The global marketplace is a fast-growing and rapidly changing field.
International business is exploding as a direct result of changes in
technology, rapidly expanding economies, and international trade
agreements. In fact, in 2010 alone the United States imported $1.3
trillion and exported $1.277 trillion in goods. Author John Capela
explains how you can set up shop in the global marketplace and expand
your business’s reach by exporting your products around the world.
"We’re living in an exciting time!” says Capela, author of Import/Export
Kit For Dummies®, 2nd Edition with CD (Wiley, 2012, ISBN:
978-1-1180-9515-7, $34.99). “In the past opportunities for many small
businesses ended within the borders of their own country, and
international trade was only for large multinational corporations.
“Today, the global marketplace provides opportunities not just for the
multinational corporation but also for small upstart companies. The
Internet, affordable changes in technology, and increased access to
information have all made it easier for firms of all sizes to engage in
international trade. Today, U.S. businesses are seeing increases in
exports to developing countries, especially in Latin America, Central
Europe, Eastern Europe, the Middle East, and Asia.”
Import/Export Kit For Dummies provides entrepreneurs and small- to
mid-sized businesses with the critical, entry-point information they
need to begin exporting their products around the world and importing
goods to sell in the U.S. If you're an entrepreneur or small- to
mid-sized business owner, the book provides you with everything you need
to know to ensure your business' growth and success.
Read on for Capela’s ten keys to becoming a successful exporter.
Identifying your market. If you’re interested in exporting, you need to
identify foreign export markets for your products. Without the right
market, you won’t be able to do any business. Thorough market research
helps you understand the economic, political, and cultural factors that
will impact your ability to successfully sell your product. This kind of
information is readily available through government agencies and
business-related organizations such as foreign trade associations,
chambers of commerce, and trade commission offices.
Visit www.export.gov
and register to become part of the user community. The site provides a
wealth of readily accessible data at no cost, and it can assist you in
identifying overseas markets for U.S. goods and services. The advantage
of these resources is that they come from trade experts located in
countries around the world. Because their expertise comes from hands-on
involvement (as opposed to second-hand information), you can be assured
that the data they provide is good.
“Remember, each individual market has different demands, and these
demands can change,” notes Capela. “Changes in technology, lifting of
trade barriers, and adjustments in import/export regulations are all
factors that may impact the level and direction of international trade.
These factors can have an influence, and you may need to consider
adjusting your marketing and export strategies for the current
situation.”
Assessing product potential. As an exporter, you need to focus on what
your product does and identify what needs it will satisfy in the foreign
market. You also need to identify the strengths and weaknesses of your
product in comparison to available competitive products. A product may
be successful in the U.S., but that isn’t any guarantee that it’ll be
just as successful in a foreign market. There may be no need for the
product in the foreign country or the product may need to be modified.
“Preparing a product for export requires not just knowledge of the
product but also an awareness of many unique characteristics of each of
the different markets you may be targeting,” explains Capela. “Cultural
differences and local customs may also require product modifications in
areas such as branding, packaging, and labeling. Awareness of
sensitivity to cultural differences is critical to a successful product
introduction.
“Different countries can have different product standards, and you need
to understand the need to conform if you want to do business
internationally,” he adds. “The U.S. Department of Commerce’s National
Center of Standards and Certification Information (NCSCI) provides this
information for nonagricultural products; visit its website at http://ts.nist.gov/standards/information/index.cfm.”
Familiarizing yourself with export controls and licensing requirements.
Exporting can expose your business to laws and regulations that you may
not be familiar with. All kinds of different rules can impact your
ability to successfully do business in foreign markets. One of these is
U.S. export controls, which take the form of prohibitions, restrictions,
and licensing requirements.
“A key to being a successful exporter is being aware of these issues,”
says Capela. “Violation of these laws can have significant
repercussions, from the government seizing your products to a denial of
your privilege to export to fines and imprisonment.”
Investigating import controls. Before exporting your product to a
foreign market, you need to identify whether the country you’re
exporting to has any import controls related to the sale of your
product. These controls can include prohibitions, restrictions, or
import licensing requirements, and they can be based on country of
origin, product type, or product characteristics. Products that violate
these controls are generally not allowed to enter the importing country.
“Import documentation requirements and other regulations imposed by
foreign governments vary from one country to the next,” says Capela.
“You need to be aware of the regulations that apply to your own
operations and transactions.”
Understanding U.S. export laws. You have to be aware of your
responsibilities when it comes to U.S. export laws. “These laws are
designed to make sure that U.S. exports go only to legally authorized
destinations,” explains Capela. “For example, the Foreign Corrupt
Practices Act prohibits a U.S. exporter from offering to pay a
commission to a foreign government official, friend or relative to get
the business. The Anti-Boycott Act prohibits Americans from
participating in foreign boycotts or taking actions that further or
support such boycotts against countries friendly to the U.S.”
Making sense of incoterms. As an exporter, you need to understand the
costs, responsibilities, rights, and obligations that accompany the use
of a specific incoterm. “Every time you prepare a quotation for a
customer, the quotation must include a term of sale,” notes Capela. “If
you fail to clearly identify the specific incoterm to your customer, it
can lead to an overestimation or underestimation of costs associated
with the goods that you’ll be selling, which can ultimately lead to the
loss of a sale.”
Making sure you have the right insurance coverage. You need to analyze
the amount of insurance on your export transaction. Weather, rough
handling of cargo by carriers, long distances, and other common hazards
make it important that you determine the type, amount, and extent of
coverage required. Also, make sure that you identify who’ll be
responsible for insurance against loss or damage while the goods are in
transit.
“If you quote to your customer and use the term CIF (short for cost,
insurance, and freight), you’re the one responsible for obtaining the
insurance, and you must include a certificate of insurance with all the
other required shipping documents that you send to the importer,” says
Capela. “If you’re quoting with a term of CIF and you don’t have an
international insurance carrier, contact your freight forwarder and
discuss the option of using its cargo insurance policy. If any other
shipping term is used, the importer is responsible for securing the
insurance.”
Focusing on the foreign market risk and methods of payment. When you’re
selecting a method of payment in an export transaction, you need to
identify the primary risk factors and then evaluate them to choose the
one that’s best for you. “Remember: Getting an order is only one step in
the process,” notes Capela. “You also have to make sure that you’re
going to get paid. Being paid in full and on time is critical to
success, and the level of risk in extending credit is a major
consideration.”
Capela pinpoints the two primary risk factors that you need to be aware
of:
Country risks: Country risk factors include economic and political
stability, the legal system, and the foreign exchange rate.
Commercial risks: Commercial risk factors include company
ownership/management, financial performance, market share, and payment
history.
Keeping track of documentation. Even though the actual purchase order
you receive from your overseas customer is the most important document
that you’ll receive, you have to get familiar with many other documents
before exporting your goods. A wide variety of documents are used in
exporting; which of them is required in specific transactions depends on
the requirements of the U.S. government and the government of the
importing country.
“Because the processing of these documents can be a formidable task,
consider having a freight forwarder handle this portion of the
transaction,” advises Capela. “Freight forwarders are specialists in
this process.”
Hiring a freight forwarder. An international freight forwarder acts as
an agent on your behalf and assists in moving the cargo from the point
of origin to the ultimate overseas destination. Freight forwarders are
familiar with the import rules and regulations of foreign countries,
U.S. export regulations, methods of shipment, and required documents
relating to foreign trade.
“A freight forwarder can assist you in preparing price quotations by
advising on freight costs, port charges, consular fees, costs of special
documentation, insurance costs, and handling fees,” explains Capela.
“They recommend the packing methods that will protect the merchandise
during transit or can arrange to have the merchandise packed at the port
or put in containers.”
“If you use the services of a freight forwarder, you won’t have to deal
with many of the details involved with the exporting of your goods,” he
adds. “Fees charged by forwarders are modest, and forwarders have access
to shipping discounts. The experience and constant attention to detail
provided by the forwarder is a good investment and a key to success.”
“Exporting is a challenge and it isn’t as easy as it may initially
appear,” says Capela. “You have to take the time to select the right
product, understand the applicable rules and regulations in both the
United States and the importing country, identify your customers, and
find out about the different payment and shipping alternatives. However
you choose to export, developing a detailed and thorough strategy is an
important part of the planning process. But once you get it down you
open your company up to great new opportunities.”
