking the shipment when received. Although not required in all transactions, it is required by some countries and some buyers. This document is prepared by the exporter and addressed to the importer, the carrier and the import customs clearance. COMMERCIAL INVOICE IS the primary document used for importation control, valuation, and duty determination that itemizes a transaction between a buyer and a seller. An invoice typically contains contact information for the seller or service provider in case there is an error relating to the billing. Payment terms may be outlined on the invoice, as well as the information relating to any discounts, early payment details or finance charges assessed for late payments. It also presents the unit cost of an item, total units purchased, freight, handling, shipping and associated tax charges, and it outlines the total amount owed. PRO FORMA INVOICE is a document that is issued by the supplier to the buyer to confirm the commitment to sell goods for a certain price and at certain terms. Pro forma invoice is sent to the buyer before the commercial invoice. It acts like a quotation and it is otherwise known as a preliminary invoice. It acts as a binding agreement and creates the sale. If there are no changes to price, quantity, or terms the content of commercial invoice that will follow the pro forma invoice, will be pretty much the same. However it is not uncommon that the final sale details are different from what was quoted in the pro forma.
BANKING DOCUMENT LETTER OF CREDIT is a financing agreement between parties (usually importer and exporter) most common used for trade arrangement where goods are crossing international borders. It is provided by the bank of the importer (also called the issuing bank) to the bank of exporter that the bank will honor the Invoice presented by the Exporter on due date and make payment when the requirements of the letter of credit have been met, the bank of the exporter pays the amount stated in the agreement. The conditions are considered have been met if the issuing bank is presented with an invoice and proof of delivery by the exporter's bank, as evidence that goods were shipped to the importer. The terms of the letter of credit may also state that other conditions be met, such as the delivery of a quality certificate and/or a certificate of insurance.