A well-considered plan, a strong internal team and a network of outside experts are among the critical factors of exporting success.
The reasons companies give for exporting are as varied as those our office counsels on international trade, yet successful companies do share some common characteristics, such as strong support and commitment from top management. Moreover, a successful exporter knows exactly what he or she is offering a foreign buyer, including how the product or service needs to be modified for foreign customers; its ultimate cost, including tariffs; and how after-sales services will be handled.
Equally important to an exporter’s success is a carefully thought-out plan encompassing market selection, regulatory requirements and the know-how to build a strong export team.
So, where in the world should you start? Often times, it begins with being contacted by a foreign distributor at a trade show or a customer from your company’s website. While there is nothing wrong with this, you can increase your chances of exporting success when you choose your markets proactively based on a long-term strategy, rather than letting others choose for you.
An obvious way to do this is to determine where the greatest demand for your product lies, which can be done by using consultants and researching industry resources. One way to get ahead of the competition is to utilize free (e.g., UN Comtrade and USA Trade Online) and subscription-based (e.g., Euromonitor International and Datamyne) databases that allow you to track international shipments to see who is buying your products around the world.
Once you have a feel for demand and can begin prioritizing your efforts, you will want to take a closer look at individual countries and potential partners and customers. Numerous free and low-cost resources can help you do this, such as the overseas offices of the Illinois DCEO Office of Trade and Investment and the U.S. Commercial Service. In addition, I have found it worthwhile to reach out to U.S. chapters of the International Chamber of Commerce in your target countries, as its members can provide an insider’s view on the reality of the local business environment. Remember, your entry into a single country should facilitate a move into a trade bloc or region in the future.
At this stage, international business becomes a delicate balance of intersecting regimes and requirements. It can also be the point at which prospective exporters start to feel overwhelmed. Dividing issues into domestic, foreign and international requirements helps make it more manageable.
U.S. Export Requirements
This process begins with determining which federal agency has jurisdiction over the export, be it the Departments of Commerce, State, Agriculture or any number of others. The agency that controls your export determines if an export license is required.
A relatively small proportion of exports actually require licenses from the U.S. government; however, all U.S. exporters must ensure they do not do business with countries, individuals or entities to which the U.S. government controls commercial access. In most cases, this means checking with the Office of Foreign Assets Control to verify there are no embargoes or sanctions in effect.
And here’s something even some experienced exporters miss: a U.S. exporter must ensure that foreign individuals and companies involved in the sale are checked against six export screening lists maintained by the Departments of Commerce, State and Treasury. These lists are designed to safeguard against “bad actors” and can be checked in one step by accessing the Consolidated Screening List at export.gov.
Once U.S. requirements are met, you must repeat the process for the destination country. Foreign countries have their own requirements covering such things as product standards, certifications, electricity regulations, packaging and recycling laws, and quality expectations. Many countries provide up-to-date, easy-to-locate information about its requirements online. At the same time, it is not uncommon for some countries to provide information that is out-of-date, incomplete or simply wrong. It’s always a good idea to contact the importing country’s customs department and double-check your information. It will also be necessary to identify which foreign agencies regulate the import of your product to determine if there are additional requirements.
A good first step is to become familiar with the basic concepts and language of international trade. Incoterms are rules published by the International Chamber of Commerce (iccwbo.org) and accepted worldwide for the interpretation of most commonly used terms in international trade. Your next step will be to identify any applicable international laws or agreements. The most common way international law becomes a factor is if the countries involved are signatories of an international agreement. For example, the United Nations Convention on Contracts for the International Sale of Goods (CISG) has been ratified by more than 80 countries, including the U.S. If you are exporting to another signatory country, it is likely that CISG will apply.
Assemble Your Team
Now, the time has come to assemble your export team. For many companies, that means identifying key players from within before considering hiring employees with international expertise. However, companies must realistically consider the added demand on employees’ time, as well as their interests and abilities, and the resources needed to make them successful. It’s also important to build a resource team you can rely on. Key players will include a freight forwarder and a banker and attorney with international expertise.
A freight forwarder will work as your agent to move your shipment from “dock to door.” He or she will also be able to advise you on export costs, customs requirements, export documentation and clearing foreign customs. Freight forwarder directories can be found at forwarders.com.
A good international banker should be an informational resource you can depend on, able to offer expertise on currency risk, payment methods and access to federal export loans and guarantees through the U.S. Small Business Association (sba.gov) and the Export-Import Bank of the United States (exim.gov).
An international lawyer will help you identify and comply with international laws and advise you on the international implications of your terms of sale. Legal advice, of course, is expensive. A good way to identify your needs is through a free consultation with the Export Legal Assistance Network (exportlegal.org), offered by the National Bar Association.
Finally, if you are confused at any point in the process, the Illinois Small Business Development Center, International Trade Center at Bradley University is ready to help with no-fee counseling and assistance locating the best resources and expertise. We want to be part of your export success. For more information, call (309) 677-3075 or visit bradley.edu/turnercenter. iBi
Jim Ryan is a trade specialist with the Illinois SBDC International Trade Center at Bradley University.