Exporting 101

Five Steps to Expand Your Business Internationally
by Eugene Laney
DHL Express

A seesawing economy, coupled with President Obama’s National Export Initiative, makes now an ideal time to consider international expansion.

After the past few years of recession, the U.S. economy is still on uneven ground. It’s been a challenge for business owners to not just grow their sales, but even to stay afloat. At the same time, while it has been well-documented that the BRICS (Brazil, Russia, India, China and South Africa) countries are seeing tremendous economic growth, the International Monetary Fund has identified as many as 150 emerging international markets on the cusp of economic expansion as well.

As a U.S. business owner, this could be an ideal time to tap into the growing economies of these international countries, and the National Export Initiative (NEI) is helping pave the way.

Expanding internationally can seem very daunting because of the uncertainties that come with doing business outside of the U.S. Questions arise about the cost and logistics of shipping across the globe, customs and trade laws, as well as currency conversion and rate instability. This is where the NEI comes to the rescue.

Currently, 70 percent of U.S. exporting is done by small to medium-sized businesses. The goal of the NEI is to double exports by 2014 by providing a platform for U.S. businesses to go international. As a resource, it will help businesses win more foreign government contracts, find buyers worldwide, participate in more trade missions and trade shows, receive more export financing, and learn new ways to sell products and services overseas.

By considering a few factors, business owners can get a handle on the opportunities that exist, while avoiding the pitfalls.

Identify Markets
Whether you are importing or exporting, conducting research on countries to do business with is one of the first things business owners should tackle. This is a vital step in deciding who you will buy or sell from, and which countries have a need for your service or product. Developing countries like Chile, Mongolia, Kazakhstan, Mexico, Philippines, Vietnam and Turkey are rapidly growing and should be included as a list of potential business partners. These emerging countries have a growing middle class who are more educated and have more earning power, making their ability to consume goods and services rise rapidly.

When identifying markets, business owners will also want to pay attention to specific growth sectors within these countries. For example, Vietnam has a high demand for electronics and fertilizer, while Mongolia is importing sugar, industrial consumer goods and cars. In other areas like China, healthcare-related goods are in demand, while Hong Kong has a burgeoning upper class interested in wine and the fine arts.

From an importer’s standpoint, market research will help determine which international countries are most capable of meeting your demands: economically, logistically, geographically and politically.

For example, if you are a California-based business, does it make sense to ship to Europe, or can you accomplish your goals by shipping more directly to Asia? What are the country’s logistical capabilities? Does it have a port or airport nearby? How will this affect the length of time it takes to receive your shipment?

Know the Rules
Whether you are importing or exporting, there are trade, customs and shipping laws that will apply. These can vary greatly, depending upon which country you are dealing with. These laws will not only govern how your shipment is received, but will also be specific to the type of product you are sending. For example, companies in the life sciences industry will have a different set of laws than a company selling electronics overseas. Additionally, depending upon the product and how long it will take to arrive, it might have to be packaged differently, which leads directly to the next important factor to consider.

Find a Logistics Agent
Perhaps the most important decision to make when deciding to go international is who your logistics partner will be. If your shipments do not arrive on time, stall in customs, require additional fees or arrive in the wrong locations, this could put a quick end to your growth goals. Business owners need to find a shipping partner who understands the intricacies of shipping overseas and has the bandwidth to ensure that products arrive on time, in proper shape and in a cost-effective manner. The company should also have offices located within the major international ports and airports to ensure proper logistics management.

Furthermore, a good logistics agent will do more than simply provide the means for your shipments to be delivered; they will offer you additional services to make the process easier. Some of the leading companies provide shipment cost (including duties, taxes and other import fees) and time calculators, comprehensive country trade and customs information, and automated shipment processing. A good way to review your logistics agent is to ensure they have been certified by the Transported Asset Protection Association.

Secure Financing
As business owners know, expansion typically requires additional funds. Fortunately, because of the NEI and the general push towards globalization, funding is available for those businesses interested in expanding overseas. The U.S. Small Business Administration’s 7(a) program offers financing through its special loans and export loans programs. Information can be found at sba.gov. The U.S. Export and Import Bank (Ex-Im) provides working capital guarantees (pre-export financing), export credit insurance, and loan guarantees and direct loans (buyer financing). On average, 85 percent of Ex-Im’s transactions directly benefit U.S. small businesses. Information can be found at www.exim.gov.

Utilize Free Resources
The best news for business owners expanding internationally is that you do not have to go it alone. In addition to the information available through your shipping agent, there are numerous governmental and other websites available that can provide detailed information and a roadmap on what’s needed to become a global company. Some examples are:

  • U.S. Chamber of Commerce, uschamber.com
  • International Monetary Fund, imf.org
  • International Trade Administration, trade.gov
  • The Federation of International Trade Associations, fita.org
  • U.S. Customs and Border Protection, cbp.gov
  • American Association of Exporters and Importers, aaei.org
  • U.S. Export Assistance Centers, export.gov/eac
  • National Association of Manufacturers, nam.org.

Opportunity is knocking for U.S. business owners to go global. With thorough research and a well-defined strategy, international barriers can successfully be crossed. iBi

Eugene Laney is vice president of international trade affairs at DHL Express.

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