University of Azuay Faculty of Law School of International Studies "FEASIBILITY ANALYSIS OF THE IMPORTATION AND COMMERCIALIZATION OF TECHNIFIED INFRASTRUCTURE, EQUIPMENT AND ACCESSORIES FOR SWINE FARMS IN THE PROVINCE OF AZUAY". Graduation project prior to obtaining the Bachelor Degree in International Studies with Bilingual minor in Foreign Trade. Author: Juan Diego Vásquez Rea Director: Ing. Antonio Torres Cuenca – Ecuador 2017 GRATITUDES To God, for giving me the necessary capacity to fulfill this goal so long awaited. For his blessings and obstacles that were served to develop me as a person and professional. To my beloved wife and daughter, who are the fundamental pillars and the motor that encourage me to prepare and to be better every day. To my beloved parents who always were at all times ready to help me with their advice and financial support. To my siblings, relatives, friends, and colleagues who in one way or another contributed and supported me to continue my studies. To my project director, for being an excellent person and for sharing his knowledge and experience ii TABLE OF CONTENTS INTRODUCTION .................................................................................................................. 1 CHAPTER 1 ........................................................................................................................... 5 ENVIRONMENT ................................................................................................................... 5 1. PEST ANALISIS ................................................................................................................ 5 1.1.1Political Analysis ............................................................................................................ 5 1.1.2 Economic Analysis ........................................................................................................ 9 1.1.3 Social Analysis. ........................................................................................................... 15 1.1.4 Technological Analysis. .............................................................................................. 18 1.2 Conclusion of Chapter 1 ................................................................................................. 21 CHAPTER 2 ......................................................................................................................... 23 MARKET RESEARCH ....................................................................................................... 23 2.1 MARKET STUDY. ........................................................................................................ 23 2.1.1 What is the Market? ..................................................................................................... 23 2.1.2 Objectives of the market study. ................................................................................... 23 2.1.3 Market Segmentation ................................................................................................... 24 2.1.4 Methodology ................................................................................................................ 26 2.1.5 Description of the swine sector in the province of Azuay ........................................... 27 2.1.6 Interview with Producers ............................................................................................. 29 2.1.7 Survey to Producers ..................................................................................................... 32 2.2 Marketing Mix ................................................................................................................ 34 2.2.1 Product ......................................................................................................................... 34 2.2.2 Price ............................................................................................................................. 48 2.2.3 Place ............................................................................................................................ 50 2.2.3.1 Strategic Location ..................................................................................................... 50 2.2.4 Concept of Promotion. ................................................................................................. 55 2.2.5 Main Competitors ........................................................................................................ 57 2.3 Conclusion of Chapter 2 ................................................................................................. 60 CHAPTER 3 ......................................................................................................................... 61 SELECTION OF SUPPLIERS ............................................................................................. 61 iii 3.1 Factors to consider at the time of the negotiation process. ............................................. 62 3.1.1 Factors related to quality: ............................................................................................ 62 3.1.2 Economic Conditions .................................................................................................. 63 3.1.3 Logistic Conditions. .................................................................................................... 64 3.1.4 Other conditions. ......................................................................................................... 65 3.2 Analysis of potential Suppliers ....................................................................................... 66 3.2.1 Description of Suppliers .............................................................................................. 67 3.3 Results of the Analysis of Suppliers ............................................................................... 78 3.4 Conclusion of Chapter 3 ................................................................................................. 80 CHAPTER 4 ......................................................................................................................... 81 THE IMPORTATION PROCESS ....................................................................................... 81 4.1. Terms used in the import process: ................................................................................. 82 4.1.1. Importer Registration. ................................................................................................. 82 4.1.2. ECUAPASS: ............................................................................................................... 82 4.1.3. Restrictions and Prohibitions. ..................................................................................... 82 4.1.4. Import Licenses or Technique Barriers: ..................................................................... 82 4.1.5. Nationalization of goods: ........................................................................................... 83 4.1.6. The Customs Declaration (DAI): ............................................................................... 83 4.1.7. Accompanying documents ......................................................................................... 84 4.1.8. Support documents ..................................................................................................... 84 4.1.8. Custom appraisals ....................................................................................................... 85 4.1.2. Payment of Taxes: ...................................................................................................... 85 4.1.2. Import Regimes. ......................................................................................................... 86 4.2 Terms of trade (Incoterms) ............................................................................................. 86 4.3 Payment forms. ............................................................................................................... 88 4.3.1 Advance Payment: ....................................................................................................... 88 4.3.2 Through collections: .................................................................................................... 88 4.3.3 Irrevocable and confirmed letter of credit: .................................................................. 88 4.3.4 A Consignment: ........................................................................................................... 89 4.4 International transportation. ........................................................................................... 90 iv 4.4.1 Maritime transport. ...................................................................................................... 90 4.4.3 Maritime transport documents ..................................................................................... 93 4.5 Tariff headings and subheadings .................................................................................... 94 4.6 Safeguards. ..................................................................................................................... 95 4.7 Import Process of Swine Equipment from China to Ecuador. ....................................... 96 4.7.1 Negotiation. ................................................................................................................. 97 4.7.2 FOB Prices. .................................................................................................................