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Contemporary Guide To Export Business Manual

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Business | Businesses



An export is any movement of items outside the country. That includes items sent by regular mail or hand carried on an airplane; documents transmitted by fax; software or specifications downloaded from the internet; and technology transmitted by email or shared in a phone conversation.
An item is also considered an export even if it is leaving the U.S. temporarily, or if it is being returned to a foreign country. Finally, releasing technology or data to a foreign national located in the U.S. is also “deemed” to be an export.
Once you understand what is an export, it’s important to understand how to be a successful exporter. Here are several important tips you can use to develop a successful, respectable exporting business:
1. Develop Your Export Strategy
Identify products to sell.
If you have a product that is selling well in the United States, it’s not unusual to attempt to sell that same product or products in other markets as well. After all, 95% of the world’s consumers are located outside the U.S. And many areas of the world, like Asia, have a rapidly growing middle class.
But limiting your exporting to only your fastest selling products in the U.S. may be limiting your export potential. Products that may face growing competition in the U.S. or products that are becoming outdated in this country could find new life in other markets that don’t have similar competition or need the very latest technology.
Identifying which products you end up exporting depends a great deal on the markets you wish to sell to, which leads to the section below.
Identify markets to sell to.
Before you can sell and export your products, you need to find people to buy them. Maybe you are already receiving inquiries from certain potential customers in certain countries. Maybe you’ve self-identified logical new markets for your goods.
In either case, you need to spend time learning about these potential new markets. This includes identifying the market potential, learning how to properly (and legally) export your products or services to that market, identifying sales channels, and more. Do your research to determine what kind of modifications you may need to make to your product for this market, what the import duty rates are, and whether or not their are any U.S. export restrictions.
Make sure you understand the risk factors in potential new markets. All countries have various levels of risk associated with them. Fortunately, there many free tools available on the web to make that assessment. Download the free white paper that explains this process: Evaluating Export Markets: Assessing Country and Customer Risks.
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Identify Your Strategy For Selling. You can sell directly to end users. If you choose to sell directly to end users, your company is responsible for all aspects of the transaction—shipping, payment, product servicing, etc.—unless you make other arrangements. If you don’t anticipate and include these costs upfront, you may end up with less profit than you were hoping for. A Basic Guide to Exporting has helpful information about planning for direct sales, as well as government agencies that can assist you. You can sell to distributors who purchase goods from you (often at a discount) and resell them for a profit. When working with a foreign distributor, expect to have fewer responsibilities for support and service; the distributor will take care of these aspects, which can be challenging for new exporters. As mentioned above, the U.S. Commercial Service can help you find and select distributors who are reputable and advise you in beginning steps. You can establish partnerships with local companies. Partners represent a step up from a distributor relationship. In this case, you may find an existing company in your intended foreign market that has a distribution and support system already in place. Partnering with such a company can make entering a new market easier and lessen the cost and pain of setting up infrastructure in another country.
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Identify How You Will Support Your Products. In addition to figuring out what you’re selling, where you’re selling it, and how you plan to sell, you’re responsible for planning and implementing the care you provide after the sale. That includes determining how you will support your products—a critical factor if you want to be a successful exporter with a good reputation. Things to consider include: Service Technical support Warranties Returns International trade makes it more difficult and costly to service, repair or replace damaged goods or items. Two major service delivery options include the following: Requiring the buyer to return the product. This is an expensive option. It is also inconvenient for the foreign buyer, who is then saddled with high shipping costs and doesn't get to use your product for an extended amount of time. Figuring out a way to service your product locally. This is a cost-effective, time-saving option for most exporters. Options include using existing local service facilities or creating an office to provide service in-country.
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Identify Any Intellectual Property Concerns. Intellectual property (IP) considerations are tricky. When you export, you don’t get the benefit of rights granted in the U.S. by patents, trademarks, registrations, copyrights, et al. In a foreign country, these protections may mean little, if anything. Do your research beforehand to learn how intellectual property issues are handled in the country or countries you will be exporting to.
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Decide How To Price Your Products. Pricing is one of the most difficult challenges for exporters, even experienced ones. According to A Basic Guide to Exporting, considering the 10 questions below will help ensure you’re setting the best price for your product. At what price should your company sell its product in the foreign market? What type of marketing positioning—also known as customer perception—does your company want to convey through its pricing structure? Does the price reflect your product’s quality? Is the price competitive? What type of discounts and allowances should your company offer foreign customers? Should your prices differ by market segment? What should your firm do about product-line pricing? What options are available if your firm’s costs increase or decrease? Is the demand in the foreign market elastic or inelastic? Is the foreign government going to view your prices as reasonable or exploitive? Do the foreign country's anti-dumping laws pose a problem? Traditionally, determining proper pricing depends on costs, market demand, and competition. You’ll also want to consider additional costs the importer will incur, including tariffs, customs fees, currency fluctuation, transaction costs, and value-added taxes, because they can add to the final price substantially and may even double the U.S. domestic price of your good. Another aspect of pricing is the initial export transaction, which begins with the receipt of an inquiry form followed by a request for a quotation. You’ll prepare a proforma invoice to describe your product, set a price, set timetables, and specify terms of sale and terms of payment.
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2. Review and Understand Export and Import Regulations Make sure you know about any restrictions on exporting your goods from the U.S. Determining which of your products are subject to export regulations is one of the first, most important steps you’ll need to take in export compliance process. Here are some key things to look out for: Export license requirements. A relatively small number of exports require a license from either the U.S. Department of Commerce or another U.S. agency like the State Department. Depending on your product’s technical characteristics, destination, and end users/end uses, your product may be one of them. Our white paper, How To Determine If You Need an Export License, is a must-read resource for new exporters. Once you’ve done your background research, use our Export Controls Wizard to find out more about your specific product’s requirements. Embargoed countries are countries you are not allowed to do business with. To avoid them, you need to know which ones they are. You can find out more about embargoed countries and export regulations in our articles, Six Basic Steps for Export Compliance and The Three R’s of Export Compliance. Restricted parties are individuals, businesses and other organizations that have been identified as engaging in activities related to the proliferation of weapons of mass destruction; are known to be involved in terrorism or drug trafficking; or have had their export privileges suspended. All exporters should check all the parties in every export transaction against the various denied party screening lists to prevent incurring penalties. You can do this manually via the Federal Register, but be aware that the number of lists to be checked is large. Yes, it is time consuming, but you could face jail time if you are found to be in violation of these regulations. (To make it easier to stay in compliance and save precious time, try our Restricted Party Screening Wizard for free, so you can be sure that you are accessing the most current information available.) Find out if there are any restrictions on importing your goods in prospective countries. Just as there may be restrictions on exporting your goods from the United States, there may be limits or prohibitions about importing goods into your chosen market(s). In addition to identifying the correct Harmonized System (HS) number for your products (a number that is used to determine how much duty you must pay for the goods), you need to be aware of other types of import controls for your products, including import licenses and permits, various certificates, absolute and tariff rate quotas, and anti-dumping and countervailing duties. Research to see if your products qualify for any free trade agreements (FTA). Depending on which countries you are exporting your goods and their country of origin, they may be eligible for reduced or no duties upon import. By eliminating the import duties on your products, they become less expensive and more competitive in your chosen markets. You may want to alter how you source some of the parts of your goods in order to get your goods to qualify for a particular free trade agreement if it will eliminate the import tariff. The U.S. currently has free trade agreements with 20 countries covered by 14 different treaties. The most widely used agreement is the North American Free Trade Agreement, more commonly known as NAFTA. Each of the 14 different agreements have different rules of origin for determining whether or not your product qualifies under the agreement. It’s important to understand how these rules of origin work. Typically, the goods are wholly obtained or produced within one of the countries of the agreement, or they are substantially transformed in one of the countries. The definition of “wholly obtained or produced” and “substantially transformed” can be very narrowly defined. You should not participate in the free trade agreement unless you are sure—and can prove—that the goods qualify. And even if they do qualify, there may be times when it makes sense to opt out and not choose to participate.
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3. Prepare Your Goods for ShippingPrepare Your Goods For Shipping-Shipping Solutions.jpg Identify partners, like freight forwarders. Whether you’re looking for a new partner or reviewing your relationship with your current freight forwarder, here are seven questions you should think about before taking action: Do I have a specialized product line or type of export? How many ports will I be using for exports? Is automation easy with this partner? What is the broker or freight forwarder’s general reputation? Do I need a dedicated account representative? Do we have a written working agreement? Are there warning signs about the freight forwarder you might choose? The answers to your questions about freight forwarders will help you identify if your relationship is as functional and profitable as it could be. Understand Incoterms. One of the first things to confuse new exporters is the difference in the type of trade terms that are commonly used in international trade versus domestic sales. While most companies use a variant of FOB as the trade term of choice within the U.S., there are currently 11 different trade terms, called Incoterms 2010, that are used internationally. While using Incoterms for your export sale is voluntary, they are globally accepted and provide a shorthand of outlining when the responsibility for the goods transfers from the seller to the buyer. They don’t, however, say anything about the price of the goods, the method of payment, or when the title of the goods passes. Most importantly, they don’t replace the need for a sales contract.
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Understand product labeling requirements in your destination country. Here are a few things you need to consider: Does the country legally require using specific language? Do the product content and country of origin need to be included? Are weights and measures stated in the local units? Do items need to be labeled individually? Pack your goods. Think about this for a second: Losses from improperly packed containers add up to $5 billion a year worldwide. That’s a pretty good reason new exporters should make sure they’re avoiding potential problems when they prepare their export shipping crates. In The Art and Science of Packing a Shipping Container, we offer several tips that can help make sure your goods and containers are prepared for the journey ahead. You can also download a free export packing list to help you in your export process.
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Understand And Correctly Apply Hazmat Requirements if Appropriate. Depending on what you’re exporting, you may need to apply certain hazmat requirements. The regulations for shipping hazardous materials and dangerous goods are complicated, which you can learn about here. However, the most important step you can take when dealing with hazardous materials is to make sure you and the employees who will be dealing with these goods are thoroughly trained and knowledgeable about the regulations. Companies like CARGOpak can help you get effective hazmat and dangerous goods training through on-site DOT Hazardous Materials (hazmat) compliance training classes, as well as live, instructor-led webinars. Make Carrier Choices. New exporters need to decide what methods they are going to use to get their goods to their destinations—air, ship, rail, road or a combination. Just as with freight forwarders, make sure you’re asking questions, not just partnering with the first company you meet. What you think may be the most inexpensive, efficient way to carry your exports may not be. Explore all your options to find the most economical and efficient combination. Understand Insurance Requirements. Insurance is an important, necessary protection for U.S. exporters. A Basic Guide to Exporting covers the options available and the information you need to know in order to purchase insurance. You should also consult with international insurance carriers or freight forwarders for more information about your specific goods.
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4. Complete Your Export Paperwork Once you’ve completed all of the above steps, you’ve still got a way to go—you now need to fill out the documentation and supporting paperwork that will accompany your goods on their export journey. This is crucial to your success, because any errors (even simple typos) in your paperwork could delay shipments and your payday. Depending on what you’re exporting, you may have dozens of forms to complete. You can either do this manually or use a software product that’s specialized for export documentation: Shipping Solutions. With Shipping Solutions, you’ll complete your paperwork up to five times faster than the traditional, manual process. Give it a try for free today. It’s cost-effective, and the investment can even save you money by eliminating tedious tasks and giving you back your time. Try out this savings calculator to help identify how much money your company could save by using Shipping Solutions.
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5. Make Sure You Get Paid Arguably the most important part of being an exporter is getting paid for your goods. To make sure you get paid, you need to find an international banking partner and understand your payment options. Find an international banking partner. Interview several bankers from multiple banks. You’re looking for someone you feel comfortable with, someone with whom you have a good rapport, and someone you can trust. Make sure your bank can help you. The bank you choose should do more than provide guidance in getting paid; it should also help you assess creditworthiness and guide you on the best payment methods for your particular situation. Your bankers need to know the details about each type of document and supporting information you need in order to facilitate a smooth letter of credit. They should also know the sticking points regarding letters of credit and any other payment type, and be able to advise you regarding the best payment methods for your exports.
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Understand your payment options. There are a variety of ways you can structure an international sale and different options for getting paid. The five most common methods of payment in international trade are consignment, open account, documentary collections, letters of credit, and cash in advance. Each of these options has specific advantages, and each option carries a different level of risk for the exporter. Getting Paid for Your Exports: Payment Options for International Transactions outlines both. Make sure you understand the various terms that are the important part of the international transaction.
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d_oneX
thanks, very insightful post
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