𝐓𝐡𝐞 𝐏𝐫𝐢𝐦𝐞𝐫
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.
𝘐𝘥𝘦𝘯𝘵𝘪𝘧𝘺 𝘱𝘳𝘰𝘥𝘶𝘤𝘵𝘴 𝘵𝘰 𝘴𝘦𝘭𝘭
If you have a product that is selling well in the Domestic Market, it’s not unusual to attempt to sell that same product or products in other markets as well. After all, Major Portion of the world’s consumers are located outside the many areas of the world, like Asia, Europe, US. But limiting your exporting to only your fastest-selling products in the Home Country, may be limiting your export potential. Products that may face growing competition in the Domestic Market or products that are becoming outdated in this country could find new life in other markets that don’t have similar competition or need the very latest technology.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 choose to sell to.
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. Make sure you understand the risk factors in potential new markets. All countries have various levels of risk associated with them.
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. 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.
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
𝘐𝘥𝘦𝘯𝘵𝘪𝘧𝘺 𝘢𝘯𝘺 𝘪𝘯𝘵𝘦𝘭𝘭𝘦𝘤𝘵𝘶𝘢𝘭 𝘱𝘳𝘰𝘱𝘦𝘳𝘵𝘺 𝘤𝘰𝘯𝘤𝘦𝘳𝘯𝘴
Many exporters don’t realize the importance of protecting and enforcing their intellectual property (IP). When you export, you don’t get the benefit of rights granted in the Home Country by patents, trademarks, registrations, copyrights, et al. In a foreign country, these protections may mean little, if anything. That may mean you need to protect your inventions by filing a patent application in countries in which you plan to do business. Most countries have a first to file system, so you want to file early, perhaps by using a provisional patent application. In most countries, trademark rights are only obtained by registering that mark with the proper authority in that country. Ideally, you should register your trademarks in every country where you want your mark protected. Using your trademarks is an important factor in protecting them. By using them, you not only increase the marketing value of the marks, it makes ownership of the marks clear. In most countries, if you don’t use a trademark, it can be cancelled for non-use.
𝘋𝘦𝘤𝘪𝘥𝘦 𝘩𝘰𝘸 𝘵𝘰 𝘱𝘳𝘪𝘤𝘦 𝘺𝘰𝘶𝘳 𝘱𝘳𝘰𝘥𝘶𝘤𝘵𝘴
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 domestic price of your good. Pricing is a complicated, important aspect of exporting, so make sure you do thorough research to understand how and what to charge. You may also want to consider pricing your exports in the local currency. It can make your goods more competitive, particularly with companies located in other countries.
~ At what price does your company sell its product in Domestic 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
Make sure you know about any restrictions on exporting your goods from the Domestic Market. Determining which of your products are subject to export regulations is one of the first, most important steps you’ll need to take in the export compliance process.
𝐄𝐱𝐩𝐨𝐫𝐭 𝐥𝐢𝐜𝐞𝐧𝐬𝐞 𝐫𝐞𝐪𝐮𝐢𝐫𝐞𝐦𝐞𝐧𝐭𝐬. A relatively small number of exports require a license from either the Department of Commerce or another 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. 𝘌𝘮𝘣𝘢𝘳𝘨𝘰𝘦𝘥 𝘤𝘰𝘶𝘯𝘵𝘳𝘪𝘦𝘴 are countries you are not allowed to do business with. To avoid them, you need to know which ones they are. 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.
» Find out if there are any restrictions on importing your goods in prospective
countries.
» Research to see if your products qualify for any free trade agreements (FTA)
» Prepare Your Goods for Shipping
» Understand product labelling requirements in your destination country.
» Understand and correctly apply hazard material (HazMat) requirements if
appropriate.
» Make carrier choices.
» Understand insurance requirements.
» Complete Your Export Paperwork
» Find an international banking partner.
» Understand your payment options.
𝐏𝐫𝐨𝐭𝐞𝐜𝐭𝐢𝐧𝐠 𝐘𝐨𝐮𝐫 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐚𝐠𝐚𝐢𝐧𝐬𝐭 𝐄𝐱𝐩𝐨𝐫𝐭 𝐕𝐢𝐨𝐥𝐚𝐭𝐢𝐨𝐧𝐬
Properly classify your products.
Determine if the destination country requires an export license.
Screen all parties in your export transaction.
Watch for red flags: Know how your product will be used
Be aware of deemed exports.
Understand document compliance
𝘍𝘳𝘦𝘪𝘨𝘩𝘵 𝘍𝘰𝘳𝘸𝘢𝘳𝘥𝘦𝘳 While freight forwarders can offer a myriad of services to help facilitate your exports, at the very least they will help you arrange international transport of your goods. A freight forwarder may be hired by the seller or buyer of the goods depending on the terms of the sale, and they may provide additional services such as packaging, document preparation, and customs clearance.
𝘊𝘢𝘳𝘳𝘪𝘦𝘳𝘴 Depending on where your goods originate, there may be multiple carriers involved in the movement of your goods. An inland carrier will help move the goods from your warehouse to the port of export. From there, the goods can begin international carriage by ocean, air, rail or truck.
𝘊𝘶𝘴𝘵𝘰𝘮𝘴 Exports from the Originate Country are subject to a variety of export regulations that are monitored and enforced. Likewise, the customs agency in the country of import is charged with enforcement of import laws and the collection of duties and taxes.
𝐄𝐱𝐩𝐨𝐫𝐭 𝐃𝐨𝐜𝐮𝐦𝐞𝐧𝐭𝐚𝐭𝐢𝐨𝐧 𝐏𝐫𝐨𝐜𝐞𝐝𝐮𝐫𝐞𝐬
𝐏𝐫𝐨𝐟𝐨𝐫𝐦𝐚 𝐈𝐧𝐯𝐨𝐢𝐜𝐞 In a typical international sale, the process usually begins with a request from the buyer. Rather than providing a standard quotation form like you may use for your domestic sales, you should reply with a Proforma invoice. Your potential new customer may need a Proforma invoice to arrange for financing, open a letter of credit, or apply for an export license. If completed properly, a Proforma invoice will look a lot like your final commercial invoice.
𝐂𝐨𝐦𝐦𝐞𝐫𝐜𝐢𝐚𝐥 𝐈𝐧𝐯𝐨𝐢𝐜𝐞 Once your international buyer accepts the terms on the Proforma invoice and places their order, you need to prepare your goods for shipping, including the paperwork required to accompany the goods. The commercial invoice includes most of the details of the entire export transaction. The commercial invoices you prepare for your export shipment will probably include a lot more detail than the invoices you create from your accounting system for your domestic orders. Export license requirements, if any; and letter of credit or other banking information you need to get paid.
𝐏𝐚𝐜𝐤𝐢𝐧𝐠 𝐋𝐢𝐬𝐭 An export packing list may also include more details than a packing slip you create for your domestic shipments. • Your freight forwarder may use the information to create the necessary bills of lading. • Your bank may require a detailed packing list to fulfil the requirements for a letter of credit. • Customs officials in the Origin Country and the destination country may need to review certain items in your shipment.
𝐂𝐞𝐫𝐭𝐢𝐟𝐢𝐜𝐚𝐭𝐞 𝐨𝐟 𝐎𝐫𝐢𝐠𝐢𝐧 Some countries require a certificate of origin to identify the appropriate duty rates to apply to the goods upon import clearance. These certificates of origin usually require a seal from a chamber of commerce in the originating country. An increasing number of companies are foregoing the time and expense of hand-delivering their certificates to a chamber and are relying on electronic certificates of origin (eCO) for their exports. An eCO is faster and less expensive to obtain, allows for the option of delivering them electronically to the importer, and are registered with the International Chamber of Commerce, there are also country-specific certificates of origin used to identify goods that are eligible for free or reduced duty rates under the free-trade agreements negotiated by Origin Country.
𝐒𝐡𝐢𝐩𝐩𝐞𝐫’𝐬 𝐋𝐞𝐭𝐭𝐞𝐫 𝐨𝐟 𝐈𝐧𝐬𝐭𝐫𝐮𝐜𝐭𝐢𝐨𝐧 Your freight forwarder is an important partner in your export shipments. They typically arrange the transport of your goods with the carrier and help ensure you’ve taken care of all the details. The shipper’s letter of instruction (SLI) form contains the details of your shipment that the forwarder will use to successfully move your goods. It may also grant the forwarder a limited power of attorney.
𝐁𝐢𝐥𝐥𝐬 𝐨𝐟 𝐋𝐚𝐝𝐢𝐧𝐠 There are three common bills of lading that may be required for your shipment: an inland bill, an ocean bill, and an air waybill. The inland bill of lading is often the first transportation document created for your export. It’s used to move your goods to the ocean port or airport for transport out of the country to the buyer’s destination. The ocean bill of lading is used if your goods are shipping by ocean vessel. It can serve as both a contract of carriage and a document of title for the cargo. It can be a negotiable or nonnegotiable document. The air waybill is required for shipments by air. It is a contract of carriage between the shipper and the carrier, and it is always non-negotiable.
𝐃𝐚𝐧𝐠𝐞𝐫𝐨𝐮𝐬 𝐆𝐨𝐨𝐝𝐬 𝐅𝐨𝐫𝐦𝐬 If your products are considered dangerous goods by either the International Air Transport Association (IATA) or the International Maritime Organization (IMO), you need to include the appropriate dangerous goods forms with your shipment. These forms need to be completed by someone who has been trained to handle dangerous goods shipping.
𝐁𝐚𝐧𝐤 𝐃𝐫𝐚𝐟𝐭 A bank draft is an important part of getting paid for your exports under a documentary collection. The seller attaches the various required documents to the bank draft and presents it to the bank to get paid. Usually the seller’s bank will send the bank draft and related documents via the freight forwarder to the buyer’s bank. When the buyer authorizes payment for the goods, the bank releases the documents to the buyer and transfers the funds to the seller’s bank.
𝘌𝘯𝘴𝘶𝘳𝘪𝘯𝘨 𝘈𝘤𝘤𝘶𝘳𝘢𝘵𝘦 𝘌𝘹𝘱𝘰𝘳𝘵 𝘋𝘰𝘤𝘶𝘮𝘦𝘯𝘵𝘴 Inaccurate documents can cause delays in shipments and payments, and lead to violations of export regulations—which can lead to fines and penalties.
Comments