PREFACE

 

Exporting for the first time?
Exported before, but things have changed?
Need answers, but not sure how or where to get them?

                                                                                                This is the book you need.

                                                                                                           

                                                                                                         PREFACE

 

A Basic Guide to Exporting has given companies the information they need to establish and grow their business in international markets. Whether you’re new to exporting or just want to learn the latest ideas and techniques, and whether your product is a good or a service, this book will give you the nuts-and-bolts information you need.

 

To you, the reader, I hope this book challenges your assumptions about engaging in the world of international business and gives you the confidence to become an even greater success. Like the businesspeople featured in the pages that follow, we hope you will not only sell to the world—we hope you’ll help make it a better place. 

 

Professionally trained and experienced in International Trade Industry, I have gained very sound experience and knowledge in this field full of opportunities.

 

Thank you.

 

Deepak Joshi

Ahmadabad

STEP-BY-STEP GUIDE TO EXPORTING

                                                                                                       Step-by-Step Guide to Exporting

 

The Step-by-Step Guide to Exporting will help you get your business export-ready and well positioned for commercial success abroad.

Learn the essential principles of exporting whether you are a novice, intermediate or advanced exporter.

The Guide will help you to:

 

• Be more competitive. Apply proven export strategies.
• Sell to more customers. Target global buyers online.
• Close more deals. Secure sources of export financing.
• Enter more markets. Leverage the benefits of free trade.
• Save time & avoid risks. Learn the legal aspects of trade.

 

Step 1: Assess your export potential

Step 2: Link to global value chains

Step 3: Develop your export plan

Step 4: Identify your target market

Step 5: Develop your export marketing strategy

Step 6: Enter your target market

Step 7: Deliver the goods

Step 8: Identify your export financing requirements

Step 9 : Understand the legal side of international trade

STEP 1: ASSESS YOUR EXPORT POTENTIAL

 

 

 Step 1: Assess your export potential

 

Trading abroad can boost your company’s profile, credibility and bottom line. Companies that export their products or services sell more, and are more profitable than those that don’t. Whatever your company size or sector, the rewards from selling your products and services overseas can have exponential returns.

 

Exporting: what's in it for you?

• Increased sales. If your domestic sales are good, exporting is a way to expand your market, find foreign niche markets and take advantage of demand around the world.
• Higher profits. If you can cover fixed costs through domestic operations or other types of financing, your export profits can grow very quickly.
• Economies of scale. When you have a larger market base, you can produce on a scale that lets you make the most of your resources.
• Reduced vulnerability. If you diversify into international markets, you avoid depending on a single marketplace and suffering from a domestic downturn.
• New knowledge and experience. The global marketplace abounds with new ideas, approaches and marketing techniques that could also prove successful in Domestic Market.
• Global competitiveness. The experience your company gains internationally will help keep you competitive in Domestic  and in the global marketplace.

Exporting has many challenges, but you can surmount them through careful preparation and planning. Among these challenges are:

• Increased costs. You may have to modify packaging or your products or services, and account for short-term costs such as extra travel, production of new marketing materials and additional staff to adapt to markets abroad.
• Level of commitment. It takes time, willingness, effort and resources to establish and maintain yourself in foreign markets.
• Staying in for the long haul. While exporting holds great economic promise for most companies, months or even several years can pass before you see a significant return on your export investment.
• Language and cultural differences. Familiarize yourself with the differences in language, culture and business practices so you don't inadvertently offend your potential customer and lose a sale.
• Paperwork. There's no way around it, both Local   and foreign governments require a lot of documentation from exporters of products and services.
• Accessibility. You have to be easily available to your foreign clients.
• Competition. You must be sure you're thoroughly familiar with the competition in your target market.

 

Are you ready?

 

An export-ready business is one that has the capacity, resources and management to deliver a marketable product or service on a global scale at a competitive price. The trick is to determine whether this is true of your company—and if it isn't, how to make it happen.

Your first step is to think about the resources and knowledge your business already has. Consider the following as a starting point:

Your expectations. Do you have:

• clear and achievable export objectives?
• a realistic idea of what exporting entails and the timelines for results?
• an openness to new ways of doing business?
• an understanding of what is required to succeed in the international marketplace?

Human resource requirements. Do you have:

• the capacity to handle the extra demand associated with exporting?
• senior management committed to exporting?
• efficient ways of responding quickly to customer inquiries?
• personnel with culturally sensitive marketing skills?
• ways of dealing with language barriers?
• a local contact or “go to” person?

Financial and legal resources. Can you:

• obtain enough capital or lines of credit to produce the product or service for new orders?
• find ways to reduce the financial risks of international trade?
• find people to advise you on the legal and tax implications of exporting?
• deal effectively with different monetary systems and ensure protection of your intellectual property?

 

Competitiveness. Do you have:

• a product or service that is potentially viable in your target market?
• resources to do market research on the exportability of your product or service?
• proven and sophisticated market-entry methods?

Evaluating your export potential :

 

When analyzing the export potential of your products/goods or services, you may want to account for the following considerations:

Customer profiles

• Who already uses your product or service?
• Is your product or service in broad, general use or limited to a particular group?
• Is your product or service popular with a certain age group?
• Are there other significant demographic patterns to its use?
• What climatic or geographic factors affect the use of your product or service?

Product modifications

• Are modifications required to make your product appeal to foreign customers?
• What is the shelf life of your product? Will this be reduced by time in transit?
• Can the packaging be easily modified to satisfy the demands of foreign customers?
• Is special documentation required? For example, does your product have to meet any technical or regulatory requirements?

 

Transportation

• How easily can your product be transported?
• Would transportation costs make competitive pricing a problem?
• How efficiently does the target market process incoming shipments?
• Are specialized containers or packaging materials required?

Local representation

• Do you require a local marketer/salesperson or other local representation?
• Do products require professional assembly or other technical skills?
• Is after-sales service needed? If so, is it available locally or do you have to provide it? Do you have the resources to do this?

Exporting services

• If you're exporting services, what is unique or special about them?
• Are your services considered to be world-class?
• Do you need to modify your services to allow for differences in language, culture and business environment?
• How do you plan to deliver your services: in person, with a local partner or by electronic means such as the Internet?

Capacity

• Will you be able to serve both your existing domestic customers and new foreign clients?
• If your domestic demand increases, will you still be able to look after your export customers and vice versa?

 

 

International business and science, technology and innovation.

 

In a global marketplace, diversifying our exports into the area of science, technology and innovation (ST&I) is essential to maintain a robust and adaptable economy.

 

ST&I on the global economic structure are creating immense transformations in the way companies and nations organize production, trade goods, invest capital, and develop new products and processes. Sophisticated information technologies permit instantaneous communication among the far-flung operations of global enterprises. New materials are revolutionizing sectors as diverse as construction and communications. Advanced manufacturing technologies have altered long-standing patterns of productivity and employment. Improved air and sea transportation has greatly accelerated the worldwide flow of people and goods.

 

All this has both created and mandated greater interdependence among firms and nations. The rapid rate of innovation and the dynamics of technology flows mean that comparative advantage is short-lived. To maximize returns, arrangements such as transnational mergers and shared production agreements are sought to bring together partners with complementary interests and strengths. This permits both developed and developing countries to harness technology more efficiently, with the expectation of creating higher standards of living for all involved.

 

Rapid technological innovation and the proliferation of transnational organizations are driving the formation of a global economy that sometimes conflicts with nationalistic concerns about maintaining comparative advantage and competitiveness. It is indeed a time of transition for firms and governments alike. This book provides a broad overview of these issues and seeks to shed light on such areas as the changing nature of international competition, influences of new technologies on international trade, and economic and social concerns arising from differences in national cultures and standards of living associated with adoption and use of new technologies.

 

STEP 2: LINK TO GLOBAL VALUE CHAINS

 

 

Step 2: Link to global value chains 

 

·        Understanding global value chains : GVC

 

A value chain (whether global or not) consists of activities that bring a good or service from its conception to its end use and beyond. This includes design, production, marketing, distribution and support to the final consumer. The activities that comprise a value chain can be contained within a single firm or divided among different firms. When those activities are no longer contained within a single geographic location, such as a country, we have a GVC.

Global value chains aren't new. Trade and investment were becoming broadly internationalized in the late 19th and early 20th centuries. But due to the outbreak of the First World War, followed by the Great Depression and the Second World War, globalization didn't really move to the forefront until the last quarter of the 20th century.

International trade has evolved from companies that once manufactured products in one country and sold them in another. It is also departing from the branch–plant approach, wherein a business produced its goods in a foreign market and sold them almost exclusively in that market. Instead, international trade is now increasingly characterized by intermediate inputs (for both goods and services) who may be found anywhere in the world.

Growth of global value chains :

There are three major forces driving the growth of GVCs, according to the Office of the Chief Economist:

1. Declining costs of transportation

Unless time concerns dictate otherwise, companies can afford to move their goods production and services provisions to locations that offer the best competitive advantages.

1. Improved information and communication technologies

Advances in information and communication technologies (ICT) mean that companies are much less limited by distance when operating in foreign markets.

1. Reduced barriers to trade and investment

New bilateral trade and investment treaties, lower global tariffs and liberalized economies in developing markets, such as China and India, have allowed companies to gain access to markets that were formerly closed to them.

Global value chains allow each link of the export chain to specialize in what it does best. This leads to greater efficiency, increased productivity and lower consumer prices for higher-quality goods and services. At the same time, this trade environment stimulates the intense global competition that encourages innovation.

Companies worldwide have had to adapt to the evolution of GVCs. For example, non-core activities may be outsourced to suppliers, partners or affiliates in countries with lower labour costs or other competitive advantages. Alternatively, SMEs may supply goods or services to a GVC established by another company, including a foreign multinational.

GVCs and your business :

You have a considerable range of strategies for benefiting from GVCs. The following are among the most common.

Provide intermediate input for existing value chain

If your product is something that another company (either Local   or foreign) uses as an intermediate input, you may be able to link into their GVC by becoming a supplier. This is a very common approach and certainly the simplest. For SMEs, especially those with niche technologies or specializations, new opportunities are constantly emerging to sell to multinationals or their suppliers.

Develop your own GVC through outsourcing

If your company manufactures either finished products or intermediate inputs, you can set up your own GVC. Acquiring intermediate inputs—such as raw materials, components, subsystems and other goods and services—from foreign suppliers can help you manufacture your own products at either lower cost or greater responsiveness to market forces.

Make investments abroad to connect to or establish a global value chain

By investing abroad you can gain immediate access to a foreign market and expand your company's sales and promote its growth. There is a broad spectrum of investment approaches, ranging from the passive to the active.

You might, for example, join a GVC simply by investing in a foreign company while taking little or no part in its operations. Purchasing a foreign firm, or setting up a joint venture or partnership, is another way to increase your competitiveness in the local market. This approach can be very cost-effective if you obtain existing production and distribution capabilities through the investment, so you don't need to build them from the ground up.

At the active end of the spectrum, you could establish a wholly owned subsidiary in a foreign market. This can help you drive and benefit from the GVCs of which your company is a part. The most important advantage is that you aren't dependent on a partner, so you can control the direction your subsidiary will take. You will also have direct contact with your end users, allowing you to build solid customer relationships and helping to ensure that your identity isn't obscured by the presence of a partner. Finally, your overseas staff will answer only to you, and all data related to your foreign operation will be at your sole disposal.

 

STEP 3: DEVELOP YOUR EXPORT PLAN

 

 

 

 Step 3:  Develop your export plan

 

·        Why plan?

If you plan your export project thoroughly, you'll have a better chance of doing well in your target market. Bad planning (or no planning) can lead to major failure abroad and could severely damage your domestic operations as well.

Financial institutions and other lending agencies will not normally provide funds to a business that lacks a well-developed export plan. In addition, potential partners and investors will want to see exactly how you plan to achieve your objectives.

An export plan is a business plan that focuses on international markets. It identifies your target market(s), export goals, necessary resources and anticipated results.

 

• Your export plan should contain the following:

1. Introduction
   • business history
   • vision and mission statements
   • purpose of the export plan
   • organizational goals and objectives
   • international market goals
   • short- and medium-term objectives for exporting
   • location and facilities
2. Organization
   • ownership
   • management
   • staffing
   • level of commitment by senior management
   • relationship between exporting and domestic operations
   • corporate experience and expertise in exporting
   • strategic alliances
   • labour market issues abroad
3. Products and services
   • description of products and services
   • key and/or unique features that distinguish your product/services from those in the target market adaptation and redesign required for exporting
   • production of products and services
   • future products/services pipeline
   • comparative advantage in production
4. Market overview
   • political environment
   • economic environment
   • size of market
   • key market segments
   • purchasing process and buying criteria
   • description of industry participants
   • market share held by imports
   • tariff and non-tariff barriers
   • industry trends and other market factors
   • market outlook
5. Market-entry strategy
   • target market(s)
   • description of key competitors
   • analysis of competitive position
   • product positioning
   • pricing strategy
   • terms of sale
   • distribution strategy
   • promotion strategy / development of sales leads
   • description of intermediaries and partners
6. Regulatory and logistical issues
   • intellectual property protection
   • other regulatory issues
   • modes of transportation and cargo insurance
   • trade documentation
   • use of trade service providers
7. Risk factors
   • market risks
   • credit and currency risks
   • political and other risks
8. Implementation plan
   • key activities
   • evaluation criteria and process
9. Financial plan
   • revenues or sources of funding
   • operating budget
   • cost of sales
   • marketing and promotion costs
   • other expenses or expenditures

 

STEP 4: IDENTIFY YOUR TARGET MARKET

 

 

 Step 4:  Identify your target market

 

·        Understanding international market research

After the export plan, market research can be the most important contributor to your international success. There are more than 190 countries in the world and you want to target the right one(s) for your product or service.

To do this, you need information that will provide a clear picture of the political, economic and cultural factors affecting your operations in a given market. Market research is the key to understanding your opportunities. It can confirm that an opportunity actually exists, provide you with insight into how a new market can be developed, or help you discover what's important to your potential customers.

The three basic stages of international market research, while detailed, aren't particularly complex:

1. Screen potential markets

Collect statistics that show your sector’s product or service exports to various countries.

Identify five to 10 large and fast-growing markets for your product or service. Look at their performance over the past three to five years. Has market growth been consistent year over year? Did import growth occur even during periods of economic slowdown? If not, did growth resume with economic recovery?

Apply the same research questions to select smaller emerging markets that may not have as many competitors as an established market.

Target three to five of the most promising markets for further study.

2. Assess target markets

Examine trends that could influence demand for your product or service. Calculate the overall consumption of products or services like yours and identify the amount imported.

Study the competition, both domestic and international. Look at each competitor's Local   and foreign market shares.

For marketing purposes, become familiar with channels of distribution, cultural differences and business practices.

Identify any foreign barriers (tariff or non-tariff) for the product or service being imported into the country, as well as any Local   barriers (such as export controls) affecting exports to the country.

Research potential federal, provincial or foreign government incentives to help you promote the export of your product or service.

3. Draw conclusions

After analyzing the data, you may decide that you should restrict your marketing efforts to a few countries. In general, one or two countries are usually enough to start with.

Types of market research..

There are many ways to study a market, but the more detailed and objective your research, the better.

There are two main types of market research: secondary and primary.

1 Secondary research

Secondary research can be done in Domestic Market, using data sources including periodicals, studies, market reports, books, surveys and statistical analyses. Many of these are available online, as well as from chambers of commerce, economic development organizations, industry and trade associations, and Local   companies that are already doing business in your target market.

2 Primary research

After completing your secondary research, collect market information through direct contact with potential customers or other sources. Primary research almost always demands direct, personal involvement through on-site interviews and consultations.

State your company's objectives at the outset and present your questions clearly. For example:

• Company description: give a brief description of your company, its history, industries and markets served, professional affiliations (if any) and your product or service.
• Objectives: briefly list or describe one or more objectives for your planned export product or service, based on your secondary market research.
• Product or service: clearly describe the product or service you want to export.
• Questions: base your questions on your secondary research and be as specific as possible. You'll get a better response if it's clear that you've carefully researched your subject.

Profiling potential markets

Here's a checklist to help you summarize what you can learn about a possible market. After you've created two or three profiles, compare them to see which market(s) present the best overall opportunities.

1. Market type. Is it:
   • a fully developed market (e.g. Germany, the U.S.)?
   • a developing market with rapid growth (e.g. China, India)?
   • a developing market with marginal growth (e.g. many African nations)?
2. Political highlights. Describe:
   • the government
   • who's who
   • major political themes
   • relations with Domestic Market, including trade agreements
3. Economic highlights. Describe:
   • the domestic economy
   • economic trends
   • general imports and exports
   • imports and exports to and from originating market.
4. Business information. Specify:
   • the currency
   • the language(s)
   • business practices and regulations
   • differences in legal framework
   • government procurement practices
   • work relationships
   • office hours
5. Partnering options. List:
   • Domestic firms doing business in the target market
   • major firms from the target market doing business in domestic market.
   • options for local partners
6. Support for market-entry strategies. Identify:
   • industry associations
   • trade events in the target market
   • other networking options
   • trade media
   • research facilities
   • market research sources
7. Cultural considerations. Specify:
   • greetings and forms of address
   • do's and don'ts
   • cultural differences
   • attitudes toward Local s
   • general tips
8. Travel tips. Describe:
   • visa, work permits or other entry requirements
   • business support services
   • suitable hotels
   • telecommunications standards
   • tipping customs
   • electrical voltage
   • religious or statutory holidays

 

 

 

 

STEP 5: DEVELOP YOUR EXPORT MARKETING STRATEGY

 

 

Step 5: Develop your export marketing strategy 

 

·       Understanding export marketing plans

Long before you fill your first order, you'll need an export marketing plan.

You’ve already examined the elements required to produce an effective export plan as above. Now, you’re ready to tackle the specific marketing components of your export plan. While you're developing it, remember not to confuse marketing with advertising, sales or promotion. Marketing is strategy. The other three are the tools your strategy will use to reach your target audience.

A good marketing plan should be built around your research and will answer the following questions:

• What are the characteristics of your target market?
• How do your competitors approach the market?
• What is the best promotional strategy to use?
• How should you adapt your existing marketing materials, or even your product or service?

The many Ps of international marketing..

Commonly referred to as the "marketing mix," the four Ps of marketing are:

• Product. What is your product or service and how must it be adapted to the market?
• Price. What pricing strategy will you use?
• Promotion. How will you make your customers aware of your product or service?
• Place. How and where will you deliver or distribute your product or service?

International trade is more complicated. Add the following nine Ps to the list to produce the 13 Ps of International Marketing:

• Payment. How complex are international transactions?
• Personnel. Does your staff have the necessary skills?
• Planning. Have you planned your business, market, account and sales calls?
• Paperwork. Have you completed all the required documentation?
• Practices. Have you considered differences in cultural and business practices?
• Partnerships. Have you selected a partner to create a stronger market presence?
• Policies. What are your current and planned policies?
• Positioning. How will you be perceived in the market?
• Protection. Have you assessed the risks and taken steps to protect your company and its intellectual property?

Building your export marketing plan..

Your marketing plan is a work in progress that you will have to modify continuously. As you develop it, consider the following questions:

• What is the nature of your industry?
• Who are your target customers?
• Where are they located?
• What is your company's marketing strategy?
• What products or services do you plan to market?
• How will you price your products and services?
• Which segment of the market will you focus on?
• Does your marketing material accurately convey the quality and value of your products or services and the professionalism of your company?

Take sufficient time to collect background information on the consumer demand, competitive landscape, local import laws, customs requirements and other important factors in the target market.

As for content, a good marketing plan is closely related to your export plan and should contain the following sections:

• Executive summary, which describes the purpose of your marketing plan and how marketing activities will be used to support your export strategy.
• Product or service analysis, which gives a clear description of your export product or service, its unique selling points and how marketable it might be in the target market.
• Market analysis, which describes your target market's key economic, social, political and cultural characteristics, and provides a profile of your target customer, including buying patterns and factors influencing purchasing decisions.
• Competitive analysis, used to decide pricing and marketing strategies of your product or service. Competitive analysis should be used to help tailor your unique selling proposition (USP) to target markets.
• Goals, which describe how you will achieve your objectives in terms of market share, position, revenue and profit expectations.
• Marketing strategy, which includes pricing recommendations, mode(s) of delivery and proposed promotional methods.
• Implementation, which identifies the activities and target dates you'll undertake to carry out your marketing plan, including a detailed marketing budget.
• Evaluation, which describes how you will evaluate your marketing plan at various stages to determine if your goals are being achieved and what modifications may be needed.
• Summary, which describes, in a half page, how your marketing plan goals fit into your overall export plan.

Setting prices…

Strategic pricing is one of the most important factors in achieving financial success. Part of setting a realistic export price, and therefore an appropriate profit margin, is to examine production, delivery and distribution costs, competition and market demand. You should also understand the variables of your target market and other export-related expenses, such as:

• currency exchange rates and fluctuations
• market research
• customer research and credit checks
• receivables/risk insurance
• business travel
• international postage, cable and telephone rates
• translation
• commissions, training charges and other costs involving foreign representatives
• consultants and freight forwarders
• product or service modification and special packaging

Market Demand….

As in domestic markets, demand in foreign markets can affect your price. In other words, what will the market bear?

For most consumer goods, per capita income is a fairly good way to gauge a market's ability to pay. Per capita income for most industrialized nations is similar to that of Canada or the United States, while it is much lower for much of the rest of the world. Often, simplifying products or services to reduce the selling price may be the best option in less affluent markets.

Remember that currency valuations affect affordability. Try to accommodate currency fluctuations and the comparative value of the Local   dollar when setting your price.

Competition…

In domestic markets, few companies can set prices without considering their competitors' pricing. This is also true in exporting.

If you have many competitors in a foreign market, you may have to match or undercut the going price to win a share of the market. However, if your product or service is unique, new or demonstrates superior quality, you may be able to set a higher price.

Pricing strategies…

How will each market affect your pricing? Include product modifications, shipping and insurance in your calculations. And, as mentioned above, you can't ignore your competitors' pricing.

Refer to your market objectives when setting your price. For example, are you trying to penetrate a new market? Looking for long-term market growth? Or pursuing an outlet for surplus production?

You may have to tailor your marketing and pricing objectives to certain markets (e.g. developing nations). There are several pricing strategies available:

• Static pricing – charging the same price to all customers
• Flexible pricing – adjusting prices for different types of customers
• Full cost-based pricing – covering both fixed and variable costs of the export sale
• Marginal cost – covering only the variable costs of production and exporting, while you pay overhead and other fixed costs out of domestic sales
• Penetration pricing – keeping your price low to attract more customers, discourage competitors and gain quick market share
• Price skimming – pricing the product high to make optimum profit among high-end consumers while there is little competition

After you've determined your costs and chosen your pricing strategy, establish a competitive price for your product or service that gives you an acceptable profit margin.

Pricing checklist…

Use this handy checklist to track your costs and develop your pricing strategy.

Marketing and promotion

• agent/distributor fees
• advertising, media relations
• travel
• communications
• materials (brochures, business cards)
• trade fairs and exhibitions

Production

• unit cost of manufacture
• product or service modification
• regulatory approval
• increased R&D costs
• labelling/packaging, including translation
• packing/marking

Documentation

• inspection
• certification
• document preparation
• cargo insurance
• freight forwarder's fees

Transportation

• lading and related charges
• carriage
• warehousing and storage
• insurance

Customs

• customs and other duties at port of entry
• customs brokerage fees

Financing

• costs of financing
• interest charges
• exchange rate fluctuations
• export credit insurance

Promotion….Get your sales brochures, website and marketing proposition translated right away into the local language. Make sure to use local translators to ensure intercultural effectiveness when communicating through the use of text and/or imagery.

The outcome of your promotional strategies can make or break your export venture.

Promotion refers to any or all of the communications tools listed below that you may use to convince people to buy your product or service.

Advertising. Carefully select the media that have a wide circulation within your target audience. If few people have televisions, is radio a better bet? Or print? Or online advertising? Or social media? Word of mouth promotion (testimonials, samples, etc.)?

Promotional materials. You may need to remove elements that are inappropriate, offensive or meaningless in the target market. Then have a commercial writer adapt these materials into the native language, and have it double-checked by a native of the country.

Direct mail. A targeted direct mail campaign can be very effective if you do your research and gain experience in your target market.

Media. Prepare a media kit that includes a profile of your company, new products/services, newsworthy activities and any articles published about your company.

Personal visits. Many cultures value personal contact as the best means of promotion and building business relationships.

Trade shows. Attending or participating in international trade shows allows you to promote your business, check out the competition and do market research.

Internet. Be prepared to commit time and money to keeping your website up-to-date, useful to customers and maintained in other languages.

Social media. Consider the most appropriate online platform for your audience and market. What is your demographic and where do they congregate, communicate and share information with business peers? Is it Facebook, LinkedIn or Twitter? Or are there local social media platforms relevant to the market (e.g. WhatsApp / Linkedin in India WeChat in China or XING in Germany)?

Marketing tools …

Developing the right marketing tools is crucial to the success of your business. Below is a list of tools and tips to get you started.

Business cards

• Professionally designed and high quality
• Easy to read
• In the appropriate language(s)
• Consistent throughout your firm
• Distinctive and informative
• Up-to-date and complete, including area codes, country, telephone and fax numbers, postal code, email and website addresses

Brochures

• Creative and appealing
• Informative and easy to read, highlighting your uniqueness
• Professionally designed and printed
• Visually pleasing

Customer testimonials

• Demonstrate that your company is highly recommended
• Represent your best customers
• Feature quotes from top executives
• Include in your brochure and on your website

News articles

• Clearly state that your company is a recognized leader
• Quote in your brochure
• Reproduce on your letterhead
• Display in your office
• Send to potential clients

Videos

• Sophisticated and interesting
• Professionally translated and produced
• Oriented to the quality and benefits of your product or service
• Clear and concise
• Make conveniently available on YouTube, Twitter and other social media channels

Website

• Comprehensive and informative
• Professionally designed
• Easy to navigate
• Visually pleasing
• Up to date and reliable
• Enabled to submit online enquiries (via forms or email)
• Capable of allowing online purchasing (if appropriate)

 Social media

• Set up accounts in social media such as Facebook, LinkedIn, Twitter, those from consumer organizations and online review sites
• Be aware of the social media that are used in your targeted market
• Be aware of the functionality in these social media, such as the Share button
• Understand how your product shows in search engines on the Internet
• Set up social media analytics so you are aware of your audience, their referrals of your company, as well as associated commentary
• Be prepared to respond in a positive, proactive fashion to address customer concerns or demonstrate appreciation of compliments.

STEP 6: ENTER YOUR TARGET MARKET

 

 

 Step 6:  Enter your target market

 

·       Understanding entry strategies

Developing a market-entry strategy simply means finding the best methods of delivering and distributing your goods. Or, if you're exporting services, it means setting up ways to obtain and manage contracts in the foreign country.

• help you finesse your market-entry strategy
• connect you to the trade commissioners and global contacts you need—in more than 160 cities around the world—to help you with the challenges of market entry.

·         Refining your entry strategy

You've chosen the most promising markets for your product or service. Now, based on your market research, you must decide which entry method best suits your needs.

Some factors to consider:

• How is business conducted in your target market and industry sector?
• What are your company's export strengths and weaknesses?
• What is your company's financial capacity?
• What product or service are you planning to export?
• How much service and after-sales support will your customers require?
• What trade agreements or barriers apply to your target market?

·         Methods of market entry

The traditional means of market entry fall into four broad categories: direct exports, indirect exports, partnerships and acquisitions/investments. We'll examine each of these and then look at the question of intermediaries: agents, distributors and other go-betweens.

·         Direct exports

For products, you market and sell directly to the client. For services, you negotiate, contract and work directly with the client.

Advantages of Direct exporting

• A higher return on your investment than selling through an agent or distributor
• Allows you to set lower prices and be more competitive
• Close contact with your customers

Disadvantages of Direct exporting

• You don't have the services of a foreign intermediary
• Customers or clients may take longer to get to know you

·         Indirect exports

For products, you market and sell to an intermediary such as a foreign distributor. You can also retain a foreign agent or representative who does not directly purchase the goods.

For services, you contract with an intermediary who then negotiates and contracts on your behalf.

For many new exporters, an intermediary may be the best way to enter a market.

Consider short-term trial contracts to test-run the arrangement and ensure it will do what you are seeking.

·         Partnerships

You might find it advantageous to partner with a local company whose strategic position complements or enhances your own. A well-structured partnership can benefit both parties in the following ways:

• Your partner can complement your capabilities and provide the local expertise, insights and contacts.
• Each company focuses on what it does and knows best.
• Both partners share the risk.
• You can pool ideas and resources to help keep pace with change.
• You can approach several markets simultaneously.
• Your partner may provide technology, capital or market access that you might not be able to afford on your own.
• Partnerships may help resolve problems related to professional accreditation, movement of personnel across borders and tax and legal status.
• In a highly competitive global market, combining the technical and financial strengths of two businesses can make both more competitive.

You develop a partnership strategy in three steps:

1. Decide whether or not a partnership can work for you. If your needs can be satisfied in-house, a partner may not be necessary. If you need financing, you may be better off looking for investors. But if you require special expertise or a local market presence, then a partnership might work very well.
2. Define the form, structure and objectives that a partnership must have to suit your needs. To do this, evaluate your company's goals, its ability to achieve them and where you need help in doing so. Then identify how the partnership must work in order to fill in those gaps.
3. Find a partner who meets these criteria and who will be a good "fit" with your company. It is very important to select a partner that has the values and approach to businesses that match your own for a partnership to be successful.

There are several different forms of partnerships. The primary options are:

• Licensing – a license is the granting of rights to another business so that it can legally use your proprietary technology and/or intellectual property. This usually does not involve granting all the rights to the property.
   
• Franchising – more than licensing, the franchisee is given the right to use a set of manufacturing or service delivery processes, along with established business systems or trademarks, whose use is controlled by a licensing agreement.
   
• Cross-licensing – each firm licenses products or services to the other for sales purposes.
   
• Cross-manufacturing – a type of cross-licensing in which companies agree to manufacture each other's products.
   
• Co-marketing – carried out on the basis of a fee or a percentage of sales to take advantage of existing distribution networks and domestic markets.
   
• Co-production – the joint production of goods, enabling your business to use its skills and resources to provide cheaper manufacturing.
   
• Joint venture – each business contributes capital to a newly created corporation that they operate together, or the Local   and the local business enter into a general partnership agreement and operate the joint venture as a partnership.

Using the expertise of lawyers, accountants, bankers and other professionals is vitally important when setting up any type of partnership. All parties must be absolutely clear on who holds which rights and which responsibilities.

Plan your alliances carefully and pay attention to the qualifications of a foreign agent or distributor. The experts can help vet your potential partner. Talk to a trade commissioner to request a bona fide check to qualify the contact.

Acquisitions and investments..

A partnership isn't the only way to tap into the resources of a foreign company. Acquiring a firm in your target market, or making a substantial investment into one, can achieve the same results.

Through acquisitions and investments, you immediately gain access to the local market, as well as patents and other intellectual property, resource availability, access to capital, specialist expertise, proprietary technology and product differentiation.

You may also enjoy lower operating and production costs in your foreign operation than at home.

Selling to foreign governments

Foreign governments can present a rich source of contracts for exporters. The United States government alone procures more than $500 billion in goods annually.

 

 

Selling to multinational corporations..

To sell goods or services to foreign corporations, it is essential to conduct research to understand their supply chain sourcing practices. Incorporating the mechanism by which you access the supply chain should be considered in developing your market-entry strategy. Corporations have different sourcing needs, practices, guidelines or entry points to their supply chain. Some approach their supply chain management in terms of Tier 1 and Tier 2 suppliers, for example, with Tier 1 suppliers selling directly to the corporation and with Tier 2 selling to Tier 1. Also, some require their potential suppliers to register their business on an online portal for consideration. Many multinational corporations also have corporate supplier diversity initiatives to source from women, minorities and other groups that are traditionally underrepresented in supply chains. For these initiatives, the key contacts and process for entering the supply chain are typically different (i.e. potential requirement for certification). This, however, does not preclude designated groups from accessing other parts of the supply chain; it is simply a unique entry point that may provide them with a competitive advantage.

You may be wondering where to start in understanding the complexities of accessing corporate supply chains. Information on websites, talking to corporate representatives in Local   subsidiaries, or meeting with representatives during business fairs or networking events can shed light on sourcing needs and practices. Trade Commissioner Service can also assist with providing business intelligence and qualified contacts.

Free trade agreements: understanding the role of trade policy in reaching your export and investment goals..

The global trading environment has become increasingly complex. The World Trade Organization (WTO) has provided an effective foundation for establishing and enforcing global trade and investment rules. In addition to pursuing their interests in WTO forums, WTO member countries have increasingly sought out other tools to generate opportunities and ensure fair treatment for their businesses, as well as create advantages relative to competitors.

There has been a proliferation of trade and investment agreements:

• on a bilateral or regional basis, that is, outside the WTO:
• free trade agreements (FTAs)
• foreign investment promotion and protection agreements (FIPAs);
• air transport agreements (ATAs); and
• sector-specific initiatives within the WTO, including:
• WTO Agreement on Trade Facilitation (TFA);
• WTO Agreement on Government Procurement (GPA);
• Trade in Services Agreement (TISA);
• WTO Information Technology Agreement and its recent expansion (ITA);
• WTO Environmental Goods Agreement (EGA), among others.

So what is the trick to finding your way through all these agreements?

• Stay focused on what you sell and where you want to sell it.
• Identify which barriers and rules could apply to your specific goods or services in these markets.

There are three important trends to note regarding tariffs and global trade:

1. Overall, global tariffs have decreased as a result of unilateral tariff reductions as well as WTO agreements. Bilateral and regional trade agreements also provide for the elimination or reduction of tariffs, but only on a preferential basis (e.g. only for goods originating from each party to the agreement).
2. Because tariffs have generally decreased, there has been an increased focus on non-tariff measures that can affect trade (known as non-tariff barriers). These measures are permitted to meet legitimate public policy objectives, but governments need to ensure that they are the least trade-restrictive option necessary to achieve those objectives. The goal is for regulations to be in place to protect the public, while at the same time allowing trade to flow.
3. Modern FTAs increasingly address not only tariffs, but also non-tariff barriers that are restricting or distorting trade.

• All countries, including India, employ regulations and other measures to meet legitimate public policy objectives, such as ensuring the safety of our food supply or preventing the spread of pests or diseases.
• Regulations are also necessary to ensure that products are not harmful to consumers, such as specifications on an infant’s crib.
• However, these measures should not be used to unnecessarily restrict trade or discriminate against foreign products. 

Evaluating the use of intermediaries..

Before you jump on a plane and start knocking on doors, think about using an intermediary. The right one can save you an enormous amount of time and money. There are several types: agents, representatives, trading houses and distributors.

1.  Agents and representatives

Agents and representatives aren't exactly the same. An agent secures orders from foreign customers in exchange for a commission. A representative specializes in sales within a specific geographic area.

Both types of intermediaries may be authorized and commissioned to enter into contractual sales agreements with foreign customers on your behalf. This is usually less costly than setting up your own direct sales operation. Such an arrangement also gives you control over the price of your product or service—an important advantage.

Do your due diligence on a potential agent or representative to make sure they will serve your interests. For example, to ensure that they aren't pushing for an exclusive relationship just to keep your product or service out of the market. Consider negotiating a trial period.

Good foreign agents or representatives can research markets, advise on financing and transportation options, clear goods through customs, provide access to potential customers, make collections and supply information on local business practices, laws and cultural traditions.

2.  Trading houses

Trading houses are domestic intermediaries that market your goods or services abroad. A full-service trading house handles a great many aspects of exporting, such as market research, transportation, appointing distributors or agents, exhibiting at trade fairs and preparing advertising and documentation.

Some trading houses act as "principals" or "export merchants," buying products outright from Canadian suppliers, while others act as "agents," selling on commission.

If you prefer not to sell directly to foreign customers or worry about finding a foreign intermediary, you might consider using a trading house.

3.  Foreign distributors

Unlike agents, distributors actually purchase your product or service and resell it to local customers. Often, they set the selling price, provide buyer financing and look after warranty and service needs.

A bonus is that the distributor can usually provide after-sales service in the foreign market. On the other hand, using a foreign distributor may reduce your profit margins and result in a loss of control over your product and/or price.

Selecting the right intermediary…

You can obtain information about potential intermediaries from the Canadian Trade Commissioner Service in Canada and abroad, as well as from Canadian and foreign trade associations, business councils and banks.

Before you meet in person, talk to several firms and then carry out your due diligence to make certain they're reputable. You can also protect yourself by entering into a limited term trial agreement.

To evaluate a prospective intermediary in detail, use the questionnaire below.

• Size of sales force
• How many field sales personnel does the agent or distributor have?
• What are its short- and long-range expansion plans, if any?
• Will it have to expand to accommodate your needs properly? If yes, would it do so?
• Sales record
• Has its sales growth been consistent over the past five years? If not, why not?
• What are its sales objectives for the next year? How were they determined?
• Territorial analysis
• What territory does it now cover? Is it consistent with the coverage you're looking for? Is it willing and able to expand?
• Does it have any branch offices in the territory you wish to cover?
• Are its branch offices located where your sales prospects are greatest?
• Are there plans to open additional offices?
• Product or service mix
• How many product or service lines does it represent?
• Are they compatible with yours?
• Does it represent any other Canadian firms?
• Would there be any conflict of interest?
• Would it be willing to alter its present product or service mix to accommodate yours, if necessary?
• What would be the minimum sales volume needed to justify handling your lines?
• Do its sales projections reflect this minimum figure?
• From what you know of the territory and the prospective agent or distributor, is its projection realistic?
• Facilities and equipment
• Does it have adequate warehouse facilities?
• What is its method of stock control?
• Are their computers compatible with yours?
• What communications facilities does it have?
• If servicing is required, is it equipped and qualified to do so?
• If new equipment and/or training are required, to what extent will you have to share these additional costs?
• If necessary, would it be willing to inventory repair parts and replacement items?
• Marketing policies
• How is its sales staff compensated?
• Does it have special incentive or motivation programs?
• Does it use product managers to coordinate sales efforts for specific lines?
• How does it monitor sales performance?
• How does it train its sales staff?
• Would it be willing to share expenses for sales personnel to attend seminars?
• Customer profile
• What types of customers is it currently in contact with?
• Are its interests compatible with your lines?
• Who are its key accounts?
• What percentage of total gross receipts do these accounts represent?
• Principals represented
• How many principals does it currently represent?
• Would you be its primary supplier?
• If not, what percentage of its total business would you represent? How does this percentage compare with other suppliers?
• Promotional thrust
• Can it help you research market information?
• What types of media does it use, if any, to promote sales?
• How much of its budget is allocated to advertising? How is it distributed?
• Would you be expected to share promotional costs? If so, how will this amount be determined?
• If it uses direct mail, how many prospects are on its mailing list?
• What printed materials are used to describe its company and the lines it represents?
• If necessary, can it translate your advertising copy?
• Does it have its own website?

 

STEP 7: DELIVER THE GOODS

 

 

 Step 7:  Deliver the goods

 

v International trade regulations

You'll have to familiarize yourself with your target market's import regulations, product standards and licensing requirements. If you're a service exporter, you may have to acquire professional or other accreditation from the country where you'll be operating.

v Trade and international security

The World Customs Organization (WCO) has developed an initiative to help protect the international supply chain against terrorist exploitation: the SAFE Framework. It aims to establish and integrate standards for supply chain security and management, strengthen cooperation among customs administrations and promote the seamless movement of goods through well-secured international supply chains.

v Export declarationsv Export permitsv Delivering products

There are four ways of getting your product to your customer's doorstep: by truck, rail, air or ocean. Choosing the right shipping method, or combination of methods, is vital to export success—you want the product to get there on time and at the lowest cost.

v Shipment methods

• Truck

Trucking is popular for shipments within North America, but service declines once you go beyond the major industrialized countries.

 

• Rail

Rail is widely used when shipping to the United States or to and from seaports.

• Air

Air is more expensive than surface or sea transport, but the higher costs may be offset by faster delivery, lower insurance, cheaper warehousing, exotic markets and better inventory control.

• Ocean

Shipping large items, bulk commodities and goods to offshore markets that do not require fast delivery is more economical by sea.

• Using Incoterms

To provide a common terminology for international shipping and minimize misunderstandings, the International Chamber of Commerce has developed a set of international commerce terms known as Incoterms. Familiarize yourself with these terms so that you know you are speaking the same language as your buyer or intermediary.

• Freight forwarders and brokers

You'll need to deal with a lot of documents when delivering products to foreign countries. You don't normally do it all yourself, however—use freight forwarders and customs brokers to help reduce the workload abroad.

Freight forwarders will help you improve your delivery times and customer service. These agencies will negotiate rates for you with shipping lines, airlines, trucking companies, customs brokers and insurance firms. They can handle all of your logistical requirements, or just negotiate your shipping rate; it's up to you.

• Packing your goods

Proper packing can also reduce the risk of theft during transit.

Assume your products will have a bumpy ride, particularly if you're shipping overseas.

Pack them to survive rough-and-ready cargo handlers and poor roads.

During transit, handling and storage, your goods may be exposed to bad weather and extreme temperatures. If they need special temperature controls or other protective measures, be sure they get them.

The type of shipping may determine the kind of packing you should use. For example, if the goods are carried by ship, you need to know whether they will be placed above or below deck.

• Labels and marks

Labeling regulations vary widely from nation to nation, so verify the required labels before you ship.

Your product may not clear customs if labels don't conform to local requirements such as product weight or electrical standards.

Marking distinguishes your goods from those of other shippers. Marks shown on the shipping container must agree with those on the bill of lading or other shipping documents; they may include some or all of the following:

• buyer's name or some other form of agreed upon identification
• point/port of entry into the importing country
• gross and net weight of the product in kilograms and pounds
• identification of the country of origin, e.g. "made in Canada"
• number of packages
• appropriate warnings or cautionary markings

Provide a packing list that identifies and itemizes the contents of each container. Each container must also contain a packing list itemizing its contents.

• Transportation insurance

International carriers assume only limited liability and make the seller responsible for the goods up to the point of delivery to the foreign buyer. For this reason, you must have international transportation insurance.

Marine transportation insurance protects both ocean- and air-bound cargo. It also covers connecting land transportation. There are three main types of marine transportation insurance:

1. Free of particular average(FPA) insurance is the narrowest type of coverage. Total losses are covered, as well as partial losses at sea if the vessel sinks, burns or is stranded.
2. With average(WA) offers greater protection from partial losses at sea.
3. All riskis the most comprehensive insurance, protecting against all physical loss or damage from external causes. Once the documents transferring title are delivered to the foreign buyer, you are no longer liable for the goods.

• Export documentation

Export documentation identifies the goods and the terms of sale. It also provides title to the goods, evidence of insurance coverage and certifies a certain quality or standard. Several documents are required for overseas shipping and fall into two categories:

• Shipping documents

Goods shipped by sea are typically insured for 110% of their value, to compensate for the extra costs involved in replacing lost goods.

Shipping documents are prepared by you or your freight forwarder. They allow the shipment to pass through customs, be loaded onto a carrier and be transported to the destination. Key shipping documents include:

• commercial invoice
• special packing or marking list
• certificate of origin
• certificate of insurance
• bill of lading/air waybill*

A bill of lading is used for land and ocean freight, while an air waybill is used for air freight. Note that the ocean bill of lading can be a negotiable instrument that passes title to the goods. Other types of bills pass title to the consignee as soon as the goods are delivered.

• Collection documents

The most important collection document is probably the commercial invoice, which describes the goods in detail and lists the amount owing by the foreign buyer. This form is also used for customs records and must include:

• the date of issue
• the names and addresses of the buyer and seller
• the contract or invoice number
• a description of the goods and the unit price including the total weight and number of packages
• shipping marks and numbers
• the terms of delivery and payment

Other collection documents include:

• certificates of origin
• certificates of inspection, used to ensure that goods are free from defect
• import and export licenses, as required (e.g. a NAFTA certificate of origin)

• Duty deferral and duty relief

If you're importing goods in order to re-export them, you might be able to use the Duties Deferral Program, administered by the concerned government..

There are three components to the Duties Deferral Program:

1. The Duties Deferral Program enables eligible companies to import goods without having to pay customs duties, as long as they export the goods after importing them..
2. With the Drawback Program, duty is refunded on previously imported goods when these goods have been exported..
3. Customs Bonded Warehousesare regulated by the government  A bonded warehouse is a facility, operated by the private sector, in which you may store goods without having to pay duties and taxes. This could be beneficial if you're planning on importing goods for the purpose of exporting them..

• Delivering services: how it's different

The challenges of delivering services to a foreign market are just as complex as those of delivering products. The challenges are different, however, and often depend on factors in your target market, such as:

• extent and reliability of telecommunications/internet links
• existence of a reliable IT infrastructure
• frequency and convenience of air links between Canada and the market
• technological sophistication, receptivity and flexibility of customers
• potential support through official channels, government departments and international development agencies
• ability to satisfy legal regulations governing work permits or professional certification
• potential to enter into a local partnership

You'll most likely be delivering your services by one, or a combination of, the following methods:

• Provider visits client. This is the most common export activity and involves meeting the client repeatedly, often at the site.
• Client visits provider. In industries such as tourism, thousands of Canadians earn income by meeting the needs of foreign visitors.
• Establishment in the market. Large legal and accounting firms, as well as major banks, are most likely to use this method to establish their presence abroad.
• Electronic delivery. E-business is increasingly more important for conducting global business.

STEP 8: IDENTIFY YOUR EXPORT FINANCING REQUIREMENTS

 

 

 Step 8: Identify your export financing requirements

 

·       Understanding the risks of export financing…

If by chance your first international order is far larger than you expected, how are you going to finance the expansion you need? Payments can take months, and buyers may default or go out of business.

Self-financing a growing export business can be very risky, especially for new or smaller exporters. Fortunately, there are options that can minimize your risks and even give you a competitive edge.

Be prepared to meet increased demand from a successful foreign sale. Ask for advanced payments to cover the cost of increased demand and reduce risk.

Because of this, your export drive will need a reliable cash flow. You will also need a comprehensive financial plan for the export venture. If you don't have one, it will be very difficult to arrange the financing your venture may need.

The most important objective of your plan, however, is ensuring that your company always has sufficient cash or operating lines of credit. To do this, the plan must include:

• a cash budget that highlights your financing requirements over the next two or three years, so you can determine the timing and amount of your cash expenditures.
• a capital budget, which is a longer-term overview of the funds you'll need to complete your export project, that provides an operating plan against which you can measure actual expenditures and revenues and tells you when the project will start generating positive cash flows.

You'll need to know the timing of both cash inflows and outflows. Cash flow planning can help you defend against such problems as:

• exchange rate fluctuations
• transmission delays
• exchange controls
• political events
• slow collection of accounts receivable

Accurate details are important to the overall effectiveness of your export plan.

International trade payments usually take longer to arrive than domestic ones, so allow for this in your cash flow planning.

Export Myth: Exporting is too risky…

Exporting doesn't need to be riskier than doing business at home—it's just different. Letters of credit, export credit insurance and reference checks through banks and international credit reporting agencies can help protect your business. Trade laws also tend to be straightforward and legal advice about them is easily available.

 

Methods of collecting payment…

There are several ways for customers to pay an invoice in international trade: cash in advance, letters of credit, documentary credit, documentary collection and open account. We'll examine them in order of increasing risk to your company.

ü Cash in advance

Cash in advance is your most secure option because it eliminates all risk of non-payment and adds to your working capital. Unfortunately, few foreign buyers are willing to pay cash in advance, although some will pay a portion when goods or services are specially ordered. For services, a retainer might be paid upon signing a contract, after which progress payments are matched to deliverables.

ü  Letters of credit

Letters of credit (L/Cs) name a bank to receive and check shipping documents and to guarantee payment. With an L/C, the costs of financing a transaction may be borne by either the exporter or importer.  Both sight- and term-payment provisions can be arranged.

Letters of credit can be confirmed or unconfirmed. For example, a Canadian bank can confirm an L/C issued by a foreign bank, thus guaranteeing that the Canadian bank will pay the exporter even if the foreign bank doesn't. This kind of L/C is much better for you than the unconfirmed one.

L/Cs can also be irrevocable, which means they can't be cancelled or amended without your approval. The most secure L/C is one that is both confirmed and irrevocable.

In practice, an L/C works like this:

• The customer arranges an L/C with his or her bank.
• The customer's bank prepares an irrevocable L/C. This includes specifications as to how you'll deliver the goods.
• The customer's bank sends the L/C to your Canadian bank for confirmation.
• Your bank issues a letter of confirmation and sends the letter and the L/C to you.
• You check the L/C very carefully. In particular, you ensure that it agrees in all respects with the terms of your contract with the customer. If the L/C's terms and those of the contract are different, and if you don't meet the L/C's terms because you overlooked the discrepancy, the L/C may be deemed invalid and you might not get paid.
• You arrange shipping and delivery with your freight forwarder. Once the goods are loaded, you get the appropriate shipping documents from the forwarder; you use these to prove that you have fully complied with the terms of the contract.
• You take these documents to your bank, which sends them to the customer's bank for review. The customer's bank sends them to the customer and the customer obtains the documents that will allow the goods to be claimed.
• The customer's bank pays your bank, which then pays you.

ü Documentary credit

Exporters can also use sight and term documentary credits:

• A documentary credit calling for a sight draft means that the exporter is entitled to receive payment on sight, i.e. upon presentation of the draft to the bank.
• A term documentary credit, in contrast, may allow for payments to be made over terms of 30, 60 or 90 days, or at some other specified future date.

ü Open account

Open accounts require you to ship goods and pass title to the customer before payment is made. In these cases, you're fully exposed to any credit risk associated with the customer until payment is received. In addition, because open account terms usually allow 30, 60 or 90 days (or even longer) before payment is due, you are, in fact, financing the transaction for your buyer.

Your exporting checklist…

Here's a checklist you can use to track the general progress of your exporting venture, or simply to get an overview of the entire process.

ü Planning and preparing

Whether you export goods or services, many of the following preparatory steps will be similar:

• Research the market using techniques and resources described in this guide.
• Ask the TCS in your target market for help in assessing your market prospects and to provide you with a list of qualified contacts.
• Visit cities in the region and talk to potential buyers and intermediaries.
• Request a face-to-face briefing from an officer of the TCS in the region to discuss the latest developments in your target market.
• Develop a network of contacts and potential partners.
• Find out who are your competitors and potential allies, and who are the key importers, distributors and agents for your product or service.
• Develop a profile of the ideal agents and distributors; then, make a short list of the ones whose skills and experience best complement your export objectives.
• If exporting a service, consider the possibility of finding a local partner to represent your interests.
• Put together a promotional package describing your company and its products or services.
• Attend a regional trade fair to continue your market research, do preliminary promotion and establish contacts with potential buyers and associates.
• Make arrangements with key export service providers such as freight forwarders, trading houses and customs brokers.

ü  Making the deal

The following summarizes the way you arrange a deal and ship goods to your buyers. If you're a service exporter, you won't have to deal with documentation, freight forwarding, shipping or customs clearance.

• Verify the prospect's credit rating.
• Contact other exporters who have had dealings with the prospect.
• Ask the TCS in your target market to provide you with information on the prospect.
• Verify the prospect's business profile.

ü Finalize the sale

Finalization normally begins when your sales department receives a purchase order from the buyer. You should respond with an acknowledgment of the order or a sales confirmation. Be sure to confirm the following details:

• quantity
• payment terms
• shipping/trade terms
• transportation method
• price

ü Prepare a letter of credit

The process for a letter of credit (L/C) is:

• The buyer issues an instruction to his or her own bank.
• The buyer's bank sends the L/C to your bank.
• Your bank sends the L/C to you.

Review the L/C carefully with your freight forwarder, banker and legal counsel. It must be consistent with your sales agreement, and you must comply with all of its provisions. Remember that an L/C pays upon receipt of correct documents, not upon successful completion of the transaction. If a name or address is misspelled, if the shipping date is wrong or if all charges are not included, you may be unable to collect.

ü Prepare other documentation

Your shipment must be accompanied by all relevant documentation, including:

• commercial invoice
• packing slip
• shipping instructions
• certificate of origin
• standards documentation (if necessary)
• health/sanitary certificate (if necessary)

ü Freight forwarder involvement

Your freight forwarder prepares the following documents and delivers copies to you, your buyer and your commercial bank:

• customs invoice
• consular invoices (if required)
• special packing or marking list
• insurance and certificate of insurance
• bill of lading

ü Shipmentü The shipment process works like this:

• Your freight forwarder sends the goods to the carrier.
• Your customer receives all relevant documentation, allowing the shipment to clear customs.
• The goods clear customs at the destination entry point.

ü Collection

After the shipment has been sent:

• The freight forwarder presents your bank with the L/C and all accompanying documentation.
• You present your bank with a sight draft (demand for payment).
• Your bank passes the documentation to the buyer's bank with a demand for payment.
• The buyer's bank accepts the documentation and lets you know when the funds will be transferred.
• Your bank transfers funds to your account.

 

 

STEP 9 : UNDERSTAND THE LEGAL SIDE OF INTERNATIONAL TRADE

 

 

 

 Step 9 : Understand the legal side of international trade

 

v International commerce terms (Incoterms)

To provide a common terminology for international shipping, the following Incoterms have been developed under the auspices of the International Chamber of Commerce.

Cost and freight (C&F)

The exporter pays the costs and freight necessary to get the goods to the named destination. The risk of loss or damage is assumed by the buyer once the goods are loaded at the port of embarkation.

Cost and freight (C&F)

The exporter pays the costs and freight necessary to get the goods to the named destination. The risk of loss or damage is assumed by the buyer once the goods are loaded at the port of embarkation.

Cost, insurance and freight (CIF)

The exporter pays the cost of goods, cargo and insurance plus all transportation charges to the named port of destination.

Delivered at frontier

The exporter/seller's obligations are met when the goods arrive at the frontier, but before they reach the "customs border" of the importing country named in the sales contract. The expression is commonly used when goods are carried by road or rail.

Delivered duty paid

This expression puts maximum responsibility on the seller/exporter in terms of delivering the goods, assuming the risk of damage/loss and paying duty. It is at the other extreme from delivered ex works (see below), under which the seller assumes the least responsibility.

Delivered ex quay

The exporter/seller makes the goods available to the buyer on the quay or wharf at the destination named in the sales contract. There are two types of ex quaycontracts in use: ex quay duty paid, whereby the seller incurs the liability to clear the goods for import, and ex quay duties on buyer's account, whereby the buyer assumes the responsibility.

Delivered ex ship

The exporter/seller must make the goods available to the buyer on board the ship at the location stipulated in the contract. All responsibility/cost for bringing the goods up to this point falls on the seller.

Delivered ex works

This minimal obligation requires the seller only to make the goods available to the buyer at the seller's premises or factory. The seller is not responsible for loading the goods on the vehicle provided by the buyer, unless otherwise agreed. The buyer bears all responsibility for transporting the goods from the seller's place of business to their destination.

Ex works (EXW)

The price quoted applies only at the point of origin and the seller agrees to place the goods at the disposal of the buyer at the specified place on the date or within the period fixed. All other charges are for the account of the buyer.

Free alongside ship (FAS)

The seller quotes a price for the goods that includes charges for delivery of the goods alongside a vessel at the port. The seller handles the cost of unloading and wharfage; loading, ocean transportation, and insurance are left to the buyer.

Free carrier (FCA)

Recognizing the requirements of modern transport, including multi-modal transport, this principle is similar to free on board (see below), except that the exporter's obligations are met when the goods are delivered into the custody of the carrier at the named port. The risk of loss/damage is transferred to the buyer at this time, not at the ship's rail. The carrier can be any person contracted to transport the goods by road, sea, air, rail or a combination thereof.

Free of particular average (FPA)

This type of transportation insurance provides the narrowest type of coverage: total losses, and partial losses at sea if the vessel sinks, burns or is stranded, are covered.

Free on board (FOB)

The goods are placed on board the vessel by the seller at the port of shipment specified in the sales contract. The risk of loss or damage is transferred to the buyer when the goods pass the ship's rail.

Free on board airport (FOB airport)

Based on the same principles as the ordinary FOB expression, the seller's obligation is fulfilled by delivering the goods to the air carrier at the specified airport of departure, at which point the risk of loss or damage is transferred to the buyer.

Free on rail (FOR) and free on truck (FOT)

Again, the same principles apply as in the case of ordinary FOB, except that the goods are transported by rail or road.

With average (WA)

This type of transportation insurance provides protection from partial losses at sea.

v Transportation and delivery terms

The following are common terms used in packing, labelling, transporting and delivering goods to international markets. They are in addition to the above Incoterms.

Area control list

A list of countries to which any export (except humanitarian items) requires an export permit.

Bill of lading (ocean or airway)

A contract prepared by the carrier or the freight forwarder with the owner of the goods. The foreign buyer needs this document to take possession of the goods.

Certificate of origin

A document that certifies the country where the product was made (i.e. its origin). A common export document, a certificate of origin is needed when exporting to many foreign markets. It must be used for Canadian-made goods to qualify for preferential tariff treatment under the North American Free Trade Agreement.

Commercial invoice

A document prepared by the exporter or freight forwarder, and required by the foreign buyer, to prove ownership and arrange for payment to the exporter. It should provide basic information about the transaction, including description of goods, address of shipper and seller as well as delivery and payment terms. In some cases, the commercial invoice is used to assess customs duties.

Consular invoice

A statement issued by a foreign consul in the exporting nation describing the goods purchased. Some foreign governments require Canadian exporters to first obtain consular invoices from their consulate in Canada. A fee is usually charged.

Customs declaration

A document that traditionally accompanies exported goods bearing such information as the nature of the goods, their value, the consignee and their ultimate destination. Required for statistical purposes, it accompanies all controlled goods being exported under the appropriate permit.

Customs invoice

A document used to clear goods through customs in the importing country by providing documentary evidence of the value of goods. In some cases, the commercial invoice may be used for this purpose.

Dock receipt

A receipt issued by an ocean carrier to acknowledge receipt of a shipment at the carrier's dock or warehouse facilities. (See also, Warehouse receipt)

Ex factory

Used in price quotations, an expression referring to the price of goods at the exporter's loading dock.

Export control list

A list of goods and technologies that require export permits to be exported from Canada, pursuant to the Export and Import Permits Act.

 

Export permit

A legal document that is necessary for the export of goods controlled by the Government of Canada, specifically goods included on the Export Control List (see above) or goods destined for countries on the Area Control List).

Freight forwarder

A service company that handles all aspects of export shipping for a fee.

Insurance certificate

A document prepared by the exporter or freight forwarder to provide evidence that insurance against loss or damage has been obtained for the goods.

Landed cost

The cost of the exported product at the port or point of entry into the foreign market, but before the addition of foreign tariffs, taxes, local packaging/assembly costs and local distributors' margins. Product modifications made prior to shipment are included in the landed cost.

Packing list

A document prepared by the exporter showing the quantity and type of merchandise being shipped to the foreign customer.

Pro forma invoice

An invoice prepared by the exporter prior to shipping the goods, informing the buyer of the goods to be sent, their value and other key specifications.

Quotation

An offer by the exporter to sell the goods at a stated price and under certain conditions.

Warehouse receipt

A receipt identifying the commodities deposited in a recognized warehouse. A non-negotiable warehouse receipt specifies to whom the deposited goods will be delivered or released. A negotiable receipt states that the commodities will be released to the bearer of the receipt.

v Financial and insurance terms

The following are the most commonly used terms in international trade financing.

All risk

This is the most comprehensive type of transportation insurance, providing protection against all physical loss or damage from external causes.

Bid bond

When an exporter is bidding on a foreign contract, a bid bond guarantees that the exporter will take the contract if the bid succeeds. An exporter who refuses the contract must pay a penalty equal to the amount of the bond.

Cash in advance (advance payment)

A foreign customer pays a Canadian exporter prior to actually receiving the exporter's product(s). This form of payment carries the least risk from the exporter's perspective.

Confirming house

A company, based in a foreign country, that acts as a foreign buyer's agent and places confirmed orders with Canadian exporters. A confirming house guarantees payment to the exporters.

 

Consignment

Delivery of merchandise to the buyer or distributor, whereby the latter agrees to sell it and only then pay the Canadian exporter. The seller retains ownership of the goods until they are sold, but also carries all of the financial burden and risk.

Document of title

A document that provides evidence of entitlement to ownership of goods, e.g. carrier's bill of lading.

Documentary collection

The exporter ships the goods to the foreign buyer without a confirmed letter of credit or any other form of payment guarantee.

Documentary credit (sight and term)

A documentary credit calling for a sight draft means the exporter is entitled to receive payment on sight, i.e. upon presenting the draft to the bank. A term documentary credit may allow for payments to be made over a term of 30, 60 or 90 days, or at some other specified future date.

Draft (bill of exchange)

A written, unconditional order for payment from one party (the drawer) to another (the drawee). It directs the drawee to pay an indicated amount to the drawer. A sight draft calls for immediate payment. A term draft requires payment over a specified period.

Export financing house

A company that purchases a Canadian exporter's foreign receivables on a non-recourse basis upon presentation of proper documentation. It then organizes export arrangements and provides front-end financing to the foreign buyer.

Factoring house

A company that buys export receivables at a discount.

Letter of credit (L/C)

An instrument issued by a bank on behalf of an importer that guarantees payment to the exporter for goods or services, provided the terms of the credit are met.

Letter of credit (confirmed)

A Canadian bank confirms the validity of a letter of credit issued by a foreign bank on behalf of the foreign importer, guaranteeing payment to the Canadian exporter provided that all terms in the document have been met. An unconfirmed letter of credit does not guarantee payment so, if the foreign bank defaults, the Canadian exporter will not be paid. Canadian exporters should accept only confirmed letters of credit as a form of payment.

Letter of credit (Irrevocable)

A financial institution agrees to pay an exporter once all terms and conditions of the transaction are met. No terms or conditions can be modified without consent of all parties.

Open account

An arrangement in which goods are shipped to the foreign buyer before the Canadian exporter receives payment.

 

 

 

CONCLUSION..

 

 

 CONCLUSION .......

 

 

Globalization is risky, no matter what. Failure to take the right steps early on can cause a much faster collapse in international markets than what we’d see domestically. The demands that global markets place on teams will change, so your group will need to be well-equipped for what’s around the corner. Being prepared for every scenario will help your company confidently tackle these challenges, so it’s important to educate your team. Transparency is critical, Patel adds. “Another key to overcoming resistance is always being honest and realistic about outcomes and situations. At the end of the day, it is your credibility that people trust and sometimes helps with the unknown.”

Just DO IT…

Don’t wait until you have a fully substantiated treatise before you start. Doing it will give you the experience and training you need to be sharper in other circumstances. It will refine your sense for doing business with another culture not familiar to you.

Are your bags packed or are you still hugging the shores?                            GOOD LUCK....

 

 

 

Impressum

Tag der Veröffentlichung: 20.01.2021

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Widmung:
A Basic Guide to Exporting has given companies the information they need to establish and grow their business in international markets. Whether you’re new to exporting or just want to learn the latest ideas and techniques, and whether your product is a good or a service, this book will give you the nuts-and-bolts information you need.