Unit 14 - Silkancil Imports

An environmentally focused US company named "Silkancil Imports" ("SI") imports products that are useful in helping to preserve the environment. It plans to import a special device from Sweden which recycles household (kitchen) food waste into compost fertilizer for gardens and lawns called the "Food Recycle Apparatus" (FRA). The FRA consists of a plastic bin with a capacity of circa 250 liters, which has integrated into it a computer chip and a series of electronic sensors which decide when the waste material in the bin should be shuffled and stirred, to assist the organic processes needed for composting. Otherwise, the organic waste may overheat in the composting process or only partially break down. The device includes paddles and partitions which operate the stirring and shuffling when the sensors decide that such stirring or shuffling is needed. The device is intended for sale to individual households, and can be discretely installed and hidden in garden shrubbery. It saves burning of rubbish and thus arguably helps protect the ozone layer, and also saves problems with landfill or ocean disposal.

Currently, in the United States, there is a device sold for similar purposes. The US product does not utilize electronic sensors. About a million units are sold per year, of which 40% are imported into the United States. SI (your client) thinks that very quickly his imports of FRA could capture half of the import market (20% of US sales), perhaps increasing total imports into the US, but perhaps not.

The FRA technology was developed in the Netherlands at a government supported university which is devoted to environmental technology. The Government of the Netherlands licensed this technology at no fee (free of charge) to any producer in the Netherlands which could demonstrate capacity to produce and market its products internationally. However, foreign producers must pay a fee.
The Government of the Netherlands paid Netherlands producers of FRA technology products a grant to cover expenses of promoting the product in foreign markets and training persons in the product as well as consumers about the benefit of FRA technology throughout the world. This enabled the producer to sell the FRA technology abroad for a price less than it is sold in the Netherlands. The Netherlands government also rebated its Value Added Tax (VAT) on each item that was exported.

SI, as prospective importer, wants to know about the risks of potential trade actions against it after it spends one or two years and develops a market for itself (possibly at the expense of those already in the market). For Indonesian students, you should concentrate on trying to understand how what you do as exporters also has effects on your prospective business partners as importers (and your partners’ problems are ultimately your problems too). SI wants to particularly know about potential antidumping and counter veiling duties law claims.