A: Many exporters fail because they are unable to deliver their products in a timely and reliable manner. We recommend that you consider the following factors before selecting your freight forwarder:
- Location and operating hours of their local office. Visit their office often. If they are located nearby, you will save on communication and travel expenses. Make certain that they will be accessible evenings and weekends in case of emergencies.
- Location of branch offices. This will be especially important if you have to locate an export shipment quickly. If they have worldwide branches and affiliates, they will be able to trace your misrouted or delayed shipments from both ends of the transaction without involving third parties.
- Make sure they are a full-service forwarder. Can they handle ocean shipments, air shipments and container consolidation to reduce transport costs? Could they handle importing? Check their references to make certain they can process your shipping documents correctly and efficiently.
- Check our directory of Freight Forwarders and Shippers in Idaho.
A: The U.S. Commercial Service keeps and updated list of FTA’s at http://www.export.gov/FTA/index.asp
A: As of January 1, 2008, all tariffs and quotas were eliminated on U.S. exports to Mexico and Canada under the North American Free Trade Agreement (NAFTA).
The NAFTA provides coverage to services with the exception of aviation transport, maritime, and basic telecommunications. The agreement also provides intellectual property rights protection in a variety of areas including patent, trademark, and copyrighted material.
The government procurement provisions of the NAFTA apply not only to goods but to contracts for services and construction at the federal level. Additionally, U.S. investors are guaranteed equal treatment to domestic investors in Mexico and Canada. Mexico and Canada have very strong ties to the U.S.and they are great markets to start exporting due to their relative stability and familiarity. More information at www.nafta-customs.org/what-is-nafta.html.
A: The U.S. Department of Commerce has created a website to assist U.S. businesses with internet exporting. The site provides practical advice, information on e-commerce, and a host of resources for small and medium sized businesses interested in "e-exporting" at: www.export.gov/sellingonline
A: While circumstances vary by product, price and level of expertise, it would be unusual for a U.S. company to earn a profit after one year of exporting. Although the possibility improves in the second year, most U.S. companies do not make a profit until they have been exporting for at least three years. There is an unavoidable learning curve involved in exporting. If a company does earn profits in the first or second year, we recommend that they reinvest the money to increase future export sales, profits and local market share. Not many companies, in the United States or elsewhere, can become successful exporters and moneymakers unless they are in the international market for the long term.
A: The U.S. Foreign Corrupt Practices Act of 1977 ("FCPA" or the "Act") prohibits U.S. companies, their subsidiaries, as well as their officers, directors, employees, and agents from bribing "foreign officials" and also requires U.S. companies that issue debt or equity to maintain internal accounting controls and to keep books and records that accurately reflect all transactions. For more information click here.
A: Most companies that have not succeeded in exporting, regardless of their target market, product or service, have made one, or possibly several of the following ten mistakes:
- Failed to develop an international marketing plan before beginning to export
- Lacked total commitment from top management in the initial stages of exporting
- Selected overseas representatives too quickly without thorough investigation
- Chased orders around the world instead of using a systematic marketing plan
- Neglected new export customers when their domestic market was booming
- Failed to treat international and domestic representatives on an equal basis
- Refused to modify products to meet foreign regulations and local preferences
- Did not print sales, service and warranty messages in local languages
- Refused to use export management companies (EMC) in less promising markets
- Failed to consider licensing or joint venture agreements in more restrictive markets
A: Unless your products are highly technical, unique or modified at your customer's request, eliminate as many domestic costs as you can from your export ex factory (works) price and then add on your estimated costs to export and your profit margin.
One of the most common mistakes made in export pricing is the inclusion of domestic costs that do not apply to the foreign buyer. A prime example of inflated export pricing is the inclusion of domestic sales and marketing costs for advertising, promotion, commissions, company vehicles, expense accounts, etc. If you were the foreign buyer, would you want to pay the seller a second time for costs that have nothing to do with your transaction, or doing business in your country?
Once you have eliminated as many domestic costs as you can from your standard ex factory (works) price, then add on estimated costs for product modifications, special packaging, export administration, international market research, foreign travel, training, etc. Remember that your standard export ex factory (works) price will be increased by your customer's costs for transport, insurance, import duties, and a mark-up percentage for their cost of doing business and their profit margin.
A: There are four basic types of export sales representatives:
- Commissioned Export Sales Agents (often referred to as export brokers)
- Export Management Companies (EMCs)
- Export Trading Companies (ETCs)
- Full Stocking Distributors.
Before you decide which types of export sales representatives you will use, we suggest that you ask yourself the following five questions:
- Through what channels are similar products being sold in your export markets?
- How much capital do you have and what financial risks are you willing to assume?
- What degree of control do you want to retain over the marketing of your products?
- When do you want your representatives to take title and physical possession of your products?
- When, how and from who do you want to receive payment for your export sales?
**Please note that there are no regulations for export management companies, so before hiring someone be sure to check their references and credentials.
A: Being aware of the risks and preparing for them will make your move into your target market that much more secure.
While trade barriers and unfair practices take many forms, the most common examples are listed below:
- Intellectual property infringement - including copyright, patent and trademarks.
- Customs procedures that are not uniformly applied.
- Lack of competitive bidding for foreign government tenders.
- The application of direct or indirect subsidies by a foreign government in favor of domestic suppliers.
- Burdensome certification and testing requirements that are not required by domestic manufacturers.
- Influence peddling - A corporate entity or country is interfering with fair trade practices at your expense.
- Bribery, corruption and requests for payoffs - When foreign bribery prevents you from competing fairly on the basis of price, quality or service.
If you feel your company’s exports or foreign bids have been, or may be adversely affected by a trade barrier or unfair business practice, you may file a complaint electronically with the Trade Compliance Center within the International Trade Administration.
The Frequently Asked Questions (FAQs) have been separated into the following categories: Trade Problems and Foreign Trade Barriers
For more information on how to prevent this and avoid it visit: http://www.export.gov/tradeproblems/index.asp
A: A freight forwarder will make arrangements for and expedite shipments to overseas destinations. Your freight forwarder should perform these services on your behalf:
- Act as your agent per your power of attorney to transport your products to the foreign port of import and, if requested by you, directly to the importer’s location in the foreign market.
- Prepare and examine shipping documents for accuracy, completeness and compliance with the legal requirements of importing countries.
- Distribute international shipping documents and, if requested by you, submit them directly to your bank for collection and deposit to your account.
- Act as your "Customhouse Broker" per your power of attorney and arrange for clearance of your import shipments through the designated port of entry.
A: It can be costly to appoint an export sales representative without visiting their country and observing their operation firsthand. It is not especially difficult to create a favorable (but false) impression during a well-planned overseas visit, but it is an entirely different matter to sustain that false image after you have had the opportunity to speak with their employees, customers, bankers and local suppliers.
Do not allow potential export sales representatives to select ALL of the people you will be meeting. This would be like allowing the used car salesman to select the mechanic who will be evaluating the vehicle you would like to buy. The outcome is predetermined. Select a few individuals and organizations yourself, and meet with them away from your host's facility, where discussions will tend to be more informal and candid.
Some exporters, especially those with limited funds, forgo regular visits to their export markets to conserve short-term operating capital. This is a potentially expensive policy. We strongly recommend that exporters spend the money to travel to their foreign markets on a systematic basis. The most important factor in successful exporting is developing and sustaining strong personal relationships with overseas representatives. Letters, faxes, and telephone calls are no substitute for personal contact in foreign trade, especially when you need a special favor or help in a difficult situation.
A: Not all exports require a license. In fact, a relatively small percentage of all U.S. export transactions require licenses from the U.S. government. Licensing determinations are made on individual transactions, not just the product. However, the characteristics of your product will determine if you need a license for a particular transaction.
The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce is responsible for licensing products that are “dual-use,” or have both commercial and military or proliferation applications. The first step to establishing whether a dual-use product requires a license is to find the product’s Export Control Classification Number (ECCN) on the Commerce Control List (CCL).
A: The Census Bureau sponsors a free online reference tool called the Schedule B Search Engine that can be used to classify your products.
The Schedule B search tool is the most commonly used method for classifying products. Click "search" and enter a "descriptive keyword" that best describes your product.
To learn more about the Schedule B search engine see the Census Bureau's Frequently Asked Questions. For assistance with the search engine, please contact the Census Bureau toll free at 1-800-549-0595.
If, after consulting the Search Engine, you need additional assistance on Schedule B numbers, you may contact a commodity specialist at the U.S. Census Bureau Foreign Trade Division:
- Durable goods (metals, machinery, computer, electronic and other miscellaneous goods) call: 301-763-3259
- Non-durable goods (food, animal, wood, paper, mineral, chemical and textile goods) call: 301-763-3484
For assistance identifying your appropriate HS number you may also contact your local Export Assistance Center or call the Trade Information Center at 1-800-USATRAD(E). If you are having difficulty determining your Schedule B number, you may also want to review the Customs Rulings (CROSS) database.
A: Some of the common government-required forms of documentation are listed below. The seller normally prepares his or her own commercial documents and the freight forwarder normally prepares the transportation documents. Some freight forwarders will do all the paperwork for you.
Automated Export System:
On June 2, 2008, the U.S. Census Bureau made the filing of export information through the Automated Export System mandatory for all shipments where a Shipper’s Export Declaration was previously required.
The Automated Export System (AES) is a collaboration of federal agencies, such as the U.S. Customs and Border Protection and the Foreign Trade Division, and the U.S. export trade community.
Export information is collected electronically, edited immediately, and errors are detected and corrected at the time of filing. AES is a nationwide system operational at all ports and for all methods of transportation. It was designed to assure compliance with and enforcement of laws relating to exporting, improve trade statistics, reduce duplicate reporting to multiple agencies, and improve customer service. For more detailed information, please visit: www.cbp.gov/xp/cgov/trade/automated/aes/easy_steps.xml or www.aesdirect.gov.
The following facts can be used to determine whether or not the AES is needed for shipment:
- The AES must be filled out for any shipment valued at $2,500 or above (If the shipment is valued at over $2,500 but is made up of various commodities falling under several Schedule B numbers none of which is valued at $2,500 or higher, no AES is required.)
- The AES is required for any shipment to particular countries, such as Cuba, Libya, and North Korea, and for any shipment requiring a validated export license [call the Trade Information Center 800-USA-TRAD(E) for more information].
- An AES is required for shipments to Puerto Rico, the U.S. Virgin Islands and the former Pacific Trust Territories even though they are not considered exports (unless each Schedule B item is under $2,500).
- Shipments to Canada do not require an AES. (Shipments to third countries passing through Canada do need an AES.)
Bill of Lading:
A bill of lading is a contract between the owner of the goods and the carrier. There are two types: a straight bill of lading, which is non-negotiable, and the negotiable/shipper’s order bill of lading, which can be bought, sold or traded while goods are in transit and is used for letter-of-credit transactions. The customer usually needs a copy as proof of ownership to take possession of the goods.
Certificate of Origin:
The Certificate of Origin is only required by some countries. In many cases, a statement of origin printed on company letterhead will suffice (download sample certificate or see Sample with explanation). Special certificates are needed for countries with which the United States has special trade agreements, such as Mexico, Canada and Israel.
Commercial Invoice:
A commercial invoice is a bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, number of copies, language to be used, and other characteristics (see Sample).
Consular Invoice:
A consular invoice is required in some countries; it describes the shipment of goods and shows information such as the consignor, consignee, and value of the shipment. If required, copies are available from the destination country's Embassy or Consulate in the U.S.
Destination Control Statement:
This statement appears on the commercial invoice, ocean or airway bill of lading, and SED to notify the carrier and all foreign parties that the item may be exported only to certain destinations.
Export Packing List:
An export packing list itemizes the material in each individual package, and shows the individual net, legal, tare and gross weights in U.S. and metric values. Package markings should be shown along with the shipper’s and buyer’s references. The packing list is attached to the outside of the package in a clearly marked waterproof envelope. The list can be used to determine the total shipment weight and whether the correct cargo is being shipped. Customs officials may use it to check the cargo at inspection points.
Inspection Certificate:
Some purchasers and countries may require a certificate of inspection attesting to the specifications of the goods shipped, usually performed by a third party and obtained from independent testing organizations.
Insurance Certificate:
Used to assure the consignee that insurance will cover the loss of or damage to the cargo during transit (see Sample). These can be obtained from your freight forwarder.
A: What they are:
Incoterms are 11 standardized definitions of commonly used shipping and trade terms that cover issues such as control of goods and financial responsibilities such as payment of cargo insurance and freight. Incoterms provide traders with a common set of rules outlining each party’s obligations and liability for the product, thus reducing misunderstandings. The International Chamber of Commerce (ICC) establishes and publishes the Incoterms. To use the terms correctly, trade practitioners should consult the ICC for the complete, authorized Incoterm definitions. Incoterms are sets of 3 letter standardized trade terms which are used in international contracts for the sale of goods.
What they do:
Incoterms inform the sales contract by defining the respective obligations, cost and risks involved in the delivery of goods from the seller to the buyer.
They do NOT:
Constitute a contract, supersede laws governing the contract, define where title transfers, nor do they address the price payable, currency, or credit terms. These things are defined by the express terms in the sales contract and by the governing law.
For helpful documents concerning Incoterms, see the MIQ Logistics – Incoterms 2011.
A: An ATA Carnet (a. k. a. "Merchandise Passport") is a document that facilitates the temporary importation of products into foreign countries by eliminating tariffs and value-added taxes (VAT) or the posting of a security deposit normally required at the time of importation. For more information, "ATA Carnet: Your Merchandise Passport." The products must not be brought in with the intention to sell. They are often used for trade show demonstrations or things of that nature.
A: A patent is a legal instrument which gives the owner exclusive rights to an invention. The patent granted by the US Patent and Trademark Office (USPTO) only protects the owner of the patent within the United States. The Patent Cooperation Treaty (PCT) has enabled businesses wishing to obtain patent protection in other countries to do so by filing one international patent application with the USPTO. For further information, please see the USPTO website at: USPTO or The Trilateral Patent Office (U.S., Europe, and Japan)
A trademark is a word, name, symbol, or device that identifies the source of goods used in trade. In most countries outside of the United States, trademark rights are acquired through registration, which is done on a country by country basis.
A copyright protects original works of authorship. In the US, a copyright gives the owner the exclusive right to reproduce, distribute copies or display the works publicly. There is not an "international copyright" currently in place. Ultimately, copyright protection depends on the national law of each country. Therefore it is recommended that one investigates local copyright laws before publishing a work anywhere. For more information, please see the US Copyright Office.
A: CE marking certifies that a product has met EU health, safety, and environmental requirements, which ensure consumer safety. Manufacturers in the EU and abroad must meet CE marking requirements where applicable in order to market their products in Europe. For more information visit: www.export.gov/cemark/index/asp
A:
Certificates of Origin are issued on behalf of U.S. exporters who are required to provide assurances to foreign buyers that the goods they are purchasing originated in the United States.
Before you begin to fill out the NAFTA Certificate of Origin form you should have the following information:
- Determine when to use Certificate of Origin ( Form 434 )
- Have the exporter's tax identification number* and address
- Have the producer's tax identification number and address
- Have the importer's tax identification number and address
- Find your HS classification number
- Determine your preference criterion
- Have the producer's tax identification number and address
The forms you’ll need when applying for a Certificate of Origin are listed at www.nafta-customs.org/nafta-forms.html
A: The Harmonized System is an international method of classifying products for trading purposes. This classification is used by customs officials around the world to determine the duties, taxes and regulations that apply to the product. Under the Harmonized System, products are assigned a six-digit identifying number: The first two digits of this number identify the chapter into which the product falls. The second two digits identify the heading within that chapter. The final two digits identify a specific class of products. Each country may further expand the Harmonized System by adding additional digits. The U.S. Census Bureau website provides a search engine to find the correct code for your products. If you need additional assistance to find the correct code, please call 1-800-TRADE.
A: Because we don’t know how "limited" your funds are, we must assume that you have enough cash to begin exporting but not enough to sustain a long-term marketing program. Are you relying on "projected" export revenues and profits to finance short-term export operations and future expansion into new foreign markets? If so, it is an unwise approach that will probably result in failure. Your projections could be wrong. You could find yourself in need of immediate cash. If you are unable to respond with an injection of capital, you may be forced to close down your export operations and absorb the loss of your initial investment. We suggest that you seriously consider delaying your decision to export until you have accumulated enough capital to be a long-term player in world markets.
A: Many options are available depending on the annual sales, international market, type of financing structure and financial institution. International Trade Specialists are available through the Idaho Department of Commerce to identify the best options for your business and connect you with the appropriate lenders, brokers and financing professionals.
The following are export financing options available to companies:
Export-Import Bank of the United States
- If you need working capital above $1.1 Million then consider Ex-Im Bank’s working capital guarantee program. It enables U.S. exporters to obtain loans to produce or buy goods or services for export. These working capital loans, made by commercial lenders and backed by our guarantee, provide you with the liquidity to accept new business, grow your international sales and compete more effectively in the international marketplace.
- If your foreign customer needs financing, then consider Ex-Im Bank’s loan guarantee for international buyers. With it, international buyers are able to obtain competitive term financing from lenders when financing is otherwise not available or there are no economically viable interest rates on terms over one-to-two years
- If your foreign customer needs fixed rate financing to purchase U.S. goods and services then consider Ex-Im Bank’s Direct Loan program. This loan to an international buyer is generally used for financing purchases of U.S. capital equipment and services, and exports to large-scale projects.
- If your foreign customer of U.S. capital goods prefer lease financing as an alternative to traditional installment loans than you should consider Ex-Im Bank’s Finance Lease Guarantee program. Ex-Im Bank will guarantee lease financing to creditworthy international lessees, both private and public sector, when financing is otherwise not available or applicable interest rates are not economically viable.
Click here to go to the Export-Import Bank website.
Small Business Administration options:
- If you need working capital up to the $2.0 Million level, then consider SBA's Export Working Capital Program. It provides short-term, transaction-specific financing to small business exporters. Exporters may use this program for pre-export financing of labor and materials and post-shipment financing of the accounts receivable generated from these overseas sales.
- If you need to finance your export-related production activities, then consider SBA's Export Express loan program. It helps small businesses that have exporting potential, but need funds to buy or produce goods, and to provide services, for export.
- If you need to upgrade your facilities to be more competitive then consider the SBA's International Trade Loan Program. It helps small businesses seeking to expand their operations or help those adversely affected by competition from imports.
Click here for the Small Business Administration website.
Overseas Private Investment Corporation
- The Overseas Private Investment Corporation (OPIC) Financing provides medium- to long-term funding through direct loans and loan guaranties to eligible investment projects in developing countries and emerging markets.
Click here for the Overseas Private Investment Corporation website.
U.S. Department of Agriculture options
- For Agriculture specific needs consult the Foreign Agricultural Services financing programs.
Click here for the U.S. Department of Agriculture website.
A:
A: Unless you have the expertise of an international currency trader, your primary objective as an exporter should be to sell your products in foreign markets at a predetermined profit margin. The easiest way for you to do that would be to require payment in dollars. However, if this is not possible, we recommend that you "hedge" your profit margin against the devaluation of your customer’s currency. Establish a foreign currency account at your bank and arrange for a foreign exchange credit line. Your bank will then agree to purchase most of the foreign currencies that you receive from export sales at a fixed rate in dollars against future deliveries. You can use hedging in export transactions involving letters of credit, documents against payment, consignment of goods, and open account. Hedging is also advantageous to importers because they can guarantee a firm purchase price in local currency when they sign the order.
A: Each company should tailor the following checklist to its own needs. Key factors vary significantly according to the products and Countries Involved.
Size of Sales Force
- How many field salespeople does the representative or distributor have?
- What are the short- and long-range expansion plans, if any?
- Would the representative company need to expand to accommodate your account properly?
- Would it be willing to do so?
Sales Record
- Has the sales growth of the representative company been consistent?
- If not, why not? Try to determine its sales volume for the past five years.
- What is the average sales volume per outside salesperson?
- What are the sales objectives of the representative or the distributor for next year? How were they determined?
Territorial Analysis
- What sales territory does the representative company now cover?
- Is the sales territory consistent with the coverage you desire? If not, is the representative or distributor able and willing to expand the territory?
- Does the representative company have any branch offices in the territory to be covered?
- If so, are they located here your sales prospects are greatest?
- Does it have any plans to open additional offices?
Product Mix
- How many product lines does the representative company handle?
- Are these product lines compatible with yours?
- Is there any conflict of interest?
- Does it represent any other U.S. firms? If so, which ones? (Names and addresses)
- Would the representative company be willing to alter its present product mix to accommodate your?
- What is the minimum sales volume that the representative or distributor need to justify handling your line?
- Do its sales projections reflect that minimum figure?
- From what you know of the territory and the prospective representative or distributor, is the projection realistic?
Facilities and Equipment
- Does the representative company have adequate warehouse facilities?
- What is the method of stock control?
- Does it use computers Are they compatible with yours?
- What communications facilities does it have (fax, modem, e-mail)?
- If your product requires servicing, is the representative company equipped and qualified to perform that service? If not, is it willing to acquire the needed equipment and arrange for training?
- To what extent will you have to share the training cost?
- Are there alternative ways in the market to service the product?
- If necessary and customary, is the representative or distributor willing to inventory repair parts and replacement items?
Marketing Policies
- How is the sales staff compensated?
- Does the representative company have special incentive or motivation programs?
- Does it use product managers to coordinate sales efforts for specific product lines? How does it monitor sales performance?
- How does the representative or distributor train its sales staff?
- Would it pay or share expenses for its sales personnel to attend factory-sponsored seminars?
Customer Profile
- What kinds of customers is the representative company currently contacting?
- Are its interests compatible with your product line?
- What are the key accounts?
- What percentage of the total gross receipts do those key accounts represent?
Principals Represented
- How many principals is the representative or distributor currently representing?
- Would you be its primary supplier?
- If not, what percentage of the total business would you represent How does this percentage compare with other suppliers ?
Promotional Thrust
- Can the representative company help you compile market research information to be used in making forecasts?
- What media doe sit use, if any, to promote sales?
- How much of the budget is allocated for advertising?
- How are those funds distributed among various principals?
- Will you be expected to contribute for promotional purposes?
- How will the amount be determined?
- If the representative or distributor uses direct mail, how many prospects are on the mailing list? What type of brochure does it use to describe the company and products that it represents?
- If necessary, can it translate you r advertising copy?
- Does the representative have a Web site to promote the product?
- Can it provide product demonstrations and training if needed?
A: After determining that your company is ready to export you will begin the search for potential markets.
Step 1: Screen Potential Markets
For each product consider:
- Using historical value and volume data is it possible to identify market demand and trends. Statistics on product exports are available from a variety of sources including FAS, Department of Commerce and the National Trade Data Bank.
- Identifying several (i.e. 6) target markets that are large and growing fast. Look for consistent market growth or growth after a recession.
- Identifying smaller markets. These markets may provide ground-floor opportunities so as to develop customer loyalty before your competitors enter the market. While value and volumes may be small, smaller markets should have much higher growth rates than the large markets.
Of the countries investigated – which have the most potential? Which have the strongest supporting data?
Step 2: Assess Targeted Markets
For each market, the following should be considered:
- Trends for the Product: consumption, value of the import market, demographic information, etc.
- Sources of Competition: domestic and import.
- Marketing and Use: channels of distribution, cultural differences, pricing
- Trade Barriers: tariff and non-tariff, packaging requirements, labeling, certificates.
- Incentives & Promotion Opportunities: Trade shows, missions, trade leads, industry partners.
Step 3: Draw Conclusions & Develop an Export Plan
A: While it depends on the industry, here are some general categories that you should cover:
- Is there an export market for my products and services?
- What are the barriers to entry to a particular market?
- Which are the best markets and their size?
- Which products or services are best suited for export?
- What is the most effective method for entering a market?
- Who are the major competitors in the market?
- What is the nature of the products and services offered in the market?
- Do the customers in the market demand special support for products or services?
- Are any of your major customers a force in any of the target markets?
- Do the products, services, packaging, advertising, or literature require modification to meet market needs?
- What are the regulations and licensing requirements?
- Is there political risk or a protectionist government?
- What is the state of the national economy?
- How developed is the infrastructure and distribution system?
- Keep up on industry news and recent updates
A: Here are some general tips that you may find useful:
- Because trade shows are so expensive to attend, be sure that it is worth the money, and attend one as a guest to get a general feel for it and get ideas from the competition
- Send 3 people, have one walk around making contacts and getting ideas, while the other two man the booth
- Have an attention getter which will attract people to your booth
- Plan for the unexpected and reserve everything in advance
A: It will almost always be more effective if you advertise and promote your products in the language of the export market. If translators are not familiar with the current idioms and word usage in the export market, words and phrases with multiple meanings could seriously damage the image of your company and products.
A good strategy is back translation which means having the material translated into the foreign language, and then having it translated back to English by someone else to ensure that the correct message is coming across. For this reason, it is best to employ a professional translation service. For further information and tips on translation services please click here.
A: There are several ways to go in in search of buyers.
Local Resources
There are many great resources available to Idaho companies through the Idaho Department of Commerce:
Industry Associations
Another great option is to locate any industry associations in the target country. The people there keep records and know how the industry is doing. It is a great start, and you can easily find out who the competition is.
U.S. Department of Commerce Resources
Buyer finding programs are a great resource, such as “Matchmaking” through BuyUSA.gov, which matches U.S. exporters with buyers and importers in overseas markets. Advertising in Commercial News USA (CNUSA) is a great way to get exposure. This is the official U.S. Department of Commerce showcase for American-made products and services. It provides worldwide exposure for U.S. products and services through and illustrated catalog-magazine and through electronic bulletin boards. The CNUSA is designed to help U.S. companies promote products and services to buyers in more than 145 countries. Each issue of the free bimonthly catalog-magazine reaches an estimated 400,000 readers worldwide. CNUSA is mailed directly to qualified recipients and is also distributed by Commercial Service personnel at U.S. embassies and consulates throughout the world. Features of this include the following:
A: Check them against the Denied Persons List, do a credit report, and contact the U.S. Commercial Service in the country and ask for an International Partner Profile
A: The U.S. Department of Commerce has created a website to assist U.S. businesses with internet exporting. The site provides practical advice, information on e-commerce, and a host of resources for small and medium sized businesses interested in "e-exporting." www.export.gov/sellingonline/.
If you’re trying to target international audiences with your site, it is important to have different language options and to have all content translated: When reformatting your website you should also consider:
- Cultural nuances, such as differences in color association and symbols
- Payment preferences
- Pricing in the appropriate currency/currency converters
- Use of metric measurements (used in Canada)
- Foreign advertising laws, privacy laws and tax regulations
- Customer service system for foreign customers, in their language.
Online or offline, exporting regulations are the same and you will need to do your due diligence to avoid problems. With massive competition online, in virtually all industries, you cannot wait for customers to stumble across your site, you will need to actively promote it. Here are some tips that you may find useful when creating your online strategy:
- Advertise your web domain on offline ads
- Put your domain name on all business cards, letterheads, envelopes, packaging, and promotional materials
- Register your site with various search engines and work on your Search Engine Optimization (SEO)
- Consider advertise your site though these search engines
- Find the largest e-marketplace in the target country and register your site with it
A: The answer depends upon the laws of the country in which the cancellation takes place. In many countries, a representation contract can be terminated relatively easily. However, in other countries, it can be very costly and time-consuming to sever a business relationship with an agent or distributor.
You could be required by local law to compensate the representative for a portion of the original investment, promotional money spent in advance to secure future sales, and the projected income they would have earned during the remaining period of the contract.
Because business customs and laws vary in different countries, it is important you present your representation contracts to an international attorney who is knowledgeable of the laws and regulations of the country in which you will be selling your products. While doing so will be more expensive in the initial stages, it is a sound business investment which could save money fighting litigation in foreign courts.
These are some of the legal questions to consider:
- How far in advance must the representative b notified of you intention to terminate the agreement? (3 months in most countries, but a registered letter may be needed to establish when the notice was served)
- What is “just cause” for terminating a representative? (Specifying causes for termination in the written contract usually strengthens your position)
- Which country’s o/international convention’s laws govern a contract dispute?
- What compensation is due to the representative on dismissal? (Depending on the length of the relationship, the added value of the market that the representative created for you, and whether termination is for just cause as defined by the foreign country, you may be a\required to compensate the representative for losses)
- What must the representative give up if dismissed? (The contract should specify the return of property, including patents, trademarks, name registration, and customer records)
- Should the representative be referred to as an agent? (In some countries the word agent implies power of attorney. The Contract needs to specify whether the representative is a legal agent with power of attorney)
- In what language should the contract be drafted? In most cases, the contract should be in both English and the official language of the foreign country)
A: This is a mistake made by too many new exporters. They tend to select countries that are close to saturation with products that are similar and identical to theirs. While it is more comfortable to know that they will be exporting to well-established markets, they are not prepared for the fierce battles that will follow with entrenched competitors who will not give up their local market share without a fight. This potentially combative situation could result in ever-decreasing product prices and profit margins, and a premature and costly exit from the export market.
An alternative marketing approach is to select export markets based upon their NEED for your products. In many instances, this means penetrating markets where little to none of your type of products has been sold in the local market. While the risk is higher, so is the profit potential. It will require a more intensive advertising and promotional campaign to educate local customers about the benefits of your products and why they should buy them (possibly for the first time).